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Lord Pearson of Rannoch: My Lords, I hesitate to interrupt the noble Lord, but perhaps I may remind him that we are here to ask questions, not to make speeches.

Baroness Jay of Paddington: My Lords, I believe that my noble friend did ask a general question. I hope that he also helped the noble Lord, Lord Rodgers, in understanding the concept of benchmarking. I am inclined to sympathise with the noble Lord, Lord Rodgers, about the infelicity of the verb "to benchmark". However, benchmarking as a concept is probably well understood. I agree with my noble friend that the process of assessing best practice is very well understood in the public and private sectors in this country. I was grateful for my noble friend's authoritative experience of the engagement by both small and large EU businesses in this subject. That again demonstrates, particularly to noble Lords opposite, that this is something with which the free market, the private sector and business in Europe agree.

Lord Dahrendorf: My Lords, while I appreciate the Statement repeated by the Leader of the House and the language of the Lisbon Summit, there is one small technical question the answer to which interests me, although perhaps it is the subject for another debate. It seems to me that this is the first time that the objective of raising the employment rate from 61 per cent to nearly 70 per cent has played an important part in Statements of this kind. Why has this particular benchmark entered the debate, especially in view of the fact that one of the main instruments to fight unemployment in many European countries is the extension of primary education and early retirement?

Baroness Jay of Paddington: My Lords, I should not like to challenge the noble Lord on his statement that this is the first time the matter has been mentioned in this form. The noble Lord is probably right; I do not know otherwise. The point about the relative rates of

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employment was simply to put into context the overall attempt to increase the number of jobs, particularly those in the new knowledge economy. The noble Lord is right to mention the relative value of what we in this country call "lifelong learning". That is specifically mentioned in the conclusions as something of very great importance to the successful implementation of much of the policy. I believe that what is conveyed by the Statement is that employment has risen significantly in the various member states of the Union, and therefore it is perfectly legitimate to attempt to aspire to (to use a fashionable phrase) a percentage rise in employment to achieve the 20 million extra jobs, to which the Prime Minister referred. To put on my hat as Minister for Women, one of the UK's economic predictions is that probably 1.7 million new jobs will be created in this field in the next decade, of which 1.3 million will be for women. Therefore, it appears that the overall percentage is an aspiration that is worth setting down.

Lord Pearson of Rannoch: My Lords, perhaps I may press the Leader of the House on two of the answers that she has given, one to my noble friend Lord Strathclyde and the other to my noble friend Lord Howell. I thought I heard the noble Baroness say in reply to my noble friend Lord Strathclyde that the Government would not sign up to any tax harmonisation measures which they did not like. Presumably, the Government have signed these conclusions of the presidency. In the fourth part of paragraph 21 one sees that they have agreed,

    "to conclude, in line with the Helsinki European Council conclusions, the pending tax package".

In paragraph 22 one also sees that they have signed up to the statement:

    "The opportunity provided by growth must be used to pursue fiscal consolidation more actively".

As regards red tape, I heard the answer the Minister gave my noble friend Lord Howell. However, in view of what is said in paragraph 14 of the presidency conclusions, can the noble Baroness tell the House unequivocally whether the Council agreed to withdraw any of the acquis communautaire or whether they remain sacrosanct? If so, how on earth can one possibly hope to meet the aims of paragraph 14?

Finally, I refer to another item which is not included in the somewhat rosy Statement of the Prime Minister. These Statements always appear to be the triumph of bureaucratic hope over what will certainly turn out to be the bitter experience dictated by the world market. I note in paragraph 21--perhaps the Minister can confirm this--that the Government have agreed,

    "to make rapid progress on the long-standing proposals on takeover bids".

How can that be good for the British economy?

Baroness Jay of Paddington: My Lords, I hope that the noble Lord did not mishear me or that I did not mis-speak. In relation to the tax issue, I thought that I said that the Government have made it clear over a long period that those matters of tax relating to our

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own tax situation will not be subject to qualified majority voting. If I said something different, I apologise; that is what I meant.

Tax was not explicitly discussed at Lisbon. The noble Lord is right to refer back to the conclusions at Helsinki. As he will know, discussions on the broad package are under way with our European partners.

On the paragraph relating to the acquis--the noble Lord referred, I think, to paragraph 14--it relates specifically to small and medium-sized enterprises. I do not have the information about whether there has been specific change to the acquis on that. I doubt it very much or it would have been made explicit. I can only refer the noble Lord back to the point I made to the noble Lord who asked me whether it was possible to align that with the existing acquis and IGC process. It is a live issue which would have to be set under that umbrella.

The noble Lord raised the tight timetable on the financial services action plan.

Lord Pearson of Rannoch: My Lords, I refer to the takeover directive.

Baroness Jay of Paddington: My Lords, I am sorry; I have misunderstood.

Lord Pearson of Rannoch: My Lords, the takeover directive appears to be being pushed ahead with Prime Ministerial support.

Baroness Jay of Paddington: My Lords, in that case I am not sure to which paragraph the noble Lord refers.

Lord Pearson of Rannoch: My Lords, paragraph 21.

Baroness Jay of Paddington: My Lords, I was emphasising the previous part of paragraph 21. I apologise to the noble Lord.

The noble Lord is right to say that the issue will have to be considered in the broader context of the tax package. It was not specifically addressed at Lisbon. I refer the noble Lord back to the Helsinki arrangements which establish the package for tax reform.

Financial Services and Markets Bill

4.33 p.m.

Lord McIntosh of Haringey: My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, That the House do now again resolve itself into Committee.--(Lord McIntosh of Haringey.)

On Question, Motion agreed to.

House in Committee accordingly.

[THE DEPUTY CHAIRMAN OF COMMITTEES (Lord Murton of Lindisfarne) in the Chair.]

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Clause 129 [General rule-making power]:

Lord McIntosh of Haringey moved Amendment No. 226D:

    Page 60, line 6, after ("activities") insert ("or

(b) with respect to the carrying on by them of activities which are not regulated activities,").

The noble Lord said: In moving the amendment, I speak also to government Amendments Nos. 230C, 230G, and 277B; and refer to opposition Amendment No. 231XA.

We begin today's Committee with a debate on Part X of the Bill--Rules and Guidance. It is one of the most vital, if technical, parts of the Bill. Rules are a key instrument by which the authority will give effect at working level to its statutory objectives and the principles to which it must have regard. The role of guidance is to provide information and advice to the regulated community--with respect to rules but also on more general issues.

The first clause of Part X is Clause 129, the authority's general rule-making power. This is a key clause in the new regime. It confers a power on the authority to make rules applying to authorised persons in carrying on regulated activities. Clause 130 gives the FSA power to apply rules to authorised firms' non-regulated activities where it is necessary in order to avoid an adverse effect on the customers of the authorised business.

The effect of Amendment No. 226D and my intention to oppose the Question that Clause 130 stand part of the Bill will be to integrate the authority's power to make rules which affect non-regulated activities as part of its power to make general rules. Amendments Nos. 230C, 230G, and 277B delete references to non-regulated activities rules elsewhere in the Bill.

There are two main reasons for this change. First, it will bring much greater focus to the authority's remit to make non-regulated activity rules. I shall come back to that point in a moment. Secondly, although in many respects Clause 130 repeats what is in Clause 129, one point in which Clause 130 differs is that Clause 129 allows the FSA to make rules even when there is no relationship between the authorised person to whom the rules will apply and the persons, that is those consumers dealing with persons providing regulated activities, whose interests are protected by the rules. This is necessary to cover situations where rules are necessary to control systemic risk. The absence of such a provision in respect of non-regulated activities could lead to doubt about when a rule applies.

Returning to the first point, the authority will be able to make rules under the integrated power--those were Clauses 129 and 130--only if it appears to be necessary or expedient for the purpose of protecting the interests of consumers. It is worth emphasising that the people whose interests are being protected are limited to consumers dealing with persons who are carrying on regulated activities; and that the protection is focused on protection in relation to the carrying on of those activities. It is clear as a matter of common sense that what a person does otherwise than

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in connection with regulated activities is capable of having an effect on his regulated activities. But that is not a licence for the authority to interfere with the running of a person's non-regulated activities.

This Bill is about regulated activities. But there is an important qualification to this. Where there is a risk that a person's non-regulated activities could damage the interests of his regulated activity customers in relation to the carrying on of regulated activities then that is a matter for the Bill. It is right that the rule-making powers of the authority should extend to this type of situation. This is the effect of our amendments. They make it clear that the authority's powers are limited to this situation That is what our Amendment No. 229 (which we have already debated) says. It is worth remembering that we are talking here about a power.

It is at the stage when the authority makes its rules that it must consider whether there are situations where non-regulated activities could damage the interests of a consumer of a regulated activity. Even if it can identify such situations, the authority must also reach the view that a rule it made could provide protection for such a consumer and that it is necessary or expedient to make that rule, bearing in mind the authority's general duties as set out in Clause 2.

As a result of the amendments, Clause 129(1) will allow the authority to make rules to protect the interests of consumers. By bringing in non-regulated activity rules into Clause 129, it will be clear that the purpose of such rules is also to protect the interests of consumers; and by making this small change all the provisions of Clause 130 can be removed.

I turn to Amendment No. 231XA. Clause 141 allows an authorised person to be sued for damages if a private person--

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