The Parliamentary Under-Secretary of State, Department of Health (Earl Howe): My Lords, over the past 10 years, from 2001 to 2011, the number of female doctors in the National Health Service has increased by 75%. Female consultants have increased by 105%, female registrars by 288% and female GPs by 58%. The Government, in partnership with other organisations, including NHS employers, the NHS Leadership Academy and royal colleges, support good working practices, such as flexible working, job sharing and part-time working, which support the retention of female doctors.
Baroness Hollins: Is the Minister aware that part-time training in the NHS is becoming much less available because of workforce pressures and difficulties in filling hospital rotas? Now that the majority of medical students are women, does he agree that the challenge is how to support those doctors who wish to work part time, perhaps while their families are young or while they have other caring responsibilities, and then to support them to move between full-time and part-time work that makes proper use of their talents and training? I declare an interest as president of the BMA and also as someone who worked part time for seven years as a trainee doctor.
Earl Howe: My Lords, I agree with the noble Baroness. I think this is less of a problem with retention of female doctors than a problem with the career progression of female doctors, which is a serious and significant issue. The noble Baroness, Lady Deech, published a very well argued report about three years ago, and a number of worthwhile initiatives have been started as a result of that. I do think that these need greater focus with more support at a higher level. Women are in a significant minority in more senior leadership roles in the NHS, and that is a loss all round.
Baroness Cumberlege: My Lords, I declare an interest, and my interests are in the register. Does my noble friend agree that some of the brightest women in the land choose a medical career and are well equipped to take on positions of leadership? Does he also agree that they are under-represented on the boards of the new clinical commissioning groups? Can he suggest to the national Commissioning Board that it examines this issue before authorising the individual boards?
Earl Howe: My noble friend makes a very important point. There is good evidence that women doctors make safer decisions, are often better at communication than men and understand better the needs of women, and we need them to inspire the next generation of women doctors. Therefore, to fish for clinical leaders from half the talent pool is not a sensible thing to do. As for CCGs, my noble friend makes a very important point. The NHS Leadership Academy has established development opportunities, including action learning sets for female CCG leaders. But we recognise that more work is needed at a system level to aid progress in this area.
Baroness Afshar: My Lords, do we have any details about minority women in high positions in the medical profession? Many minority women, particularly Muslim women, would prefer to be seen by a woman expert if they can possibly do so, and it is a matter of regret that very often they cannot.
Earl Howe: Yes, indeed, my Lords. The noble Baroness, Lady Deech, raised that in her report as an action point. It can be done at a trust level or at a higher level in the health service. But it is certainly important to monitor-I understand that the term is "credentialing" -the skill sets of those doctors, who may move out of the health service and want to move back in again, so that jobs can be found for them more easily.
Baroness Wheeler: My Lords, I am sure the Minister will agree that recruiting women into the medical profession is just as vital as retaining them once they are trained and working. Given the high costs of university fees and the burden that these place on young people, particularly those from poorer backgrounds and those with family and caring responsibilities, how will the Government ensure that women are not put off applying to medical school?
Earl Howe: My Lords, there is no evidence that there is a problem with female recruitment into the health service. Indeed, the male-to-female gender balance over the past few years has decreased from 1.83:1 in 2001 to
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Lord Ribeiro: My Lords, I declare an interest as a member of the committee chaired by the noble Baroness, Lady Deech. In 1998, I introduced the first job-sharing scheme for female trainees in London and Essex. This involved two girls who both had children and managed to complete their training before the 48-hour week was introduced. What efforts are the Government making to encourage job-sharing and less than full-time training?
Earl Howe: My Lords, the Government fully support flexible working. We encourage organisations to take account of the recommendation made by the noble Baroness, Lady Deech, on that subject and adopt working arrangements that are amenable both to doctors who are parents and doctors who are carers.
Lord Patel: My Lords, first, I declare an interest. In my family there are four women doctors-I do not call them "girls". They are all higher achievers than I could ever be. Does the Minister agree that there are in some of the most demanding specialties more women doctors in higher positions than in some of the other specialties and that in the specialties where there are not, it is the attitude of the senior doctors-possibly even male doctors-that is the problem?
Earl Howe: I discussed this subject in my briefing with departmental officials. There are multiple and quite complex barriers to career progression, including a conflict of roles between someone's clinical responsibilities and their domestic responsibilities. There are structural barriers, as I have mentioned, in relation to part-time work, and in terms of general practice there is the sessional GP contract, which is another barrier to progression. The lack of role models is a factor and we should not overlook individual and organisational mind-sets, to which the noble Lord alluded, which result in lower personal aspiration in this area.
Baroness Northover: My Lords, conflict-affected and fragile states are the furthest from reaching the current millennium development goals. Conflict and security are also often overriding concerns for poor people. The Government recognise that a post-2015
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Lord McConnell of Glenscorrodale: My Lords, I thank the Minister for her Answer, and I understand completely the Government's commitment to this agenda. The reality is, however, that in conflict-affected and fragile states, children are twice as likely to be undernourished, babies are twice as likely to die before the age of five, and none of these states is likely to reach any of the millennium development goals by 2015. Will the Government use their position of leadership, as a co-chair of the high-level panel on the post-2015 development framework, to take responsibility for the next generation? Will they ensure that, unlike the previous millennium development goals, the next set of goals for the international community reflect the importance of justice, security and peace, without which there cannot be development in these affected states?
Baroness Northover: The noble Lord is right about how the effect of conflict wipes away development gains. He refers to the high-level panel which the UN set up; the Prime Minister is one of its co-chairs, and it met last week. Given that it is seeking to address the causes of poverty, it is acutely aware that, as he says, no fragile and conflict-affected state will reach any of the MDGs.
Lord Chidgey: Is my noble friend aware that the aid effectiveness forum in Busan launched a new deal for fragile states, to give voice to the 1.5 billion people who did not benefit and are not benefiting from the MDGs? What position is the United Kingdom taking on the new deal's five peacebuilding and state-building goals-the PSGs-which are quite separate from the MDGs?
Baroness Northover: My noble friend will be aware that my right honourable friend the previous Secretary of State for International Development was instrumental in trying to ensure that the peacebuilding and state-building goals were addressed at Busan. The current Secretary of State is taking this forward. We are very strongly in support of what was decided at Busan, and in fact, we are already taking this forward in South Sudan and Afghanistan, and are applying the principles in other countries as well.
Baroness Northover: We are at the beginning of working out how to take forward millennium development goals that will be signed up to internationally. However, I note that the UN task team that is considering what might underpin this is looking at social development, inclusive economic development, environmental sustainability, and peace and security. It is well understood that justice, fairness and security are all important in underpinning the relief of poverty.
Lord Hylton: My Lords, are non-recognised entities in the former Soviet Union and other special areas such as the Gaza Strip or ethnic minority regions of such countries as Burma and many others receiving their fair share of aid and technical assistance?
Baroness Nicholson of Winterbourne: Following the Minister's most helpful answers and given that not one of the conflict-ridden and sensitive countries has reached a single millennium goal, will the Government consider recommending to the United Nations that for those countries the single millennium goals in place now be retained rather than put something more complex in place which they would never reach?
Baroness Northover: There is a strong argument for keeping the current MDGs. They have been a great international focus and have done a great deal to relieve poverty around the world, get children into education and so on. I am somewhat sympathetic to that. However, these are to run until 2015. The important thing now is to build on the progress that has been made, carry forward the things that work well and learn some of the lessons of those MDGs: for example, universal education for children does not necessarily mean that those children in schools are actually learning something. All those things need to be addressed. However, my noble friend is right: we have to build on what has already been set in place.
Baroness Kinnock of Holyhead: My Lords, the Minister will, of course, be aware that women face disproportionate disadvantage and discrimination and that they are behind in all the development goals, especially in conflict-affected and fragile states. Will the Government call for a new post-2015 stand-alone goal on gender inequality and a specific target on violence against women and girls?
Baroness Northover: The noble Baroness is quite right about the disproportionate effect on women and girls. She will know that of the eight current MDGs, gender equality is the third and maternal health is the fifth. Given that the groups are looking at the causes of poverty and noting the disproportionate effect, as she has, I would be astonished if gender equality did not run right the way through any replacement of these MDGs.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud): My Lords, the universal credit programme remains on schedule to launch the pathfinder in April 2013 and to go live in October 2013.
Lord Touhig: I regret that I do not share the Minister's confidence in this matter but, on behalf of those who depend on benefits to survive, I sincerely hope that he will be proved right and I will be proved wrong. In Grand Committee the noble Baroness, Lady Stowell of Beeston, told me that,
and confirmed that the Government intend people to claim this benefit online. However, work carried out by the noble Baroness, Lady Grey-Thompson, indicates that 8 million people in this country do not have access to a computer, and that of those, 3.9 million are disabled. What proposals do the Government have to ensure that people who are disabled and do not have access to a computer will be able to claim universal credit?
Lord Freud: My Lords, we did a survey on our complete claimant base and found, somewhat to our surprise, that 78% of them were already online, and, indeed, that 41% of them used online banking. Our target when we start next year is to have 50% of people going online, with others going to our other channels which support the online process. We plan to have a support and exceptions process to help the people who need support in getting their universal credit.
Baroness Sherlock: My Lords, is the Minister aware of the recent report of the Joseph Rowntree Foundation which showed that it will be very difficult for people to claim online because only 20% of people now do so and only 40% are ready and able? What will the Government do if people do not feel able to claim online? How far and for how long are the Government willing to extend paper applications to those who struggle?
Lord Freud: My Lords, I should make clear that we are not entertaining paper applications. We are looking at either face-to-face or telephone support groups. We have looked at pushing JSA online and the figures have gone up from 16% in September last year to 39% this September. We are moving people very rapidly to the online route.
The Countess of Mar: My Lords, the banks have shown us that computer systems are not infallible. Can the Minister tell the House what provision there is for back-up in case something goes wrong? These people are very vulnerable and cannot do without money for a long time.
Lord Freud: My Lords, we have a very substantial contingency prepared if, for instance, a disaster takes down our data centre-we have two data centres for that reason-and particularly if we have a cyberattack.
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Lord Stoneham of Droxford: Can the Minister confirm that the Treasury is giving the fullest possible co-operation to his department on the computerisation of the universal credit system? In particular, are employers being sufficiently geared up to provide monthly pay information on their employees?
Lord Freud: My Lords, I am happy to confirm that the Treasury is whole-heartedly in support of this radical transformation of our welfare system. Part of the system relies on real time information through HMRC networks, and HMRC is driving ahead with a series of expanding pathfinders. It currently has 2 million employees or pensioners on the system today and is ramping it up into April and October next year.
"Moving to real-time information (RTI) reporting in which employers send payroll information to HMRC on or before every payday instead of after the end of the tax year is an enormous change. In the main, the larger employers are putting plans in place, or at least thinking about it. But many small and medium-sized businesses are likely to be blissfully unaware of this radical change".
Lord Freud: My Lords, there is naturally a programme to get employers on board. HMRC has launched a major campaign-for instance, writing to 1.4 million employers so that they are ready in time. Even in the KPMG report, 75% of employers were aware of the change over and that was before this campaign got going.
Baroness Armstrong of Hill Top: Is the Minister content that people currently being moved from one benefit to another frequently have to wait three, four or more weeks because the system cannot cope? How is that meant to give us confidence in what the Minister and the department are proposing for next year?
Lord Freud: The noble Baroness is absolutely right on this particular problem. It is one of the reasons we are sweeping away the existing system-it is simply too complicated for people to operate. The real difference in the new welfare system is that we do not have a distinction between out-of-work benefits and in-work tax credits. You do not have to jump from one system to the other when you move category. You stay on the same system and do not have to suffer awful delays.
Baroness Browning: Will my noble friend confirm that people claiming disability benefits will be reassured that when the Government calculate the minimum amount they need to live on, the cost of maintaining a computer and purchasing internet access will now be part of that computation?
Lord Freud: My Lords, that is not how the benefits system is built up. It is not, and has not been ever under any Government, built up on the basis of needs. It is based on a particular set of payments for people in different categories. That will continue. In fact, under universal credit the gross amount for people who are unemployed will remain more or less unchanged as a direct result. Clearly people can get access to computers. They do not necessarily have to have them at home.
Lord Bach: My Lords, does the Minister accept that when universal credit comes in, an enormous number of wrong decisions are bound to be made? Is he aware that just when universal credit comes in, legal aid for legal help with benefit law will just have been abolished? Are those two facts merely coincidental, or is it a calculated act of policy, whose aim is to punish the vulnerable and the poorest?
Lord Freud: My Lords, when you turn what can be 200 pages of applications for the current suite of benefits into one very much more simplified system, clearly you will dramatically reduce the number of errors that people will make. I therefore think that the complaint is about the existing system and not about the system we are planning.
To ask Her Majesty's Government how they will respond to the view expressed by the Equality and Human Rights Commission that the proposals in the Justice and Security Bill [HL] regarding closed material procedures are incompatible with the Human Rights Act 1998.
The Advocate-General for Scotland (Lord Wallace of Tankerness): My Lords, Her Majesty's Government disagree with the EHRC's analysis. Case law shows that closed material proceedings can occur compatibly with the right to a fair trial in Article 6 and the other rights contained in the convention. CMPs are explicitly made subject to Article 6 in the Bill. The UK Supreme Court affirmed as recently as last year in the case of Tariq that a procedure involving CMPs was compatible with Article 6 of the European Convention on Human Rights.
Lord Clinton-Davis: The proposals regarding CMPs are controversial and difficult, are they not? How do the Government now propose, as they must, to deal with the powerful criticism of the Equality and Human Rights Commission and others that CMPs are incompatible with a fair trial, in breach of Article 6 of the European Convention on Human Rights and fail to define clearly the national security concerns which are claimed to lie at the heart of the Government's proposals? Are we too late to intervene and discuss the position with this body?
Lord Wallace of Tankerness: My Lords, I certainly agree with the noble Lord that these proposals are controversial, difficult and complex. Indeed, they have already been the subject of much debate in your Lordships' House. As I indicated, the Government believe that they are compatible with Article 6. Upon introduction of the Bill, I signed a statement that its provisions are compatible, and the Government have published their own summary of the human rights issues in the Bill, which we gave to the Joint Committee on Human Rights and which has been published. The definition of national security was debated in your Lordships' House in Committee, and there are many reasons as to why national security is not defined in many statutes. The noble Lord asked if there will be a further opportunity for discussion. Indeed, there will be such an opportunity because the future business set down for the House indicates that the Report stage will be held on the 19th and 21st of this month. I anticipate some informed and robust discussions during those debates.
Lord Marks of Henley-on-Thames: My Lords, my noble and learned friend the Advocate-General will no doubt agree that the opinion of John Howell QC obtained by the commission needs to be taken seriously. Have the Government yet had time to consider how far amendment of the Bill might address the thrust of the criticisms he advances-in particular, by ensuring that its impact is strictly limited to material that would otherwise be subject to public interest immunity and to cases where otherwise no trial at all would be possible, and by giving claimants as well as the Government the right to have such material considered by a court, with the assistance of a special advocate?
Lord Wallace of Tankerness: My Lords, I can certainly assure my noble friend that the Government give serious attention to representations from the Equality and Human Rights Commission and to this particular opinion, as I have indicated. There is a good response to the two key concerns that have been raised. It is the Secretary of State who applies for the CMP, but it is nevertheless the courts which decide whether to grant a declaration and, thereafter, which material will be heard in closed proceedings. With regard to criticism of the standard of gisting, we believe, as we said in Committee, that following the judgment in the Tariq case the Supreme Court found that the requirement of fairness can vary from case to case. The Bill states that closed material proceedings must comply with Article 6, when it applies, and we leave it to the courts to decide what Article 6 requires in any case. I am grateful for the constructive proposal of my noble friend. He will be aware that as well as considering seriously the opinion of the ECHRC, we will also consider the comments made in Committee, and I think we will receive before Report stage the report from the Joint Committee on Human Rights. I certainly look forward to giving that the consideration it deserves.
Lord Wallace of Tankerness: My Lords, again the issues regarding public interest immunity have been well aired and were referred to by my noble friend Lord Marks. I am sure that we will return to this on Report. The concern expressed during our earlier debates was that if PII is successfully asserted by the Secretary of State, that material in respect of which PII is successfully claimed has no part to play-it is not admitted to the proceedings. The Government's concern is that there may well be situations where the Government have an answer to serious allegations made against them but, under the PII system alone, they are not able to bring that material before a judge. We believe that it is better if it is before a judge, subject of course to the proper safeguards in this Bill.
Lord Campbell of Alloway: My Lords, I support what my noble friend has said, having appeared before that court on more than one occasion and set up my own chambers in Brussels, and having had an interest there. However that interest was always in our country, which predominated over that of the interest of Europe.
Baroness Oppenheim-Barnes: My Lords, for many years I have been deeply concerned about all the issues that these regulations deal with. Unfortunately, I was not able to attend the Committee, but I read the reports and in particular the careful Explanatory Note that went with the regulations. I pay tribute to the Government for the work that they have done in a difficult and emotive, although narrow, field. We cannot have a full answer, but they have given us something which I believe to be very acceptable.
The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach): My Lords, with the leave of the House, I will repeat a Statement made earlier today in another place by my right honourable friend the Home Secretary. It is as follows:
"Mr Speaker, with permission I would like to make a Statement on historic allegations of child abuse in the North Wales Police force area. In 1991, North Wales Police conducted an investigation into allegations that, throughout the 1970s and 1980s, children in homes that were managed and supervised by Clwyd County Council were sexually and physically abused. The result of the police investigation was eight prosecutions and seven convictions of former care workers. Despite the investigation and convictions, it was widely believed that the abuse was in fact on a far greater scale. But a report produced by Clwyd Council's own inquiry was never published because so much of its content was considered by lawyers to be defamatory.
In 1995, the then Secretary of States for Wales, my right honourable friend the Member for Wokingham, appointed a QC to examine all the relevant documents and recommend whether there should be a public inquiry. The recommendation was that there should be not a public inquiry but an examination of the work of private care homes and the social service departments in Gwynedd and Clwyd councils.
This work revealed not only shortcomings in the protection of vulnerable children, but that the shortcomings had persisted even after the police investigation and subsequent prosecutions. In 1996, my right honourable friend the Foreign Secretary, then the new Secretary of State for Wales, therefore invited Sir Ronald Waterhouse to lead an inquiry into the abuse of children in care in the Gwynedd and Clwyd council areas.
The Waterhouse inquiry sat for 203 days and heard evidence from more than 650 people. Statements made to the inquiry named more than 80 people as child abusers, many of whom were care workers or teachers. In 2000, the inquiry's report, Lost in Care, made 72 recommendations for changes to the way in which children in care were protected by councils, social services and the police; and, following the report's publication, 140 compensation claims were settled on behalf of victims. But the report found no evidence of a paedophile ring beyond the care system, which was the basis of the rumours that followed the original police investigation, and indeed one of the allegations that has been made in the past week.
Last Friday, a victim of sexual abuse at one of the homes named in the report, Mr Steve Messham, alleged that the inquiry did not look at abuse outside the care homes, and renewed allegations against the police and several individuals. The Government are treating these allegations with the utmost seriousness. Child abuse is a hateful, abhorrent and disgusting crime, and we must not allow these allegations to go unanswered. I therefore urge anybody who has information relating to these allegations to go to the police.
I can tell the House that Mark Polin, the chief constable of North Wales Police, has invited Keith Bristow, the director-general of the National Crime Agency, to assess the allegations recently received, to review the historic police investigations and to investigate any fresh allegations reported to the police into the alleged historic abuse in north Wales care homes. He will lead a team of officers from the Serious and Organised Crime Agency, and other investigative assets as necessary, and the Child Exploitation and Online Protection Centre will act as the single point of contact for fresh referrals relating to historic abuse in north Wales care homes. He will produce an initial report reviewing the historic investigations and any fresh allegations by April 2013. I have made it clear to Mark Polin and to Keith Bristow that the Home Office is ready to assist with the additional costs of this work.
In addition, as the Prime Minister said yesterday, the Government will ask a senior independent figure to lead an urgent investigation into whether the Waterhouse inquiry was properly constituted and did its job. Given the seriousness of the allegations, we will make sure that this work is completed urgently.
Given that there have also been serious allegations about other historic child sex offences, I should also inform the House of the work being conducted by Her Majesty's Inspectorate of Constabulary. This will establish a full picture of all forces that have received allegations in relation to Jimmy Savile, examine whether the allegations were investigated properly, and identify wider lessons from the responses of the police forces involved. I have been assured by HMIC that its work will also take into account any lessons that emerge from these latest allegations.
Before I conclude, I would like to warn honourable Members that if they plan to use parliamentary privilege to name any suspects, they risk jeopardising any future trial and therefore the possibility of justice for the victims that I believe the whole House wants to see.
I believe that the whole House will also be united in sending this message to victims of child abuse. If you have suffered and you go to the police about what you have been through, those of us in positions of authority and responsibility will not shirk our duty to support you. We must do everything in our power to do everything we can to help you, and everything we can to get to the bottom of these terrible allegations. I commend this Statement to the House".
Baroness Smith of Basildon: My Lords, I am grateful to the Minister for repeating the Statement today because for the past few weeks we have reacted with increasing horror as new details of historic allegations of sexual abuse of children and young people have emerged. Your Lordships' House will emphatically agree with the noble Lord that these are deeply disturbing allegations. It is not only that the crime itself is so despicable and that many young people's lives have been deeply affected and in some cases destroyed. It is not just that the very adults who have abused children and young people seem to have enjoyed the protection offered by positions of trust and fame. The most evil
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But I remain to be convinced that this is the most appropriate way forward given what could be the scale of the problem. The whole House will welcome the Government's Statement that all allegations must be treated with the utmost seriousness. As the noble Lord said, child abuse is a hateful, abhorrent and disgusting crime. We would concur that anyone who has information must go to the police.
As my right honourable friend Yvette Cooper, the shadow Home Secretary, has said, we need to have a full criminal investigation and we also need to examine what further changes are needed in the way in which we protect children and investigate abuse. But we also need to know whether there has been institutional failure to deal with historic allegations, whether by turning a blind eye, by covering up, or by simply failing to get to the bottom of what has happened.
For any child or young person to report physical or sexual abuse takes an enormous degree of courage. Any and every abused child or young person has the right to expect that the authorities will take them seriously, believe them and take action to protect them and deal with the abuser. That is why we must examine whether there is a further, deeper problem, whether in north Wales, in the cases involving Jimmy Savile and the BBC, or in those of grooming and sexual abuse in Rochdale and Rotherham. If children and young people who have been physically and sexually abused have reported their abuse and the authorities have failed to believe them, or even worse have believed them but then failed to act, that is truly shocking. Those who have failed to investigate or have sought to protect abusers or cover up abuse are equally guilty.
Given the scale of this issue, it has become evident that we cannot look at the allegations in north Wales in isolation. I hope that the noble Lord will understand when I express concern that the Government's response will not address the wider concerns and seek assurances from the Minister.
I welcome the new criminal investigation into the allegations in north Wales. In particular, I very much welcome the involvement of the Child Exploitation and Online Protection Centre, which has considerable expertise. But can the Minister confirm that the inquiry can go wherever the evidence takes it and will not be confined to north Wales?
Also, the Minister may be aware from our debate on the Crime and Courts Bill with his predecessor and the Parliamentary Questions that I have asked on this issue that I remain concerned that the transition to the new National Crime Agency may leave the organisation underfunded. I have raised this now on several occasions. Will the Minister confirm that these investigations will not in any way be hampered by a lack of funding?
Does the Minister understand the widespread concerns about there being so many inquiries? I am aware that these have grown rather than being planned in this way, but in addition to the police investigations there are three BBC inquiries into Savile, a Department of Health investigation into Savile's Broadmoor appointment and several individual hospital inquiries. There is the CPS inquiry into why Savile was not prosecuted; there is the new north Wales inquiry; there is the HMIC inquiry into other forces that may have received information about Jimmy Savile; and there are others.
The Minister will be aware that we have already called for all the Savile inquiries to be held together. Is there not a strong case for a single, overarching, robust inquiry, not just about the abuse itself but also about whether individuals or groups used positions of influence-either their own or that of friends-to evade criminal prosecution? Of course we need to get to the bottom of what happened in each and every case but we also need to see if there are common themes and problems to prevent them happening again. There is a genuine concern that too many individual and specific inquiries is not the proper way to learn the right lessons for effectively and properly safeguarding children and young people. Time and again, evidence of serious institutional failures is presented; a single overarching inquiry into whether these allegations were ignored, or if there was a cover-up to protect abusers from public exposure and prosecution, is now essential.
The Waterhouse report led to, I believe, 72 recommendations and significant changes in child protection. The Children's Commissioner was introduced, there is the Care Standards Act and the child protection Act, and we saw a strengthening of the law in introducing new measures and policies on safeguarding children and young people in schools and in social services. We saw the creation of the Child Exploitation Online Protection Centre, but yet again we are now presented with evidence that children and young people who came forward to report abuse were not taken seriously. We know that abuse was ignored for far too long against girls and young women in Rochdale and that concerns raised in Rotherham were not acted upon.
The Minister may be aware of previous debates we had with his predecessor about our concerns on the weakening of the vetting and barring system, our concerns about the changes to CEOP as it was merged into the new National Crime Agency, and our concerns about the funding of the new National Crime Agency. PCTs have warned that child safeguarding has been jeopardised by confusion and transitional arrangements in NHS reforms. Is the Minister confident that the fragmented inquiries announced today will give a clear picture of the action that is needed to really protect children from abuse in the future?
It demands enormous courage for a child or young person to speak out and report sexual or physical abuse; if they are not believed or if their reports are not acted on, it only compounds that abuse. I believe the Minister and your Lordships' House are united in the objective of wanting the most effective and robust inquiry possible for lessons to be learned and for actions that will really make a difference, because only then can we truly provide justice to those who have suffered.
Lord Taylor of Holbeach: I thank the noble Baroness, Lady Smith, for her response to the grave Statement that we have had to make to the House today and for her general welcome for the way in which the Government are responding promptly to the issue. I agree with her that perhaps the most serious issue is whether there has been institutional blindness, if one can put it like that. I absolutely agree that this must be the key to the agenda going forward in order to make sure that the interests of victims are properly recognised, that the police prosecute without fear or favour, and that justice is seen to be done.
The noble Baroness asked whether there would be restrictions on these investigations. Police investigations are police investigations and they go wherever the evidence takes them. She asked, too, about the funding. The Government understand that there will be resource pressures because these investigations will involve all of the authorities engaged in them in additional work. The Home Office will encourage those organisations to apply to it so that any extra additional costs can be considered as part of the funding provided to them by the Home Office.
The thrust of the noble Baroness's questions was whether it would be better to wait and set up an overarching inquiry in order that the lessons may be learnt. I do not believe that that is the right approach. I believe that these allegations demand immediate investigations. The lessons that will be learnt by these investigations may well require a comprehensive review of child protection in this country-that is a reasonable conclusion to come to-but I do not believe that the House would thank us if we stood by and delayed the investigations involved. I hope that I have the support of the noble Baroness in that. If I have misunderstood the noble Baroness, I apologise. I think the Government are on the right track here and doing what the House would wish of them.
On the question of organisational change and whether it will impede or assist these investigations, as the noble Baroness said, this issue has been debated over time and in all ways. All I can say is that Keith Bristow will be heading up an organisation which has considerable resources available to it through the National Crime Agency. These bodies will be there to do their task, to assist him to achieve our objective of better child protection for all young people.
Baroness Stowell of Beeston: My Lords, perhaps I may assist the many noble Lords who I am sure will want to contribute today by reminding them that the
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Baroness Hamwee: My Lords, one area which has not been mentioned in the Statement is support for the victims. Justice will be one form of reparation, but can the Minister say anything about any other form of support that will be given to individuals?
can the Minister assure the House that for every inquiry-I am not talking only about police inquiries-there will be consultation as to its terms so that the best, most proper terms are put in place? If the remit is not right then the outcome will tend not to be right. In this case, for instance, the involvement of the Children's Commissioner in the terms of the inquiry seems quite obvious.
Lord Taylor of Holbeach: I thank my noble friend for her questions. Clearly, the victims are at the heart of this inquiry and providing them with the confidence to come forward is one of the most important things that we can do. I hope that we in this House will echo the wishes of the Home Secretary by giving that support.
The terms of reference of inquiries are very important to the outcomes they produce. I am particularly concerned that we make sure that the original inquiry in North Wales, the Waterhouse inquiry, was indeed set up in such a way. The noble Baroness, Lady Smith, asked about that but I did not reply to her. However, my noble friend has given me the opportunity to do so. We must make sure that that inquiry addressed the right issues. We now have an opportunity to revisit the inquiry and to make sure that it was not too restrictive in what it was seeking to do.
Lord Lloyd of Berwick: My Lords, am I right in thinking that Mr Justice Waterhouse was appointed to investigate allegations of abuse within the care system but he in fact investigated allegations of abuse outside the care system? We know that he sat for 203 days and found no evidence at all to support those allegations. Should that not have been an end to the matter? I do not know whether the noble Lord is aware of the principle that there should be an end to litigation; so also there should be a principle that there should be an end to investigations.
Lord Taylor of Holbeach: Were it so easy just to put an end to these things, that would be fine, but we are faced with a situation where it is quite clear that this matter was not at an end. Allegations are still being made that should cause a responsible Government to be prepared to revisit the matter. That is not to cast aspersions on the work that was done at the time, but everybody would expect us to look again to make sure that we know exactly what the scope of child abuse was in those very far-off days.
Lord Roberts of Conwy: My Lords, I have a copy of Lost in Care, the late Sir Ronald Waterhouse's report-all 937 pages of it. It is a very thorough piece of work, as one would have expected from a High Court judge. The terms of reference are spelled out in this report, as is an explanation of why he ordered that names should not be published, largely for the protection of the victims, as in rape cases. Does my noble friend really think that, after all these years, any new evidence will actually emerge as a result of these further inquiries? I have heard most of the media reports over recent days and, frankly, I have heard nothing new. There is also the further point that the report contains a subsidiary report by Sir Ronald Hadfield, the assessor of the police activity in this context. His report comes right at the very end of the Waterhouse report and is critical of some of the police operations.
Lord Taylor of Holbeach: I am very pleased that my noble friend has made that contribution to the debate. If I disagree with him, it is not because I do not respect his experience and the fact that he was active in politics in that part of the country at the time when this report was being produced. He has a copy and has no doubt studied it. However, if I thought that nothing more was going to come out of this further investigation, all I would say is, "Fine. That is very good". If there is nothing more to be found, we can rest content that the matter is indeed closed. However, if we find that there is other material, we should know of it. We are right to seek to pursue this matter even though many of the individuals involved may long ago have disappeared.
Lord Campbell-Savours: My Lords, on 17 June 1996 I asked the then Secretary of State, Mr Hague, whether all the cases that have been referred to in the appendices to the Jillings report had led to prosecutions. I was told that that was not the case, and that there were names which were still outstanding. Can we be assured that, as a result of what the Government are planning, those outstanding names will be reconsidered with a view to prosecution if at all possible?
The Earl of Listowel: My Lords, does the Minister agree that it will be a considerable comfort to those children who were abused in the past to know that children are not abused in this way in the care system today? However, he will know that it is unfortunately still the case that children are being abused; the deputy Children's Commissioner's report finds that thousands of children are still being abused and sexually exploited today. Does he hope that this report might contribute to the swell of public feeling to say that we will do better for these children in care, ensure that their staff have the qualifications they need to give the excellent care and protection that these children need and change legislation to ensure that these occurrences will not take place so frequently?
Lord Taylor of Holbeach: The whole House will be awaiting the results of the inquiry from Sue Berelowitz which is likely to come out later this month. However the
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Baroness Walmsley: My Lords, following on from what the noble Earl has just asked, will the reports that the Minister has just announced be free to make recommendations to public services and organisations? It seems likely that recommendations will be made to social services, the criminal justice system and the police. Health services, such as STD clinics where young girls go over and over again, are very often in a position to pick up warning signs, which they do not always pass on. This has recently come out in the report referred to by the Children's Commissioner. Similarly, in the education service, schools can help to prepare children to understand the dangers and to protect themselves.
Lord Taylor of Holbeach: My noble friend is absolutely right. A multi-agency approach is the way in which this issue needs to be addressed across government. She quite rightly points to the fact that different aspects of government are able to assist in this process. It is certainly the Government's objective to have a cross-departmental, cross-agency approach in order to make sure that the information that we have gained through these unfortunate events, and the public attention which has been drawn to the exposure of the Jimmy Savile case, can be properly addressed so that we can create a better place for young people in this country.
Lord Touhig: My Lords, I apologise to the Minister and the House. I had to absent myself from the Chamber for the first couple of minutes of the Minister's Statement, but I did hear it in full in the other place. I have one question for the Minister. Clwyd County Council carried out an inquiry and produced its own report which was never made public, for legal reasons I believe. Can the Minister tell us whether the new inquiry will have access to examine this report?
Lord Bates: I commend my noble friend on the report that he has brought forward. The noble Baroness, Lady Smith, touched on the potential dangers of having multiple inquiries going on at the same time. Will my noble friend reflect on the possibility of consulting the right reverend Prelate the Bishop of Liverpool on the best way forward, the Lord Bishop having delivered a widely respected and thorough investigation into highly complex issues, illuminating a great tragedy and bringing out truth that previous investigations had failed to do?
Lord Taylor of Holbeach: As someone who holds the right reverend Prelate the Bishop of Liverpool in the highest possible regard, I would always be happy
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Lord Rowe-Beddoe: My Lords, I express and share the concerns of the noble Baroness, Lady Smith, the noble Lord, Lord Roberts, and indeed the noble and learned Lord, about the characterisation in the Statement about whether the inquiry led by the distinguished jurist and High Court judge was properly constituted and did its job. There is already a commingling in the media between that aspect and new evidence that is contained further on in the Home Secretary's Statement. For the benefit of people involved here, we should seek further clarity.
Lord Taylor of Holbeach: I have tried to provide a proper balance between my regard for the way in which the original report was undertaken by Sir Ronald Waterhouse and what we are seeking to achieve today. We would be wrong to ignore the terms under which that inquiry was held. It has much to contribute to discovering what went on in the light of the allegations being made today. We would be mistaken if we chose to preserve that inquiry in aspic and say that it did not have lessons to teach us about how to investigate these matters today.
Lord Harris of Haringey: My Lords, I am sure that we all welcome the fact that there is to be a new police inquiry into these matters, but I would be grateful for the Minister's explanation of the thinking behind this being led by Keith Bristow, who is heading up the new National Crime Agency. I have enormous faith in Keith Bristow himself. However, given that the Serious Organised Crime Agency and the yet-to-be-created National Crime Agency are going through a period of enormous flux and confusion while this happens, and the job of the chief executive of an agency that is being set up is usually pretty highly committed to setting up that agency, how will it be possible for him to lead the sort of inquiry that all noble Lords have said they want-very thorough, potentially extremely lengthy and potentially extremely involved? In practice, where will the resources come from? I am not talking about the money but the individual officers. Who is going to co-ordinate that? How is that going to be practically done when the person you are asking to lead the inquiry is supposed to have a more than full-time job setting up a new government agency?
Lord Taylor of Holbeach: I remind the noble Lord that the Statement made it quite clear that it was the chief constable of North Wales Police, Mark Polin, who actually requested Keith Bristow to head up this investigation, and to do so using the resources that are available to him through SOCA and other assets that are available for serious investigations. Indeed, we will face a new world with the National Crime Agency, but that still has to come before your Lordships' House and I would not presume on that. This is a recognition
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Baroness Uddin: My Lords, I declare my interest as a former child protection worker. Will the inquiry say why 80 people were named in the inquiry, but only eight prosecutions took place and seven convictions were made? It would be interesting to know what the Minister intends to do, not just in supporting and listening to those victims and survivors who are coming forward, but in terms of long-term support, which is critical. If I may echo what my noble friend Lady Smith said, this is a great opportunity to look generally at the level of abuse in different institutions. As the noble Earl also said, this is rampant and still the experience of hundreds and thousands of young people whom we are continuing to fail.
Lord Taylor of Holbeach: I thank the noble Baroness for her contribution, particularly as she speaks from direct experience as a child protection officer. I said earlier that the police will prosecute without fear or favour. The reason why these matters are being reopened is to make sure that the judgments that were made at that time were correct. Further information that the investigations uncover will, I suspect, lead to other prosecutions being brought; certainly, they should do if the investigations discover further evidence of child abuse. I hope that that will be one of the consequences.
A second consequence, to which the noble Baroness alluded, is support for victims. The Government are mindful of the fact that it is victims of crime who need support and we intend to implement policies to provide exactly that.
The Commercial Secretary to the Treasury (Lord Sassoon): My Lords, this group of government amendments comprises two straightforward technical concessions, which I signalled in Committee. The first, government Amendment 20, responds to an amendment moved by my noble friend Lady Kramer in Committee. This helpfully highlighted that the legislation does not expressly prohibit the Chancellor from appointing the governor, or one of the deputy governors, of the Bank to be chair or deputy chair of court. As I assured my noble friend at the time, the policy intention-indeed long-standing practice-has always been for non-executives to play these crucial roles. However, Amendment 20 puts this
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The other amendments in the group deal with the terminology around the Court of Directors. In Committee, various noble Lords, including my noble friend Lord Philips of Sudbury and the noble Lord, Lord Burns, commented on the oddity of the Court of Directors being comprised of directors, which refers to the non-executive members only, and the executive members, who are not classified as directors at all. I make a commitment to go away and look at options for clarifying this, and the amendments in this group are the result. The amendments would change all references to "director" to "non-executive director". This means that all the members of court are now directors, with the legislation distinguishing clearly between non-executive and executive directors. As I have said, these are straightforward concessionary amendments, which usefully tidy up the court arrangements, and I hope that the House will support them. I beg to move.
Lord Eatwell: My Lords, I congratulate the noble Lord on the improvement to the drafting of the Bill that these amendments secure. It is worth pointing out that this is not a mere clarification. A persistent feature in the development of corporate governance in this country in the past several years has been the enhancement of the role and responsibilities of non-executive directors. Clear recognition in the Bill that these are non-executives carries with it the potential for them to play a proper role in the overall oversight of the Bank, a matter which we will come on to later when we discuss the role of the oversight committee. I support the Minister's amendments.
"(2A) The Directors of the Bank of England shall only be appointed if Her Majesty is satisfied that they have the relevant knowledge and experience, and that their appointment will enhance the mix of skills and experience of the Court."
Lord Eatwell: My Lords, in Committee my noble friend Lady Hayter and I sought to ensure that the body of what we can now comfortably refer to as "non-executives" was suitably diverse to overcome the dangers of groupthink. Groupthink, combined with a persistent failure to challenge the executive, has been all too evident at the Bank of England over the past five years and, indeed, in the years preceding the economic and financial crisis.
We were criticised at the time for the imprecision of the term "diverse", which we included in our amendment in Committee. We have taken those criticisms on board. We have gone away and thought about them. In particular, we were very struck by the words of the noble Lord, Lord Sassoon, in criticising our position:
Let me reiterate the main point. Until now, those involved at the Bank in a non-executive capacity have not shown themselves capable of holding the executive to account. That is a serious failing in corporate governance. Until now, those involved in a non-executive committee at the Bank have been seduced by groupthink or overwhelmed by the power of the governor or deputy governors. This is again a serious failing in corporate governance. It is simply not good enough for the Government to say, "Well, we understand and we'll do better in future". It is simply not good enough to provide vague assurances. If we are to create a new Bank of England with new major powers and responsibilities, it should be capable of dealing with those responsibilities in a clear structured way with suitable non-executive scrutiny. That is what Amendment 2A would achieve using the words to which the noble Lord, Lord Sassoon, has already agreed.
Amendment 6A, which is also in this group, makes the same point with respect to the mix of skills on the Financial Policy Committee. Of course, the skills mix will be different on the FPC from on the court. There will be a need for more technical expertise. For example, it would be a huge mistake to rely just on people with experience of working in financial services. I notice, for example, that no one appointed to the interim FPC has done any serious economic research into the phenomenon of systemic risk-not a single one. That is exactly the phenomenon on which the FPC is supposed not merely to opine but to take action. Therefore I think that a degree of diversity in the skill set of non-executive directors appointed to the FPC will greatly enhance its effectiveness and indeed its reputation.
Lord Sassoon: Noble Lords may be aware that a similar amendment to Amendment 2A was tabled and debated in another place. Then, as now, and as I said in Committee, the Government do not believe that such a legislative provision is necessary or appropriate. Starting with the question of knowledge and experience, the Government have repeatedly confirmed their commitment, as I did in words quoted by the noble Lord, to ensuring the appointment of serious, knowledgeable and experienced candidates who have
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Even without a prescriptive legislative obligation, in order to build an effective court the Treasury is mindful of the need to seek not only an appropriate depth but breadth of skills and experience. Ministers can and do take this into account in forming their recommendation without the need to further impose a duty on Her Majesty to form a view as to the candidate's knowledge or experience before she makes the appointment.
I turn to the question of diversity, which I understand to mean not only of gender, geography or ethnic background but also of sectoral experience, insight and knowledge, as is suggested by Amendment 6A. Court and, in future, FPC appointments are advertised openly, and applications are welcomed from candidates from a variety of backgrounds. For example, the role profile for the most recent court vacancies sought people with substantial experience as board members, as head of function of major financial organisations and as senior managers in a relevant area of public policy, or in the voluntary sector or a trade union.
However, given the size of the non-executive contingent on court and the number of external members of the FPC, it would simply not be possible to prescribe a set of criteria to ensure full diversity-that is, to ensure that each and every different background and characteristic is represented on the board and committee -without severely limiting the potential field of qualified applicants. It is therefore a question of judgment.
I stand by exactly what I said in Committee, which is that the Government are committed to ensuring an appropriate breadth as well as depth of skills; and this is as true of the FPC as it is of the court. While I agree entirely with the sentiments and principles behind these amendments, I do not believe that it is necessary or appropriate to legislate to achieve these aims.
Lord Flight: Could I ask the Minister whether he feels that the arrangements as they stand, where these posts are advertised and people apply, have actually delivered the sort of Court of the Bank of England that is appropriate to the needs going forward? There has been, I believe, fair criticism of the court for not being a robust enough body, but the court is assembled by the very arrangements that the Minister is talking about.
Lord Sassoon: My Lords, the whole substance of the point here is that we are giving the court a very clear and enhanced mandate, particularly through the oversight committee, which we will come on to. In the context of the new role and mandate for the court, it will increasingly attract the very best people who go with the new mandate. The comparison with the past is not necessarily a fair one.
Lord Eatwell: The Minister in reply says that this amendment is not necessary or appropriate. However, in attempting to substantiate those propositions, he referred to the policy of the Public Appointments Committee, which is not responsible in any way for a mix of skills but simply for the quality of the individuals who come before it. When he referred to the variety of backgrounds, he did exactly the thing that I was afraid he would do: he referred to people with senior board experience in commercial and financial organisations and not to anybody who actually understands systemic risk or how to manage it. If they did, perhaps we would not have got into the mess that we did. So I am surprised-well, I suppose that I am not surprised-but I am disappointed that he finds it neither necessary nor appropriate.
Lord Eatwell: That is very helpful, and I thank the Minister for it, but my point on the FPC is reinforced by what he has just said. I would hope that in FPC appointments some reference would be made to the appropriate skill set, which was not that quoted, although it may be appropriate for the court. Perhaps if I could nudge the Treasury in that direction when making an advertisement, that might be a result. Having said that, I beg leave to withdraw the amendment.
"(2A) Within one month of the appointment of a person under subsection (2)(a), Her Majesty's Government must make parliamentary time available for the House of Commons to debate and express a view on that appointment."
Lord Eatwell: My Lords, this moves us on to a rather serious matter. Everybody in the House will be aware that there is considerable and growing disquiet about the powers heaped on the Governor of the Bank of England; he or she will chair the court, the Monetary Policy Committee, the Financial Policy Committee and the Prudential Regulatory Authority. On top of that, he or she is designated by the Bill to be the sole interlocutor between the Bank and the Treasury in the designated meetings with the Chancellor. On top of that, the governor must guide the Bank's other activities in policy and research. And on top of that, the governor will continue to represent the Bank in international fora. I suppose that just occasionally he or she will sleep.
Kate Barker has great experience in this field and seems to have captured exactly the problem. As noble Lords will be aware, there has been considerable disquiet from serious financial commentators about the future position of the governor.
There is another inevitable downside to this agglomeration of powers. The post of the governor has become-and will become yet more-excessively politicised. That is very unfortunate. However, that is the inevitable consequence of the Government's proposals. If that is the Government's wish, they should face up to the consequences, and permit Parliament to debate the appointment, at least after the appointment is made. Even then, the prospect of such a debate will focus the mind, let us say, of the Chancellor in making a recommendation, in the knowledge that he will have to defend it before the House of Commons. I beg to move.
Lord Barnett: My Lords, I strongly agree with much of what my noble friend has said. As I have said before, I have been extremely concerned about the new governor's huge job. As my noble friend has spelt out, we would be giving enormous powers to that new governor. That is why I have expressed my dissatisfaction, to put it mildly, with the way that this Bill has been drafted. I hope that my noble friend will accept an amendment from me to his amendment; namely, that it should be available not only to the House of Commons but to Parliament. This House has scrutinised this Bill to an enormous extent. To say now that the appointment should be deferred only to the House of Commons is something that I certainly do not like. I hope that my noble friend will rearrange his amendment to accept the word "Parliament" rather than "the House of Commons".
We will come later to the question of "must" and "may", but I am very pleased to see that in this amendment my noble friend has put "must" rather than "may". It is certainly crucial that it should happen,
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Lord Flight: My Lords, I do not particularly see how having a debate about the appointment after the governor has been appointed does very much to improve accountability. Ongoing accountability is needed. The debate is whether or not that should be through the Treasury Select Committee, or whether potentially there should be much greater constitutional development in terms of appearing before one or both Houses of this Parliament, in the sort of way that occurs in the USA. I agree with the principle that there is a great deal of power, which needs to have some accountability. Looking back over the events of the past five years, there was certainly a period between autumn 2007 and summer 2008 when it was very clear that the Governor of the Bank of England was completely unaware that a major banking run was overtaking this country. A bit of accountability and some questions from this House or the other place would perhaps have stirred things up.
Lord Phillips of Sudbury: My Lords, I concur with what the noble Lord, Lord Flight, has said, and I am a bit foxed by the way in which the noble Lord, Lord Eatwell, introduced this amendment. I think I heard him say that these appointments have become more and more politicised, and that he regretted that. It strikes me that to require a debate to be held in the House of Commons after the appointment has been made is an invitation to the utmost politicisation, especially because, as far as I can see, there would be no consequence to that debate, in that the appointment would already have been made.
Lord Sassoon: My Lords, before I turn to the detail of this amendment, I thank the Bill team for dealing with a significant hatful of amendments, this being the first, that turned up from the noble Lord, Lord Eatwell, rather late yesterday evening.
Lord Sassoon: I will give way in a moment. I will do my best to engage in constructive and meaningful debate. As I say, I am very grateful to the team because we did not have much notice of a number of these amendments.
Lord Eatwell: I am sure the noble Lord does not want to mislead the House. The amendments were sent to the Bill team on Friday afternoon and I had a long telephone conversation with it to discuss them. I assure the noble Lord that I had that telephone conversation. He says from a sedentary position, "not on
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Lord Sassoon: My Lords, Amendments 2B, 2C, 3L, 3M, 6B, 6G and 7F, among others-maybe that is the lot-appeared at the Treasury late yesterday and not all the amendments were discussed in the conversation to which the noble Lord refers. However, there are some important and some not so important matters in these amendments and I will do my best to do them justice.
As we have heard, this amendment relates to the role of Parliament in the appointment of the Governor of the Bank of England and has been the subject of much debate both here and in another place. Specifically, Amendment 2B seeks to secure a debate in another place following the appointment of the governor, something which I do not believe is necessary or appropriate. The Government are committed to maintaining an appointments process that is proportionate and attracts candidates of the highest quality. It is important to ensure the credibility of the candidate and safeguard his or her independence. If the appointment was subject to a debate in another place, I suggest that there is a significant risk of politicising the process and undermining the appointment of the new candidate. Of course, it has been argued that such a debate could enhance the credibility of the candidate but previous governors have achieved credibility without being subject to such a debate. Credibility ultimately stems from effective action to meet the Bank's objectives. If the appointment were subject to a debate in another place, the candidate would not be present to answer questions or defend him or herself.
I very much agree with that. Therefore, the Government believe that the pre-commencement hearing held by the Treasury Committee strikes the right balance in terms of scrutiny of this executive appointment and allows for a more constructive debate with the candidate in attendance to satisfy the committee's concerns about his or her personal integrity and professional competence. The Government welcome the Treasury Committee's ongoing role in holding such hearings and, importantly, as my noble friend Lord Flight reminded us, holding the governor to account throughout his or her tenure. I hope I have provided sufficient reassurance and that the noble Lord feels able to withdraw this amendment.
Lord Peston: I wish to make a comment and ask the Minister a question. My comment is that there are no long words in this amendment. I would have thought that the average person who had been at school could
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My question to him is: if this debate took place in both your Lordships' House and the other place, has it not occurred to him that that debate might be devoted mainly to saying what an excellent appointment has been made in this case, what an extremely good person has been chosen and wishing him well in his very arduous task? Why is the Minister taking it for granted that the debate would be mostly about slagging off whoever the appointed person may be?
Lord Sassoon: My Lords, I am not taking it for granted. I am merely quoting the fears of the noble Lord, Lord Eatwell, when he addressed this issue in Committee. "Inevitably be whipped and become very political indeed," were his words, not mine. However, I agree that this is the way that these things tend to go. The concept of a congratulatory first is not one that sits easily with another place.
Lord Eatwell: My Lords, I am grateful for the comments that have been made-some accurate, some less so. First, with respect to the issue of being politicised, my concern is motivated primarily by the powers being translated from elected persons to an unelected person. That is what is happening in this Bill. This will inevitably make the position of the governor much more of a political focus rather than the markets and technical focus it has been very much in the past-perhaps not in the 1930s with Montagu Norman, but in recent years. That is where the politicisation has come from. We need to recognise that powers have been transferred from the elected to the unelected by giving the elected some role.
The Minister did me the honour of quoting me, although of course out of context. I was referring-as I am sure he would agree-to pre-appointment hearings as are common in the United States. This is not the intention of this amendment at all. However, a series of important issues is going to come up again and again unless the Government take very seriously the very considerable conglomeration of powers in the hands of the governor, given by this Bill, and the fact that powers are being moved from the elected to the unelected. It is vital that Parliament should consider this crucial issue. I hope that the Minister will take some of these considerations away and think very carefully about them. In the mean time, I beg leave to withdraw the amendment.
Lord Eatwell: My Lords, the noble Lord, Lord Sassoon, has made it clear today that the non-executives will play a major role in the governance of the Bank. This amendment seeks to ensure that non-executives, essentially here in the court, are appointed with the consent of the Treasury Select Committee. The point is being reiterated. Given the powers invested in the Bank, including and especially the FPC powers that have previously rested only with the Chancellor or other elected persons, it is appropriate that there should be some political oversight of the appointments. The Treasury Committee is surely the right place.
What are the major arguments against this pre-appointment scrutiny? First, that the procedure will be unduly intrusive and onerous; and, secondly, that it will be too politicised. As a result, suitable persons will not apply. I think that the arguments in the context of what is being done in this Bill are ill founded. The Government decided to politicise the position of the Bank by giving it powers previously reserved for elected persons. The Government decided to load on to the Bank virtually all regulatory functions and control of monetary and credit policy. In this context, the Government should accept that the Treasury Committee's scrutiny is entirely appropriate. Let us remember that that committee has played a serious non-partisan role for a number of years, both when chaired by my noble friend Lord McFall and now, as chaired by Mr Tyrie. The committee does an excellent, non-partisan, technical and difficult job. In that context, it could play an important role in monitoring those persons to whom the powers previously assigned to elected persons are now to be given.
While Amendment 2C relates to the non-executive directors of the Bank, Amendment 6B in the group extends the same principle to the independent members of the Financial Policy Committee. If anything, the point is even stronger here, because these are people who will be participating in decisions that directly affect individuals' lives. The members of that committee will be making decisions about your mortgage rate and the availability of credit in general to individuals in society. It is therefore surely right that appointments should be subject to the consent of the political part of national governance, as represented by the Treasury Select Committee, which is handing over these powers.
Sometimes, we in Britain are a bit overly sensitive about appointments procedures. I remember that university appointments used to be totally confidential to appointments committees. Now appointees have to appear before the whole faculty and the students, give lectures to demonstrate how good they would be and defend themselves.
Lord Eatwell: Yes, it is true. They have to do that prior to any form of appointment. Therefore, the sort of sensitivity I mentioned is overdone. Greater transparency and more robust procedures would serve us well. Most important of all, there must not be an abdication of powers that in the past were reserved to elected persons without some substitution of proper political oversight, as provided for in Amendments 2C and 6B. I beg to move.
Lord McFall of Alcluith: My Lords, I agree with my noble friend on this issue. Anyone with experience of the Court of the Bank of England would say that its impact has been less than useful over past years. Given the powers that we have given to this Governor for an eight-year period, it is important that the sentiments expressed in the other place as regards accountability are satisfied, because, paradoxically, if that is not the case, it will make the role of the Governor even more political and members of the court will come under pressure.
I had personal knowledge of this during the height of the financial crisis. My concern at that time was to ensure both the political and the financial stability of the situation. It is therefore important that that is adhered to. There needs to be, as the Treasury Committee said, proper records of the court's proceedings. If transparency is not available, the accountability element will not be pursued. The Government are making a big mistake by establishing what is, in effect-although some people may disagree-is a multinational corporation with one person at its head, with little corporate governance best practice.
There needs to be a stage at which the Government can listen to Parliament on this, make the Bank truly accountable to Parliament and ensure the best outcome for the country. We have the Financial Policy Committee and the Prudential Regulation Authority, but there is no doubt that there will be conflicts of interest there. There will be one individual responsible, while the Government and Parliament are spectators and bit players. That should not be the case, and the Government really need to think very clearly and seriously about this issue.
Baroness Noakes: My Lords, as a former member of the court, I feel slightly under attack this afternoon, but I was long gone before the financial crisis. In the context of the previous amendment, my noble friend Lord Flight pointed out that the important way to express accountability is on an ongoing basis, not at the point of appointment. The most important thing, going forward, is whether or not the new oversight committee will do its job and who will make sure that it is held to account. It seems to me that it should be the Treasury Select Committee in another place and it is not something for which we need to legislate. The Treasury Select Committee is well apprised of the need to ensure that there are proper accountability mechanisms to act as a counterweight against significant additional powers for the Governor of the Bank of England; and that there are proper checks and balances within the Bank of England and then from the Bank to Parliament.
Lord Sassoon: My Lords, I am grateful to the noble Lord, Lord McFall of Alcluith, and to my noble friend Lady Noakes. My noble friend was an estimable member of the court and I am sure that she brought great distinction to its deliberations. As she reminds the House by referring to the oversight committee, the noble Lord, Lord McFall is right to say that the court has not always necessarily done everything that Members of Parliament would have wished in recent years. Critically, that is why the oversight committee that we
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Powers are not somehow being moved from elected politicians to the Bank. The Bank is being granted a range of powers which are regulatory in nature. Financial regulation has been undertaken by independent regulators for over a decade in the UK and before that, of course, large swathes of it were not in any way carried out by elected politicians or even properly constituted regulators. They were done in a self-regulatory way. So this idea that somehow we are transferring stuff from politicians to the Bank, as if some heinous crime was being committed and that we need lots of belts and braces, is the wrong background.
Let me specifically address the amendments here and the role of Parliament in key appointments. As we have heard, they are different in some respects from the previous amendment about appointing the Governor. The appointments of non-executive directors of the court are not currently subject to a pre-commencement hearing by the Treasury Select Committee. As with the Governor, the appointments of non-executive directors are made by Her Majesty and governed by the OCPA code. As I explained earlier, this stipulates certain practices in terms of a robust and fair appointment process, with appointments made principally on merit. Members of the court are accountable to Parliament and it is right that the Treasury Select Committee can and does invite them to give evidence at the appropriate juncture. However, the non-executive directors are not policymakers. Their role is to oversee the running of the Bank and it would be highly unusual to make such appointments subject to the consent of the Treasury Select Committee. The Government therefore believe that the current appointments process for non-executive directors of the court remains the right one. Similarly, the appointment of external FPC members will be subject to a robust process that seeks qualified and experienced candidates. External members of the FPC will be subject to pre-commencement hearings-as was the case with the appointees to the interim FPC. The FPC will be accountable for its actions to the Bank's oversight committee and directly to the Treasury Select Committee, which we expect to take regular evidence from the external members of the FPC, as it does already from the MPC and the interim FPC.
As with the roles of governor and external members of the MPC, the market-sensitive nature of these roles means that the combination of pre-commencement hearings and Treasury Select Committee scrutiny in-post offers an appropriate balance in terms of parliamentary scrutiny. Again, the Government welcome the ongoing role played by the Treasury Select Committee. I hope that I have provided sufficient reassurance for the noble Lord to withdraw his amendment.
Lord Eatwell: My Lords, I am grateful to everybody who took part in this short debate, and especially for the support of my noble friend Lord McFall, who has such experience in these areas. I always take very seriously indeed the opinions of the noble Baroness, Lady Noakes. I quite understand her concern that accountability should be a phenomenon that is ongoing and not just on appointment. Why not on appointment, too, so to speak?
I was puzzled by the introduction with which the noble Lord, Lord Sassoon, prefaced his remarks. He stated that financial regulation had been going on for a decade. It has been going on at an international level since 1974. The whole point of this legislation is that macroprudential legislation has not been done at all before. That is why the various reports such as the Turner review by the FSA, the report of the US Treasury in 2009, and the report of the high-level committee of the European Union led by Monsieur de Larosière, all identified a new role for financial regulation in dealing with macroeconomic variables, which it had never done before. This is a new area of financial regulation which is specifically the responsibility of the Financial Policy Committee.
The Minister said that there had been no transfer of responsibilities. Was not the control of credit in our economy the responsibility of the Treasury? Has it not been so since the Second World War? Did not the various Acts on the control of credit start as Treasury Bills? Now the availability of credit is predominantly the responsibility of the Financial Policy Committee. That is a transfer of powers. I wonder if the Minister would like to consider that example.
The Minister then said something truly extraordinary. He said that the non-executive members of the court were not policymakers. Perhaps I may refer him to Clause 4 on financial strategy, which states:
Lord Eatwell: Certainly, but that is not what the Minister said. He said that the non-executive directors were not policymakers-but they are to participate as a nine-member majority of the court, including the chair, as he pointed out. However, we now hear that they are to sit silently while the executive directors determine policy. That is nonsense and the Minister knows it. These individuals are policymakers-and rightly so; they should be. That is why we need the right sort of people, and why it is right that there should be suitable hearings preceding their appointment, as suggested by the amendment.
The Minister is getting into a muddle. He should go away and think hard about what the Financial Policy Committee is required to do, recognise that there has
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Lord Eatwell: My Lords, this is a major amendment that I had the pleasure of discussing with the Bill team on Friday. I was going to preface my remarks by saying that there is a developing consensus that the Government are piling responsibilities on the Bank of England. But I hear that consensus is not developing on the other side of this Chamber, since the noble Lord, Lord Sassoon, does not seem to recognise that the Bank and the governor are having these extra responsibilities or indeed that there has been transfer of powers.
Interestingly enough, others do recognise that. Mr Tyrie, just last week, with the oversight committee already in the Bill, referred to the Bank's defective governance. Then, Mr Bill Winters, a former executive at JP Morgan and author of one of the very tightly constrained reviews into the Bank's operations that was published last week, concluded that the Bank was too "centralised and hierarchical". Then Sir John Gieve, a former deputy governor, commented on the same review saying,
That was last week, with the oversight committee in place. Those comments echo criticisms made by a number of former senior Bank of England staff and by serious commentators in the financial press. This is a serious issue.
I have already listed the major issues, but I will list them briefly in the context of this amendment because it may help the House. With respect to the powers assigned to the governor in the Bill, the power of an unelected person will be equivalent almost to that of the Chancellor of the Exchequer. Indeed, it will exceed the Chancellor's powers in that the Chancellor is under constant scrutiny from Parliament whereas the governor is under less intense and less constant scrutiny.
We have to remember that the governor will not only chair every financial policy committee in the land with the sole exception of the FCA, but will be the lone high-level interlocutor with the Chancellor. He holds these positions while having no statutory responsibility to consult or involve other senior officials
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In Committee, the Government took an important step by creating the oversight committee. But noble Lords will notice that within the designations of the responsibilities of the oversight committee, there is one notable oddity. There is a notable absentee. Nowhere does there appear the verb "to oversee". We have an oversight committee that does not oversee. In fact, a careful reading of the designated activities of the oversight committee reveals that all its key responsibilities are retrospective. It must keep under review. It must monitor. It must review procedures. It must conduct performance reviews. The only thing that it must not do is oversee. This is not an oversight committee, it is a hindsight committee-a valuable role, no doubt, but hardly an activity to moderate the powers of the "Sun King" governor other than by retrospective embarrassment, and governors of the Bank of England seem to be peculiarly impervious to embarrassment.
The amendment introduces the verb "to oversee". It gives the oversight committee the power of oversight. This will have a number of beneficial consequences. The governor and the executive will, as in all good governance systems, be accountable to the non-executives for their activities and their policies. As in all well run organisations, the non-executives will not design the strategy or tactics of the Bank-that is the job of the executive-but they will be the advisers and the arbiters. They will oversee.
Instead of being either a glorified review committee in the shape of the noble Lord's hindsight committee, or creatures of the executive, as in the court, the quality of a person likely to be willing to devote a considerable amount of time and effort to the job of non-executive of the Bank will be significantly enhanced because they are getting a real job. The foundations will be laid for the creation of a modern governance structure within the Bank of England, appropriate to the 21stcentury and to the major powers now vested in the Bank.
In this group there are also Amendments 3B, 3G and 3H, which are a direct consequence of the recognition of the role of the oversight committee in overseeing the activities of the governor in particular, and of the Bank in general. If the oversight committee is to exercise this role effectively it should have the final sign-off to the policies prepared by the court and by other executive institutions. I should be clear that in all well run firms it is the task of the executive to prepare policy and to execute it, but it is the role of the non-executives-of the oversight committee-to scrutinise and sign off the executive's proposal. The oversight committee should oversee.
Amendment 3K makes clear that the role of the oversight committee in its task of overseeing is to approve the policy prepared by the court; it is the precise role of non-executives in all well run companies. Amendment 6C makes clear that the oversight committee is not to be confined to the impotent ghetto of reviewing procedures of the FPC but can also review the FPC's policies. After all, if it cannot review policies what will
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I quite understand that the Government have not had long to consider this core idea, although they have had a bit longer than the noble Lord earlier suggested. I give credit to the Bill Committee and I understand the pressures it is under; similar pressures are experienced in my office.
Lord Sassoon: I do not want to labour the point but would the noble Lord, Lord Eatwell, accept that I did not list Amendment 3A as one that came late? I fully accept that this is not one of the hatful that I referred to as arriving late. We have indeed had longer to consider this amendment.
I hope that, at the very least, the Government will agree to take this proposal away and think about it. After all, if we are going to have an oversight committee it should oversee; otherwise perhaps the Government should simply change the committee's name. I beg to move.
Baroness Noakes: My Lords, I am a bit puzzled by these amendments and I should say that while the Minister's officials may have had them since last Friday, those of us who are trying to take part in this Report stage saw them only first thing this morning, which comes of when the party opposite chose to table its amendments.
The noble Lord says that there is no oversight in the new section dealing with the oversight committee. If I were to define oversight I would say it is about reviewing and monitoring; that is the very nature of what is involved. The noble Lord suggests it means some real-time involvement by the non-executives in what happens on a daily basis within the Bank. That simply cannot be-it seems to me the noble Lord misunderstands the role of non-executive directors.
This group of amendments also contains the concept of the non-executive directors, via the oversight committee, approving the strategy. The oversight committee is a sub-committee of the Court of Directors and is not there to approve what the court should be doing. This is correctly formulated in that it is the court that is preparing the strategy. The oversight committee has no role in relation to that except by virtue of the membership of the individual non-executive directors who are also members of court. I really do not understand this sequence of amendments.
Lord McFall of Alcluith: I support my noble friend's amendment. It is important to emphasise oversight because we are setting up a more complex body than the one we had before; we are going from a tripartite body to a quadripartite body. There are many interstitial areas and oversight is even more important in those areas.
As I mentioned earlier, there will be many conflicts between the FPC and the PRA. On the relationship between the Prudential Regulatory Authority and the Financial Conduct Authority, will prudential regulation trump conduct of business, which has happened in the past? Will the FCA feel inferior to the PRA as the FSA felt inferior to the Bank of England?
As to the culture, we can have all the rules we like but, within a plethora of rules, there can be a monoculture which reports to the top and a diverse range of opinions do not get listened to. There are many lessons to be learnt there. An oversight committee is very important in order to look at that and ensure that the Bank of England is indeed exercising the best corporate governance and best practice.
Lord Hodgson of Astley Abbotts: My Lords, like my noble friend Lady Noakes I have some difficulty in understanding the thrust of these amendments. I see the issue of the nomenclature, which may be unfortunate, but I have to say, as a director of a company, that keeping under review and overseeing are almost one in the same. I do not see the difference between those two functions. It is absolutely clear that keeping under review and oversight are running on similar tracks.
The dangers behind the noble Lord's amendments are that we are starting to find a way of dividing responsibilities. We are moving from clear lines of responsibility to a situation where a sub-committee of the board, as appears in the Bill, is starting to dictate the pace of the board itself. That is an unworthy, unnecessary and potentially dangerous development.
Lord Myners: My Lords, I support my noble friend's amendment. The decisions on the aggregation of power within the Bank of England are now set. The Government are clear in their determination to achieve that.
In my view, no one form of regulatory architecture can be assuredly more successful than others. Looking around the world at what happened with the global financial crisis, we saw many different structures of regulatory architecture come under strain. Some point to the twin peaks system associated with Canada as evidence that the Government's current thinking in this area is consistent with a model that appeared to work better there than in other jurisdictions. However, if one wishes to understand why Canada did not experience the same harsh consequences of the global financial crisis, as in the United States, Europe and the United Kingdom, one finds the answer in matters other than regulatory architecture-including the nature of the economy and control of lending and leverage-which are inherent in the Canadian system and distinct from those followed elsewhere.
If we are going to aggregate this power in the hands of the Bank of England, we have to ask ourselves questions about checks and balances because we learnt from the failure of individual UK banks and institutions that, in almost all cases, there was an overly dominant individual in charge of the organisation that failed. That is the big lesson, which the FSA has not picked up completely in its reports on the collapse of RBS and HBOS. However, it is a clear lesson, whether it is Sir Fred Goodwin at Royal Bank of
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Are we creating an architecture here in which we are putting too much power in the hands of one person? I think we are. I was a member of the court for four years and have seen how it and the Bank operate. One must be careful not to extrapolate from the behaviours of the existing incumbents of senior positions in the Bank and members of the court into the future, but a very clear lesson to me was that the court just could not be effective at corporate governance, as both the noble Baroness, Lady Noakes, and the noble Lord, Lord Hodgson, referred to earlier. The court cannot be effective in that way. When I was a member in 2007, three members of the court sought to escalate matters to the Treasury about the Bank's management of liquidity and of risk. It simply was not possible for my two colleagues and me to register with the Treasury or anyone else, in any meaningful way, our concerns about the Bank's failure to understand the risks that were accumulating in the system.
Are we creating a structure now in which that could not happen again in the future? I do not think we are. We are not clear as to the role of the court. We give it some responsibilities but very little power to influence the responsibilities that we give it. We must ask important questions about the constitution and membership of the court to ensure that, in future, it is not simply a ceremonial body that is, on the whole, discouraged by the governor from asking questions, but something that at least approaches the independent challenge that one would expect-
Lord Myners: I will give way in a moment to the noble Lord, Lord Hodgson, who has had his opportunity. We must look to create a body that is capable of appropriately challenging the current governor and governors in the future. I am not sure that this is necessarily seriously advanced by the language we are using here. Perhaps I will anticipate the point on which the noble Lord, Lord Hodgson, wishes to intervene by saying that he is quite correct about perhaps dancing on the head of a pin when it comes to whether these are questions about supervisory roles or oversight. However, it is absolutely critical that we ensure, in this Bill, that the court is able to appropriately challenge and check the authority that this Bill places in the hands of the governor. We have learnt painfully in recent years about the consequences of coping with a dysfunctionality between the governor and members of the court. I give way to the noble Lord if he still wants to come in.
Lord Hodgson of Astley Abbotts: The noble Lord was quite right. I understood the force of his polemic and the seriousness of the point he was making but could not see how that is in any way addressed by adding the word "overseeing" to "keeping under review", which seems to me, as he indicated, to be a distinction without a difference.
Lord Myners: The words proposed by my noble friend take us a little further in the right direction. I would like to go a great deal further but am more than happy to support my noble friend's amendment.
Lord Blackwell: My Lords, despite the cogent words of the noble Lord, Lord Myners, I share the confusion on this side of the House about what these amendments are intended to do. Everyone agrees that it is vital that there should be strong oversight of the governor and the executives of the Bank by the non-executive directors and that we have proper accountability and scrutiny. But what is proposed here is a court that will have a clear and very sizeable majority of non-executive directors. The amendments proposed by my noble friend earlier made it clear that all the members of that court would be directors, and would be directors in common, sharing responsibility for the decisions of the Bank. However the non-executive directors would be in a majority, and if those non-executive directors disagreed with what the executives proposed, they could make that clear in the court and they would have the majority to hold sway.
According to these amendments, the court, involving all directors, would be able only to propose policies and then a sub-committee of the board of only the non-executives would then go away and approve them. That seems to turn corporate governance on its head. Either we have a supervisory board of non-executives, which is a totally different structure, or we accept that the Court of Directors is indeed the Court of Directors and should, with all its members, accept responsibility. What we have here is a very sensible proposal for an oversight committee of non-executive directors that will play its role in allowing non-executive directors to review and scrutinise offline, but to report to the full court, as is normal in any governance process. All directors must share equal responsibility in the end for the decisions of that organisation.
Lord Nickson: My Lords, I apologise for the fact that I have not taken part in the proceedings and I did not intend to do so today. I am completely out of date in that my experience goes back a long way. When I was the chairman of a Scottish bank, which belonged to an Australian bank, Fred Goodwin, as chief executive, reported to me, before he went to RBS for five years. We got on very well. I am quite thankful that he went to RBS and that I did not have responsibility at the end.
I completely sympathise with the points of view that have been put from the government Benches. The principles are exactly the same. It is impossible to conceive that one would appoint a majority board of non-executive directors along with an executive. They have the responsibility for oversight. You might have a sub-committee, but I would be very surprised if any candidate for the position of governor would actually accept it having power over the non-executives in the Court of the Bank of England. Therefore, I think that the amendment is nonsense in practical terms. Although I may be out of date, I strongly believe that it should be rejected.
Baroness Wheatcroft: My Lords, I share the qualms that have been voiced about this group of amendments. I believe that the court needs to exercise far more power than it has appeared to in the past, although I am intrigued to hear the noble Lord, Lord Myners, say that when three members of the court tried to make their views and their concerns known, they had no impact at all. That would seem to be a failing of the Government rather than the governance of the court.
The amendment that causes me particular concern is Amendment 3B, which proposes that the Bank's strategy should for the time being be "prepared" by the Court of Directors. It does not seem to me that "preparing" a strategy should be for the non-executives. It may well be, and should be, their right to determine whether that strategy is the right strategy. However, we want them to "determine" rather than "prepare".
Lord Flight: My Lords, it seems to me that none of these things makes any difference. The real issue is that if a board of directors cannot sack the chief executive if it thinks that he is not doing his job properly, then it is an enfeebled board. That is the fundamental issue. As long as we have the chief executive appointed for a term period and not able to be removed by the board, then there will be an issue about the effectiveness of that board.
Lord Kerr of Kinlochard: My Lords, I did not take part in the Second Reading debate. I should have done so. I support what the noble Baroness, Lady Noakes, said, which seemed to me to be absolutely correct. On the point made by the noble Baroness, Lady Wheatcroft, I find Amendment 3B the most bothersome in this group. If the court is merely preparing, not determining, who is determining? There is a danger here of the decision-taking power moving to this oversight committee.
I cannot see that Amendment 3A has any real effect. Clearly, there is an overseeing role if the committee is called "oversight", but I think that the noble Baroness, Lady Noakes, is quite right about that.
The amendment that seems to be completely correct and would go some way to meet the point being made from the opposition Benches is Amendment 3C, which proposes that the committee should be entitled to a degree of professional support. That seems sensible to me.
Lord Sassoon: My Lords, I am grateful for this debate. The noble Lord, Lord Eatwell, started by welcoming the creation of the oversight committee as an important step, but then went a leap too far in getting rather confused about what, in his terms, "modern corporate governance" really means. As so many noble Lords have explained, it means that ultimately the governing body as a whole-the board of directors, the Court of the Bank of England-has to take the key decisions. As the noble Lord, Lord McFall of Alcluith, said, the principal role of the oversight committee is for learning lessons. I completely agree with him, and will go on to explain that the role of the oversight committee, as constructed in the Bill before these amendments, is completely in line with what the Treasury Select Committee envisaged.
My noble friends have explained all these things much more clearly than I could. The noble Lord, Lord Nickson, modestly said that he is out of date. I do not believe that he is out of date at all. He and the noble Lord, Lord Kerr of Kinlochard, who has great current experience of corporate governance in one of the UK's largest multinationals, have got this right. I had been puzzled-I wondered whether I had missed something in all this-but I am grateful that the House shares my concerns.
To address the specifics, Amendment 3A would shift the oversight committee's functions from a more backward-looking, reviewing role-the lesson-learning role that the noble Lord, Lord McFall, referred to-to a real-time overseeing role, which would involve scrutinising and perhaps second-guessing the Bank's policy decisions while they are being taken. As my noble friends and other noble Lords have made clear, if that role is taken at the board level, it is taken by the board as a whole. I do not believe that this proposed new role would be at all appropriate.
As I have said, we can look to what the Treasury Select Committee in another place said when it recommended the introduction of ex-post reviews of the Bank's policy performance. This is worth quoting at some length, from the committee's 21st report of the Session,Accountability of the Bank of England:
"The Governor stressed to us that 'the decisions that the PRA, FPC and MPC make on policy are not decisions that the Court needs to second guess'. We agree. The Bank's governing body should place more emphasis on oversight and ex-post scrutiny. This does not require or authorise it to become involved in second guessing immediate policy decisions. But there is a need to analyse and learn lessons from the actions of the Bank on a routine and consistent basis, drawing on expertise from within the Bank. Ex-post review of the Bank's decisions would, we believe, be in the interests of good governance of the Bank".
which is entirely consistent with the Treasury Select Committee's recommendations and strikes the right balance between ensuring effective retrospective scrutiny of the Bank's policy decisions and avoiding a situation where the non-executive members of the court would be second-guessing the policy decisions taken by the Bank's expert policy committees and Bank executives. Of course, in this context my noble friend Lord Blackwell is quite right to point out that when these decisions are for the court as a whole, the non-executives are, as one would expect in any good modern corporate governance structure, in a majority.
I am a little puzzled by Amendments 3B, 3G, 3H and 3K, which seek to make the non-executives of the court solely responsible for determining the Bank's financial stability strategy. Again, this is completely at odds, as the House has been told, with the way in which model corporate governance operates. Surely the reason for making the governing body as a whole, in this case the court of directors, responsible for the
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On the role of the non-executives, I am sure that the noble Lord, Lord Myners, is right when he says he could not get the Treasury to take concerns seriously back in 2007, but I cannot answer for what happened in the Treasury under the previous Administration. All I can say is that if any member of the court of the Bank, whether executive or non-executive, came to the Treasury now, we would take their concerns extremely seriously.
I do not want to belabour the point, but I am not sure whether the noble Lord, Lord Eatwell, is envisaging situations in which the non-executive directors, coming from a court meeting in which they agreed the financial stability strategy, then go into an oversight committee meeting where they decide perhaps that the strategy agreed by the whole court was wrong in some way. We need to distinguish here clearly, as have many noble Lords, between the differing responsibilities of the court and of the non-executives on the court. The court, as the Bank's governing body, is responsible for setting the Bank's overall strategy, including its strategy for financial stability. It is the responsibility of the executives of the Bank, with the support of the court, to deliver that strategy. It is the responsibility of the oversight committee to hold the executive to account for how it delivers on the strategy by keeping its performance under review and, again in the words of the noble Lord, Lord McFall, for learning the lessons. This split of responsibilities in the Bill is appropriate and consistent with modern corporate governance.
Finally, Amendment 6C would add policies to the existing requirement in subsection (4) of new Section 9B that the oversight committee keep the procedures of the FPC under review. I can assure the noble Lord, Lord Eatwell, that this amendment is entirely unnecessary. The oversight committee is already responsible for keeping the policy and performance of the FPC under review. Subsection (2)(a) of new Section 3A of the 1998 Act, as inserted by Clause 3 of this Bill, clearly states that the oversight committee is responsible for keeping under review the Bank's performance in relation to all of its objectives and strategy, including the objectives of the Financial Policy Committee. With the benefit of this useful debate, I hope that the noble Lord will see fit to withdraw his amendment.
Lord Myners: I want to be helpful and pick up one point about the references that have been made by several Peers to models of good corporate governance. The noble Lord, Lord Flight, with considerable experience and great standing in business in the City, has already pointed out one respect in which the court cannot be compared with a conventional board of directors: its ability in the end to remove the executive if it has lost confidence in it.
The point that I raised about our experience in 2007 is another distinct difference from corporate governance; namely, there is no shareholder to whom the non-executives can appeal. What happened in 2007 was that three members of court had meetings with Treasury officials to raise their concerns about the absence of full challenge and the dominant influence of a single voice in the court. They expressed those views to Treasury officials, who shrugged their shoulders and said that there really was not much that they could do. The governor is ultimately appointed by Her Majesty and members of the court are elected to do their work, and there is nothing that the shareholder-effectively the Treasury-can do. That is another area where we must be very careful not to assume that we are just picking up the corporate model and inserting it into the Bank. The Bank is different by virtue of the very limited powers placed on the court and the absence of a shareholder.
Finally, I question whether the Minister's constant references to good corporate practice would be reflected in the role of a board in overseeing ex post facto what a company does. My experience of sitting on boards is that boards are very much involved in reviewing the formulation and implementation of strategy on a constant basis, not in carrying out post-implementation exercises. Your Lordships' House should be careful to recognise that there are limits to the complete applicability of corporate practice to the particular circumstances of the Bank of England, the court and the governor.
Lord Sassoon: My Lords, I know that the custom of this House on Report is that noble Lords do not make second substantive speeches, so the noble Lord will understand if I do not respond to his points-otherwise we will not make much progress. However, I will clarify one point in answer to the question asked by my noble friend Lord Flight about the removal of the governor and the suggestion by the noble Lord, Lord Myners, that the governor cannot be removed. This is of course wrong, as I am sure the noble Lord, Lord Myners, knows. If he would like to refresh his memory of the Bank of England Act 1998, paragraph 8 of Schedule 1 sets out precisely the conditions under which the governor can be removed.
Lord Eatwell:My Lords, I am very grateful for the discussion which I have enjoyed very much. I have been educated and entertained by the remarks made by noble Lords all around the House. The key position that we have to start from is that the Bank of England is different. Its structure is different and the structure of responsibilities is different. When we think about corporate governance, we have to think about the way in which we can maintain a suitable degree of accountability.
In Amendment 3A, I was attempting to nudge the Government a little further on the oversight committee which, as the noble Lord made clear in contradiction to what the noble Baroness, Lady Noakes, said, is entirely retrospective at the moment. In those circumstances, the maintenance of accountability is not really enough, given the degree of responsibility and powers that the Bank will have.
It occurred to me that a non-executive committee often has the final say. When things really go wrong, it is the non-executive committee that has to gather together and deal with what is going wrong in a company. Here the non-executive committee, by nudging it a little further and including the word "oversee"-for an oversight committee-would actually nudge the oversight committee, as conceived by the Government, in a direction in which it could hold to account the executive of the Bank to a greater degree than is the case at the moment. I think that the Government are being excessively complacent about this. We have this massive switch of powers, and we are being told that everything will be all right and that this Committee-which, as the noble Lord says, is entirely retrospective-will somehow create an aura of accountability. I just do not see that happening.
I regret that the noble Lord has not taken a constructive view of what we were trying to achieve. I would have been quite happy to accept some recognition by him that there is a degree of a problem in this particular institution and that we need-in this House and, indeed, in Parliament in general-to address this problem if we are to move forward successfully with the structure of financial regulation and oversight in this country. The noble Lord has given no indication of any sympathy whatever. Instead, he wants to keep the oversight committee purely retrospective, with no ability to take a broad view-not on a daily basis, of course not-and he wants the non-executives to have that specific role. Given that he has shown no interest at all and no understanding of the serious issues involved, I would like to seek the opinion of the House.
Lord Eatwell: My Lords, in the debate that we have just had we heard a lot about the values of the oversight committee and what an important job it has to do. The noble Lord, Lord Sassoon, made some comments about new Section 3C, perhaps inadvertently, while he was reflecting on the group of amendments that we have just looked at. The purpose of this amendment is to ensure that the oversight committee-or hindsight committee, as I think it should be called-has the resources to do its job.
We have to remember that the Bank of England has form in this respect. In the early days of the Monetary Policy Committee, independent members were deliberately starved of resources by the Bank in order to enhance the position of the executive members. We all hope that the Bank has learnt its lesson from the very negative publicity that that incident produced. However, we are now in different territory. The powers are greater, and the responsibilities are wider. Hence it is vital that the oversight committee should be well resourced. New Section 3C refers to the possibility of hiring people to conduct a performance review, but that is one step down the line. The committee needs its own staff to help determine exactly which performances should be reviewed, and who should be asked to do that sort of important secretarial work.
That is the purpose of the amendment before us. It can do nothing but strengthen the Bank of England, making the committee into an effective instrument of
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Lord Peston: My Lords, I support this amendment in substance. The noble Lord will be delighted to hear that I also wish to make a couple of semantic points. My noble friend said that the committee should have its own staff. My view is that it should not only have its own staff but should appoint its own staff, thereby guaranteeing that the staff are its own, work for it and, to use the slang expression, are not "narks" of the governor. Therefore, the noble Lord ought to accept the amendment.
My two semantic points are as follows. First, I find the committee's name most unattractive. Will the noble Lord ask the Bill team to look up the definition of "oversight" in the dictionary as it has a very definite meaning which I am sure the Government and the Minister do not wish to be associated with this committee. It may not be too late to choose a more felicitous name. I wonder whether I am the only person who has thought what a ridiculous name the committee has.
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