I come to the question of the CEO of the FCA, to which the noble Baroness, Lady Kramer, referred. We are in no doubt that the FCA CEO should be counted as an external member of the FPC. The CEO of the FCA is not an executive of the Bank, and the FCA is entirely separate from the Bank.

There is no doubt that having the FCA CEO on the FPC is of huge value to the committee. It is true that her membership of the FPC brings particular benefits in terms of regulatory co-ordination, but she also has extensive relevant expertise, and, crucially, she brings an independent viewpoint and external challenge from outside Threadneedle Street, because the FCA is a completely independent body with a different set of objectives. It is also worth noting that this reciprocates the arrangement on the FCA board, where the chief executive of the PRA is counted, alongside the Treasury-appointed chair and the other

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members, as a non-executive. The CEO of the FCA is therefore eminently qualified to operate as an external, non-executive member of the PRA board.

In summary, the Government believe that it is appropriate to have an equal number of internal and external members, as the committee has today. This will ensure sufficient input from the Bank of England as executive and internal Bank of England expertise, while supporting the external, non-executive members’ role of providing a challenge to members’ thinking.

With those explanations in mind, I should be grateful if the noble Lord would withdraw his amendment.

5.45 pm

Lord Sharkey: I thank the Minister for that response. There is no argument about the value of the CEO of the FCA being on the FPC. I fear that I was completely unconvinced by the argument that one more external member would make the FPC collapse into chaos and disorder; that seems a bit far-fetched.

The difference between us is whether the independence that the noble Lord maintains that the CEO of the FCA has is true independence. The test he seems to apply is simply that, well, the FCA itself is kind of independent, so she is obviously independent. In fact, the Minister did not mention my major concern, which is the influence that the Bank itself has over the CEO of the FCA. I give way to my former noble friend.

Baroness Noakes (Con): My Lords, can the noble Lord explain why he thinks that the Bank has any influence whatever over the chief executive of the FCA? There are no provisions in statute that give any sense of influence, even, and I struggle to find where in practice you could point to where that influence could be deemed to exist.

Lord Sharkey: There are two partial answers to the noble Baroness’s question. The first is, as I mentioned, that where the chief executive of the FCA can be summarily dismissed, presumably either at the instigation of the governor or at least with his permission and consultation—

Baroness Noakes: I ought to say two things to that. The chief executive of the FCA was not summarily sacked; as I understand it, he was informed that his contract would not be renewed, and there is a world of difference. As far as I am aware, there is no practical issue of the Governor of the Bank of England or any other senior official of the Bank of England having any locus in the decision whether to renew the chief executive’s contract. If the noble Lord has evidence of that, I should be happy to see it.

Lord Sharkey: The fine distinction between being summarily dismissed and not having his contract renewed temporarily escapes me, but I am sure that it will come to me. The point I am trying to make is that I believe that the Bank has influence over the CEO of the FCA. I was asking the Minister—because he did not deal with this—to explain why he clearly believes that it does not have influence over the head of the FCA.

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I also point out, as I did in my initial speech, that the PRA itself can act to restrain and constrain the activities of the FCA, as I am sure that the noble Baroness knows. The PRA is an organ of the Bank, so the actual independence of the FCA is somewhat compromised by that arrangement. That was the point that I was trying to make.

However, having said all that, and not being terribly convinced by the Minister’s arguments—I am sure that we will want to return to this later—in the mean time, I beg leave to withdraw the amendment.

Amendment 7 withdrawn.

Clause 6 agreed.

Amendment 8

Moved by Baroness Worthington

8: After Clause 6, insert the following new Clause—

“Long-term systemic risk

After section 9C(3)(c) of the Bank of England Act 1998 (objectives of the Financial Policy Committee) insert—

“(d) systemic risks to the long-term stability of the UK financial system attributable to long-term fundamental change, such as climate change, demographic change, and technological change.””

Baroness Worthington (Lab): My Lords, today we are discussing a Bill that should have the long-term sustainability of the financial system at its heart. To that end, we are discussing provisions that would open up the Bank to further scrutiny, maintain existing scrutiny and guard against the possible repetition of group-think. Amendment 8 would change the list of risks, as set out in the Bank of England Act 1988, that the Financial Policy Committee must consider in order to include long-term systemic risks to our financial stability.

These risks may arise from fundamental structural changes that have important implications for our financial system and therefore our long-term sustainable economic growth. There are some risks to longer term financial stability that do not emerge within the typical time horizons of financial markets or the monitoring of the Bank. The time horizon of the Financial Policy Committee’s stability activities is not set in statute but according to the governor, it typically extends a little further than that of the Monetary Policy Committee, which is one to three years, but certainly no further than the outer boundaries of the credit cycle—around five to seven years. The danger is that, by the time fundamental structural changes that have been developing in the background are acknowledged by markets and regulators as an important issue for financial stability, it may be already too late. Unsustainable investments may have become embedded in institutions’ balance sheets, with capital locked into enterprises and business models that may have been rendered uneconomic as a result of long-term changes.

I will touch on three areas where risks are apparent over longer term time horizons. The rise of new technology, which has already radically and permanently reshaped both the real economy and the financial industry, and future innovations such as machine learning, artificial intelligence and the rise of digital currencies,

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will have important implications for the wider economy and the robustness of our financial sector. Demographic change around the world is also reshaping economies, and with them their financial services industries. The increasingly ageing populations in developed economies will have implications for the pensions and the insurance industries. An IMF report found that if people live just three years longer than expected, in line with past underestimations, such an increase in longevity would add 9% to pension liabilities for private pension plans in the United States. These demographic changes have important implications and we must not be caught in just short-term thinking.

Lastly, we face the profound challenge of long-term changes in our natural environment, including the overarching risk of global climate change. This challenge has two elements: the implications of physical changes in the environment for the real economy, and the responses to that change from governments and other key actors as impacts become more apparent and policies are introduced. The financial services industry, like every other industry, will have to respond and adapt to climate change. The risk it presents, though relatively long term, should be integrated into prudential regulation now.

In recognition of these risks, Defra invited the Bank of England in 2013 to take part in an adaptation reporting cycle under the Climate Change Act. The Bank took part on a voluntary basis, and that is welcome. However, it was the PRA that undertook to respond to Defra’s request. The Financial Policy Committee’s response to the invitation was recorded in its minutes of the meeting of March this year:

“The committee’s central expectation was that the risks to financial stability were likely to be beyond the FPC’s typical policy horizon”.

That is precisely the problem that governor Mark Carney highlighted when he referred to the “tragedy of the horizon”. It is the problem I wish to raise by moving this amendment.

Of course, it is to be welcomed that the Bank is looking into the implications for the insurance industry, but as I said, this goes far beyond just insurance. Researchers from Oxford and Cambridge universities estimate that between 5% and 20% of the average diversified equity investment portfolio is at risk of re-evaluation as a result of climate change. The UK, although home to only 0.2% of the world’s coal, oil and gas reserves according to Carbon Tracker in 2013, listed in London alone reserves equivalent to 18.7% of the remaining global carbon budget. The over-representation of fossil fuels in our markets is a subject that I hope we can return to on Wednesday, as I have tabled another amendment on this theme.

To sustain economic development regulators must take into account long-term trends and changes that markets may fail to see. That means allowing time horizons to be determined not by the credit cycle, market behaviour or the Bank’s price stability objectives, but by the unknown future risks our financial stability regulators must be equipped to guard against. As global leaders will meet less than a month from now in Paris to discuss the long-term sustainability of the planet and climate change, it is right that, across all areas of policy, we ask what the implications are of

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this historic meeting. Making our financial sector more attuned to the risks of climate change and other long-term threats is something the UK can and should show global leadership on. Our current governor is already making the case. The Government can and should do more. I look forward to hearing the Minister’s response. I beg to move.

Baroness Kramer: My Lords, I added my name to this amendment because this is a crucial discussion and an important opportunity to draw the Government’s attention to these issues. This Government, like many others and almost every speaker on financial issues in this House, have expressed their frustration with the short-termism that dominates the British financial services industry: a search for short-term profits rather than understanding the longer term perspective. Indeed, the Chancellor has often voiced frustration at the fact that UK pension funds are very unlikely to invest in the kind of long-term infrastructure projects he sees as essential for our country. Canadian pension funds will gladly invest, but not UK ones. We suffer from this ongoing blight. Of course, the ultimate frustration is that many of those who put their money into such pension funds would be absolutely delighted to see it invested in infrastructure, renewable energy and sustainable projects, because they are often looking for a 30 to 40-year horizon regarding the return on the money they invest. However, that is not the way the system works.

When the Bank of England was given responsibility for financial stability, there was an assumption that part of the thinking would then extend into that long-term arena, and that the Bank would be freed from the narrow and short-term issues of stability. In fact, I think the Chancellor talked about avoiding the stability of the graveyard and looking at the much longer term horizon. So far, the Bank has not used its wide range of powers or its influence to enter into that territory. Whether it is sustainability as defined by projects such as renewable energy, rail infrastructure or broadband, a wide range of projects need a response from the UK’s financial services. That surely requires the Bank to take some role, and to take cognisance of this issue. I hope that debates such as this will persuade the Treasury and Government to engage much more extensively in those conversations with the Bank in its various and many parts, and to consider whether the relevant committees should at least have regard to those priorities, and potentially see them as obligations and duties, given the important role that long-term investment plays in the future of the UK.

Baroness Wheatcroft (Con): My Lords, listening to the debate this afternoon, it is clear that many have concerns about the power and influence of the Bank of England. However, I cannot help but feel that this amendment takes that concern a step too far. Much as I have great admiration for Mark Carney, I cannot imagine how he is expected to predict the effect of artificial intelligence. The duties we are putting on the Bank are already extremely far-reaching. The responsibilities now placed on the Financial Policy Committee are deep and will have a huge impact, but to ask it to range as far as this amendment is surely to demand something beyond common sense.

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The role of ensuring financial stability is crucial. It means keeping our financial institutions on the straight and narrow, and watching out for problems. However, to ask for those decisions to be taken in the light of what may be happening 20 or 25 years from now is surely a step too far. The role of Government in thinking about such issues is clear, but we would be in very dangerous territory if we thought of the FPC as the arm of government to influence such decisions.

Lord Davies of Oldham (Lab): My Lords, I would like to join in this debate because, although I respect the expertise of the noble Baroness who has just contributed, I am rather more in sympathy with the arguments of my noble friend Lady Worthington and the noble Baroness, Lady Kramer. I hear what was said about placing obligations on the Bank, but we should also appreciate that we have the benefit of the present governor—on whom I have not lavished many plaudits this afternoon as I was rather concerned about the future structure of the Bank, for which he will be responsible. Nevertheless, we all recognise the governor’s merits in taking a wider perspective on aspects of the economy than has perhaps been the case heretofore. Certainly, the speech that he made not so very long ago, in September, to Lloyd’s of London, in which he said that climate change is the “tragedy of the horizon”, ought to wake all of us with alarm, but also make us ask how we can adjust and make responsive our institutions to the anxieties that obviously flow from the developing and clearly established dangers of climate change.

6 pm

I realise that I may not be pressing at an open door when I deal with the Minister in his area. After all, he belongs to an Administration who have been presenting a series of closed doors to green policies in recent months, with the end of subsidies for offshore wind production; the granting of the right for fracking to be conducted in our national parks; the end of the Green Deal insulation for our homes; and the end of the zero-carbon standard for housebuilding. All those may look like small beer against the general perspective, but they are an indication that the Government are still far from persuaded of the significance of climate change, which stands somewhat in contradistinction to what the Governor of the Bank of England said in September. On this occasion, my support is with the governor.

Although the Financial Policy Committee will take into consideration systemic risks attributable to structural features, those attributable to the distribution of risk within the financial sector, and unsustainable levels of leverage, debt or credit growth—and I would not in any way, shape or form detract from the significance of those cardinal objectives that the committee is obliged to consider, which are well within the rubric that it has had for some time—I hope that, just as we seek to establish a somewhat longer-term perspective for our financial institutions on investment and the development of the economy, in that longer term we will also look at systemic risk which is some distance away but which, unless we take action now, will have

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calamitous implications for the economy and, of course, the wider world. While the Minister stresses the committee’s significance in its work of managing financial risks in the shorter term, as I am sure he will, I hope he will also accept that it would be nothing but advantageous for the committee to accept the signal from the governor himself that everyone concerned with the future welfare of our country needs to take into account the issues of climate change and how we can moderate it, because a failure to do so will render a great deal of our short-term measures wholly and totally inappropriate.

Lord Bridges of Headley: My Lords, I begin by thanking the noble Baroness, Lady Worthington, for sparing the time to meet me to discuss this amendment before today and repeat my offer that, should she wish to have further meetings with me or the Bank of England I am sure that I can happily facilitate it. I thank the noble Baroness, Lady Kramer, for once again making a very eloquent contribution to this debate.

I am sympathetic to the motives behind this amendment. Climate change, demographic change and technological change are important structural issues, as the noble Lord has just said, which could indeed have a very significant impact on financial stability. It is right that the macroprudential authority should be alert to these, and other, long-term systemic risks. However, as I hope other noble Lords will agree, in the light of what I am about to say, the amendment is unnecessary, so I do not feel able to accept it.

I start by stressing one point. The current legislation places no limit on the time horizon of the systemic risks that the FPC must consider in its assessment of the risks to the resilience of the UK financial sector. Therefore, the current legislation already provides for the consideration of long-term systemic risks such as those listed in the amendment. Indeed, at its meeting of March 2015, the FPC discussed precisely one of those risks: the risks to financial stability from climate change. This is evidence that the FPC has previously considered longer-term systemic risks, and may do so again in future, should it see fit. Although the FPC concluded that the risks from climate change would not materialise within its typical policy horizon, the Bank is also taking action on longer-term systemic risks through other channels, given the importance of these issues. I shall draw noble Lords’ attention to just three, although I am happy to meet to discuss the issue further.

First, the issue of climate change has been added to the Bank’s One Bank Research Agenda. I would be very happy to arrange for the noble Baronesses, Lady Worthington and Lady Kramer, to meet with Bank officials to discuss this issue in more detail. Secondly, the governor of the Bank is using his chairmanship of the Financial Stability Board to consider the risks that climate change poses for financial stability and the steps that could be taken to mitigate them, including through improved disclosure. I remind your Lordships of what the governor said in the speech to which the noble Lord referred. He said:

“With better information as a foundation, we can build a virtuous circle of better understanding of tomorrow’s risks, better pricing for investors, better decisions by policymakers, and a smoother transition to a lower-carbon economy”.

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He set out in quite a lot of detail what he considered the most effective disclosures are—they are,

“consistent, comparable, reliable and clear”,

and “efficient”.

Thirdly, the Bank’s open forum will host a public discussion of some of the types of risks raised in this amendment, such as how financial innovation and technology can support the economy and how financial markets can regain their social licence. Those are just three of the steps that I would like to highlight. I would be more than happy to meet the noble Baroness again. I hope that what I have said addresses some of her points and that she will withdraw her amendment.

Baroness Worthington: My Lords, I am genuinely grateful for how the Minister has responded to this amendment. It was intended to stimulate debate and elicit a reassuring response and, indeed, the Minister’s words have been reassuring. It is clear that the stakes are very high when it comes to climate change, and every aspect of government policy needs to think through the implications so that we do what we can in the time that we have to avert and limit the risk. It has been a significant new intervention from the governor to make this part of the Bank’s One Bank Research Agenda, and we hope that that will bear fruit.

I know that the governor is pursuing initiatives with the FSB that are international in nature. My point was to try to stress the fact that the UK sits at the global table when it comes to financial services, and the City of London makes such a valuable contribution, not only to our economy but globally, that we can show leadership here. We should not simply say that this can be sorted out by an international process. There are things that we can do as the UK Government and as we sit here now, with the legislation in front of us, to send a strong signal. But as I say, I am reassured.

On the issue of disclosure, more can be done now for us to start to think through what those standardised reporting requirements might be. I have tabled an amendment today that will enable us to have a further, more detailed discussion on that point.

Although there is no limit on the time horizons considered by the committee, I hope that over time the culture of the Bank will change through as many efforts as we can make and that in future, if there is a need for legal change, we might revisit this. Changing culture is a difficult thing. As the Minister said, every needle makes a difference, and I hope this needle will hit the mark and cause this debate to continue because this needs to be thought through now because it is incumbent upon us to act. I beg leave to withdraw the amendment.

Amendment 8 withdrawn.

Clauses 7 and 8 agreed.

Clause 9: Audit

Amendment 9

Moved by Lord Davies of Oldham

9: Clause 9, page 7, line 12, leave out “reasonable”

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Lord Davies of Oldham: My Lords, I shall speak also to the other amendments in this group. I will be brief. If ever I were cast before the Lord Mayor’s Show, it is in moving this rather marginal amendment when a huge, significant debate on the relationship of the Audit Commission to this legislation will take place as soon as we finish debating these rather minor amendments. I shall keep my remarks necessarily brief on this because I want to hear the more weighty contributions that are likely to be made on more fundamental aspects of the relationship of the Audit Commission to this Bill.

I think I can anticipate the Minister’s response to these amendments, particularly when he is at his most constructive, as he has been today. He will say that “reasonably” is used to limit excess, that it is a common legislative tool and that I have been at Westminster long enough to recognise that. I do, but I make no apology for the fact that I have introduced these amendments centred on “reasonably” merely to get some locus with regard to the important consideration of the National Audit Office. The Bill will allow the National Audit Office to initiate value-for-money studies across the entire Bank, other than for the financial audit of the prudential regulation functions of the Bank. It ought to be compatible with the—I hesitate on this word—desubsidiarisation of the PRA. The National Audit Office will be able to conduct any value-for-money study and is not to be concerned with the merits of the Bank’s general policy. It will consult the Bank of England regarding any proposed study.

Our amendments deal only with the practical arrangements between the National Audit Office and the Bank. They do not try to deal with conflicts that may present themselves between the Court of Directors and the National Audit Office or the proposed means by which various resolutions could be achieved. Nor am I seeking in any way, shape or form to pre-empt the much more substantial debate which is to take place in a few moments. However, we had a harbinger of that debate in the contributions by the noble Lord, Lord Bichard, at Second Reading, and the chair of the National Audit Office, Sir Amyas Morse, has also spoken publicly about his concerns. The issue is made more sensitive because of the Bill’s general approach to oversight and scrutiny, which we have covered in a series of discussions today. The National Audit Office’s concern with regard to its work mirrors many of the worries that we have already expressed about the Bill in its current form.

I hope it will be recognised that I am not going to press these amendments today. I am not even going to ask the Minister to give much more than a cursory reply to them. They were tabled against the background that at Second Reading we had an expression of real concern about the role of the National Audit Office as conceived in the Bill, and I cannot wait for that debate to take place. I promise the Committee I will play, if any, a small, supportive role. I beg to move.

6.15 pm

Baroness Noakes: My Lords, the noble Lord, Lord Davies of Oldham, is being rather modest about these amendments. I think they are rather good., However, I

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do not understand why he has proposed amendments to Clauses 9 and 10 but not to new Section 7G introduced by Clause 11, which relates to the main value-for-money study power. Not being limited in the way that these amendments imply would be at least as important to the new powers introduced by Clause 11.

I hope the Minister’s reply is not cursory because this is quite an important point. We do not very often legislate on public audit matters. I can remember doing the Public Audit (Wales) Bill, and there was no restriction on the Comptroller and Auditor-General for Wales reasonably requiring certain information. Reasonable time was in the Bill, but not a requirement to demonstrate that he reasonably required the information. It seems to me that the more you try to constrain an auditor, the more you allow an organisation which is being audited to run rings around that auditor. Having been in the auditing profession, I feel rather strongly that we should not try to restrict auditors but should make it as easy as possible for them to get whatever information they want.

Lord Higgins (Con): My Lords, the noble Lord, Lord Davies of Oldham, is always modest, but on this occasion he is excessively so. I agree with my noble friend because the implication of putting the words “reasonable” and “reasonably” in these clauses is that somehow the National Audit Office would act unreasonably, and I do not believe that that is the case. Perhaps the Minister will tell us where else in the legislation governing the National Audit Office such clauses are applied. These are quite unnecessary words. It may well be that, given the more formal auditing functions of the National Audit Office, as against the value-for-money provisions, there might be some occasion when it is necessary to get hold of documents at an unreasonable time. I hope the Minister will respond to this and agree to delete the words which appear in the amendments.

Lord McFall of Alcluith: My Lords, I support the noble Lord, Lord Higgins, and the noble Baroness, Lady Noakes. I was a member of the Parliamentary Commission on Banking Standards which looked at the word “reasonable” and concluded that it is a lawyer’s word. If it is a lawyer’s word, it costs a lot of money, and if it costs a lot of money, it can obscure the truth. Let us get rid of it and invest the authority in the Comptroller and Auditor-General which will save everyone time and money.

Lord Bridges of Headley: My Lords, as my noble friend Lady Noakes said, the noble Lord, Lord Davies, is once again being incredibly modest and reasonable about his reasonableness amendment. I think the amendments merit a full response, so I hope he will forgive me. I will try my best, and I will pick up on the point made by the noble Lord, Lord McFall. I heed what he said about this in the past.

I shall set out the Government’s position. Clause 9 gives the Comptroller and Auditor-General a new role in the financial audit process of the Bank. The Comptroller and Auditor-General will be consulted on the appointment of the financial auditor and on the work programme

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that that auditor sets out to deliver. The Comptroller and Auditor-General will have the right to attend the relevant parts of the meetings of the Bank’s audit and risk committee. This is intended to assist the NAO in conducting value-for-money examinations of the Bank under Clause 11.

Clause 10 provides for increased public scrutiny in circumstances where a Treasury indemnity has been granted to the Bank, or to a company of the Bank. Fortunately, times when a Treasury indemnity is deemed necessary are rare, but it is right that where there is a direct risk to public funds the Treasury can require the Bank to prepare a financial report on any activities that have been indemnified, so that the extent of the risk to public funds can be assessed, and that this report is subject to review by the Comptroller and Auditor-General. I agree that in both of these contexts the question of access to information is critical. It is central to the ability of the Comptroller and Auditor-General, assisted by the National Audit Office, to carry out effectively the roles defined for him in the Bill. So I am pleased that the noble Lord, Lord Davies, has tabled the amendments and that the issue has been raised, but I am unable to accept them.

To address my noble friend Lord Higgins’s point, the language used in the Bill regarding the Comptroller and Auditor-General’s access to information mirrors the relevant wording from the National Audit Act 1983, which provides in Section 8 that,

“the Comptroller and Auditor General shall have a right of access at all reasonable times to all such documents as he may reasonably require, for carrying out any examination under section 6 or 7”,

in the National Audit Act,

“and shall be entitled to require from any person holding or accountable for any such document such information and explanation as are reasonably necessary for that purpose”.

As far as I am aware, the inclusion of requirements of “reasonableness” in this section has not created difficulties for the Comptroller and Auditor-General in the context of value-for-money examinations carried out in relation to other public bodies, and I see no reason why it should cause a problem now.

Some may argue that the Bank would be able to use this reasonableness requirement to delay examinations, but if the Bank did not comply with its obligations under this clause then the Comptroller and Auditor-General would be able to seek an injunction from the courts to enforce his rights. As such, it seems to me that the amendment is unnecessary, and I ask the noble Lord to withdraw it.

Lord Davies of Oldham: My Lords, I am not going to withdraw it without first expressing my enormous appreciation for the support from the government Benches for what I had regarded as modest amendments. The noble Baroness, Lady Noakes, often expressed herself with great vigour against any proposals that I put forward when we were in government, but today I have found some favour with her when I did not quite anticipate it. Obviously the noble Lord, Lord Higgins, is always reasonableness itself, so I knew that he would speak very well on this matter.

The issue was not so much that I did not think it was worth airing the question of reasonableness. I accept very much the Minister’s coherent and proper

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response to this very short debate, and I think that we very much appreciated the tone that he adopted. The reason why I was concerned about these amendments at this stage was against the background that they are immediately before what we all recognise is a pretty substantial issue regarding the Bill, and I know that others are going to present that argument with considerable force. It seemed only reasonable if on this occasion I couched my expressions in modest terms. I promise not to make a habit of that, and beg leave to withdraw the amendment.

Amendment 9 withdrawn.

Amendment 10 not moved.

Clause 9 agreed.

Clause 10: Activities indemnified by Treasury

Amendments 11 to 13 not moved.

Clause 10 agreed.

Clause 11: Examinations and reviews

Amendment 14

Tabled by Lord Bichard

14: Clause 11, page 9, line 27, leave out from “section” to end of line 28 and insert “shall not be construed as entitling the Comptroller to question the merits of the policy objectives of the Bank, including in relation to monetary policy.”

Lord Bichard (CB):My Lords,if I might be allowed a moment of personal explanation, I was advised earlier today by the clerks that the Addison rules of 1951, of which I have to admit I was not previously closely informed, might be argued to preclude someone who holds the position that I do of chair of the board of the National Audit Office from speaking on these issues or indeed from moving the amendment. I do not wish to put myself in the position of appearing in any way to act inappropriately or against the rules of the House so I readily, albeit reluctantly, agreed not to speak further in this debate. I hope, however, that the House will allow others who have supported the amendments that I tabled in good faith to move them.

The Deputy Chairman of Committees (Baroness Fookes) (Con): I take that as a kind of personal statement.

Lord McFall of Alcluith: My Lords, I shall move Amendment 14, which is in the group Amendments 14 to 18, concerning Clause 11 and the proposed audit arrangements for the Bank of England. As it stands, the Bill provides for the NAO to carry out value-for-money studies at the Bank, but it also imposes a number of constraints on this. First, before carrying out a study, the Comptroller and Auditor-General would have to consult the Court of Directors at the Bank. Secondly, if the court is of the opinion that an examination is concerned with the merits of the Bank’s general policy in pursuing the Bank’s objectives, then it can ultimately prevent the Comptroller from proceeding with an examination.

These provisions contrast sharply with the terms under which the NAO undertakes value-for-money

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studies in every other public body under the National Audit Act. That legislation gives the Comptroller and Auditor-General,

“complete discretion in the discharge of his functions … in determining whether to carry out any examination … and as to the manner in which any such examination is carried out”.

The National Audit Act prohibits the NAO from questioning the merits of policy objectives. As I will mention later, the NAO has never sought to cross that line. However, the Bill extends this prohibition to cover the Bank’s general policy in pursuing the Bank’s objectives, as well as giving the Bank an effective veto over which studies are undertaken.

That presents the NAO with several major problems. First, as the Comptroller and Auditor-General has said, it therefore gives an impression of greater accountability on the part of the Bank that is at odds with reality. Secondly, it undermines the independence of the NAO to decide what should be examined, and that independence is key to holding public bodies to account. Thirdly, if these provisions are agreed for the Bank, it will encourage others to challenge the independence of the office; perhaps every new body and many existing ones wish for the same ability to veto or limit the NAO’s work—to the great disadvantage of Parliament and the taxpayer, for both of which the NAO has long performed an invaluable function. This is not an issue, therefore, that can be limited to the particular circumstances of the Bank of England.

Why would anyone wish to impose these kinds of constraints on the NAO? Perhaps there is a concern that the Bank should not have its policy decisions examined. That would be entirely understandable, but the fact is that the NAO has had decades of experience of operating without questioning the merits of policy objectives. It has done so without any difficulty in the Ministry of Defence, including the security services, or indeed the Foreign Office, where it has recently been looking at how crises in Tunisia, Libya and Yemen have been handled. It is difficult to argue that if the NAO is capable of dealing satisfactorily with this level of sensitivity, it could not be trusted to steer clear of questioning policy objectives at the Bank.

I know it has been argued that there are no precedents for the equivalent of the NAO being involved with a national bank, but the Government Accountability Office in the US audits the Federal Reserve Board and the Federal Reserve Banks, with exceptions to the scope of their audits being made explicit, and including transactions for and with a foreign central bank; deliberations, decisions or actions on monetary policy matters; and transactions made under the direction of the Federal Markets Committee. The Comptroller and Auditor-General has made clear from the outset that he would be content to agree similar such exceptions in this country. These amendments seek in the case of Amendments 14 and 16 to bring the definition of “policy” into line with that used in the National Audit Act, Amendment 15 would delete the need for the Comptroller to consult the court before undertaking an examination, and Amendment 17 would remove the veto of the Bank’s Court of Directors over examinations.

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6.30 pm

Lord Higgins: I am having a slight problem with Amendment 14. It seems, effectively, simply to put back again the lines which the noble Lord seeks to leave out. That is to say, in each case it seems to say that the Comptroller will not question the merits of the policy objectives of the Bank.

Lord McFall of Alcluith: I did not quite pick up on the noble Lord’s point.

Lord Higgins: I will try again. Amendment 14 says,

“leave out from ‘section’ to end of line 28”,

which is concerned with the question of whether the Comptroller can question the merits of the policy objectives of the Bank, and which effectively says, “No; the NAO can’t”. However, Amendment 14, which I may have totally misunderstood, seems effectively to put it back in the same way, except with the addition of the words,

“including in relation to monetary policy”.

Lord McFall of Alcluith: In fact, the Comptroller and Auditor-General made clear to me that he does not want to question the merits of the policy of the Bank, so if there is a misunderstanding there, we should sort it out, particularly when it comes to Report. However, that is certainly not the case, and he would not want to do that.

Amendment 18 deletes a provision which would apply Section 353A of the Financial Services and Markets Act 2000, which would restrict the ability of the Comptroller and Auditor-General fully and openly. As the Government have said on many other occasions, transparency is an essential ingredient of accountability. These amendments seek to ensure that the Bank is subject to a level of transparency necessary to ensure its proper management of its resources. Parliament and the taxpayers have the right to expect nothing less.

An article in the Financial Times at the weekend said that, globally today, central banks exercise unparalleled power and independence. Willem Buiter used to come before the Select Committee quite regularly and was a former member of the policy committee. He is now the chief economist at Citi and stated that presently, central banks,

“are punching well above their weight … This could lead to a backlash and to central banks losing their operational independence, even where this independence makes sense—in the design and conduct of monetary policy”.

When the former Governor King came before the Treasury Select Committee, which I chaired, he was very clear both in formal and informal settings that the integrity and credibility of the bank is essential if society is to have confidence in its monetary policy decisions. That being the case, the Bank should not be marking its own exam paper. It should be honest in its intentions and transparent in its actions, and it cannot tie the hands of the Comptroller and Auditor-General with the court holding a power of veto. In the short and even the long term, that does not serve the best intentions of the Bank or society. In that spirit, I beg to move.

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Lord Young of Cookham (Con): My Lords, I will make a brief intervention in this debate as a former Treasury Minister and ex officio member of the PAC. As we have heard, Clause 11 sets up a new interface between two public institutions, both of which are independent: on the one hand the Bank of England, independent since 1997, and on the other the Comptroller and Auditor-General, who has been independent for a lot longer. In establishing this new interface, clearly one has to get the balance right.

From the exchange before the Treasury Select Committee last month, it is quite clear that the original drafting caused difficulties for the Bank of England and was amended. If one looks at Mr Roxburgh’s answer to a question posed by Helen Goodman, it is clear that there was an agreement that there had been a change in the drafting because of the reservations of the Bank of England. However, it is quite clear that the clause as now drafted causes difficulties for the other partner, namely the Comptroller and Auditor-General. The briefing note says that it “greatly limits” the Comptroller and Auditor-General’s freedom of action and that it does not provide him with,

“the independence that is essential to accountability”.

If one looks back at the C&AG, there is no history of him looking at policy issues in his investigations. There is of course concern that if the Bank of England is given an exemption of this nature, other institutions subject to audit by the C&AG might seek a similar exemption—the BBC is a possible example. At Second Reading my noble friend who wound up the debate said that the concerns that were ventilated then were,

“well argued and should be taken very seriously”.—[

Official Report

, 26/10/15; col. 1082.]

Obviously, it is important to avoid a public spat between two important independent institutions. The sensible way forward is for the Minister to promote bilateral discussions between the NAO and the Bank of England to see if they can come up with a memorandum of understanding, which, if necessary, might then be incorporated into the Bill if an amendment is necessary. However, there should be some discussions before Report so that there can be an agreement on the appropriate terms of trade between these two public bodies.

Baroness Kramer: My Lords, I will briefly join in the debate. We have two very highly regarded independent organisations—the Bank of England and the NAO. I say to the Government that it is unfortunate that legislation has come forward without resolving the relationship between the two of them. This House should not be in this position today, and neither should either of those two institutions. I very much hope that the Government will take the advice proffered and bring these various parties together to get a resolution here. Both are key institutions that need to have their independence appropriately protected.

In answer to the question asked by the noble Lord, Lord Higgins, the two lines about which he was concerned a moment ago, which are taken out and replaced by what he read as almost two identical lines, almost get to the crux of this matter. The amendment strengthens that assurance that the NAO and the Comptroller and Auditor-General do not in any way seek to question

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the merits of policy objectives. It is trying to make that absolutely clear by putting in a stronger statement to that extent. The problem the NAO has, as the noble Lord, Lord McFall, said, is that due to the way in which the language is now drafted, the Bank effectively now has a veto over which studies are undertaken. Frankly, that is, I think, unacceptable to every party.

We in Parliament depend very much on the NAO and the reports it provides to us. It is very important for us to be able to receive that information, knowing that it is impartial and independent, for us to be able to perform the role we play. All the discussions today have talked of the importance of oversight. While we very much respect the Bank of England, we are all incredibly conscious that it has made very serious mistakes in the past which have cost us dear, and that we all need to play a role in interacting and making sure that we understand and are appropriately taking on our responsibilities toward that institution. Frankly, it is very hard to see how we in this House or in the other place can do that without effective reporting from the NAO.

I hope that the Government will take this matter away for reconsideration because these are significant concerns. I take great heart in hearing from the noble Lord, Lord McFall, that the Federal Reserve board in the United States is one of the bodies on this globe that most asserts its independence and integrity. The Federal Reserve accepts a similar kind of oversight from the US Government Accountability Office, and it seems to me that we have a template there. If it works for the Federal Reserve, surely it can work for the Bank of England.

I hope that these amendments will be taken exceedingly seriously. While the noble Lord, Lord Bichard, is not in a position to speak himself, there are many in this House, including the noble Lord, Lord Higgins, and the noble Baroness, Lady Noakes, who will be able to appreciate the importance of the points that he would have made had he had the opportunity.

Baroness Noakes: My Lords, I support the amendments. I was deeply shocked to see that the Government proposed to give the Bank of England a veto over whether the Comptroller and Auditor-General could undertake a particular value-for-money study. I have believed for a long time that it has been an anomaly that the Bank of England has not been within the remit of the Comptroller and Auditor-General. I do not believe that any public body, however great and however independent, should be able to stand on that greatness and independence and say, “I do not want the National Audit Office or the Comptroller and Auditor-General to examine what I have been doing”. Public audit can be effective only when it is unfettered, and the concept of fettering the Comptroller and Auditor-General is, frankly, unacceptable.

Lord Higgins: My Lords, first, I express regret that I was not able to speak at Second Reading. I was preoccupied with the European Union Referendum Bill and other matters. However, I am certainly deeply concerned, as are other noble Lords, about the situation that now seems to have developed in the relationship

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between the Bank of England and the National Audit Office. I am sure that my noble friend was right in saying a moment or two ago that this ought to be resolved on Report. If necessary, that is what we will need to do.

I have a long history of involvement in this matter. I was much involved—this shows how long ago it was—when it was first suggested that the National Audit Office should carry out value-for-money investigations. However, it is very important to ensure that the NAO remains completely independent. I share the view expressed a moment ago that it would be wholly wrong for the NAO to have to get the permission of the people being investigated to carry out a review. I am extremely grateful to the noble Baroness, Lady Kramer, for explaining what I did not previously understand about the relationship between the amendment and the words being left out. I now understand the point that she made, which was extremely subtle, if I may say so.

Having said that, I am a little puzzled. I chaired the Treasury Select Committee for a decade or so and was succeeded by the noble Lord, Lord McFall. I was also a long-standing member of the Public Accounts Commission, which I chaired for some time. It is extremely important that we preserve the position of the NAO, and, as I said, I agree with those who say that it ought not to have to seek permission to carry out reviews.

I am just a little doubtful about what is meant by “policy”. This may turn out to be a rather fine line. For example, at the moment it seems to be the policy of the Bank, and indeed the governor, to give forward guidance on interest rates. That certainly needs inquiry as far as value for money is concerned, because the forecasts have been extraordinarily wrong on a number of occasions and a lot of people—for example, those renewing their mortgages—may have suffered considerably. In passing, I hope that the governor will reconsider whether that is an appropriate policy and perhaps no longer give forward guidance on interest rates.

The other points in relation to this matter have been made at Second Reading and in today’s debate. This is something that we have to resolve. We have to make sure that the relationship between the two bodies is maintained, otherwise the Comptroller and Auditor-General, very understandably, will have to think personally—the office of Comptroller and Auditor-General has always been a very personal one—about whether he can really operate in a situation where his independence is being questioned.

6.45 pm

Lord Davies of Oldham: My Lords, I do not enjoy the role of opposition a great deal but, just for once, in the light of this debate I am glad that I am here this evening and not where the Minister is sitting. He has been presented with a very difficult situation. I assure him that it is not often that in this House we have not just the Official Opposition presenting a strong case on an issue but two very experienced Members on his own Benches—on this occasion, the noble Baroness, Lady Noakes, and the noble Lord, Lord Higgins—pressing the need for change in a Bill. The equally

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experienced—although more so in the other place than here—noble Lord, Lord Young, indicated that there has to be some way out and that it is time the Government pursued it. It certainly is.

What a mess the Government are in and what great difficulty, I am sure, the Minister will have in defending how they arrived at this ridiculous situation. Time is of the essence. Even if the Government stagger through this House without too much challenge—and I am still not convinced about how sharp that challenge should be—the other place will consider this matter shortly and there will certainly be a great deal of difficulty down there unless change is effected. I accept what the noble Baroness, Lady Noakes, suggested: it is best to get it right in this House before Report, so the Minister does not have too much time.

Lord Bridges of Headley: My Lords, it is always nice to start off with some sympathy for my position from the noble Lord, Lord Davies. I thank all noble Lords who have spoken and made some very thoughtful contributions. I start by letting your Lordships know that detailed discussions are ongoing between the Bank, the NAO and the Treasury to find a way forward on this issue that all sides find acceptable. These discussions have not yet concluded but I hope to be able to update the Committee before Report.

I should like to set out the Government’s position and will address the amendments and the stand part debate relating to Clause 11 in one fell swoop. However, before I continue, I thank the noble Lord, Lord Bichard. He met me last week and talked me through the amendments that he had hoped to table for today. I thank him for engaging so constructively and I very much hope that that dialogue with me can continue, even if he is unable to contribute to this debate in Committee.

I begin by emphasising that by extending, for the first time, the NAO’s ability to conduct value-for-money reviews of the Bank, the Bill will deliver a significant increase in the transparency and accountability of the Bank to the public and Parliament. The Government are strongly of the view that enhancing the accountability of the Bank of England is in the public interest but it is also in the Bank’s interest—strengthening public trust in the Bank will only add to its credibility.

The issue of how the Bank uses public resources is long running, as my noble friend Lord Higgins said. There has been debate on it ever since the Bank was nationalised in 1946. While researching this debate, I came across correspondence on this issue from my grandfather, who happened to be a Permanent Secretary at the Treasury in 1946 and during the 1950s. So something in the Bridges genes means that we have to deal with these things, although I do not know quite know what that is.

Since the 1950s, the relationship between the Bank and the Government has clearly evolved. Now, we regard the independence of the central bank as critical to our economic security and prosperity. As the noble Lord, Lord McFall, said, independence has been an issue of debate not just here but elsewhere. As Ben Bernanke, a previous chair of the Board of Governors of the Federal Reserve System, said:

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“A broad consensus has emerged among policymakers, academics, and other informed observers around the world that the goals of monetary policy should be established by the political authorities, but that the conduct of monetary policy in pursuit of those goals should be free from political control”.

As a number of your Lordships have said, today the Bank of England occupies unique territory in the foundation of the UK economy, and policy decisions by the Bank are of vital importance to everyone. To deliver its mandate effectively, it is essential that the Bank’s independent status is preserved.

The NAO also plays a vital role as Parliament’s auditor. Its own independence is crucial to ensuring that there is effective review of the effectiveness and efficiency of the public sector and for maximising public accountability. Parliament, and in particular the Public Accounts Committee, relies on the work of the NAO to scrutinise properly the value for money of taxpayer-funded activities. It is therefore important that the NAO be allowed to do its work in as unfettered a way as possible.

Lord Higgins: The Minister referred to the PAC. On the whole, we seem to be rather short of any input from the PAC, although it is, crucially, using the results of the NAO studies. Would the Minister at least consult them as to whether they have any views on the debate that we are considering now? The PAC has a very definite interest.

Lord Bridges of Headley: My noble friend makes a good point and I will be happy to mull it over.

Turing to the Bill, a number of your Lordships expressed concern that the provisions in Clause 11 fetter the independence of the Comptroller and Auditor-General. As your Lordships know, this view is shared by the NAO. Others, including the Bank, have been concerned to ensure that the proposals do not undermine the role of court and infringe upon the vital independence of our central bank. The position put forward in this Bill is therefore one of compromise, as my noble friend Lord Young of Cookham eloquently pointed out. It is a unique arrangement that seeks to strike a balance and protect the independence of two vital public bodies that, unsurprisingly, approach this issue from very different vantage points.

There are two main areas where the arrangements set out in the Bill are different from those that are typically put in place between the NAO and its counterparties. In both cases, the purpose of these special arrangements is to protect the operational independence of the Bank’s policy-making.

First, a bespoke carve-out has been designed to ensure that the Bank’s policy functions are out of the scope of the NAO’s value-for-money reviews. This reflects the differences between the policy objectives of the central bank versus those of a government department. I will turn to this issue in more detail when we come to specific amendments.

Secondly, we have designed the process to unlock disagreements between the Bank and the NAO over what constitutes policy. This is particularly important given the complexity of the Bank’s functions, which makes drawing this distinction especially challenging. To be clear, the process is this: if the court is of the

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opinion that an NAO review is seeking to examine policy, the court must notify the Comptroller and Auditor-General of its concerns. If, following consultation, the court is still of this opinion, the Comptroller must not proceed with the examination of that area. The Bill also requires that any such disagreement be made public to ensure transparency and to facilitate public and parliamentary scrutiny.

The arrangements set out in Clause 11 seek to increase the accountability of the Bank, while protecting its independent status and recognising the complex nature of its activities. I believe that the proposals are effective and transparent, but this is, as we know, a complicated area. This is why discussions between the Bank, the NAO and the Treasury are ongoing.

I will now turn to the tabled amendments. Amendments 14 and 16 seek to replicate the language of the National Audit Act 1983. It is well understood that the NAO is bound not to consider the merits of the policy objectives of any body with which it engages, but the Government believe this language to be difficult to apply in this specific instance. This is because, as a number your Lordships have said, the Bank of England has a unique role in the United Kingdom economy. The intent of the Bill is to convey the same meaning as set out in the National Audit Act 1983 but phrased in a way that is more applicable in the context of the Bank. Indeed, the policy carve-out is very similar to that which currently applies in the case of NAO oversight of the PRA. The Government do not believe, therefore, that this confuses or obfuscates the boundaries of the Comptroller and Auditor-General’s oversight.

Amendment 15 seeks to remove the requirement that the Comptroller and Auditor-General consult with the court of the Bank before the NAO initiates a value-for-money study. I understand that such consultation is standard practice and consistent with the normal manner in which the NAO goes about its work. The reason why it is particularly important here is due to the role that this Bill establishes for the court of the Bank in determining what constitutes policy. New section 7E in Clause 11 provides that the court may inform the Comptroller and Auditor-General if it considers that a proposed value-for-money study is concerned with the merits of the Bank’s general policy in pursuing its objectives. Consistent with this, the Bill provides that the court must be consulted prior to the initiation of any value-for-money study that the NAO wishes to carry out.

Amendment 17 is concerned with what happens when there is disagreement between the Comptroller and Auditor-General and the court. Clause 11 provides that, should the court continue to be of the opinion that an element of the Comptroller and Auditor-General’s review constitutes policy, the Comptroller and Auditor-General will be unable to proceed with the examination in relation to that policy, and will be unable to include the results of the examination which relate to that policy in any report produced. However, in order to provide the appropriate balance and to protect the role of the Comptroller and Auditor-General, where there is an unresolved disagreement, the nature of this disagreement must be published. This again will open up any disagreements to full parliamentary scrutiny.

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A number of your Lordships referred to precedent. I do not believe that this sets a precedent for the NAO. The Bank of England is truly unique, in that no other organisation can claim to be the central bank of the UK or to play such a critical role in our economic prosperity and security.

Finally, I turn to new Section 7H. This does not place any restriction on the Comptroller and Auditor-General’s access to information. Therefore, I do not agree with those who argue that it would restrict the ability of the Comptroller and Auditor-General to examine the Bank fully and openly. This section would be relevant only in narrow circumstances in which the disclosure of certain types of information would be of serious detriment; this includes sensitive information on monetary policy and financial stability, for instance. Both these roles of the Bank are obviously highly market sensitive, and it is straightforward to imagine circumstances in which disclosure of information, even in aggregated form, would undermine financial or economic stability. Section 7H is included in this Bill to protect against such eventualities, while ensuring that the Comptroller and Auditor-General has full access to information held by the Bank. These same limitations apply to the regulators and, indeed, to the external auditors of the Bank. For these reasons, I reject the amendments to Clause 11 and beg that they should not be pressed.

The noble Lord, Lord McFall, raised the issue of the Federal Reserve and its audit. I would like to say briefly that it is important to note that, in the US, the debate is, as I mentioned, far from closed. Indeed, legislators, policymakers and commentators in the US have been engaging for a long while in similar discussions to those that we are having today. Just as in this debate, there are those who want a greater sense of accountability for the central bank and there are those who argue that the sufficient protection of central bank independence is important. Of course, there may be valuable insights to gain through inspecting the accountability frameworks of international central banks. That is something that the Government have done in drafting the legislation, and will continue to do as the Bill develops. But to suggest that there is an easy solution that we can transplant into this system from elsewhere is wrong.

To summarise, the provisions in this clause have rightly attracted a great level of debate. This level of debate is only proper because the provisions concern two incredibly important public bodies, and I expect that we will continue this debate as the Bill progresses. These clauses are an important step in increasing the accountability of the Bank. I ask that this clause stand part of the Bill.

7 pm

Lord McFall of Alcluith: My Lords, I thank the Minister for his reply. He made a point about the Federal Reserve, in respect of which there is a huge amount of engagement in the United States at the moment. Congressional members are knocking it about like mad. The status of the Federal Reserve is more in question than that of the Bank of England—that is accepted here. The point of these amendments is to ensure that the status of the Bank is maintained and

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that its independence is not questioned. The analogy with the Federal Reserve is a bit off the mark on that issue.

As my noble friend Lord Davies said, the Government are in a pickle. There has to be a lot of consideration before Report. The noble Lord, Lord Young, made a point about facilitating engagement between the Comptroller and Auditor-General and the Bank of England. According to my information, they have met but there is still a gap. To give an example from my own experience, when I was chairman of the Treasury Committee I was approached by the Treasury to ensure that the Bank of England was audited. I said to them, “Do your own business: I am not doing it for you. Engage in it”. I notice that three distinguished former Permanent Secretaries are sat on the Benches. I do not know what you call a trio of Permanent Secretaries, but the noble Lords should not worry: it would have to be something complimentary. My question to the Minister is: are the Treasury the fly in the ointment at this stage?

The noble Baroness, Lady Noakes, said that the Bank of England should be audited and that it can be effective only if it is. We are here to ensure that that effectiveness is maintained. The noble Lord, Lord Higgins, talked about value for money and the NAO being independent. This arrangement could end up in a public squabble between the Bank and the NAO, and that is not going to serve anyone’s interest, particularly when it comes to parliamentary scrutiny. That does not serve the Bill. A lot of thinking needs to be done on this issue. The noble Lord also made a quite radical point about the value for money of forward guidance. The Comptroller and Auditor-General does not want to go near that. He has been very reasonable—I have used that word before—in his ambitions and it is important to see where he comes from on this issue.

The Minister talked about increasing transparency, but where will it increase?

Lord Higgins: The Minister has suggested that there was a compromise. It would not appear to be a compromise as far as the release of information is concerned. The Comptroller and Auditor-General appears to take the view that the Government’s position on that issue is unacceptable. Can we be sure that that is not taken as settled? We also need to consider the question of releasing information.

Lord McFall of Alcluith: There cannot be a compromise when the court has the veto at the end of the day and this has been public. We do not know where this is going to lead. I do not think there is a compromise at this stage.

Thinking off the top of my head—and I am in good company, because the Government are doing the same—given the need to bring people even further together, why can the Comptroller and Auditor-General not engage with the Governor of the Bank of England? Perhaps there could also be some third parties: wise heads such as the noble Lord, Lord Higgins, who has tremendous experience, and the former Permanent Secretaries. Why can they not sit down and say which areas the Comptroller and Auditor-General should

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have an opportunity to go over? Can we get that wise counsel before Report, so that we do not end up with a squabble? At the moment, there is a big gap between the governor and the Comptroller and Auditor-General that should be narrowed before Report. There is an opportunity to introduce a bit of common sense so that, on Report, we can all agree that the independence of the NAO and the Bank of England are important. Both institutions have a job to do in the best interests of the country, and the authority and integrity of both would thereby be increased. I seek the co-operation of the Minister in achieving a compromise before Report. I beg leave to withdraw the amendment.

Amendment 14 withdrawn.

Amendments 15 to 18 not moved.

Clause 11 agreed.

House resumed.

House of Lords: Questions

Question for Short Debate

7.06 pm

Asked by Lord Hunt of Chesterton

To ask the Leader of the House what plans she has to change the arrangements for the tabling of parliamentary questions to give priority to those who ask few questions, so that more members of the House can ask questions.

Lord Hunt of Chesterton (Lab): Parliamentary Questions are an essential and valuable part of parliamentary procedure. They probe the Government and hold them to account. However, what is not in the official version is that these Questions have a much broader role in this House and in the other place. They also enable the Government to respond by querying the possible policies of the Opposition, as we have been seeing recently, although this is generally done politely and discreetly. I have also found that parliamentary Questions enable Peers to learn about the concerns, experiences and knowledge of other noble Lords. It is not clear whether they can be asked about constitutional or procedural issues. I was not allowed to ask one for clarification on the Pepper v Hart rule, which is an arcane but important part of our procedure. However, Questions are part of the glue which binds our Chamber together.

This is now a topical issue: with the House expanding as rapidly as it is, we need to think about PQs. If we accept this broader point of view, we could look at the procedures of the House for selecting Questions. We should review our procedures to encourage more noble Lords to ask Oral and Written Questions. I am grateful to the House of Lords Library research services for some statistics. During 2014-15, the 444 lead oral Questions were asked by only 181 noble Lords, who asked at least one each. Given that there are 760 to 790 eligible Members, nearly 600 therefore did not ask a Question. However, about 314 asked Written Questions, so some 100 asked Written Questions but not oral ones. The media criticism of the House of Lords, which is justified only to a limited extent, is that many

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Members are not sufficiently visible. Since it is a great honour to be in this House, the view from the outside is that people should be seen. When I joined this House, some people said they looked forward to watching television and seeing a person they knew perform. Even my colleagues in the United States asked what I was doing and why I was not performing more often. That is a slightly trivial remark but it is part of what is being discussed.

The procedure for Oral Questions is that they are tabled up to four weeks before they are asked. They have to be accepted by the Table Office and improved. I do not make any criticism of the Table Office—it is helpful and often makes good suggestions about how Questions should be written—but we need to find a way in which more Questions can be asked by the non-askers. One way, perhaps, is that the non-askers and the people who ask very seldom, should be given priority. That is not the case at the moment.

Members, of course, can ask one Oral PQ and a Topical Question if chosen. The staff of the Opposition and the Government offices help their Members to promote questions. This facility is not as available to Peers from other parts of the House. The maximum number of questions is up to seven Oral Questions/PQs per year. It is a theoretical maximum because few people get up to that level. When Questions are asked, priority is given to Members who apply in person, which is reasonable, but they can also be asked by phone and email. That needs to be well understood.

Topical Questions are an important part of our procedures and are normally the fourth Question asked on Tuesdays, Wednesdays and Thursdays. From my experience, the Table Office operates some selectivity in suggesting what constitutes a Topical Question. There is a tendency to see Topical Questions as the kind liked by the more popular parts of the media—questions not necessarily about boring, serious events such as critical meetings of international bodies, which may well be rather more important.

What is the result of the procedure that we have? I will not go through the whole list, but 85 Peers asked one question per year; 21 asked three questions; and five asked seven questions.

It is interesting to note whether there is any correlation with the number of years that someone has been in the House. The total number of lead Parliamentary Questions from people who have been here from nought to 10 years, and 10 to 20 years, is about the same, so there is no dropping off. That is rather encouraging. However, beyond 20 years and up to 50 years, the statistics, not surprisingly, show some falling away. Nevertheless, there are finite numbers even after so many years.

The few points I have made need to be considered. I suggest that the arrangements be reviewed in order to enable greater involvement of Peers and more issues to be covered. One way to perhaps do that is to have a survey of Peers, something I have not seen since I have been here.

Baroness Chisholm of Owlpen (Con): My Lords, as this is last business, each Back-Bench Peer has up to 10 minutes to speak rather than seven—except for the noble Lord, Lord Tyler, who is speaking in the gap, who has only four minutes.

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7.13 pm

Lord Trefgarne (Con): My Lords, I am glad to have an opportunity to contribute to this debate and I thank the noble Lord, Lord Hunt, for raising the issue this evening.

I come to this topic with a degree of expertise—or a degree of experience, at least, if not expertise—as I think I am entitled to say that I am still the Minister who has answered more Questions from the Dispatch Box than any other. I answered more than 1,000 between 1979 and 1990. Since then, of course, I have not been able to ask anything like as many.

I want first to touch on Private Notice Questions, which are very rate. This is unfortunate because there are often issues which ought to be—and could be—raised by Private Notice Questions. We are allowed one additional Question by private notice each day but the criteria under which Private Notice Questions are allowed are very strict and often when they are submitted to the Lord Speaker they are disallowed—no doubt entirely correctly—because they do not meet the criteria. I understand that the Lord Speaker inquires of officials in the House, including the Government Whips, as to whether she should allow the question. It is unfortunate that the Government Whips should have a say on whether a Private Notice Question is allowed because they would say no, would they not, given the circumstances that often prevail if the question is of a sensitive nature. The criteria by which Private Notice Questions are allowed or disallowed ought to be reviewed. I have made that proposition to the Lord Chairman of Committees and I hope he will take it to the appropriate committee when he has an opportunity to do so.

As for Oral Questions, I suggest that we have five instead of four a day. We tried that experiment in the past but it did not work out then. The problem is that when asking their supplementary questions, noble Lords and noble Baronesses go on for too long; and, I am sorry to say, Ministers sometimes go on for too long, not only with the original Answer but with their supplementary answers too. If all noble Lords and noble Baronesses could be persuaded to keep their answers shorter, there might be more scope to have a fifth Question, which would be a good innovation.

I also suggest that when we sit on Fridays we could perhaps allow two Oral Questions—at present we have none on Fridays—which would provide a few more spaces in the year for that purpose.

On Questions for Short Debate, we now have Grand Committees in which those questions can be asked. This is an excellent innovation because more Questions for Short Debate can now be asked in the Grand Committee, although I am told that the list is not full. There are still plenty of gaps in that arrangement and not enough such questions are tabled. Again casting back on my memory, I recall answering what we used to call Unstarred Questions, which are now Questions for Short Debate. I remember having the privilege of answering one in white tie and tails many years ago before we went off to a diplomatic reception or some such event. I have not seen that recently from noble Lords and noble Baronesses speaking from the Government Front Bench, but perhaps that will happen in the future.

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Finally, I do not have too much to say about Questions for Written Answer. They work well. Ministers might try to answer them more quickly occasionally but the arrangement is basically sound. I hope that it will continue and that noble Lords will continue to use that facility.

7.17 pm

The Earl of Clancarty (CB): My Lords, I thank the noble Lord, Lord Hunt of Chesterton, for the opportunity to speak in this debate.

The beauty of the system as it stands is that if you have a burning question you know you will get to ask it if you are willing to put in a little effort. People say, “I do not have time to queue”, but it is a privilege to ask Oral Questions in this House. It is a service we perform on behalf of the public. If we feel the question we wish to ask is important, then, quite honestly, we should make time to queue. All of us should be humble enough to do that.

The current system is simple and open. Those first in the queue get their questions asked. The problem with the method of the ballot, if it were adopted for regular Oral Questions, is that it could introduce the temptation to game the system because it would become less transparent and more complicated. What worries me particularly is the possibility that Peers might get together to submit the same Question or a variation on it to increase its chance of winning the ballot. I am not saying that Members would do that but it is a temptation that would then exist which was not there before. Would we be getting a daily list of every entry into every ballot for every Question to ensure that this could not happen? Frankly, that sounds like an administrative nightmare and a waste of public money, if the ballot system were to be introduced. In the end, the system would be frustrating for those who continually have to resubmit their Question and might never get to ask it or have any control over the day on which they do get to ask it.

The same problems do not exist for the excellent balloted topical Questions element, because at any one time there is a limit to the number of topical Questions, and there is a small window of time in which to ask them. The Table Office, as we know from experience, takes seriously the decision of whether a Question is topical or not, so with topicals you either win or lose without the worry of continually having to resubmit your Question more than perhaps once or twice. There is of course a way of dealing with the problem, as the noble Lord sees it, without changing the system. If we feel that too many of the same people are asking Oral Questions, we should limit further the number of regular Questions an individual can ask from the current seven to perhaps five a year. It might be helpful if that would significantly increase the number of questioners. From the stats kindly provided by the Table Office for last year, by my calculation that would have freed up 25 regular Questions—a week and a half’s-worth, so not that many—but perhaps having some taken up by new questioners. The fact remains, however, that there will always be some people who want to ask Oral Questions

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more than others. Although Oral Questions are important, they are still only one way to participate in the business of the House.

If there is some tweaking to be done, it is regarding supplementary questions. I think that the House is correctly tolerant about the use of notes for asking supplementaries. The ability to ask a good Question is not the same as the ability to learn lines, and if there is one thing that would markedly reduce the number of people participating at Question Time, it would be to enforce the non-reading guidance. The House is also correctly intolerant of overly long supplementaries, of which we have too many, and often asked by those without notes in hand. Many of us have on occasion pushed it to the limit, but there is some unspoken boundary that does get crossed, and it sometimes feels as though we could have got in another two or even more speakers during a Question if we had not had those especially long supplementaries. Does the Minister think that enough guidance, either formal or informal, is given on this, particularly to new Members?

The popularity of Oral Questions for Members is one valid measure of their success. At four, we have the right number of Questions, and here I disagree with the noble Lord, Lord Trefgarne. There is a good balance between regular and topical and they last for the right length of time. Only a minority of Members leave before the end, but if they lasted for more than 30 minutes, that would not be the case.

Lord Trefgarne: My suggestion was that we keep Question Time to 30 minutes, but have five Questions instead of four.

The Earl of Clancarty: That may be slightly different, but we have tried five Questions in the past and I do not think it worked. I believe that, as it stands, we have the right system for generating questions. We should not tamper with a system unless we are confident that it can be improved.

7.22 pm

Lord Sherbourne of Didsbury (Con): First, I thank the noble Lord, Lord Hunt, for initiating this debate. I am grateful to him because Question Time is clearly one of the most important events in the House. The Chamber is always packed and it is one of the best ways of holding the Government to account. It also gives people a chance to jump in with questions, and there is much more opportunity for spontaneity than is perhaps the case in other debates, so it is important that a debate is taking place on the issue of Question Time.

I come to the debate with an initial thought. Many odd things struck me when I came into this House two years ago, but I have got used to most of them. However, the oddest thing I found was the fact that to table an Oral Question, you have to queue for two or sometimes three hours in a very dark corridor. Initially I was attracted to the idea of having a ballot. People should table Questions, put them into a ballot and have them picked out. But the more I looked into this, the less persuaded I became. It is true that the present system disadvantages those Peers who are not full time

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in the House. Many of the Cross-Benchers, for example, have important outside interests and therefore they do not have the chance to queue. That is a problem.

I think that a ballot was tried out for a short time in the past, but the danger is that the ballot will be flooded with lots of Questions, and it may just be that the business managers encourage their colleagues to do exactly that. But the most important reason I am opposed to a ballot is this. When one tables a Question in the present system, whereby you have to write it out and take it to the Table Office, you take some care over the Question. You make sure that it is reasonably drafted and the clerk will also look at it carefully. With a ballot, people will become much more casual about their Questions and the quality would not be as good. I have a suggestion which perhaps the Minister could respond to favourably by saying that it could go up before the Procedure Committee at some stage. Could there be a ballot, at least for the first three Questions under the present system, which would give a noble Lord the right to table a Question? You would not have to queue because you would not be submitting a Question at that point. The system would work like this: you would put your name in to ask a Question on a particular date, and you are then told by the Table Office that you have won the right to table one. You would then take the Question in person to the Table Office, as you do now, perhaps up to two weeks in advance of the Question being answered. I think that that could be a way of dealing with the problem of having to queue.

I have two other thoughts which take the subject a little wider, one of which I am not sure will meet with the approval of the noble Lord, Lord Hunt of Kings Heath. It is whether there should be a self-denying ordinance that supplementaries should not come from the Front Benches, thereby giving all Back-Benchers more opportunity to speak. That is a thought which I put forward in a very tentative way indeed.

My other thought about keeping Questions and indeed Ministers’ responses crisper is this. I suggest that the digital clocks in the Chamber should run down rather than run up. I would like to move to a policy of having eight minutes for each Question, so we do not have any query about when the time has come to an end. A Question would start at eight and you would see the clock running down to zero. When people who are asking questions, and indeed Ministers, see the clock reaching four or three minutes, they would realise that they have to be a bit crisper. Indeed, I would have the same system for people making speeches in debates so that they know that their time is running down.

I have looked at some of the debates on Questions that we have had in the past. There are a million opinions about them, so I will end by saying simply that any thoughts which are taken forward to the Procedure Committee would also involve, I hope, a great deal of consultation with noble Lords.

7.28 pm

Lord Berkeley of Knighton (CB): My Lords, just on that last point, if we had a count-down, noble Lords might be like football match attenders counting down,

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“Five! Four! Three! Two! One!”. I am not sure that we want to go down that path.

I must make a confession before I say anything else. When I saw that the noble Lord, Lord Hunt, had tabled this Question, for which I am very grateful, I thought to myself, “I must be here this evening because I might at last begin to learn about one or two things I have totally failed to comprehend”. Unlike the noble Lord, Lord Trefgarne, I am completely inexperienced in this field, having been a Member of your Lordships’ House for only a couple of years, but having managed to speak in debates for which I am deeply grateful. I agree with my noble friend Lord Clancarty that it is a great privilege.

However, I am confused. The Companion, which often is very companionable, is very uncompanionable on this subject of Oral Questions. Let me give an example. A few months ago I wanted to ask a Question and went into the Table Office. As usual the clerks were incredibly helpful. I gave them my Question which they put down, and a week or so later I asked it. Last week I went to the Table Office—I know this shows my ignorance—and said, “I have a Question, but I am not sure whether I can just give it to you”. She said, “No, you will have to join the queue on Monday”. That had not happened last time—hence my failure to understand. Fair enough I went along. She then asked, “Is it a topical question?”. This is probably a good example, especially for the noble Earl, Lord Howe, who is very well versed in this subject. I wanted to ask whether the Government had any opinion on the recent national health statistics about female genital mutilation, which over a three-month period had been rather shocking. However, these figures came out during the recess, so was this topical or not? We had quite a long debate about it.

I suppose where I would love a bit of clarity as a new boy is: what exactly is the procedure on putting a Question down and when you have to queue and when you do not? While I accept my noble friend’s strictures about being prepared to queue because it is an honour, I cannot help feeling slightly that, with today’s technology, it is a rather archaic way of doing it. I found it slightly awkward. I was sent away by a noble Lord who was at the back of the queue, but just in the right place. He had a slightly soured, wistful air about him but also a note of triumphalism because in fact his Question would get in.

I ask these questions because I would like to learn a bit more about this process. The Companion could be a little clearer. After all, what we want, and what the noble Lord, Lord Hunt, wishes to achieve, is to tap the wider experience of the House. I am not sure, as the noble Lord, Lord Sherbourne, has just said, that getting into the queue is necessarily the best way of doing that.

7.33 pm

Lord Tyler (LD): My Lords, I am delighted to have an opportunity to contribute in the gap, very briefly, and particularly to at least half support the noble Lord, Lord Trefgarne. I hope that this will not surprise him. The real demand in the House is not for more Questions but more opportunities to contribute to Question Time. That is what we should be thinking

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about. I think that the noble Lord, Lord Trefgarne, will regard it as a compliment if I regard him as a traditional Tory. I hope that the noble Earl may take the same view. That is where it seems to me the demand is. It is a traditional Tory approach that supply should meet and reflect demand.

I am in favour of five tabled Questions, whether it is within 40 minutes, 30 minutes or 45 minutes. That can be a matter of discussion. Clearly, the real demand in the House is to contribute to those very useful mini-debates that we have. I am probably the only Member in your Lordships’ House this evening who has experienced Questions at the other end of the building, where there are no real discussions, no dialogue and no proper debate. There is a bit of a row from behind the Minister to egg him on, like a football crowd, and there is the opposite from the Opposition Benches. It is not the same quality of real discussion or real exchange and follow-up that we have in your Lordships’ House. The original Question is often followed by a question that is absolutely spot on because the Minister’s reply has not developed the discussion in any positive way.

An interesting point was made earlier tonight. I think that reading the Question often means a shorter supplementary rather than a rather wordy one from some of our more experienced Members who tend to be more loquacious. I also think that it would be useful if we got away from this absurdity of referring to this lucky dip, this raffle, as a ballot. In my view, a ballot is something you vote in. Every time I am asked, “How did you manage to get that Question?” I say, “It was a lucky dip, you know”. They say, “But it was a ballot”. The origins of the word ballot as I understand it from the Oxford English Dictionary is that people actually express a preference for something. That is what a ballot is for. It would be helpful if we got away from that.

The contrast with the Commons means that we have something rather special in those 30—or 35, or 40, or even 50—minutes. We have an opportunity for a real exchange across the House. That is what I am in favour of. That is where people seem to want to be. I did not read the brief from the Lords Library in quite the same way as the noble Lord, Lord Hunt of Chesterton, who made an excellent opening speech. I thought that he was underrating the extent to which Members are involved. When we had a big Division in your Lordships’ House a fortnight ago, about 500 people voted. If a third to a half of our Members are regularly putting down an Oral Question each Session, that is not bad. That does not seem to be the issue. The issue is that we do not have enough time for that exchange across the House. That is why I think there should be more attention to the time that is given to those supplementary questions.

It is time for a more comprehensive review. Everything that has been said in your Lordships’ House this evening, and which I suspect may well be said by the noble Lord, Lord Hunt Kings Heath, in a moment suggests that the increasingly active participation of Members—it is not so much the total number but the fact that we have more active Members on all sides of the House—means that they want to contribute in a meaningful, positive way. I hope, therefore, that the

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noble Earl, Lord Howe, will be able to say that it will be the policy of those who have influence in the usual channels to look again at this issue.

7.37 pm

Earl Attlee (Con): My Lords, I agree that we have a problem. About 10 years ago, if I had got fed up with a Minister regarding his Written Answers, I would roll into the Minute Room and say: “Starred Question—next available slot to ask Her Majesty’s Government about it”. We cannot do that now, so we have a problem.

I think that the Opposition Front Bench should be able to ask supplementary questions at Question Time on behalf of Her Majesty’s Opposition, but not necessarily all the time. We did try five Questions in 35 minutes a few years ago but it was a failure because your Lordships got bored with it. I think that four Questions in 30 minutes is right. It is long enough to expose the Minister’s difficulty, or for the Minister to convince the House.

I have two observations. The first one is that asking an Oral Question is perhaps the most challenging procedure in your Lordships’ House, especially when you are on the opposition Benches, because the Minister holds all the cards. The Minister knows what his response will be but the person asking the Question does not know what he will say and has only milliseconds to decide which supplementary to use. It is a very difficult procedure. That may be why some noble Lords are reluctant to table Oral Questions.

My second observation is in answer to my noble friend Lord Trefgarne, and I would like to boast a little bit, because I am told that I hold the record for the number of supplementary questions answered by a Minister—I think it is at least 12 and may even be 13. I told my officials that I would answer very briefly because noble Lords want to be able to say at a dinner party, “I asked the supplementary question about that”; they do not want to say, “I listened to a long Answer from the Minister”.

7.39 pm

Lord Hunt of Kings Heath (Lab): My Lords, it is a great pleasure for me to congratulate my noble friend on initiating this debate. Although I do not agree with everything that he said, I very much agree with his final words when he asked for a general review of Oral Questions. I think that there is a general view in your Lordships’ House that that would be a very good thing. I hope that the noble Earl, and indeed the Chairman of Committees, will be sympathetic. Certainly from the Opposition’s point of view, we would be very sympathetic to a more general discussion which allows Members of the House to give their views.

I think that this is the first opportunity I have had to welcome the noble Earl, Lord Howe, to his new role as Deputy Leader of the House. I very much look forward to our further debates.

My noble friend was absolutely right to talk about the importance of Oral Questions. We start the day with them and the House is full, unlike the other place. At their best Oral Questions are excellent, with very sharp questions posed to Ministers on key issues of the day. We are not always at our best at Oral Questions,

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but when we are, we should be very proud of them. We should do everything we can to protect the best aspects of them and try to eradicate the worst.

I must confess to being a serial offender as regards the number of Oral Questions that I try to table. However, I say to the noble Earl that I think my role as an opposition spokesman on health is to try to put the Opposition’s point of view across, and Oral Questions are one of the best ways I can do it. Although I think we should come in on supplementaries, we should not come in on every supplementary. As I have discussed with my noble friend, in the main we try to wait, allow noble Lords to ask questions and come in later on. I think that is the best way of doing it. The noble Earl, Lord Howe, was a role model in that regard in that he did not come in on every Question when in opposition. It was all the more telling when he did come in because of that, so we have some good role models in this respect.

I know some noble Lords feel that queuing is not the best way to tackle this issue. But the fact is you know that if you want to table an Oral Question, you turn up early and that if three noble Lords are there, you go away. It seems to me that is a rough and ready system but at least it is fair except in recesses. I will come back to that point. One can also have the most delightful conversations. On such an occasion, the noble Earl, Lord Clancarty, and I talked about the merits of Birmingham Opera, which is having a reception here tonight at this very time. I am sure that the noble Lord, Lord Berkeley of Knighton, would also be at that reception if we were not debating this issue.

The problem with a ballot is essentially that it can be manipulated. Not only would it be a lottery but we would risk getting either Questions that are not very topical or such a system would be manipulated one way or another through slates or the usual channels. We need to avoid that at all costs.

However, other issues around this are very relevant. I totally agree with the noble Lord, Lord Trefgarne, about Private Notice Questions. The Companion is pretty ambiguous about the advice that the Lord Speaker is given on whether or not to accept a Private Notice Question. It is clear that the advice is very conservative, if I can use that word to the noble Lord, Lord Trefgarne. Essentially, the Lord Speaker rarely allows Private Notice Questions. We are much more dependent on Mr Speaker in the other place, who is much more generous in allowing Urgent Questions, which are then repeated as 10-minute Questions here. I do not think that is right. Surely, if we really want to make Oral Statements here as effective as possible, we should be anxious to allow topical Questions to be tabled. I hope that any review will look at what the Companion says about issuing advice to the Lord Speaker.

As regards the clock running down, I think what has been proposed is a good idea but the risk is that Ministers will play to the clock and, if they simply look at the clock, they will spin out their remarks so that another supplementary cannot be asked. That brings me to the big question of long-winded questions and answers. I was a Minister for 10 years and what I most enjoyed were long-winded supplementaries. First, it gave you time to think of an answer or to find it in your file. Secondly, you could choose which bit of that

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long-winded question to answer. However, I dreaded the noble Baroness, Lady Sharples, getting up because she asked questions that lasted about 10 seconds. Usually, they were factual questions and there was no time to find out the answer. My noble friend Lady Farrington has developed her own capacity to do that and it is very telling. Why on earth do noble Lords feel the need to ask such long-winded questions? I just do not understand it. It is as if they have come here, seen what goes on, then almost ignore it as willy-nilly they are going to make a speech. I say to the noble Lords on the Government Front Bench that they are also somewhat guilty of this. Instead of giving a 70-word first Answer, why not make it 30 words? That would get the House in a better frame of mind. Of course, the reason why government Ministers do not do that is because they know that if they gave a short Answer, it would encourage a lot more questions. I am afraid I have to inform the House that Ministers do not like lots of questions. They love long-winded questions but if we were to sharpen up our practice we would sort this out.

As regards whether we should have more Oral Questions, the noble Lord, Lord Strathclyde, very much supported the move to five Oral Questions, which I think lasted 40 minutes. However, that did not work and lots of noble Lords left after 30 minutes. There was a feeling that somehow we had lost the sharpness, so we went back to having four Oral Questions. I like the idea of having five Oral Questions in 30 minutes, but the deal has to be that we completely rule out long-winded questions and answers. It would be interesting to try that out for a few weeks to see whether we could make it work.

There is a problem as regards what happens during Oral Questions. Apart from the issue of Front Bench opposition interventions, I am concerned by some noble Lords’ behaviour during Oral Questions. When noble Lords who may not be very experienced attempt to get up and ask a supplementary question, they can be drowned out by more experienced and assertive noble Lords. When I first came to your Lordships’ House in 1997, noble Lords rather quaintly tended to give way to other noble Lords. I am afraid that that does not happen very often now. It also counts against female Members of this House. There are, of course, some feisty Members who do not have any problems at all but, frankly, some of the behaviour is tantamount to bullying. We have not been able to agree to give authority to the Lord Speaker to intervene. We rely on the Leader and the Deputy Leader to do so. I held that role for two years and know that is not always an easy one. If we will not give the Lord Speaker the authority to intervene, as a self-regulating House we are entitled to ask noble Lords to behave rather more appropriately. I encourage the Leader and the Deputy Leader to be somewhat more assertive in intervening on bad behaviour and long-winded questions and answers. I think they would find that the House would generally support them.

Over all, this has been an absolutely splendid debate. I hope the noble Earl will say that, like us, he is sympathetic to a more general review. I am sure that many noble Lords would be willing to take part in discussions.

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7.48 pm

The Minister of State, Ministry of Defence (Earl Howe) (Con): My Lords, I am very pleased to be the Minister responding to what has undoubtedly been an extremely worthwhile short debate on a topic that we all care about very much. I think all noble Lords will agree that Question Time is a valued opportunity for noble Lords from across the House to hold the Government to account, often in a very immediate way when we think of topical Questions in particular. That is why I begin by saying that I am right behind the noble Lord, Lord Hunt of Chesterton, in wanting to encourage a broad range of contributions at Question Time, and indeed in our work more generally.

I think, too, that this House sets itself apart from other legislative Chambers with its range of expertise and range of experience in numerous fields. It is through that expertise and experience that we best complement the work of the other place. It is undoubtedly important that we should always encourage as broad a range of contributions as we can to inform and guide our business. I think that is common ground.

Certainly, that is something that the previous coalition Government and we as the current Government have sought to do over the past few years. For example, we have expanded the opportunities available for Peers to ask Questions for Short Debate by introducing a slot for topical QSDs, which provides a fresh opportunity for a timely debate on the Floor of the House each Thursday, and by committing to set aside regularly a day in the Moses Room for five Back-Bench Members to ask QSDs. I am pleased to say that from where we sit that has been a success: no fewer than 104 Members of the House were able to ask QSDs in the last Session. We have also increased opportunities to serve on Select Committees, having supported the establishment of two net additional units of committee activity since 2012, four of which are devoted to ad hoc committees.

Turning to Question Time itself, I should perhaps start by making the point that we already hear from a broad range of contributors. Indeed, in the last Session more than 430 Members asked one or more Questions or supplementary questions. That is nearly 90% of our average daily attendance. Limiting Members to no more than seven Questions in a calendar year is another way in which we have sought to foster even greater diversity; indeed, 10 Members were caught by that limit last year.

Naturally, that does not mean that we should not look at what more might be done and I well appreciate the concerns that have been raised this evening. In particular, there is no doubt that we hear from some voices around the House considerably more often than others. There has been unanimity this evening that we should try to do something about that, and I will say more on that topic in a moment. Looking at the last Session, for instance, 16 Members made more than 25 contributions each at Question Time. Of the total number of questions asked, one in five were asked by the 20 most frequent contributors. I would just add that with three-quarters of the 20 most frequent contributors coming from the opposition side, there is certainly no danger that the Government are not being held to account. We certainly feel that we are.

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I also know, as we have heard in this debate, not least from my noble friend Lord Sherbourne, that some Members find it hard to succeed in tabling an Oral Question; others find it hard to intervene with supplementaries.

Some speakers this evening, including my noble friend Lord Sherbourne, were concerned that Front-Benchers tend to dominate at Question Time. I sympathise with that point—after all, 30% of the 25 most frequent contributors in the last Session sat on the Opposition Front Bench, and more than 10% of all questions were asked by the Opposition Front Bench. If we are to continue the practice of the Opposition Front Bench having a supplementary on nearly every Question—and I welcomed the comments of the noble Lord, Lord Hunt of Kings Heath, on that point—it is worth considering whether Questions themselves should only or usually be tabled by Back-Bench Members. For what it is worth, that was generally the rule when my party was last in opposition. The Front Bench was under standing instructions to defer to Back-Benchers other than in the most burning circumstances.

What changes might ensue from this? If we can make changes for the better, of course it is worth finding a way to consider those ideas. Several ideas have been raised today, which I will come on to. Before I do, I emphasise one thing, which is that noble Lords who want to change the way that things are done should feel empowered to propose it, and indeed it is open to any Member with a proposal to write to the Chairman of Committees, as chairman of the Procedure Committee, to look to take it forward, whatever it may be. I know that my noble friend Lord Trefgarne would welcome that process.

Lord Trefgarne: My Lords, I have already written to the Lord Chairman, and he has referred me to the noble Earl, Lord Howe.

Earl Howe: Well, clearly a conversation needs to ensue from that. I am grateful to my noble friend. I can tell him and other noble Lords that my noble friend the Leader of the House is always keen to facilitate the consideration of any new ideas. Some noble Lords this evening raised the idea of a ballot for Oral Question slots. If I understood him correctly, my noble friend Lord Sherbourne was against a ballot of Questions but in favour of a ballot of Peers. The noble Earl, Lord Clancarty, raised some cogent objections to the whole proposition.

The idea of a ballot has been raised frequently before, and my noble friend the Leader of the House facilitated a suggestion to this end from the noble Lord, Lord Avebury, at a Procedure Committee meeting earlier this year. However, there was no consensus within the committee at that point, as there appeared not to be in 2013 when, despite the agreement of the Procedure Committee and government support, the Procedure Committee’s proposal to allocate Questions by ballot was withdrawn by the then Chairman of Committees when it became clear that there was no support on the Opposition Benches for the change.

We see merit in the idea of a ballot for the allocation of Oral Questions if we can avoid the pitfalls highlighted by the noble Earl, Lord Clancarty, and the noble Lord, Lord Hunt of Kings Heath.

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Lord Hunt of Kings Heath: I welcome what the noble Earl has been saying. I have a suggestion to make. There is a problem in recess where clearly the queuing is always stacked in favour of people who live in London. If one wanted to pilot a different approach, why not pilot it during recess periods so that we could see how it worked and whether there were some more general lessons to be learned? It is just a suggestion.

Earl Howe: I think that is a very creative idea. Worries have been expressed this evening about what rules apply during recess and what counts as a topical Question, as the noble Lord, Lord Berkeley, pointed out. However, I do not think that we are likely to find total unanimity on the idea of a ballot—as the contributions this evening have demonstrated—but if there is one message that has come through it is that we should think through this idea rather more carefully, as there might be some underlying balloting system that would work.

The benefit of the present system is that it gives the House four weeks’ notice of upcoming Questions. The one thing we do not want to do is add complexity to the system or reduce the notice period to, say, two weeks, as I think my noble friend Lord Sherbourne suggested. However, I am in favour of the principle of what my noble friend wants to achieve and I would not wish to discourage him from putting his ideas to the noble Lord, Lord Laming, as chairman of the Procedure Committee.

The pros and cons of the queuing system have been referred to. For clarity, I say that if there is a slot available, noble Lords do not have to queue; they can take that slot on the spot. But if no slot is available and one is to become available, as they do four weeks ahead of the period being considered, it is allocated on a first-come, first-served basis, hence the queue that tends to form. I fear that the noble Lord, Lord Berkeley, was lucky in the first instance that he referred to and slightly unlucky in the latter instance.

Lord Berkeley of Knighton: I thank the noble Earl as that has explained something which I have been trying to fathom. As I suggested, the Companion could be a little clearer about this, because if you are a new Member of this House, it is quite difficult to work these things out.

Earl Howe: I am quite sure that that is a very good general point to make. I am not at all sure that new Members of the House receive enough guidance when they arrive—on a variety of issues, this being one of them.

My noble friend Lord Trefgarne favoured introducing a slot for a fifth Oral Question. As other noble Lords pointed out, that was trialled in the past—I think it was in 2002 to 2004—but not taken forward after that. It was also not supported in the Procedure Committee when its revival was proposed in the last Parliament. I agree with my noble friend Lord Attlee that, rather than adding to our proceedings, the perception was that a fifth Question tended to switch people off, and that the energy and momentum of Question Time, which I think we all appreciate, rather dwindled as a result.

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Another point to be made here is that we now often have Urgent Question repeats taken in the slot immediately after Questions. I would be surprised if the House wanted effectively to take six Questions before starting on the day’s business. For similar reasons—and I agree with the noble Lord, Lord Hunt of Kings Heath, on this—I would not support extending Question Time to 40 minutes.

My noble friend Lord Trefgarne raised some issues about Private Notice Questions. As my noble friend knows, the system for PNQs has been considered several times without any changes being agreed. I certainly believe that there is a case for bringing forward the deadline by which decisions about PNQs are made. However, I am not sure that there is wide-ranging support for changing the decision-making approach as such, although I know that my noble friend is trying to put this forward for the Procedure Committee’s consideration. The key point here is that the decision on whether to grant a PNQ is one for the Lord Speaker. The Government provide the policy background to assist the Lord Speaker but do not have a say as to whether the PNQ is allowed—and that presupposes that the PNQ relates to a matter of government responsibility. The Companion states:

“The decision … rests with the Lord Speaker, after consultation”.

My noble friend Lord Trefgarne also raised the possibility of having Oral Questions on a Friday. We sit for only around five hours on a Friday if we are to rise at 3 pm, which is generally the time when noble Lords are keen to make tracks homeward. Fridays are a particularly valuable time for noble Lords to discuss Private Members’ Bills and, although it is worth a discussion, I am not convinced that people would want the time to be taken up by Oral Questions.

My noble friend Lord Sherbourne came up with the interesting idea of a countdown approach, with eight minutes per Question. Maybe it should be seven and a half minutes, if we are not to exceed the 30 minutes in total. I was very struck by that idea. The Clock already indicates the time taken during Oral Questions and the current system allows some flexibility in the lengths of those Questions, some of which run short of eight minutes as well as running over the seven minutes. My personal view is that there are some merit in the existing system over the one that my noble friend suggested, because it has flexibility built into it. We have to allow some measure of flexibility. It is always difficult for the Clerk of the Parliaments to judge this but in general he does it very well indeed.

The noble Lord, Lord Hunt of Kings Heath, proposed a general review. I am not personally averse to that idea, although we have reviewed the whole system of Oral Questions in a series of forums, including the Leader’s Group at the start of the last Parliament and in the Procedure Committee on repeated occasions in the course of that Parliament. We have also had several votes on aspects of Questions: for example the issue around reading out Questions in full. I would very much welcome a general conversation about this. I am not sure we need to go as far as having a formal, full review. We have had a number of good ideas put forward this evening and we could encapsulate those in a general conversation of the kind that I am proposing.

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My noble friend Lord Trefgarne, the noble Earl, Lord Clancarty, and the noble Lord, Lord Hunt of Kings Heath, with whose points I very much agreed on this subject, bemoaned the tendency for supplementary questions to be over-lengthy. The Companion is very clear about this, stating:

“Supplementary questions … should be short and confined to not more than two points”,

and where they are not, the House should make its views heard. Again, I received with sympathy the suggestion of the noble Lord, Lord Hunt, that the Leader and Deputy Leader should perhaps be more proactive in the way that we guide the House on this issue. We can only urge noble Lords to respect the guidance in the Companion but, again, there may well be greater scope for new Peers to have this point impressed more firmly upon them. For that matter, Ministers’ replies to supplementaries should also be short and crisp.

Lord Hunt of Chesterton: Does the Minister not think that some survey of all the many tens of new Peers who have come would be a good idea? How else is he going to find out this information? There is a small group of people here. People may write in or read Hansard, but some signal needs to be given that we really want to hear what all the new people joining the House of Lords think about this.

Earl Howe: Yes, I am sure that that idea deserves full consideration. I think we would all agree that it is getting to a stage where we must impress on all Members of the House, not just the new arrivals, that we have rules which are here for a purpose and have been carefully thought through over the years—and that it is in all our interests to adhere to them.

Lord Tyler: I wonder if I am alone in observing that the shouting at Members—and new Members, too—who are reading notes tends to lengthen the whole process rather than shorten it. If somebody has a good note and refers to it in a short, sharp question, that is surely preferable to those who waffle on without notes to guide them.

Earl Howe: I totally agree with the point that the noble Lord makes.

What this useful debate has shown is that there are some changes which we could helpfully consider. But I would add that, regardless of what procedural changes we might wish to consider, we also need to look at how we can work together to enable more voices to be heard at Question Time. One of the concerns raised with me is that the Chamber of the House can feel an intimidating place in which to intervene at Question Time and that the louder voices are heard more often. That is something we all can change, if we are minded to do so.

Self-regulation is a cherished feature of this House and one that we should guard jealously. It means that

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we are in control of our own affairs and can work together to make our business work. That is a responsibility on us all. It is not just for the Leader, incidentally, or for that matter the party and group leaders; it is for each and every Member of the House. If we want to hear from a broader range of people—and from the debate today, I clearly sense that we all do—we need to encourage those who speak less to speak up. That means making sure that we allow those with particular expertise to get in when they seek to do so and look for ways of helping those from whom we hear less to take part.

One way would be to keep supplementary questions brief, to allow other noble Lords to get in, but more generally it is about making sure that being self-effacing does not mean not being heard. Fostering that culture could be the single biggest step that we could take to hear from more noble Lords and to make our Question Time an even better forum for us to showcase the contribution that this House can make to the world outside.

Although I welcome any further discussion with those who want to consider procedural changes, we should remember also that cultural change must follow in step if we are to really make the best use of the talent around the House. I look forward to working with those here today to make progress in that regard.

Draft Investigatory Powers Bill

Message from the Commons

A message was brought from the Commons that they have come to the following resolution to which they desire the agreement of the Lords:

That it is expedient that a Joint Committee of Lords and Commons be appointed to consider and report on the draft Investigatory Powers Bill;

That a Select Committee of seven Members be appointed to join with any committee to be appointed by the Lords for this purpose;

That the Committee shall have power:

(i) to send for persons, papers and records;

(ii) to sit notwithstanding any adjournment of the House;

(iii) to report from time to time;

(iv) to appoint specialist advisers; and

(v) to adjourn from place to place within the United Kingdom; and

That the quorum of the Committee shall be two.

House adjourned at 8.10 pm.