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There are areas where supervision, government and engagement need to improve. The noble Lord, Lord Turner, will on 18 March be producing his report on regulation. I believe that will produce a number of important themes around capitalisation, macro-prudential regulation, liquidity management and the responsibility of directors. There is also a global context which we need to pursue as part of the G20 and revisiting the role of the Financial Stablity Forum and the IMF. There is much work to be done, therefore, and no doubt this House will be informed as progress is made.

Lord James of Blackheath: My Lords, I should first of all declare that I am in possession of a pension from Lloyds Bank. Before the House thinks it has discovered a new scandal, I should hasten to add it is only £32 per month and I did not have the benefit of the intercession of the noble Lord, Lord Myners, in its negotiation.

I am concerned about the constant use of the word “toxic”, which is misleading and extremely dangerous in this context. “Toxic” implies that it is beyond recovery; it is a death process that is going to go to the fulfilment of complete death, which is not how we should regard this. The Minister and I have shared the experience of what was once the R&R, the reconstruction and renewal programme of Lloyd’s of London. You could have said that every syndicate in Lloyd’s was toxic but most of them survived that process and came to a very big fulfilment. The only way to approach the so-called toxic fund is to regard it as another reconstruction and renewal fund. For that purpose there is one thing the

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Minister could do which would bring huge benefit to the process. I have already written to the Minister on this subject and I should like to raise it again, particularly as he has already made reference to Sir David Walker, who was the author of this idea at its first manifestation some 30 years ago.

Lord McIntosh of Haringey: Question?

Lord James of Blackheath: My Lords, a question is coming. I should like the Minister to give urgent consideration to the restitution of London Rules, which would provide an easy and rapid solution to the problem. The businesses in this toxic fund are not sole-banked with Lloyds Bank or the Royal Bank of Scotland. They are often syndicated among many other banks and you have to prevent the virus from spreading to the destruction of the banks around them. If the Minister brings in the principle of London Rules, he will have the means of regulating the multi-bank process now and giving an enormous advantage to the rescue process. Will the Minister give urgent consideration to bringing back London Rules?

Lord Myners: My Lords, first, let me apologise. I did use the word “toxic” and it probably is an incorrect word. I have no difficulty in saying sorry. The issue around these assets is partly to do with the fact that they are poisonous, in that correct definition of toxic, but also that they are currently suffering from illiquidity. One of the virtues of the type of scheme that we have offered the banks is that it provides an opportunity for time and patience to see values recover. As the noble Lord, Lord James of Blackheath, knows, the London Rules worked rather well in a different environment. I am not sure they would work as well now in an environment in which loans are so widely distributed and where the lenders are based all over the world and the asset is now often in the hands of a hedge fund rather than in the hands of a bank. The London Rules operated in a previous environment in which most lending was domestic and mostly under the supervision of the Bank of England.

I first came to work in the City in 1972 or 1973 during the secondary banking crisis. The London Rules worked then but I do not think they would work as well now. That said, talks are going on at the moment which seek to promote codes and practices which are very similar to those which we associate with the London Rules.

Lord Brooke of Sutton Mandeville: My Lords, pursuant to the earlier question of the noble Lord, Lord Newby, about transparency, does the Minister participate in signing off the Statement which is going to be made first in another place and repeated by himself here? If he does, does he apply to it the test of whether the Statement contains the information that he would want if he was in opposition in your Lordships’ House as against being in Government?

Lord Myners: My Lords, I am entirely satisfied with the completeness of the Statement made by my colleague in the other place.

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Marine and Coastal Access Bill [HL]

Bill information page
Copy of the Bill as debated
Today's Amendments
Explanatory Notes
Delegated Powers 1st Report
Constitution Cttee 1st Report

Committee (7th Day)

7.08 pm

Clause 114 : Grounds for designation of MCZs

Amendment A123 had been retabled as Amendment A135A.

Amendment A124 not moved.

Amendment A125

Moved by Lord Taylor of Holbeach

A125: Clause 114, page 68, line 21, leave out “it thinks that”

Lord Taylor of Holbeach: These amendments represent a heavy-duty grouping but we are keen to ensure we concentrate the debate around the main issues. While I seek to move Amendment A125, I will speak to the others, or should I say address the issue they have in common. At first sight, the amendments might appear to delete thought from the process. Deleting “it thinks that” or “the appropriate authority thinks”, or “the MMO thinks” might suggest we are seeking to induce an absence of thought into the Bill. This is not the idea, however. On the contrary, my amendments in this group seek to explore in a little more depth the management of the designation process and the basis on which the assessments in this part will be made. There is a certain amount of judgment to be exercised in the designation and implementation of marine conservation zones.

As I am sure the next group of amendments will show, there is a great deal of disagreement about the relative importance of the many factors that could or should be taken into account. It is clear from conversations with Defra and the relevant stakeholders that Natural England and the Joint Nature Conservation Committee have already been tasked with and funded for the organisation of consultation panels. That appointment follows the existing practice of designating and managing existing conservation sites such as SSSIs. Some questions, however, have been raised about whether this is the best way forward. At this Dispatch Box, we have referred to many occasions on which the MMO’s areas of responsibilities have been restricted or removed. My noble friend Lord Cathcart has been keeping a list, which I believe is nearly into double figures. I am afraid that we are rather inclined to view the provisions as yet another addition to that list.

We fully appreciate the point that the statutory conservation bodies represent a wealth of experience and expertise in conservation matters and that it would be counterproductive to separate them into marine and terrestrial-based organisations. However, our understanding of the MMO from discussions on the earlier part of the Bill was that it should be an umbrella organisation with the links and responsibility to coordinate between and rely on more specialised bodies in a relevant area when necessary.

Why, therefore, is the MMO being completely isolated from any involvement in the designation of zones that will impact enormously on its responsibilities to draw up and implement marine plans, and on its ability to

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issue licences? Does the Minister feel that the MMO could play a very useful role not only in maintaining an impartial role in negotiating between conflicting interests and ensuring that all relevant voices are heard but also in contributing its knowledge and experience to the designation process directly?

Naturally, we have received some very strong representations from the conservation bodies that they would prefer to keep control of the process of designation. They have some concerns that, if control of the process is given to a body that does not have conservation as its sole focus, the end result will be too watered down to be effective. However, the MMO has a responsibility to contribute to sustainable development and will, we hope, have an even stronger duty in this area by the time that the Bill leaves your Lordships’ House. It is also subject to scrutiny by Parliament and directions and guidance by Defra. What grounds are there for thinking that it would be an ineffective champion of an effective and manageable conservation network?

There is, of course, a further safeguard in this Bill that the zones are to be designated by the Secretary of State, based on recommendations. The current thinking is that any unfeasibility in the conservation objectives can be caught and amended here. If a planned development clashes with a proposed zone, it appears to be the expectation that the Secretary of State will spot the conflict and will ensure that the necessary adjustments, either to the relevant plan or the zone, are made.

This seems to be a very inefficient way of proceeding. Why not build in at a much earlier stage an appreciation of where difficulties are likely to develop? Alternative sites for either the development or the zone could then be considered and a more optimal solution found. I prefer a system that resolves conflicts of interest early and locally. Much greater reassurance would also then be given to stakeholders that their views would be heard at an earlier stage, eliminating the current incentive to postpone the resolution of conflict until a later stage to keep to targets, with all the usual reviews, readjustments and appeals that such a policy tends to produce. I beg to move.

7.15 pm

Lord Greenway: In voicing my support for the amendments, I make it clear to the Committee that I have long been associated with the yachting fraternity and I will move amendments proposed by the British Marine Federation, which looks after the industrial side of the boating industry. While I would normally also speak for the Royal Yachting Association, the Opposition Front Bench will do so in Committee, with my full support.

The Minister of State, Department of Energy and Climate Change & Department for Environment, Food and Rural Affairs (Lord Hunt of Kings Heath): This is a good way to start today’s sitting. I fully recognise the point that the noble Lord, Lord Taylor, raised about the importance of being sure about the way in which the appropriate authority should seek to designate marine conservation zones and the way in which the MMO carries out public consultation in relation to by-laws. I fully accept that, in moving the amendment,

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the noble Lord raised a number of interesting points about the role of Ministers—the hierarchy of decision-making, if you like—and the role of the MMO in providing appropriate advice. Clause 114 makes it clear that the appropriate authority for designating marine conservation zones will be the Secretary of State, Welsh Ministers or Scottish Ministers for the Scottish offshore region, in the last respect acting with the consent of the Secretary of State because the function was executively devolved, as we have previously discussed.

The idea is that the appropriate authority—in other words, the relevant Ministers—will want to act on advice and recommendations from the statutory nature conservation authorities and other marine bodies with expertise, such as the Marine Management Organisation. I say to the noble Lord, Lord Taylor, that I regard the role of the MMO in this regard to be important and would not, I hope, be added to the list of the noble Earl, Lord Cathcart. We are only too well aware of the importance of the MMO.

The noble Lord, Lord Taylor, said that some take the view that the designation of sites should be placed on statutory nature conservation bodies. I make it clear that the Government do not have that intention. We believe that the duty to create a network of sites must lie with the Secretary of State. The various international conventions and European directives will place requirements on the UK to provide a network. Surely it is Ministers who ultimately must make the decisions and be held accountable for them.

Lord Tyler: I am listening with interest to the noble Lord. Am I right in thinking that Ministers have executive responsibility for the designation of areas of outstanding natural beauty in the terrestrial planning field precisely because Ministers need to be accountable for such designation? Is that the comparison that he would make? Is that the precedent that he would make? I have some sympathy with that argument; that is why we did not support the amendments tabled by the Conservative Front Bench; we believe that designation is an executive decision rather than an advisory one.

Lord Hunt of Kings Heath: I am not going so far as to say that the precedent is drawn from the noble Lord’s example; I do not have the experience to do so. I am clear that it should be a ministerial decision but Ministers can then be held accountable to Parliament. The role of the various other bodies that have been mentioned so far must be to provide the necessary advice.

Baroness Young of Old Scone: When it comes to the designation of sites of special scientific interest in the terrestrial environment, the statutory nature conservation body Natural England decides on the designation—it is not a ministerial decision. So there are examples of situations where Ministers do not take every decision.

Lord Hunt of Kings Heath: That is why I did not want to fall into any traps. I am not saying that the noble Lord, Lord Tyler, was setting a trap for me, but I did not want to endorse the example that he gave, because we can all look to different examples to support

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our arguments. Our view, which informs the Bill’s provisions, is that, given the nature and importance of these matters, they are for Ministers to decide. Later on in our debate we will be talking about the hierarchy of decision-making. The debate is about information and how it comes to the Ministers who make decisions.

The effect of Amendment A125 would be to require the appropriate authority to be sure that it is desirable to designate a site, rather than enabling it to do so when it thinks that it is desirable. That would impose an objective test, as opposed to the current test in the Bill, which is based on expert judgment and which gives more discretion to the designating authority. The reason for having discretion is that otherwise, the bar for designation might be raised too high. In earlier debates, we were taken to task over marine nature reserves. Only two have been established since 1981. Arguably, one reason is that very high hurdles were set for such designation.

The purpose of Part 5 of the Bill is to provide the tools to protect areas so that they can recover their diversity and thereby enrich our seas. Some areas may represent a significant proportion of our network of sites. In those cases, it may not be realistic to require the appropriate authority to be sure that designation will contribute to conservation. We want the appropriate authority to be able to designate a site when it has good reason for thinking that the site should be designated.

Amendments A142 and A144 concern consultation over the designation of sites. The provisions in Clause 116 have been designed to ensure, so far as reasonably practicable, that every interested person is consulted before a designation order is made. Clearly, public consultation requires a degree of judgment by the appropriate authority, because in practice it cannot always be certain that it has consulted in the best way. My department follows best practice on public consultation, and my department will be carrying out this consultation. It is important that the wording of the Bill enables the Secretary of State to reflect this objective.

On rare occasions, an area may need urgent protection through immediate designation. Clause 116(10) and (11) therefore allow designation to take place on an interim basis without public consultation. Amendment A147 might restrict the power to designate urgently, so that it could be exercised only where there was definitely an urgent need. Paradoxically, this could weaken the protection of vulnerable and threatened sites, because the appropriate authority could only act when it was sure that the designation was urgently required. We have heard much in previous debates about the need to reflect the precautionary principle. One risk of the amendment is that it might leave the Secretary of State with too strict a test to operate to secure the urgent protection needed for an environment when information is incomplete.

Clearly, the Secretary of State will not act lightly. He will need to take advice on the site from nature conservation bodies and from the MMO, and be clear in his mind that there is an urgent need to protect it. By the time enough evidence for certainty is produced, the features of the site might already have been damaged

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or destroyed. That is the reason that we want to allow the appropriate authority—in this case, the Secretary of State—to exercise some judgment.

Amendments A187 to A192, and Amendments A194, A195 and A197, remove the words “the MMO thinks” from Clauses 126 to 129, which relate to the making of by-laws, emergency by-laws and interim by-laws. These words acknowledge that the MMO will need to exercise its expert judgment in deciding how best to publish them. The aim is to ensure, as far as is reasonably possible, that the details come to the attention of all interested parties. There may be different opinions on how best to achieve that, and we think it right for the Bill to reflect this. I assure the House that the MMO will operate best practice on consultation and on publication of its intentions; that the guidance that the Secretary of State issues to the MMO will be clear about this; and that the MMO must then do what it thinks is best.

I hope that, in responding to these amendments, I have explained why the Bill is worded to allow certain subjective judgments, either by the Secretary of State or by the MMO. It does not give the appropriate authorities and the MMO complete freedom. They will need to act reasonably, and can be legally challenged through judicial review if they fail to carry out their functions in a reasonable way. That is sufficient protection against any arbitrary decision-making. I hope that I have made it clear to the noble Lord, Lord Taylor, that the MMO will have a valuable role in this process; and also that, as far as concerns decisions by the authority, it is right that Ministers should take them.

Lord Taylor of Holbeach: I thank the Minister for his reply. In the broadest terms, we agree with him. We certainly agree that ultimate political accountability should lie with the Secretary of State.

As I said when introducing the amendments, the essential reasoning behind them was to beef up the role of the MMO. The Minister has accepted that the MMO has an important task. What he said implies that the MMO will be central to the designation process. I am not seeking to exclude from the process statutory bodies with conservation experience: without their expertise, the MMO could not function at all. The MMO is the key link between the marine policy statement, marine plans and marine licensing. The designation of conservation zones comes into that process, and it is very important that there is a continuity of decision-making that involves the MMO.

I am grateful to the Minister for addressing these issues. I do not think that we are a million miles apart on this matter. I beg leave to withdraw the amendment.

Amendment A125 withdrawn.

Amendment A126 not moved.

Amendment A127

Moved by Lord Taylor of Holbeach

A127: Clause 114, page 68, line 23, at beginning insert “existing”

Lord Taylor of Holbeach: These amendments follow on from our previous debate. They are intended to give noble Lords an opportunity to discuss the different

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weight that certain factors will have when designation of marine conservation zones is considered. I speak to Amendment A127, but I will address the other amendments, which, as with the last group, form a platform for a debate on a key issue.

7.30 pm

In the main, they focus around Clause 114(7), which ensures that the appropriate authority has the power to consider the social and economic consequences of any designation. We consider that reasonable. Indeed, we have added our names to the amendment tabled by the noble Lord, Lord Greenway, to make certain that those consequences are considered. Surely it would be completely counterproductive to seek to deny the Secretary of State the power to consider all consequences of a designation when choosing whether to implement the recommendations. The subsection places no obligation on the appropriate authority to decide in favour of the social and economic consequences, just to be aware of them. As I have argued on the previous group, our preference would be to have social and economic factors regarded rather earlier in the designation process to try to minimise future disagreements. To proceed with MCZs with no regard at all to other legitimate users of the sea would appear to be analogous to sticking one's head in the sand. Conservation bodies may not like some of the other users of the sea, but ignoring their claims on its resources entirely is not the most constructive way forward.

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