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Lord Newby moved Amendment No. 37:
- Page 219, line 39, leave out ("the Treasury") and insert ("Parliament").
The noble Lord said: I wanted to speak to my Amendment No. 39 in the group, but having heard the intervention of the noble Lord, Lord Jenkin, there is nothing more I need to say in support of it. He expressed our views most admirably.
I understand that Amendment No. 37 falls foul of parliamentary niceties, in that it is not the role of a Bill to dictate to both Houses how they might deal with an issue. Therefore, I shall not be surprised if in response the Minister points that out. However, it would be helpful if this House could send as strong a signal as possible about the way it wants the report of the FSA, once it arrives in Parliament, to be dealt with. Parliament has a mixed track record in fulfilling its function to examine reports.
In this area, the work of the Burns committee has shown how both Houses of Parliament working together can achieve more than the two Houses working separately. Therefore, I am keen that the substance of the amendment is carried into effect. I shall be delighted if the Minister tells me that my fears about the proprieties are misguided and that he agrees with me. In any event, it is important that the message should come out from this House that this is a sensible way to deal with a report from the FSA and, in future, similar bodies. I beg to move.
Lord Kingsland: On reflection, I think that our Amendment No. 38, which is also in the group, is not as good as that tabled by the noble Lord, Lord Newby. Therefore, I am happy to associate us with everything that he said.
In a sense, these are probing amendments, because I suspect that the Minister will tell the Committee that he is not in a position to commit your Lordships' House one way or the other on a matter which is not in the Government's jurisdiction but in that of your Lordships' House.
Nevertheless, perhaps, if the Minister looks on the amendments as being probing, he will be disposed to indicate the view that the Government Benches may take to the establishment of a committee of your Lordships' House to consider the annual report. In particular, dare he say whether he would be more inclined to favour a joint committee rather than a committee either of your Lordships' House or of another place, or both sitting simultaneously?
Lord Jenkin of Roding: I thank the noble Lord, Lord Newby, for his kind remarks. Perhaps my next remark is addressed to Hansard: copy and paste. I apologise for having made my speech in the wrong place.
Lord McIntosh of Haringey: It happens. I am grateful to Members of the Committee for the way in which they have introduced these amendments. Accountability to Parliament is a very important aspect of the FSA's responsibilities. The FSA will be more effective if it is accountable for its actions. It is a single regulator and its lines of accountability will be clearer than they were under the previous regime of multiple regulators. The general support that has been expressed throughout the passage of the Bill for the single regulator principle never becomes clearer than it has in the demands for parliamentary accountability.
The Bill makes several provisions to ensure effective transparency and accountability. The FSA is accountable to Treasury Ministers who have various rights and sanctions. They have the right to appoint and dismiss members of the FSA's board (Schedule 1); to require independent inquiries into regulatory matters of serious concern (Clause 12); and to require independent reviews of the FSA's use of resources (Clause 10).
Ministers, in turn, are accountable to Parliament. As Members of the Committee have recognised, that, of course, is not something for the Bill to specify. However, it is an important principle which underlies the provisions of the Bill. We are more than happy for Parliament to scrutinise what the FSA does, as, indeed, the Joint Committee recommended. Executive powers in relation to the FSA should rest with Ministers, who in the normal way will be accountable to Parliament for what they do in the exercise of those powers.
It is certainly not for me to say whether any committee of either House or, indeed, of both Houses should be set up. However, I believe that it is permissible for me to say that the work of the Joint Committee, with the membership and chairmanship that it had and using the procedures that it did, was enormously helpful in developing this Bill and in ensuring that it will have an easy passage through your
Lordships' House, which I am sure that it will. If I am asked what the usual channels will think, I believe I can assure your Lordships that I shall speak severely to the Deputy Chief Whip and urge him that the usual channels should consider this matter very seriously!The difficulty with Amendments Nos. 37 and 37A is that they go fundamentally against the grain of the accountability structure that I have described. The ability to give directions on the contents of the FSA annual report is an executive act which is properly exercised by Ministers, who can be held to account by Parliament for any exercise of it or failure to exercise it.
The principle which underlies Amendment No. 38 would require the Treasury to have regard to representations, reports and resolutions by either House on any report made by the authority. Although that may seem unobjectionable, it suggests that, in the absence of such a provision, the Treasury would be free to act in disregard of the views expressed by Parliament or any committee. However, that is not our position under our constitution and it would be wrong to suggest that it is.
As I said, Ministers are accountable to Parliament and they can be held to account if they fail to behave in the manner described in this amendment. They can be asked by Parliament to explain why they have not followed a recommendation and, as I hope that the Government's response to the Burns committee shows, that system is effective. We should not cast doubt on its operation here or, as inevitably would be the case if the amendment were accepted, in other areas of governmental responsibility.
As I made clear, Amendment No. 39 is less a matter for me and more one for the House and Members of another place. As I said, Treasury Ministers warmly welcome parliamentary scrutiny, whether by a Joint Committee or by other means. If the Houses so decide, we shall co-operate fully with any such scrutiny. Under those circumstances, I urge noble Lords not to press the amendment.
Lord Newby: I take the cautious words with which the noble Lord welcomed the spirit of Amendment No. 39 as being a ringing endorsement, in spirit, on his part. We understand the form of constraints under which he operates. However, we hope that in his role as Deputy Chief Whip he will ensure that as and when this Bill becomes an Act and this matter comes before the House--
Lord McIntosh of Haringey: I said that I would speak severely to the Deputy Chief Whip. I did not say that he would pay any attention to what I said!
Lord Newby: I realise that the noble Lord has a peculiar problem in this regard, and it is one that only he can resolve with his conscience. However, as I said,
we hope that the half of the personage who receives the message will respond as favourably as the half who is passing it on. With that--
Lord Jenkin of Roding: Before the noble Lord withdraws his amendment, perhaps I may say to the Minister that I detected more than an echo of "The Gondoliers":
- "United we speak as one individual".
Lord Newby: Certainly the Minister had "a little list" a moment or two ago when he read out the contents of the annual report. However, before we descend completely into "Gilbert and Sullivanalia", I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 37A to 39 not moved.]
Lord Kingsland moved Amendment No. 40:
- Page 221, line 43, leave out ("incidental purpose") and insert ("purpose which is necessary or desirable for carrying out its functions").
The noble Lord said: This amendment seeks at page 221, line 43 to leave out the expression "incidental purpose" and insert "purpose which is necessary or desirable for carrying out its functions".
As the Committee is no doubt aware, under paragraph 17(1)
- "The Authority may make rules providing for the payment to it of such fees"
- "as it considers will ... enable it--
- (a) to meet expenses incurred in carrying out its functions or for
- any incidental purpose".
- "purpose which is necessary or desirable for carrying out its functions".
9.15 p.m.
Lord Jenkin of Roding: I am sure that other noble Lords have found themselves, as I have, chairing the board committee of a regulated insurance company--in my case--or of a bank or whatever. One reaches a point on the accounts where the management says "There is nothing we can do about this. The fees have gone up 20 per cent from last year, and it was 20 per cent the year before". The board fumes and says that a stiff letter must be sent to the regulator and that this must not be allowed to continue year after year, as the company's profits have not gone up by anything like as much.
Regulated bodies feel very strongly that the regulators have not exercised sufficient self-discipline in the past. There is the feeling that the fees can be put
up almost without concern simply to meet what seem to be inexorably rising costs. It is right to voice that concern here.This is a small amendment, but it is perhaps indicative of an attitude. We really should make sure that regulators can pass on only that which is necessary and desirable, and not just any incidental expense.
The wider point is that this is of considerable importance to the regulated community. I hope that the FSA will take that on board. It was apparently not always heeded by its predecessors.
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