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John McDonnell: It would be invaluableI shall give way to an intervention on this matter for an undertakingif the impact of the Bill were to be modelled for us. In other words, it would be invaluable if we were given exemplifications of what would be excluded and what would not. It was the Committee's role to examine the model and ascertain whether it worked. However, the Bill has been so dramatically changed that the model has not been presented to anyone. The situation is rather like that of the person who understood the origins of the Schleswig-Holstein question. Lunacy is beginning to enter into the debate.
Amendment (d) would provide the maximum flexibility but it requires confidence in government. It would allow the Secretary of State to determine what is "a qualifying body". Why is that important? The amendment would overcome some of the issues that have been raised so far. The right hon. Member for North-West Hampshire suggested that the amendment was an iniquitous measure that would give power to the Secretary of State to intervene. I believe that it would introduce flexibility and accountability.
Mr. Hopkins: I strongly support my hon. Friend's most recent point about the Secretary of State's involvement. I would reinforce it by saying that the amendment at least brings government into the picture,
John McDonnell: The point behind such flexibility is that it acknowledges that governance changes over time. As agencies change and are established in the exercise of government functions, the Secretary of State would be able to identify whether they could be appropriately excluded from new clause 1. In that way, we would gain flexibility. For example, the involvement of the Bank of England in the governance of the City of London may well be worth while for a limited period to enable its finances to be sorted out, but after that, not; the Secretary of State could therefore designate it as not excluded by the court.
Mr. Dismore: Initially, I was taken by amendment (d). However, suppose in a far-off scenario that the Labour party is no longer in control and an extremely centralising Conservative party is in office. Could not the Secretary of State declare his own Department a qualifying body, and would that not lead to the danger of central Government being directly involved in local government?
John McDonnell: That is exactly why I said that the amendment needs a leap of faith from the Government. The Secretary of State could designate his Department, or numerous Departments, as outside the exclusion order so that they could participate.
The Secretary of State may wish to put certain matters on the agenda of the City of London corporation, including corporate governance and financial reform, so he would want to determine that certain Departments and Government agencies are not excluded and are qualifying bodies. That would give any Secretary of State the opportunity to influence the governance of the corporation and move it towards a reform agenda; virtually every other power that has been exercised to encourage the corporation to reform has failed. The amendment therefore provides an opportunity to introduce good governance in the corporation.
It is true that certain pressures could be applied, but that would be done openly through the electoral process, rather than through secret meetings and behind-the-scenes pressures, which Governments and Secretaries of State have applied in the past. To take the example of the City cash, a Secretary of State could designate Departments to influence the corporation's governance and introduce reforms. There are immense opportunities for any legislation to be hindered, delayed or even defeated by either House of Parliament. The Lords, who have often populated the City of London corporationmany of them serve as its aldermenseek to block the legislation that we are trying to impose on the corporation, so we may well want Secretaries of State to have influence at the grass roots, which would welcome instigated reform, rather than reform from above.
There is considerable uncertainty about the changing structures of the Government and the bodies that they set up, or on which they rely, to deliver the functions that they perform under statute. The amendment would give the Secretary of State discretion and, in doing so, would prevent legal challengesor at least provide a mechanism to minimise themto the status of Government-linked bodies in future.
Mr. Hopkins: My hon. Friend and I number among those who are concerned about Britain's future in the European Union. Indeed, there is something of a competition between the eurozone and the City of London in pursuing business in the financial world. If we are not careful, EU influence in the City could prove unhelpful to our economy and to the City's future success.
John McDonnell: Because of the confusion arising from the move from rateable value to voting on the basis of employees, the legislation could enable EU institutions to set up bodies in the City of London area and thereby exert an influence. I find that amazing.
I do not want to stir up the European debate, but, at various stages, the hon. Member for Rochford and Southend, East (Sir Teddy Taylor) has edged towards me in the Tea Room. It is worrying, nevertheless, that there is no such specific exclusion of EU institutions.
John McDonnell: My amendment would ensure exclusion of their participation in the governance of the City of London corporation. There might be an argument that those receiving EU funds are exercisingalbeit tenuouslyfunctions of government conferred on them by previous legislation passed by this House. My amendment makes it explicit that they would not so participate.