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Earl Jellicoe: My Lords, a decade or so ago I was the chairman of the Select Committee on Committees. I entirely endorse what the noble Lord the Chairman of Committees and other noble Lords have said about the importance of Select Committee work in your Lordships' House. However, I am a little concerned. At that time, when we were considering the resources available, whenever I asked the Clerks of Parliament concerned whether there would be any difficulty in extending the work of our Select Committees, I always received in reply an absolutely clear affirmative that there would be no problem whatever. I simply express my concern that there still seems to be some difficulty in the area of resources. I strongly hope that that difficulty may be resolved.

The Chairman of Committees: My Lords, I had the privilege of serving as a member under the noble Earl when he was chairing the committee on the committee work of the House; the Select Committee on Committees--the ultimate in a committee; one cannot go much further than that. As the noble Earl will recall, it was one of his committee's recommendations that the Liaison Committee should be set up--under a different name, as it happened at that time--as a means of keeping under constant review the committee work of the House and to act as a kind of "rolling Jellicoe"--if the noble Earl will forgive me for referring to his great mobility in that way. As I have had occasion previously to say to your Lordships, it is the case that when your Lordships decide that an additional committee is needed, the resources will be found one way or another. The constraint is more one of time than anything else, particularly for recruitment. Time will also be needed to establish accommodation and for the Treasury to provide the money. However, as regards the point made by the noble Earl, if your Lordships decide on a course, a way will be found to put that forward and adopt it, sooner rather than later.

Ethiopia: Food Aid

3.30 p.m.

Lord Brougham and Vaux asked Her Majesty's Government:

Baroness Amos: My Lords, we have been in close touch with the crisis as it has developed. We have responded quickly and appropriately to the emerging emergency needs. Since April 1999 we have committed over £7 million in food and non-food relief. Food aid is over 25,500 metric tonnes. We are also contributing our normal share, about 17 per cent, to the 432,000 metric tonnes which will be provided by the EC.

Lord Brougham and Vaux: My Lords, I thank the Minister for that reply. Having watched the

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devastating television news pictures last night from Gode in south-east Ethiopia, is the Ethiopian ambassador to Britain not right in saying that the £2.4 million in food aid to Ethiopia is by no means sufficient to bring safety to those dying people?

Baroness Amos: My Lords, it is important to see this in context. Some areas in Ethiopia have had drought for three years in succession, others for four years in succession. We respond to the appeals made by the Disaster Preparedness and Prevention Committee of the Government of Ethiopia who co-ordinate the donor effort. Last year the appeal was to help about 2.5 million people who, it was thought, would suffer because of the drought. This year the appeal is for a much greater number. We have a food security specialist based in Addis who has been advising the Government on how best we might bring our resources to bear to deal with the tragedy. We are there and are involved. This year we have given £5 million in both food and non-food aid. We shall continue to do what we can to mitigate the crisis if further appeals are made.

Baroness Whitaker: My Lords, does my noble friend agree that humanitarian aid must be the priority as long as the war prevents the Ethiopian Government from making the best use of development aid?

Baroness Amos: My Lords, I agree with my noble friend. Since 1998, when war broke out between Eritrea and Ethiopia, we have not provided any additional funding to our long-term development assistance except in the area of food security. That does not affect our humanitarian aid to Ethiopia.

Baroness Chalker of Wallasey: My Lords, will the Minister consider using the services of a logistic specialist as well as those of a food security specialist? The problem in Ethiopia is always that of getting the food to the people. It is no good having planners unless they have the means to transport the food.

Baroness Amos: My Lords, I agree with the noble Baroness that there is a serious logistical problem. We are partly hampered by the war between Eritrea and Ethiopia. We are considering how best we can support the Government of Ethiopia in these matters. We shall take on board the suggestion made by the noble Baroness regarding a logistic specialist.

Lord Rea: My Lords, I refer to last Wednesday's debate on central Africa. Can my noble friend add anything to the statement made at that time by her noble friend Lady Scotland that the Ethiopian Government were in a position to sign the OAU framework peace agreement in full? Can she say whether and when the proximity talks in Algiers, under OAU auspices, between Eritrea and Ethiopia will start again?

Baroness Amos: My Lords, I am not sure that I can say anything more than was said last week by my noble

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friend Lady Scotland. The Algerians are trying to find a compromise position. As I understand it, they are confident that the Ethiopians are now content with the package. They are in negotiations with the Eritreans. They remain confident that both sides can be persuaded to accept the agreement. As regards further talks, I understand that the President of Algeria hopes to have a meeting in Algiers in April. As we are already mid-way through April, I hope that that meeting will take place within the next two weeks.

Lord Avebury: I refer to the point raised by the noble Baroness, Lady Chalker, on logistics. Can the Minister say what response has been made by the international aid community and the Government of Ethiopia respectively to the offer made by President Issaias in the United States last week for the use of the port of Assab to deliver humanitarian aid? Would not the Government agree that if the port of Assab was used instead of concentrating all the humanitarian delivery through Djibouti, the effectiveness of the aid programme would be enhanced and more aid could be delivered for the same amount of money?

Baroness Amos: My Lords, the comments of the noble Lord are true. The war has disrupted the economic and social progress of Ethiopia. It has also affected food security by diverting trucking capacity, increasing cost and denying access to the ports of Massawa and Assab. I am aware that the Eritreans have offered use of the ports. That offer has been rejected by the Ethiopians, who say that there are too many conditions attached and that they see it as a PR gimmick.

Terrorism Bill

The Parliamentary Under-Secretary of State, Home Office (Lord Bassam of Brighton): My Lords, I beg to move the Motion standing in my name on the Order Paper.

Moved, That it be an instruction to the Committee of the Whole House to whom the Terrorism Bill has been committed that they consider the Bill in the following order:

Clauses 1 and 2, Schedule 1, Clause 3, Schedule 2, Clauses 4 and 5, Schedule 3, Clauses 6 to 23, Schedule 4, Clauses 24 to 37, Schedule 5, Clause 38, Schedule 6, Clauses 39 to 41, Schedule 8, Clauses 42 to 53, Schedule 7, Clauses 54 to 65,

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Schedule 9, Clauses 66 to 84, Schedule 10, Clauses 85 to 98, Schedule 11, Clauses 99 to 102, Schedule 12, Clauses 103 to 106, Schedule 13, Clauses 107 to 115, Schedule 14, Clauses 116 to 124, Schedules 15 and 16, Clauses 125 to 130.--(Lord Bassam of Brighton.)

On Question, Motion agreed to.

Financial Services and Markets Bill

3.37 p.m.

Report received.

Clause 1 [The Financial Services Authority]:

Lord Newby: moved Amendment No. 1:

    Page 1, line 7, leave out ("body corporate") and insert ("private company formed under the Companies Act 1985").

The noble Lord said: My Lords, the amendments in this grouping are the first of three groups of amendments that we shall discuss today which seek to clarify the structure of the FSA and make it more transparently accountable to the three groups with which it interacts; namely, those who work in the financial services sector, those who consume its products and Parliament.

All three groups of amendments seek to strengthen the credibility of the FSA--the creation of which we support--by enabling all those who deal with it to be confident that it will be responsive to their concerns and transparent in its dealings with them. This group of amendments deals with the overall structure of the FSA. I should like to explain what we seek to achieve before moving on to explain why we believe that the amendments achieve what we seek.

The amendments have three main purposes: first, to clarify the authority's legal status; secondly, to ensure that the authority follows best practice in terms of corporate governance; and, thirdly to provide that there is a clear division of responsibility at the head of the FSA.

We believe that the amendments are necessary because at present the FSA is simply defined in Clause 1 of the Bill as a body corporate. The model which was in the mind of the Government in drafting the Bill was that of the Bank of England with non-executive members of the authority playing the role of the Court of the Bank. The problem with that approach is that the Court is not perceived as being a powerful body and its members do not have the same status and powers as the non-executive directors of a company.

Under the Bill as it stands, members of the FSA governing body may or may not be technically board members of a company limited by guarantee which it

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is proposed will underpin the FSA. This means that there is uncertainty about the exact role and powers of the directors, particularly the non-executive directors, and that needs correcting.

Just as the role and powers of the non-executive directors are currently relatively unclear and potentially too weak, so the role of the chairman, in the absence of a chief executive, is, particularly in the longer term, potentially too powerful. This set of amendments seeks to deal with those problems.

Amendment No. 1 provides that the FSA becomes a private company under the Companies Act 1985, and Amendments Nos. 3 and 4 provide that the authority's board of directors constitute the governing body. Those amendments give the clarity and powers to the non-executive directors which we believe they need to do their job properly. Amendment No. 5 provides for a chief executive as well as a chairman, and Amendment No. 6 says that the chief executive will be called the director general. It also allows the director general and chairman to be the same person. In this group, Amendment No. 11 requires the authority to have regard to generally accepted principles of good corporate governance, and Amendment No. 16 requires that it acts in conformity with the combined code on corporate governance.

This sub-group of amendments deals both with the general desirability of the FSA following best practice in corporate governance, but it also deals with the vexed question, which occupied so much of your Lordships' Chamber in Committee, in relation to the position of the current chairman. I believe it was the majority view of the House in Committee that, were there no FSA already in existence, we would provide for both a chairman and a chief executive. But it was also the majority, if not the unanimous view of the Chamber that the credibility of the FSA had been built to date in no small measure on the widespread esteem in which the current chairman is held.

These amendments seek to square the circle by providing that there should be both a chairman and chief executive; by allowing the posts to be held by the same person; and by requiring the authority to follow the provisions of the combined code on corporate governance. The relevance of the combined code is that, while it provides for a split role at the head of the organisation to ensure a balance of power and authority, it also allows the roles to be combined. It states that,

    "a decision to combine the posts of chairman and chief executive officer in one person should be publicly justified. Whether the posts are held by different people or by the same person, there should be a strong and independent non-executive element on the board, with a recognised senior member other than the chairman to whom concerns can be conveyed".

Thus the presumption under the code is that there would be a separate chairman and chief executive, but that so long as a combined post was publicly justified and there was a strong independent element, it was possible for the two posts to be combined. We assume that, if these amendments are carried, the FSA would justify the current arrangements but that, when new

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arrangements are made, it may well decide to split the most senior roles into a chairman and chief executive model.

In Committee, the Minister argued that a corporate model and reference to the combined code was not appropriate for the FSA because it had no shareholders. That is strictly the case, but the authority actually states in its latest annual report that it follows the provisions of the combined code. If it voluntarily does so already, there should be no difficulty in enshrining the principle in the Bill.

If these amendments are incorporated into the Bill, they will be widely welcomed. They will certainly be welcomed in the City and in the financial community. They will, I hope, be welcomed by members of the Burns Committee, whose recommendation I believe they follow. They will be welcomed by Donald Cruickshank, who argued for them in his recent report on the bank industry. I believe that they will even be welcomed by many in the FSA. They should also now be welcomed by the Government. I beg to move.

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