Examination of Witnesses (Question Numbers
40-59)
RT HON
LORD MANDELSON,
SIR BRIAN
BENDER AND
MR JOHN
EDWARDS
21 OCTOBER 2008
Q40 Mr Hoyle: I do not disagree with
what you say, but what you have answered is the problem. Of course
he may have done a good job, he may be able to go between the
two departments and he is answerable to the Lords, but he cannot
come to the Commons. That is the whole point. All the balance
is weighted to the Lords. The fact is that the House of Commons
is the main scrutiny chamber and we have not got that. Of course,
you say to me that it is helpful to have shared departments. If
we did that, we would have everybody sharing departments so there
was, in your opinion, joined up government. What I would say is
that we do know that there have been clashes between DTI, BERR,
whatever we want to call it today, and International Development.
So we can have a conflict of interest. It is those that we wish
to take away. What we are saying is we need to have real scrutiny
in the Commons. I want to use your good offices to ensure that
that can be made available to us, and I think it is something
that we can report on as well.
Chairman: Before you reply, Mark Oaten
wants to make a related point.
Mr Oaten: The real issue is that perhaps
under normal circumstances this structure might just work, but
we are not living in normal times—there is an economic down
turn, business out there is desperate for support and help—and
what message does it actually send to small businesses that the
small business minister is hidden away in the Lords? All of these
MPs up and down the country have got small businesses asking us
to take up issues with Government and we cannot actually address
these on the floor of the House with a small business minister.
Surely you could have a word with the Prime Minister and say:
"These are difficult times. The Department has a major task.
Give us at least an additional minister to take on the task of
supporting small businesses through what is going to be a very
difficult period in the year ahead?"
Chairman: Roger.
Q41 Roger Berry: I think you have
a ministerial team of outstanding quality, but I do think the
message of having only one out of six ministers in the Commons
without any responsibility to any other department sends the wrong
message to the business community. Indeed, the second point—I
will ask your view on this—does it not also invite from
the Commons the kind of hostility to the Department for this reason
that, frankly, you could well do without?
Lord Mandelson: I hope that will
not be the case. I am aware that my ministerial colleagues in
the Department have to compensate for the fact that you have got
the Secretary of State and other ministers in the Lords and not
in the Commons, and we will find ways of doing that. I have not
detected any disappointment or unhappiness amongst business about
the ministerial make-up of the Department. You mentioned, Mr Oaten,
Shriti Vadera. I have never thought of Shriti Vadera being hidden
away; her influence and role is, fortunately, extensive.
Q42 Chairman: I have never met Shriti
Vadera. We have never called her before the Committee, I have
never met her personally, so I regard her as hidden away, despite
her very forward public representations. We have a meeting in
the diary to meet, by the way, next week for the first time, but
I think there is an issue there. Lords ministers are inaccessible
to members of the House of Commons.
Lord Mandelson: Are you not reinforcing
the point I am making, which is that we have to work overtime
to compensate?
Q43 Chairman: I think it is more
than that. I have a letter here, and I meant to discuss it with
you before hand—I apologise for the discourtesy (and I am
not answering here as official opposition, but as the Chairman)—from
Alan Duncan, the Shadow Secretary of State, saying, "The
fact that there is no Cabinet level minister for the Department
for Business in the House of Commons means I have concerns that
a normal system of democratic accountability across the House
of Commons has become impossible", and he is asking to appear
before this Committee to give evidence. That poses very interesting
questions that we have not discussed as a committee. I think,
at the very least, we are going to have to look at quite innovative
and radical solutions to try and address this problem as a committee,
and we will have a discussion about that privately later on, but
I would welcome any suggestions you have. I think, frankly, you
coming before us three or four times a year, welcome as it is
and which we embrace and we are thankful for, is not enough. Are
there any suggestions you can make to change it?
Lord Mandelson: I do not know
what more I can do.
Q44 Chairman: We had a private discussion
and it was a frustration David Young raised with me when he was
Secretary of State, but there is no mechanism for a secretary
to answer questions to the House of Commons directly.
Lord Mandelson: I suggest you
alter the Standing Orders of the House of Commons to allow Lords
heads of department to come and answer questions in the Commons.
Q45 Mr Oaten: Would you welcome that?
Lord Mandelson: I am now straying
way beyond my comfort zone in this discussion.
Q46 Roger Berry: It is on the record
now.
Lord Mandelson: I thought this
was a private discussion among friends, you said at the beginning!
Chairman: I think we will have to look
for infinite solutions. There is one issue about work which still
concerns me, the issue of accountability, perhaps some innovation,
which I think should be done very quickly, because the House of
Commons wants to have ministers verbally accountable to it. It
might actually help address the situation. I think it is a matter
of considerable concern to every member of the Committee, so far
as I can tell, without dissent, that we look at some solutions
and have a discussion with you about that. Have we done energy?
Q47 Mr Clapham: No, I can move to
energy, Chairman? The Secretary of State will be happy to answer
questions on energy, in the sense that his Department still has
some responsibility, and I am referring here, for example, to
the competition in markets. DBERR has the responsibility for ensuring
free and fair markets. What role will that play in the future?
Is there going to be oversight within that particular role for
the energy markets, assuming, of course, that Ofgem will now be
with the new Department?
Lord Mandelson: Ensuring that
markets operate freely and fairly is a matter for the independent
competition authorities—the first thing to make clear—rather
than for the Government. The Enterprise Act 2002 removed ministers
from competition decisions, placing them in the hands of the Office
of Fair Trading and the Competition Commission. The creation of
DECC does not alter these arrangements; they remain the same.
What we will do in BERR is maintain close links with the newly
created Department, as energy matters are an absolutely vital
concern to the UK economy in every respect. So I do not think
that you will find any fundamental difference in procedure as
far as market governance is concerned. If industry fails to deliver
in some sense, then Ofgem can refer the market to the Competition
Commission. I think that Ofgem, having on 6 October given the
industry notice to end practices, for example, that are failing
some customers and to deliver the full benefits of competition
to the entire market, illustrates to you how regulation and governance
will continue to operate to the benefit of consumers in Britain.
Q48 Mr Clapham: Within the context
of the market we see, for example, the big six energy companies
that have become much more integrated from wholesale to retail
and we see just recently that EDF have brought British Energy.
Do you feel in that sale that there is such competitiveness still
retained as to show transparency?
Lord Mandelson: The Government
as a whole made clear its support for an EDF takeover in part
as being a good way of developing nuclear new build in the UK.
The Government expressed the hope that the parties would reach
agreement. We have had discussions with EDF to agree a package
of sites that EDF would be willing to release under certain conditions
to enable a second nuclear operator to enter the market. It is
the Government as a whole which is acting and there is continuity
in government policy in this handover or change over of responsibilities
from one department to another. I think that is what you would
expect.
Q49 Mr Clapham: It is a complicated
area. As you say, there has been discussion with EDF. Has that
been around the nuclear liabilities?
Lord Mandelson: There has been
a discussion on that. The creation of DECC will have no effect
on the funding of the Nuclear Liabilities Fund, which is an independent
legal entity, as you know. When it accepts EDF's offer the proceeds
from the sale of the Government's stake in British Energy will
go to the fund, to the NLF, and will replace the annual, sort
of, cash sweep payments currently made by British Energy. EDF
will continue to be responsible for other payments which will
still be due to the fund, for example in relation to fuel loaded
into the reactor at Sizewell. So, there again, you have a continuity
of policy and practice which will not be affected by the change
over of departmental responsibilities.
Q50 Mr Clapham: This is an important
question because some months ago, when it was first mooted that
EDF may well takeover British Energy, there was the question as
to their contributions to the Nuclear Liability Fund, but presumably
that has now been resolved?
Lord Mandelson: Yes, I think it
has been resolved, is my information.
Sir Brian Bender: That is my understanding.
Q51 Mr Clapham: Given that, of course,
the sale raised £12.5 billion of funds, is that likely to
be put into the Nuclear Liabilities Fund, the £12.5 billion
that were raised?
Sir Brian Bender: The British
Government has a 35% shareholding, so it would only be that share,
but, as the Secretary of State said, as and when the deal is finalised
the proceeds from the sale of the Government's stake will go into
the NLF.
Q52 Mr Clapham: It will be the proportion
of the £12.5 billion?
Lord Mandelson: Yes, that is the
Government's stake in British Energy.
Q53 Chairman: This does raise another
question of accountability, by the way, which is that there is
no Department of Energy and Climate Change Select Committee at
present. This Committee intends to exercise its authority in light
of its reports over the last few years and, in fact, we are planning
a session with Ofgem to discuss their response to our report which
we think is material. There is another indicator here that scrutiny
of energy policy is absolutely essential, again, to our competitiveness
and, indeed, the other issues you rightly set out at the beginning.
So I would urge you to make sure your colleagues in Government
and the Leader's Office in the House, particularly, bring forward
arrangements urgently for a new arrangement for select committees
so we all know where we stand. Before we move on to the economy
more generally and your action plan for business, which you set
out, you have sent out a memorandum to your officials. Would we
be able to have a copy of that for the Committee? I am sure it
is a document you would be prepared to share with us.
Lord Mandelson: I would be very
happy. Do we have a copy?
Chairman: That is a speedy decision.
Thank you, Secretary of State. (Document handed to Committee)
I think, technically, this is against Standing Orders, but we
accept it with pleasure. I will hand over to Roger Berry to pursue
the questioning. 2[2]
Q54 Roger Berry: Secretary of State,
as part of the Government's response to the global financial crisis
and its consequences, the National Economic Council was established
to replace the Economic Development Committee. Now, apart from
adding a few more people to the membership, what exactly is the
difference between the remit of these organisations? Was this
a message that Government is acting and acting more quickly, or
was it a message that this Council has a specifically different
function from that of its predecessor?
Lord Mandelson: I think to have
such a Council, consisting of all the main Ministerial players
with relevant responsibilities to our handling of the financial
crisis, meeting twice a week in a very, very focused way, under
the chairmanship and relying on the authority of the Prime Minister,
is the best possible response we could have made. We meet in the
Cabinet Office briefing rooms (COBRA), which provide a very good
facility for these discussions to be held, not least because we
have projected around us every relevant market movement that has
a bearing on our discussions. That sort of technical facility
is not available in the Cabinet Room, for example. So I cannot
judge how the Economic Committee of the Cabinet functioned before
because I was not a member of it, but the drive, the focus and
the decisiveness of the Economic Council, I think, is very important.
It is impressive to me. It allows for very well-informed discussions
and decisions to take place in real time, and not only with the
Prime Minister presiding but the Cabinet Secretary beside him
and the relevant Treasury and other officials all present. It
enables us to deliver very strong, very decisive, joined-up government.
I am not saying that that is not always the case in all parts
of the Government (before you leap in) but in this area I really
think the machinery that has been created and the performance
of Ministers and officials is really impressive.
Q55 Roger Berry: During the recent
discussions to address the banking crisis in the UK, what was
the involvement at Ministerial level and, indeed, at official
level? We had that evening when the most senior bankers in the
country were visiting Number 11 and gagging for recapitalisation
(and I use the term "recapitalisation" advisedly) over
a curry. Were representatives from Business and Enterprise present
to ensure that the outcome of those deliberations fully recognised
the impact on British business?
Lord Mandelson: Yes, we had a
Minister there whom we share with the Cabinet Office, Baroness
Vadera, and I know from everything that the Chancellor has said
to me since that she made a very valuable contribution to that.
They did not just come in for the evening, by the way; shuttles
and relays were taking place over a weekend before the "curry
night" in question. So there was a lot of activity, a lot
of sleeplessness and, also, a lot of decisiveness, and the reason
you had that was because you had the Chancellor in the driving
seat but you had his new City Minister, Lord Myners; you had Baroness
Vadera bring her experience and knowledge to bear—frankly,
it was the best possible Ministerial team that you could have
dreamed of working at that time. That, I think, is a tribute to
the Prime Minister's judgment and choice of Ministers.
Q56 Roger Berry: Clearly, the financial
crisis was the immediate problem that had to be addressed but,
obviously, the impact on the real economy and on British business,
and so on, is an impact that exercised our concerns very early
on. Are you saying that throughout the whole of that process,
Secretary of State, your Department has been involved in all discussions
to ensure that the impact on British business was going to cause
as little damage as possible? Are you happy about the current
arrangements for your department's involvement?
Lord Mandelson: Yes, I am. We
have done that, principally, through the Shareholder Executive,
which is located in BERR, and as a department we have provided
advice on a number of areas to the Treasury regarding its role
in the current banking crisis (and is a 100% shareholder of Northern
Rock and Bradford & Bingley) because we draw on our experience
of handling this sort of government activity and responsibility
in the Shareholder Executive. So governance arrangements between
the Treasury and the relevant banks has been an area we have been
able to contribute to: board composition and remuneration; monitoring
business performance; review of business plans and review of proposed
transactions. Treasury Ministers and officials are responsible
for determining and leading on these policy matters but we all
have a collective responsibility and we have a unique experience
to draw on from the Shareholder Executive to ensure that we are
doing everything that we need to do to protect taxpayers, to maintain
financial stability and to protect customers.
Sir Brian Bender: Can I, maybe,
add a point about some wider discussions at Civil Service level?
Before the summer break the Permanent Secretary to the Treasury
was taking regular meetings among a small group of Permanent Secretaries
about developments in the economy. Since the reshuffle and the
establishment of the NEC, there is now a weekly meeting co-chaired
by the Cabinet Secretary and the Permanent Secretary to the Treasury
which I and the department's Chief Economic Adviser, Vicky Pryce,
are attending, to look at, below the NEC, the issues as they are
affecting not just the banking sector but the economy as a whole.
Q57 Chairman: Do you think it would
be sensible to move to doing banking now? Before we move on to
banks in slightly more detail: call me an old cynic if you like,
Secretary of State, but the National Economic Council is just
another Cabinet sub-committee, except a bigger one, a more unwieldy
one and a less fleet-of-foot one. It was a great trumpeting, but
it is just a title given to another Cabinet sub-committee—with
a rather bureaucratic structure around regional councils and business
ambassadors, but it is just another Cabinet sub-committee, is
it not, and was not worth great trumpeting? I am not saying it
was a stupid thing to have done, but hardly a great solution to
all our problems.
Lord Mandelson: I do not think
you are right, with respect. I think if you were to attend it
you would not characterise it in the way that you have.
Q58 Chairman: It is just the situation
of the urgency of the moment—the urgency of the moment giving
any Cabinet sub-committee that kind of character; when the urgency
has gone away in two or three years' time it will look what it
is—just another Cabinet sub-committee.
Lord Mandelson: Hopefully, the
global financial crisis will resolve itself in time. It is stabilising
the international financial system that we are all trying to pull
together to do. When I say "we are all", I do not mean
in Britain, I mean in—
Q59 Chairman: You are saying that
this has a different quality, as far as you are concerned (and
you have a lot of experience in Cabinet sub-committees), from
the traditional Cabinet sub-committee.
Lord Mandelson: I really do. I
really do. I think it is, qualitatively, quite different in its
focus, in its sense of urgency, and in the way in which departmental
heads and other Ministers come, they are put on the spot and they
have to do so very rapidly. We are not sort of going round the
houses here, and up and down the garden path, before we arrive
at some sort of talking point paper that is distributed around
the place for a sort of vague discussion. It really is not like
that at all. I wish I could smuggle you in.
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