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:00:00. > :00:00.that as a price worth paying which is a respectable argument but not

:00:07. > :00:12.one I agree with. We must now move on. Statement the Secretary of State

:00:13. > :00:19.for Foreign and Commonwealth Office. Secretary Philip Hammond. With

:00:20. > :00:23.permission I would like to update the House on the current situation

:00:24. > :00:28.in Libya and what the Government is doing to support the new Libyan

:00:29. > :00:31.Government of National accord. Yesterday I visited Tripoli, the

:00:32. > :00:36.first time that a British Foreign Secretary has done so since 2011.

:00:37. > :00:40.The fact that this visit was able to take places positive sign of the

:00:41. > :00:46.progress that has been made in recent weeks including the security

:00:47. > :00:49.situation in and around the capital. During my visit I met Prime Minister

:00:50. > :00:52.Suraj Randiv manages -- members of the privacy counsel in the naval

:00:53. > :01:00.base which has become the headquarters of the GNA. I welcomed

:01:01. > :01:04.their commitment to represent all the Libyan people and the progress

:01:05. > :01:08.that they have made in establishing the Government of national accord as

:01:09. > :01:14.a Government of the whole of Libya. I underline the UK is a balk at the

:01:15. > :01:19.GNA as the only legitimate Government of Libya. It has the

:01:20. > :01:23.endorsement of the Libyan political dialogue and the majority of members

:01:24. > :01:28.of the House of Representatives. I believe the Libyan people want it to

:01:29. > :01:32.succeed. We look forward to the House of Representatives completing

:01:33. > :01:36.its formal vote of endorsement in line with its obligations under the

:01:37. > :01:41.Libyan political agreement. I was encouraged to hear from the Prime

:01:42. > :01:45.Minister and his ministers about the steps they are taking to assume

:01:46. > :01:49.control of Government ministries in Tripoli. After five years of

:01:50. > :01:53.conflict following the overthrow of Gaddafi, the Libyan people are wary

:01:54. > :01:58.of fighting and eager for peace. They want a Government which will

:01:59. > :02:02.start to address the many challenges Libya faces. It is important that

:02:03. > :02:06.the international community works in partnership with the GNA as they

:02:07. > :02:10.continue to consolidate their position and take forward their work

:02:11. > :02:16.to meet the needs of Libyan citizens across the country. In my meetings I

:02:17. > :02:20.emphasised the need to keep the momentum on the political process

:02:21. > :02:25.and to deliver practical progress on the ground. I was encouraged to hear

:02:26. > :02:31.that a clear plan is being developed to address some of the immediate

:02:32. > :02:35.challenges delivering security, tackling Di macro and restoring

:02:36. > :02:43.public services, countering people trafficking and restarting the

:02:44. > :02:48.economy. We agreed that delivering security is fundamental to improving

:02:49. > :02:53.the day-to-day lives of the Libyan people and creating an environment

:02:54. > :03:01.that economic reactivation. The security agenda must be owned and

:03:02. > :03:05.led by the GNA. The UK, along with other European nations, stands ready

:03:06. > :03:10.to respond to requests from the Libyan Government for assistance in

:03:11. > :03:13.training the Libyan Armed Forces to improve their effectiveness in

:03:14. > :03:19.providing security and in the fight against Di macro. We agreed that we

:03:20. > :03:24.should continue to work closely to establish what those training and

:03:25. > :03:27.technical support requirements are and what if any role the

:03:28. > :03:33.international community can play in helping to meet them. A number of

:03:34. > :03:37.honourable and right Honourable members have speculated in recent

:03:38. > :03:42.days that the Government might be on the cusp of committing British

:03:43. > :03:47.troops to Libya in a combat or combat support role. I am pleased to

:03:48. > :03:51.have the obscenity to clarify the situation. I am clear that there is

:03:52. > :03:56.no appetite in Libya for foreign combat troops on the ground. We do

:03:57. > :04:03.not anticipate any requests from the GNA the ground combat forces to take

:04:04. > :04:09.on Daesh or any armed groups and we have no plans to deploy troops in

:04:10. > :04:14.such a role. I will keep the House informed of any plans we develop in

:04:15. > :04:17.the future in response to requests from the Libyan Government. The type

:04:18. > :04:22.of mission that we currently envisage would be focused on

:04:23. > :04:28.providing training and technical support away from any front-line

:04:29. > :04:33.operations. The Libyan economy is suffering from the effects of years

:04:34. > :04:37.of conflict and the impact of lower oil prices. It is clear that the

:04:38. > :04:41.presidency council is focused on the immediate need to alleviate the

:04:42. > :04:44.pressure is on ordinary Libyans including those arising from the

:04:45. > :04:50.current squeeze on liquidity in the banking system, the shortfall in

:04:51. > :04:54.power generation and the shortage of basic commodities. As well as the

:04:55. > :04:59.longer term challenges of ensuring the effective functioning of the key

:05:00. > :05:03.state financial institutions, the central bank of Libya, the national

:05:04. > :05:07.oil comp oration and Libyan investment authority. Also the

:05:08. > :05:12.challenge of rebuilding oil production and export capacity. As I

:05:13. > :05:19.said the President, the UK stands ready to provide whatever assistance

:05:20. > :05:22.it came with these issues, all of them areas where British companies

:05:23. > :05:28.have relevant experience and expertise to share. Turning to the

:05:29. > :05:32.migration of threat, there is clearly an urgent need to tackle the

:05:33. > :05:42.challenges arising from a regular migration and the criminal networks

:05:43. > :05:44.that facilitates much of it. I highlighted our desire to work in

:05:45. > :05:49.close partnership with the GNA to make progress on this issue

:05:50. > :05:52.including on tackling the people smugglers and traffickers. As part

:05:53. > :05:56.of this initiative we should look at creating a package of support that

:05:57. > :06:02.could include extending the EU's current naval operation and building

:06:03. > :06:08.the capacity of the Libyan coast guard to support and eventually take

:06:09. > :06:11.over that operation. Clearly such a package would only be implemented at

:06:12. > :06:18.the invitation of the Libyan Government. Mr Speaker, guest today

:06:19. > :06:23.I announced Britain would be allocating ?10 million for technical

:06:24. > :06:26.support to be GNA in this financial year to be delivered through the

:06:27. > :06:30.conflict security and stability fund. This package will support

:06:31. > :06:36.strengthening political participation, economic development

:06:37. > :06:39.and the delivery of capacity in security, justice and defence. We

:06:40. > :06:43.will work closely with the GNA to ensure that this support is

:06:44. > :06:50.channelled to the areas where it can have most effect. After years of

:06:51. > :06:54.conflict in Libya, the formation of the Government of national accord

:06:55. > :07:00.and its arrival in Tripoli have the potential to be a real turning point

:07:01. > :07:05.in Libya's fortunes. The challenges facing the GNA should not be

:07:06. > :07:09.underestimated and delivering the security and economic development

:07:10. > :07:12.that will allow the Libyan people to realise their country's huge

:07:13. > :07:19.potential will not be an easy task to fulfil. Big UK, together with

:07:20. > :07:24.many of our international partners, stands ready to assist. It is in all

:07:25. > :07:29.our interests that the Prime Minister and his Government are able

:07:30. > :07:33.to re-establish security and reactivate the economy and defeat

:07:34. > :07:42.Leave in Libya as quickly as possible. I commend this statement

:07:43. > :07:44.to the House. Can I begin by thanking the Foreign Secretary for

:07:45. > :07:52.advanced sight of his statement. The situation in Libya has been

:07:53. > :07:57.bloody and dangerous. And it is important to recall that it was

:07:58. > :08:06.Colonel Gaddafi's brutal response to the protests that eresulted early in

:08:07. > :08:11.-- erupted in 2011 that triggered a civil war and UN Security Council

:08:12. > :08:21.resolution that authorised a no-fly zone. This house voted to support

:08:22. > :08:25.that action, but since Gaddafi's fall Libya has become awash with

:08:26. > :08:30.rival militias, the presence of Daesh and insecurity and questions

:08:31. > :08:33.have been raised about the government and the international

:08:34. > :08:39.community's focus on what followed. I join the Foreign Secretary in

:08:40. > :08:49.praising the efforts by Libyan politicians, the UN, and special

:08:50. > :08:52.representative Martin Cop ra to reconcile the competing institutions

:08:53. > :08:57.and encourage them to follow a single Government and support the UN

:08:58. > :09:00.solution recognising the progress and calling on member states to

:09:01. > :09:08.provide support to the new government. On this side, we welcome

:09:09. > :09:14.the establishment of the Libyan Government of national accord. As

:09:15. > :09:19.the Foreign Secretary said, it faces a formidable task in restoring

:09:20. > :09:22.public services, building up the economy and tackling Daesh. Does the

:09:23. > :09:27.Foreign Secretary agree its ability to do so will be determined by the

:09:28. > :09:34.extent to which the new government is able to gain support and consent

:09:35. > :09:37.right across Libya, as it faces the task of re-establishing government

:09:38. > :09:43.and governance in all parts of country? Can the Foreign Secretary

:09:44. > :09:48.set out what assessment he has made of its capacity to do so, particular

:09:49. > :09:57.in respect of the rival militias. Can he say more about the

:09:58. > :10:02.conversations he is having with our allies about what steps can be taken

:10:03. > :10:06.and does he expect there to be a further UN Security Council

:10:07. > :10:10.resolution? The Government has indicated that it was not

:10:11. > :10:14.contemplating a British combat Nish in Libya. -- mission in Libya. Given

:10:15. > :10:19.the circumstances there, I think this is the right approach to take

:10:20. > :10:24.and I'm grateful to the honourable gentleman for confirming again today

:10:25. > :10:28.that the Government has no plans to deploy British troops in such a

:10:29. > :10:34.role. Can the Foreign Secretary therefore give the House a

:10:35. > :10:40.categorical assurance that were this view to change, any proposal to

:10:41. > :10:46.deploy forces would come before this House for a vote? He has however

:10:47. > :10:53.spoken about possibly providing training for the Libyan military,

:10:54. > :10:58.did the Prime Minister ask for specific types of support? Does he

:10:59. > :11:02.envisage any such deployment would take place in Libya or might it

:11:03. > :11:06.involve providing training in a neighbouring country? Will he give

:11:07. > :11:12.the House an undertaken he will come to the House before any such

:11:13. > :11:16.deployment takes place and seek approval as appropriate? On economic

:11:17. > :11:22.development, we support all efforts to assist the new government in

:11:23. > :11:28.eme-- improving the lives of people and getting the economy moving

:11:29. > :11:31.again. On migration is further support being requested by the new

:11:32. > :11:38.Prime Minister, or is it being considered through the EU naval

:11:39. > :11:45.force to enhance Libya's ability to disrupt criminal human smuggling and

:11:46. > :11:50.people trafficking? The people of Libya have suffered a great deal and

:11:51. > :11:55.this moment is important for their future. It is the responsibility of

:11:56. > :12:04.the world community to do all that it can to help the new government to

:12:05. > :12:11.succeed. May I thank the honourable gentleman for his response and in

:12:12. > :12:22.particular let me join with him, it is remiss of me, should have said in

:12:23. > :12:27.praising the UN Special Envoy. He has been shuttling between the

:12:28. > :12:33.groups in Libya and it is due to his energy and his effort that we have

:12:34. > :12:37.got where we are today. This is a Government of national unity, but we

:12:38. > :12:43.should be clear about the historical context of Libya. It is a country

:12:44. > :12:49.that traditionally has had a very high degree of devolution in its

:12:50. > :12:54.Government, held together often by a strong man at the centre. We need to

:12:55. > :13:00.find a new model, where Government of National Accord is going to be a

:13:01. > :13:06.national umbrella organisation, but the Prime Minister made clear this

:13:07. > :13:09.will only work if municipalities are empowered and are prepared to take

:13:10. > :13:17.on a significant degree of devolution. A devolved model is the

:13:18. > :13:25.only model that will work in Syria. And I think I need to make sure

:13:26. > :13:28.clear that the Government is at an early stage of its operation. The

:13:29. > :13:33.Prime Minister and his ministers are sitting in a naval base, physically

:13:34. > :13:38.separated from the civil servants who could support them. Yesterday

:13:39. > :13:45.they retook control of three ministries. It will only be as they

:13:46. > :13:48.are able to re-enter the ministries and regain working contact with the

:13:49. > :13:54.civil servants that they can start to do some of the detailed work and

:13:55. > :13:59.I think that... Underpins and shapes the answers to some of the questions

:14:00. > :14:04.that I will now give him. He is right, of course the GNA can only

:14:05. > :14:14.succeed with the support and concept of the factions in Libya. Let me say

:14:15. > :14:20.one thing, when I went to Tripoli, I was expecting to find the Government

:14:21. > :14:24.in a heavily fortified base. Defending all Kommers. That is not

:14:25. > :14:29.the situation. The base is lightly defended and it was clear that the

:14:30. > :14:36.Prime Minister's ability to operate there is based on the consent of the

:14:37. > :14:41.militias operating in that part of the capital. So I think he is

:14:42. > :14:46.conscious of the need to build a bottom up consensus around his

:14:47. > :14:52.activities. He asked me about the European Union, there was, I

:14:53. > :14:57.returned from Tripoli to Luxembourg, where there was a discussion at 28

:14:58. > :15:03.about future support to Libya, including defence minister

:15:04. > :15:07.colleagues and looking at the possibility of extending operation

:15:08. > :15:12.Sophia. No decisions were taken, but this is very high on the the

:15:13. > :15:19.European Union's agenda. The key will be to develop a package that

:15:20. > :15:23.addresses Libyan priorities. The Libyans are focussed on migration,

:15:24. > :15:29.but it is not their top priority I have to say. We have to create an

:15:30. > :15:33.environment where delivering on Europe's top priorities also

:15:34. > :15:39.addresses the Libyan people's top priorities. He asked about a UN

:15:40. > :15:44.security resolution I don't see and haven't heard anything suggest there

:15:45. > :15:50.is a need for a further resolution. I think the next moves at the UN

:15:51. > :15:57.will be the granting of exemptions to the arms embargo and the

:15:58. > :16:04.unfreezing of assets to allow the Government to function properly. The

:16:05. > :16:10.house will of course be consulted were the Government to decide at any

:16:11. > :16:18.point that it wanted to insert ground forces or any forces in a

:16:19. > :16:22.combat role into Libya. We do not envisage that happening in the

:16:23. > :16:25.current sishs. He asked about the situation where a training

:16:26. > :16:30.deployment is contemplated and if I quote the honourable gentleman he

:16:31. > :16:33.asked, if we would seek the House's approval for a training deployment.

:16:34. > :16:37.I should be clear about this, it is not a question of approval, it is a

:16:38. > :16:43.question of consulting the House and allowing the House to express an

:16:44. > :16:48.opinion through a vote. Which the history over the last three years

:16:49. > :16:53.has shown clearly the Government will take great notice of. But this

:16:54. > :16:56.would not be the case in the event of a training deployment. We have

:16:57. > :17:05.training deployments around the world. In fact my MoD colleagues

:17:06. > :17:09.informed we we have 16 per Nantes training -- permanent training

:17:10. > :17:14.deployment. It is not appropriate that the House is consulted on such

:17:15. > :17:20.deployment as if it were a combat deployment. Did the Prime Minister

:17:21. > :17:24.ask for training support? Not explicitly, but he did intd Kate as

:17:25. > :17:27.the -- indicate as the Government develops it may ask the

:17:28. > :17:33.international community for some support. I gained the personal

:17:34. > :17:38.impression that his instinct is very much at the lighter end of the

:17:39. > :17:46.scale. He does not want to be seen to be dependent on foreign support.

:17:47. > :17:48.He wants to do as much as possible internally, using Libyan

:17:49. > :17:53.capabilities and of course if there is any question of training, we

:17:54. > :17:58.would want to look at the options for training outside Libya as well

:17:59. > :18:05.as the permissiveness of the situation to allow training inside

:18:06. > :18:10.Libya. I think I have covered all the honourable gentleman's

:18:11. > :18:14.questions. Can I welcome the Foreign Secretary's statement and last

:18:15. > :18:18.night's European council conclusions. The sanctioning of the

:18:19. > :18:22.speaker of the the House of Representatives is welcome as he has

:18:23. > :18:32.been an obstacle to formation of GNA. As it welcomed the commitment

:18:33. > :18:37.that the E. And I assume the British contribution bill the co-ordinated

:18:38. > :18:42.with other support. A coherent British contribution will be easier

:18:43. > :18:49.with the consent and understanding of this House. It might need to

:18:50. > :19:00.include air strikes on Daesh targets and the training mission he alluded

:19:01. > :19:03.to. He is on thin ground in differentiating between a training

:19:04. > :19:07.mission and a combat zone and not seeking to carry the House. I notice

:19:08. > :19:11.the language he used talks about being away from the front line of

:19:12. > :19:16.operations. I wonder if there is anything more he can say about that?

:19:17. > :19:21.I urge him to try to continue to carry this House with him. I am

:19:22. > :19:26.grateful to my honourable friend. He is right that any kind of

:19:27. > :19:35.international support will be more effective if it is properly

:19:36. > :19:42.co-ordinated and the work of the mission and the planning cell that

:19:43. > :19:48.is in operation should be and will be co-ordinated together. Let me be

:19:49. > :19:53.clear, any proposal to carry out air strikes in support of a counter

:19:54. > :19:57.Daesh operation would trigger the convention that the Government would

:19:58. > :20:01.come to the House, consult the House, and allow a vote by which the

:20:02. > :20:05.House could express its view on the the proposed intervention. I

:20:06. > :20:10.understand his concern, he has expressed it several times in this

:20:11. > :20:16.House and in newspapers, that the, in a context of a situation like

:20:17. > :20:20.Libya, the lines between what is a combat mission and a training

:20:21. > :20:27.mission could be blurred. We are clear that we can make that

:20:28. > :20:32.distinction. I would draw his attention to Afghanistan, a kin

:20:33. > :20:35.nettic theatre, but we have a training mission there which has

:20:36. > :20:41.been successfully conducted for the last 15 months with great effect.

:20:42. > :20:49.And in Iraq, where we carry out training activities in what is an

:20:50. > :20:55.active war zone. There is a big difference between training and

:20:56. > :20:58.advising troops and getting engaged in combat activities and the

:20:59. > :21:05.Government is mindful of that distinction and of the obligations

:21:06. > :21:14.it has entered into in respect of consulting the House. Can I add my

:21:15. > :21:18.praise to the work of Martin Cobbler and the British ambassador to Libya,

:21:19. > :21:23.who has been making the best of a difficult job. Libya has been an

:21:24. > :21:28.unmitigated disaster for this government, where we have a sitting

:21:29. > :21:36.president criticising a sitting UK Prime Minister and a humanitarian

:21:37. > :21:41.side where a UN official described UK efforts as paltry bone-throwing.

:21:42. > :21:46.We do not have a good record on Libya. Can I ask these questions

:21:47. > :21:50.after the questions asked by the member for Leeds central and the

:21:51. > :21:56.chair of the committee, can he tell us how much of the mission does he

:21:57. > :22:02.envisage taking place on Libyan soil. In terms of a training

:22:03. > :22:06.mission, will any deployment of UK troops to Libyan soil be brought

:22:07. > :22:11.here and how does he distinguish between a training mission in Libya

:22:12. > :22:16.take bg place now, giving you can only have meetings in the naval base

:22:17. > :22:20.and finally does he commend the US president's candour that this has

:22:21. > :22:25.been his worse mistake and will he tell the House what does he think

:22:26. > :22:32.the Prime Minister's worst foreign policy mistake has been? Well it is

:22:33. > :22:38.easy to sit there hurling stones. The world is not a neat and tidy

:22:39. > :22:42.place and we have to deal with the situations that present themselves

:22:43. > :22:48.and he talks about humanitarian, I would remind him that when we

:22:49. > :22:54.intervened in 2011, it was to prevent an imminent genocide in

:22:55. > :22:58.Benghazi. That was a successful intervention that saved thousands of

:22:59. > :23:06.lives. And Libya is a rich country, we shouldn't forget that, there are

:23:07. > :23:10.70 billion dollars worth of Libyan assets frozen by UN security consill

:23:11. > :23:15.resolution. So this is about getting the Government in place and then

:23:16. > :23:19.releasing those assets so that the Government can function. Libya is

:23:20. > :23:23.not a country that needs humanitarian asis tans in the

:23:24. > :23:26.convention sense, but it needs technical support and help to get

:23:27. > :23:29.into a position where we can release its own assets to it, to enable it

:23:30. > :23:45.to function. He mention the British bass tab. He

:23:46. > :23:51.came with me to Tripoli and it is his desire and mine as well that we

:23:52. > :23:55.reopen the British Embassy in Tripoli just as soon as we are able

:23:56. > :24:03.to do so. -- he mentioned the British ambassador. I cannot promise

:24:04. > :24:07.that it would be eminent works -- but we will keep it under constant

:24:08. > :24:12.review and do it as soon as we can. He asks me whether any training

:24:13. > :24:17.mission to Libya would take place on Libyan soil. Yet again there is no

:24:18. > :24:19.training mission, there is no putative training mission. There has

:24:20. > :24:29.been no request for a training mission. Clearly if there is a

:24:30. > :24:34.request for such a mission, there -- the military will want to make sure

:24:35. > :24:38.it is undertaken with the minimum risk it possible to UK personnel.

:24:39. > :24:41.Their first preference would be to do it here and then next preference

:24:42. > :24:45.would be to do it somewhere else in the region and the third preference

:24:46. > :24:51.will be to do it in Libya if it is safe to do so. I can assure him that

:24:52. > :24:54.we will spare no effort in trying to ensure that any support we do give

:24:55. > :24:58.the Libyans would be delivered in a way that represents the least

:24:59. > :25:06.possible risk to the British forces delivering support. There can be no

:25:07. > :25:10.doubt that I intervention in Libya in 2011 are some in this house

:25:11. > :25:17.suggested has been an unmitigated disaster resulting in many thousands

:25:18. > :25:21.of casualties. It is a vicious civil war. Looking forward, given that

:25:22. > :25:33.this country is at a tipping point in his involvement in Libya, what

:25:34. > :25:39.lessons can we learn? The honourable gentleman asserts a fact that there

:25:40. > :25:48.can be no doubt which is deeply contentious. The situation in Libya

:25:49. > :25:52.is very difficult. The situation post 2011 was very messy. Countries

:25:53. > :25:57.in many parts of the world do not function like Britain or Switzerland

:25:58. > :26:02.and we have to deal with the real situation on the ground. I think we

:26:03. > :26:07.should look to the future and be positive about this potentially

:26:08. > :26:12.affluent country regaining stability and being able once again to

:26:13. > :26:16.function as an effective state, allowing the Libyan people to get on

:26:17. > :26:21.with their business. There is a weariness after five years and there

:26:22. > :26:27.is a growing sense that if a properly devolved form of Government

:26:28. > :26:34.can be established, that the various militias and regional groupings can

:26:35. > :26:40.work. Can I ask the Foreign Secretary what assessment is made up

:26:41. > :26:47.the size of the Daesh Libya and what their capability is? Are they going

:26:48. > :26:53.to sit tight or expand into the rest of Libya? I think our current

:26:54. > :26:58.assessment is that there are probably up to about 3000 Daesh

:26:59. > :27:04.fighters in Libya of whom are significant number would be foreign

:27:05. > :27:11.fighters. There is a generally accepted view that what Daesh are

:27:12. > :27:16.doing a Libya is a holding operation seeking to hold an area of ground

:27:17. > :27:22.possibly as a bolt hole if they find that their freedom of manoeuvre and

:27:23. > :27:26.freedom to operate is coming under intolerable pressure in Syria. I

:27:27. > :27:32.think there are many pointers to the facts that now is the time to move

:27:33. > :27:37.against them in Libya while they are still relatively thin on the ground

:27:38. > :27:43.and a their operation is in a holding phase. One of the measures

:27:44. > :27:49.of success of the Libyan Government will be the creation of a

:27:50. > :27:53.functioning economy and as a step towards that a functioning central

:27:54. > :28:01.bank. Is there any role that Britain can play in helping them achieve

:28:02. > :28:06.this? I offered the Prime Minister technical support in relation to the

:28:07. > :28:11.central bank, the national oil company and the Libyan investment

:28:12. > :28:15.authority. It is a tribute to Libyan resilience and ingenuity that

:28:16. > :28:19.international partners recognise the figures that have continued to run

:28:20. > :28:25.these institutions through this period of chaos over the last few

:28:26. > :28:30.years as technically competent and well motivated. They have been doing

:28:31. > :28:36.a good job. What the Prime Minister has now done is brought the

:28:37. > :28:41.competing appointees the eastern and western chairman of each of these

:28:42. > :28:44.institutions together to work together and to seek to forge a

:28:45. > :28:49.consensus around how the institutions can go forward as truly

:28:50. > :28:55.national is Jewish and is on a collaborative basis. I was

:28:56. > :28:59.interested in what the Foreign Secretary had to say about the

:29:00. > :29:05.current state of Daesh and the need that they need to be contained now.

:29:06. > :29:10.We're talking to other allies such as Jordan to work on training

:29:11. > :29:14.deployments and training up troops because if we don't contain Daesh

:29:15. > :29:23.now in North Africa it will be an expanding problem? We are talking to

:29:24. > :29:30.other partners like Jordan about how we can provide support to the Libyan

:29:31. > :29:38.Government. There are other actors who are acting independently. Egypt

:29:39. > :29:43.has a recognised vital interest because it has a long land border

:29:44. > :29:48.with Libya and some of the problems that Egypt has been facing in the

:29:49. > :29:53.Western desert are attributable to penetration from Libya. The House

:29:54. > :29:59.will recall that there is they continuing issue of general -- of

:30:00. > :30:02.the general, the commander of the Libyan RB who is an important figure

:30:03. > :30:09.in command significant military forces in the East but is

:30:10. > :30:13.unacceptable as a command figure to many who are supporting the new

:30:14. > :30:18.Government. That is one of the big challenges the Prime Minister is

:30:19. > :30:21.facing. I welcome the Foreign Secretary's statement and in

:30:22. > :30:29.particular the reassurances about the use of British troops in

:30:30. > :30:33.training and mentoring if that becomes necessary. Does he recall

:30:34. > :30:41.the disaster that was the training of Libyans in the UK and will he

:30:42. > :30:47.assure the House that those mistakes have been noted and if you does

:30:48. > :30:54.intend to train Libyans in the UK, that we will not make those mistakes

:30:55. > :31:01.again? We are not the only ones who had a poor experience with seeking

:31:02. > :31:05.to train Libyans outside Libya. The Italians, the Bulgarians also had

:31:06. > :31:08.similar experiences. The Prime Minister referred to this yesterday

:31:09. > :31:16.and is conscious of what was not a very glorious episode in living

:31:17. > :31:21.history. The situation on the ground has changed but we would look the

:31:22. > :31:25.most effective location for any training that was done. It is

:31:26. > :31:31.probably the case that it would not be in the UK. For climatic reasons

:31:32. > :31:34.as much as anything else we need to train people in an environment as

:31:35. > :31:39.close as possible to the environment in which they will be operating.

:31:40. > :31:49.There has been no request and there is as yet no plan. I can't impart to

:31:50. > :31:54.the House any more information. Camera welcome the progress made but

:31:55. > :31:59.say that I am disappointed that more has not been offered to deal with

:32:00. > :32:03.the migration crisis. There has been an 80% increase in crossings between

:32:04. > :32:12.Libya and Italy. This time last year half a million people were waiting

:32:13. > :32:16.in Libya to get to Italy and the EU is offering Turkey 3 billion euros

:32:17. > :32:23.to deal with the migration crisis and offering Libya nothing. What we

:32:24. > :32:27.need is permission to enter Libyan coastal waters in order to stop the

:32:28. > :32:31.people traffickers. Did he ask that permission and when can we have that

:32:32. > :32:40.permission so we can deal with people traffic and in a robust way?

:32:41. > :32:47.Can I say that he is approaching this in exactly the wrong way. Going

:32:48. > :32:51.to Libya as a bunch of Europeans and saying here is our priority agenda,

:32:52. > :32:56.what are you going to do about delivering it? It is not likely to

:32:57. > :33:03.get the buy in that we need. What I suggested is that we have to package

:33:04. > :33:09.the objectives that we want to achieve with objectives that our

:33:10. > :33:19.priorities -- that our priorities with the Libyans. It allows

:33:20. > :33:23.foreigners to operate in Libya's waters and the only way they could

:33:24. > :33:29.sell it to the Libyan people. We have to be acutely sensitive to the

:33:30. > :33:34.concerns in Libya about foreigners. I am in a stress position. I have

:33:35. > :33:38.one bunch of people who are primarily concerned to make sure we

:33:39. > :33:42.don't have any foreigners going in to Libya and the honourable

:33:43. > :33:46.gentleman desperately keen to get some foreign naval forces into their

:33:47. > :33:49.territorial waters. We have to balance this very carefully and get

:33:50. > :33:56.a package which works for the Libyans as well as for the European

:33:57. > :34:01.agenda. The Foreign Secretary and the Shadow Foreign Secretary is

:34:02. > :34:05.speaking in eloquent terms about the Prime Minister, a Government of

:34:06. > :34:08.National Accord and even the House of Representatives. Any member of

:34:09. > :34:12.the British public watching the news yesterday would have seen our

:34:13. > :34:16.Foreign Secretary and the Prime Minister of National Accord holed up

:34:17. > :34:23.in a naval base unable to leave it because there -- because they

:34:24. > :34:29.control arm of the country. Can we have a reality check. Can the

:34:30. > :34:32.Government at last realised that its bid to undermine authoritarian

:34:33. > :34:37.leaders such as Saddam Hussein Gaddafi who had a deal with the

:34:38. > :34:41.Italian Government to return migrants has involved the region in

:34:42. > :34:44.death and destruction? Can we learn the lessons and try and find a

:34:45. > :34:48.strongman and do what the chairman of the home affairs committee once

:34:49. > :34:51.and while we all want is to find some way of creating some kind of

:34:52. > :34:57.safe haven for migrants to be returned? The Chinese have a saying

:34:58. > :35:01.that the journey of 1000 miles starts with a single step and I urge

:35:02. > :35:05.my honourable friend to view this process in that context stop

:35:06. > :35:12.self-evidently I did manage to get out of the naval base in Tripoli

:35:13. > :35:16.yesterday and return to these shores. He is being a little harsh

:35:17. > :35:21.on Prime Minister on the Prime Minister and what he has achieved.

:35:22. > :35:25.There is a process going on whereby militias which only a couple of

:35:26. > :35:30.weeks ago worth threatening to shoot down any aircraft seeking to enter

:35:31. > :35:34.the airport in Tripoli bringing his Government back into the city, who

:35:35. > :35:39.are now patrolling the streets outside that naval base who are

:35:40. > :35:44.present on the ground when I landed in Tripoli yesterday. They have

:35:45. > :35:48.recognised and they have given a tentative consent to this Government

:35:49. > :35:52.process to go forward and its success will depend on prime depth

:35:53. > :35:55.-- on the Prime Minister making the right judgments and being patient

:35:56. > :36:06.enough to bring all the relevant parties with him as he develops a

:36:07. > :36:10.plan for his Government. I thank the Foreign Secretary for advanced copy

:36:11. > :36:19.of his statement. Given the failure of the last Labour Administration is

:36:20. > :36:26.to secure adequate compensation for Libya supplied Semtex for victims in

:36:27. > :36:30.Scotland, England and Northern Ireland, at the same time America

:36:31. > :36:33.was able to get that compensation, won the Foreign Secretary now

:36:34. > :36:39.indicates that he will redeem the situation and place on the agenda

:36:40. > :36:42.for the GNA and for the Prime Minister that compensation will now

:36:43. > :36:49.be a key issue that this Government will now pursue with the new

:36:50. > :36:53.administration? I can confirm to the honourable gentleman that it is

:36:54. > :36:59.already on the agenda. The Prime Minister is aware of our focus on

:37:00. > :37:04.this issue but it is a question of timing. The Government hasn't got

:37:05. > :37:08.access to the great majority of its ministries or its civil servants and

:37:09. > :37:15.hasn't got access to its assets. It would be premature to be making that

:37:16. > :37:20.the number one issue. The Government is focused on the need to raise and

:37:21. > :37:25.resolve these issues at the right point in this progression and the

:37:26. > :37:33.Prime Minister is notified that we will do so. I think it has been a

:37:34. > :37:38.thoughtful exchange between the Foreign Secretary and his shadow.

:37:39. > :37:42.There are figures of optimism but a lot of sombre atmosphere about this,

:37:43. > :37:45.not least because there is other members that have pointed out we

:37:46. > :37:50.have responsibility for what has happened in Libya.

:37:51. > :37:58.May I say this, I think he has dealt with this issue of technical or

:37:59. > :38:04.other expertise skilfully, I think what the British public would be

:38:05. > :38:10.reluctant to be for any sense of our expertise would be going to help one

:38:11. > :38:15.side or other on what could be a bloody civil war. While I think

:38:16. > :38:20.there are difficult things and there are often no good guys, there must

:38:21. > :38:24.be an appreciation that would be something that would cause angst to

:38:25. > :38:35.public if we are to have a functioning Libya in the years

:38:36. > :38:40.ahead. I'm grateful to my honourable friend, and if only it were as

:38:41. > :38:46.simple as if there were two sides. There are 120 sides. We have to make

:38:47. > :38:48.sure the support is behind Government of National Accord. We

:38:49. > :38:54.have to look for bright spots and one of the positive things is that

:38:55. > :38:58.by and large the different fangses are not motor -- factions are not

:38:59. > :39:04.motivated by ideology as they are in some of the other conflict zones, in

:39:05. > :39:08.particular not motivated by extreme religious ideology. A lot is

:39:09. > :39:14.traditional money and power interests. It is people wanting to

:39:15. > :39:23.protect their local fiefdoms, make sure they get their share of the

:39:24. > :39:26.wealth of state. I think Prime Minister Sarrage is going about this

:39:27. > :39:33.in the right way, going with the grain of Libyan society, and trying

:39:34. > :39:39.to build a consensus around it. What guarantees can he offer that our key

:39:40. > :39:44.partners, particularly in Europe have a coherent strategy on good

:39:45. > :39:50.governance and nation building, as well as migration and terrorism, and

:39:51. > :39:55.what assurances did he get from the the GNA that they have a plan to

:39:56. > :40:01.broaden out this deal so it is not beholden and vulnerable to the rival

:40:02. > :40:07.regional armed factions? Well the most effective step to broaden out

:40:08. > :40:16.the legitimacy of the government will be the vote in the HOR. The HOR

:40:17. > :40:19.is committed by the Libyan political accord, the Libyan political

:40:20. > :40:25.agreement to do that and we hope that will happen soon. On the

:40:26. > :40:37.question of our European partners, look, it is true that amng the other

:40:38. > :40:41.26 states migration is at the top of the agenda and it falls to me to

:40:42. > :40:45.urge them, as I urged the chairman of the select committee that, if we

:40:46. > :40:48.want to make progress on this, we are going to have to try and set

:40:49. > :40:56.this in a context that the makes sense to the Libyans, not just that

:40:57. > :41:01.makes sense to us. I welcome the progress the Foreign Secretary has

:41:02. > :41:05.outlined and appreciate his point about the practical realities on the

:41:06. > :41:08.ground. With that in mind, the long-term prospects for Libya are

:41:09. > :41:17.linked to its economic prospects, which are linked to its oil

:41:18. > :41:24.industry. What steps are UK TI and the British Government taking to

:41:25. > :41:31.ensure that UK industry can play its part? Well, my honourable friend is

:41:32. > :41:37.right, of course Libya has Africa's largest oil and gas reserves and a

:41:38. > :41:42.population of only 6 million. So this is in per capita terms a

:41:43. > :41:47.potentially wealthy country. British companies have played an important

:41:48. > :41:52.role in Libya's oil and gas industry and Prime Minister Sarrage made the

:41:53. > :41:56.point yesterday that BP would be very welcome back in the country. I

:41:57. > :42:05.shall pass that on to BP's management. The Foreign Secretary

:42:06. > :42:13.said that there is no appetite in Libya for foreign combat troops on

:42:14. > :42:19.the ground. Is there any appetite in the Libyan political system for

:42:20. > :42:23.foreign air forces, or foreign naval forces operating in Libyan

:42:24. > :42:31.territorial waters? I think we have seen on the latter point, we have

:42:32. > :42:36.seen already a clear wariness of any suggestion of foreign naval forces

:42:37. > :42:40.operating in Libyan waters, even if the focus is counter migration,

:42:41. > :42:47.rather than counter Daesh. I can't rule out and it would be wrong to

:42:48. > :42:54.rule out any future request for air or naval support to a counter Daesh

:42:55. > :42:58.operation. I can envisage the Prime Minister Sarrage if his Government

:42:59. > :43:04.is successful, being able to muster enough grouped forces to mount --

:43:05. > :43:09.ground forces to mount an attack on the Daesh stronghold around Sirte.

:43:10. > :43:13.Sirte is a coastal port and the Libyans will not be able to develop

:43:14. > :43:17.naval or air assets in any reasonable period of time to support

:43:18. > :43:25.such an operation and it is possible that from a military point of view

:43:26. > :43:28.they would seek assistance. Prime Minister Sarrage would have to

:43:29. > :43:33.balance that military imperative with the political issues that would

:43:34. > :43:37.arise if he were to request foreign assistance. There has been no such

:43:38. > :43:42.request, no discussion of such a request, but if it comes, we will

:43:43. > :43:46.consider it and if we think the UK should take part in such action we

:43:47. > :43:54.will come to the House and allow the House to express an opinion through

:43:55. > :44:03.a vote. A further 21 members are trying to catch my eye. Brevity will

:44:04. > :44:09.assist. I thank my right honourable friend for his statement and I know

:44:10. > :44:14.I may be a lone voice, but I would urge him against Parliamentary

:44:15. > :44:20.approval for every military intervention we take. Can I ask the

:44:21. > :44:25.Foreign Secretary about a strategy to specifically target Daesh,

:44:26. > :44:30.separate, but complimentary to the peace strategy. If we wait for the

:44:31. > :44:36.perfect political settlement, we will wait forever. Well I take my

:44:37. > :44:41.honourable friend's warning on the use of war powers with the

:44:42. > :44:45.importance that it deserves and my my right honourable friend the

:44:46. > :44:48.Defence Secretary published a statement setting out the

:44:49. > :44:52.Government's position. We must maintain the operational flexibility

:44:53. > :44:59.that we need while ensuring that the House of Commons has a proper

:45:00. > :45:06.involvement in any proposed combat deployment. The honourable gentleman

:45:07. > :45:11.asked me, sorry what did he ask me? Daesh. Look, before the Government

:45:12. > :45:16.Government of National Accord was formed, there was a discussion going

:45:17. > :45:20.on among the international community about how we would deal with Daesh

:45:21. > :45:24.if there was no solution on the ground in Libya. We concluded it

:45:25. > :45:29.would be pretty much impossible for us to do so. So I'm pleased that we

:45:30. > :45:39.do now have a government formed in Libya that we can support to do that

:45:40. > :45:47.job. Thank you. UK past intervention in Libya has been a disagser the,

:45:48. > :45:51.the mess we have -- disaster, this cannot happen again. Given that we

:45:52. > :45:55.are offering training and technical support to armed forces away from

:45:56. > :46:00.the front line, could the Secretary of State tell me what amped forces

:46:01. > :46:06.will it be training and supporting, given that Libya has a myriad of

:46:07. > :46:11.competing groups? Well, first, another assertion and I can tell him

:46:12. > :46:16.that it is not the view of the people I met yesterday that the

:46:17. > :46:24.intervention in 2011 was a disaster. It has rid the country of Gaddafi

:46:25. > :46:28.and averted a genocide. He talks in the present tense about training

:46:29. > :46:35.support. I should say yet again we are deliver nothing training support

:46:36. > :46:40.in Libya at the present time. And if any proposals, any request from the

:46:41. > :46:45.Libyan Government comes forward, for training, it would be for militia

:46:46. > :46:50.groups that have signed up to Government of National Accord's

:46:51. > :46:52.security plan and are being incorporated into the Libyan

:46:53. > :47:04.security forces that will be formed from them. Thank you. Like the the

:47:05. > :47:07.honourable lady for Birmingham, I was struck by the Foreign

:47:08. > :47:13.Secretary's correct comments that we need to continue to move against

:47:14. > :47:16.Daesh in Libya. What discussions have been had with gulf state

:47:17. > :47:23.nations in helping with that epest effort? We do of course have

:47:24. > :47:30.continuing discussions with all gulf states. It is well known fact that

:47:31. > :47:36.both Qatar and the UAE have been active in Libya. But it is fair to

:47:37. > :47:40.say that all gulf states have been distracted by the war in Yemen and

:47:41. > :47:50.have not played perhaps as active a role as they did earlier on in this

:47:51. > :47:55.conflict. Given the turmoil in Libya since the five years and one month

:47:56. > :48:08.since the House of Commons authorised action, does he regret

:48:09. > :48:18.having the UK aquay -- agree in the mission to become a mission focussed

:48:19. > :48:23.on regime change? Well, this was a complicated situation opt ground and

:48:24. > :48:28.-- on the ground and having embarked on the the mission to protect the

:48:29. > :48:33.population of Benghazi and having to then follow where that took us in

:48:34. > :48:38.order to protect the population from the retribution that the regime was

:48:39. > :48:45.seeking to vent upon it, we did what we had to do. I think we should be

:48:46. > :48:49.proud of having rid Libya of the tyrant Gaddafi, who had dismantled

:48:50. > :48:55.the structure of government in Libya and that is why Libya has had the

:48:56. > :49:05.problems it has had. There was no Government structure in Libya.

:49:06. > :49:10.Deploying British troops to Libya would add to the demands placed upon

:49:11. > :49:13.them. Can the Secretary of State provide any clarity on how many

:49:14. > :49:19.troops would be necessary and when we will learn from the GNA if

:49:20. > :49:23.British assistance is required. I'm afraid I can't. I can gave personal

:49:24. > :49:27.view that I would expect that we would be talking about training

:49:28. > :49:31.mission on the sort of scale that we are carrying out in other countries

:49:32. > :49:40.around the world. That is to say between tens and hundreds of

:49:41. > :49:45.trainers, not thousands of trainers. The Foreign Secretary says he must

:49:46. > :49:49.tackle Daesh, but Prime Minister Sarrage only operates with

:49:50. > :49:59.permission of the militia, does he not think in certain circumstances,

:50:00. > :50:03.some of the -- militia are a relying on other forces and they are at the

:50:04. > :50:08.heart of Government and where will that leave Libya in the future?

:50:09. > :50:15.There is a misunderstanding about what these militia are. After 2011,

:50:16. > :50:19.Libya fragmented, every city, every town, every region had its armed

:50:20. > :50:26.forces, its armed men protecting their communities. That doesn't make

:50:27. > :50:29.them bad people. They're not extreme Islamists in most cases, they're

:50:30. > :50:35.people who have formed home defence units if you like. They are the only

:50:36. > :50:40.force on the ground. It is not possible to talk about raising a new

:50:41. > :50:46.Libyan armed forces that will take on all these militias, that would be

:50:47. > :50:52.an unrealistic project. The only way forward is to coopt militias into a

:50:53. > :50:58.Libyan armed force and backed by a political system which is highly

:50:59. > :51:02.devolved and assures them of the autonomy and the fair shares of

:51:03. > :51:10.Libya's wealth for the communities that they're seeking to back.

:51:11. > :51:15.Following the point raised by the member for North Antrim about Libyan

:51:16. > :51:18.sponsored IRA murder in Northern Ireland and England, I understand

:51:19. > :51:23.the Foreign Secretary's comments about timing, but given that there

:51:24. > :51:29.is an emerging government in Libya and that we will be releasing

:51:30. > :51:33.something between 7 and 8 billion pounds of frozen assets from this

:51:34. > :51:39.country, will the Secretary of State and his ministerial team continue to

:51:40. > :51:45.do all they can to get compensation for the people who suffered for far

:51:46. > :51:51.too long? Yes, the assurance that I gave to the member for North Antrim

:51:52. > :52:01.extends to the WPC Yvonne Fletcher case. On the floor of the House last

:52:02. > :52:06.week, I urged caution, the member for beck Nam reminded the house of

:52:07. > :52:11.how missions change and the impact on our armed services who may have

:52:12. > :52:18.to make edecisions o'n't hoof. I would -- make decisions on the hoof.

:52:19. > :52:23.In relation, the question is this, we are told in this Parliament, that

:52:24. > :52:28.the North Atlantic treaty organisation is our primary model of

:52:29. > :52:34.defence, yet in this statement, all we have heard and I'm grateful to

:52:35. > :52:40.the EU naval deployment and our European partners, all we heard

:52:41. > :52:45.about was the European Union's role, if the GNA seeks a request, will the

:52:46. > :52:51.Secretary of State advise the House what role is the North Atlantic

:52:52. > :53:02.treaty organisation playing give the organisations that evolve from

:53:03. > :53:11.Jordan to Hungary. I suggest he puts this to his advisor.

:53:12. > :53:20.Nato is our war fighting alliance but we're not talking about

:53:21. > :53:24.fighting, we are talking about real welding and the European Union and

:53:25. > :53:28.bilateral arrangements delivered by other European countries is the

:53:29. > :53:38.right way to go about this. This is not a role for Nato. My right

:53:39. > :53:43.honourable friend and the whole house will recognise that a peaceful

:53:44. > :53:49.Libya is in the interests of the region and Europe. Could he talk

:53:50. > :53:55.about the envisaged timetable he sees for EU discussions to continue

:53:56. > :54:02.and then conclude working closely with the European governments to

:54:03. > :54:06.ensure a colour of -- collective response? I think it would have to

:54:07. > :54:11.be the timetable which will be determined by what is happening on

:54:12. > :54:16.the Libyan side. At the discussion as night we were clear we need to

:54:17. > :54:19.work up a European Union package. Somebody mentioned Turkey. It hasn't

:54:20. > :54:27.escaped the notice of the Libyans how the EU has dealt with Turkey on

:54:28. > :54:34.migration. There will have to be a comprehensive proposal and as soon

:54:35. > :54:38.as is appropriate to make the Libyan Government aware of what such a

:54:39. > :54:43.package might look like, the ball will be in their court to decide

:54:44. > :54:47.whether they wish to request such support. Went as the Foreign

:54:48. > :54:51.Secretary expect to receive the invitation to provide the support

:54:52. > :54:56.that he has mentioned and will he elaborates on what the specific and

:54:57. > :55:03.mutual objectives are, especially the timescales involved. Our troops

:55:04. > :55:10.cannot be involved in an open-ended support. There is a spectrum here.

:55:11. > :55:14.Hard training of troops at infantry level, we are a long way from any

:55:15. > :55:23.request to do that if it comes at all. Advise on structuring military

:55:24. > :55:27.command structures in a civilian led Ministry of Defence, it is quite

:55:28. > :55:31.likely that we will be asked quite soon if we can give advice on that.

:55:32. > :55:42.That is the advice we will probably give from Whitehall. Indeed as my

:55:43. > :55:45.role in the Nato Parliamentary Assembly, I was in Algeria last week

:55:46. > :55:48.and the parliamentarians I met have much experience of bringing a

:55:49. > :55:53.country together after the dog decade. They made it clear they

:55:54. > :55:58.would like to help the Libyan Government through diplomacy and

:55:59. > :56:01.bring together 120 different fractions to come together. They

:56:02. > :56:07.have a lot to offer in the circumstances. Gritty ensured that

:56:08. > :56:11.offers of help Thruway non-military intervention taken as far as they

:56:12. > :56:18.can be with the new Libyan Government? I will be pleased to

:56:19. > :56:22.hear the Algerians wanted to provide assistance based on their own

:56:23. > :56:28.experience of rebuilding a country after a bitter civil war and I am

:56:29. > :56:33.sure the Libyans would be pleased to receive such an offer. I trust the

:56:34. > :56:44.Algerian Parliamentary is felt privileged to meet the honourable

:56:45. > :56:48.gentleman. Come I welcome the ?10 million that you referred to. You

:56:49. > :56:52.looked at security, justice and defence. Can I ask the Minister

:56:53. > :57:02.consider that those serving in the RS -- RUC and PSNI will be part of

:57:03. > :57:05.the security that will be offered? The honourable gentleman raises a

:57:06. > :57:10.good point. There has been an assumption across the House that any

:57:11. > :57:13.training week it would be given by UK military personnel. Some of the

:57:14. > :57:19.training needed will be police training and may be the PSNI might

:57:20. > :57:25.be able to make a contribution to that. It is quite possible that some

:57:26. > :57:29.of the training will be delivered by contractors, often ex-military

:57:30. > :57:37.personnel are working for contractors rather than current

:57:38. > :57:43.serving military personnel. The main concern might constituents have that

:57:44. > :57:48.Libya is the country has the main conduit for illegal immigration from

:57:49. > :57:51.both safe and unsafe countries in Africa. If the Government of

:57:52. > :57:58.National Accord in Libya is unwilling or unable to make this a

:57:59. > :58:02.national priority and if my right honourable friend is unable or

:58:03. > :58:08.unwilling to press the case for how important this is for us, what is

:58:09. > :58:12.the EU plan to prevent this year being one of an absolutely

:58:13. > :58:18.disastrous to set of circumstances where we are about to experience a

:58:19. > :58:25.mass wave of illegal immigration, very dangerously across the

:58:26. > :58:27.Mediterranean towards Italy? Just to reassure my honourable friend, the

:58:28. > :58:31.Libyan Government does understand the importance of this issue. It

:58:32. > :58:38.understands the importance of the Libya because having an organised

:58:39. > :58:42.criminal traffic crosses border undermines Libya 's sovereignty. It

:58:43. > :58:47.understands the importance of addressing this issue for Libya's

:58:48. > :58:52.relations with the international community. The point I was making is

:58:53. > :58:58.we have got to put this agenda in the context of the many other very

:58:59. > :59:02.immediate challenges facing the Libyan people. In answer to his

:59:03. > :59:12.second, what is the EU doing in the meantime? The European naval

:59:13. > :59:18.operation in the Mediterranean is designed to intercept people seeking

:59:19. > :59:25.to migrate on an irregular basis and the European Union from Libya. The

:59:26. > :59:29.global initiative against transatlantic organised crime

:59:30. > :59:36.estimated that the illegal migrant trade is worth 255 to year. The 10

:59:37. > :59:41.million is hugely welcomed in terms of stopping this awful trade but

:59:42. > :59:49.also with the right honourable gentleman confirm it will plug that

:59:50. > :59:54.gap in Libya's economy so we commit something positive? Libya is

:59:55. > :59:59.potentially a rich country. It has significant oil and gas wealth and

:00:00. > :00:08.it has significant assets. The Government will not be lacking in

:00:09. > :00:11.cash. The ?10 million is simply a UK technical assistance fund. It will

:00:12. > :00:16.fund experts, it will fund the commissioning of studies and advice

:00:17. > :00:22.to the Libyan Government in the areas I either land. My right

:00:23. > :00:28.honourable friend will know the entire region of the South is a

:00:29. > :00:33.black hole. Would it have a good idea of what is going on but we know

:00:34. > :00:38.instability and the availability of arms has created a threat for the

:00:39. > :00:43.whole of sub Saharan and West Africa and not only from Daesh but from

:00:44. > :00:46.Boko Haram who have armed themselves from the Gaddafi arsenals. Can he

:00:47. > :00:50.update the House and what the Government is doing to tackle a

:00:51. > :00:56.threat to sub Saharan and West Africa from Libya? The Libyan

:00:57. > :00:59.Government is acutely aware of the threat to its sovereignty from the

:01:00. > :01:04.porosity of its borders to the south porosity of its borders to the south

:01:05. > :01:11.and south-west. I am speculating but that could be one of the areas where

:01:12. > :01:16.international community is asked for sex -- technical support in the

:01:17. > :01:20.future. This is a long border in on populated area ideally suited to

:01:21. > :01:26.policing by technical means rather than the by border guards on the

:01:27. > :01:31.ground. He will be reassured to know that the Prime Minister stated to me

:01:32. > :01:37.clearly yesterday that although his Government is intricately and the

:01:38. > :01:41.world is focused on Tripoli, use costs of the fact that it has to be

:01:42. > :01:47.Government for the east and south as well as a Government for the West.

:01:48. > :01:51.May I press the Foreign Secretary on the issue of where Libyan personnel

:01:52. > :01:57.might be trained in future? You will recall the unhappy saga in 2014 when

:01:58. > :02:02.some 2000 Libyan personnel were trained in Cambridgeshire. That

:02:03. > :02:08.ended badly with a series of violence, sexual assaults in my city

:02:09. > :02:11.of cabbages -- Cambridge when they were left unsupervised. Can he

:02:12. > :02:15.assure residents in Cambridge that there will be no further training of

:02:16. > :02:25.Libyan personnel in Cambridgeshire and can he upped the House -- that

:02:26. > :02:30.has now about the money owing to the authorities after that experience? I

:02:31. > :02:38.was Defence Secretary at the time and I remember the plans the

:02:39. > :02:45.training. It did not end well and the Libyans are acutely conscious of

:02:46. > :02:47.that. This would be a very different operation in very different

:02:48. > :02:51.circumstances. There are no plans yet and there is no request so I

:02:52. > :02:54.can't give the House any further information about what such a

:02:55. > :02:58.training programme might look like and where it will be conducted. I

:02:59. > :03:04.can give him the assurance that the lessons of what happened has been

:03:05. > :03:14.taken on board by the MoD and will be factored into any future plan. If

:03:15. > :03:17.spending 30 times as much on bombing Libya instead of reconstructing it,

:03:18. > :03:21.I wonder if the Foreign Secretary can tell us what is. If the 10

:03:22. > :03:26.million announced today that the conflict security fund, can you tell

:03:27. > :03:34.us how will be counted as ODA, the Nato 2% target and how much will be

:03:35. > :03:39.counted towards both? I will write to the honourable gentleman if I am

:03:40. > :03:44.wrong but I think Libya does not qualify for ODA because of the GDP

:03:45. > :03:50.per Capita of the country. If I am wrong, I will write to him and place

:03:51. > :03:54.a copy in the library. The Foreign Secretary spoke about the situation

:03:55. > :03:57.in Benghazi in the past but the situation remains extremely volatile

:03:58. > :04:03.and serious and Reuters were poisoned -- talking of extant ting

:04:04. > :04:07.-- reporting of extensive fighting. I wonder what discussions he had

:04:08. > :04:10.about the situation around Benghazi and whether he expects any requests

:04:11. > :04:17.for support to do with operations in that region of Libya? We did discuss

:04:18. > :04:20.this issue and we discussed it in the context of general -- of the

:04:21. > :04:25.general and the Libyan national army who are active in this area. This is

:04:26. > :04:29.one of the challenges the Prime Minister faces. One of the most

:04:30. > :04:37.effective military units available is under the command of the general

:04:38. > :04:41.who is a better while for those people who are supporters of the

:04:42. > :04:44.Government. The Government does have -- doesn't have an alternative and

:04:45. > :04:53.the effectiveness of the guard force and the LMA in stemming Daesh

:04:54. > :04:57.attacks is an important part of the Government's arsenal of defences. It

:04:58. > :05:09.has to get all these units under some form of effective central

:05:10. > :05:19.control. We implied -- we wanted to prevent and imminent large attacks

:05:20. > :05:24.on civilians in Benghazi. We said we were strung with US you build your

:05:25. > :05:28.country for the future. Will the secretary of state guarantee we will

:05:29. > :05:33.fulfil our promises? That is what we are doing. It has taken a

:05:34. > :05:37.regrettably long time to get the end of the campaign in 2011, the

:05:38. > :05:42.overthrow of Colonel Gaddafi to the point where the Libyan people are

:05:43. > :05:45.now seriously starting to seek to rebuild their democracy and economy.

:05:46. > :05:56.They are now looking to do so and we will be support them. The idea of

:05:57. > :06:02.Daesh being located in Libya is worrying enough in its own right.

:06:03. > :06:07.The prospect of them moving their operational headquarters from Iraq

:06:08. > :06:11.and Syria and Libya should be deeply worrying to us all and especially

:06:12. > :06:15.the Secretary of State. What discussions has he had both with his

:06:16. > :06:20.Libyan counterpart but also with those countries neighbouring Libya

:06:21. > :06:25.to stem the flow of Islamic militants into the country? I have

:06:26. > :06:29.had discussions but with the Libyans and also with the Egyptians and the

:06:30. > :06:36.Tunisians who are very concerned about this. The problem is the

:06:37. > :06:40.principal route of access into Libya for Daesh militants appears to be by

:06:41. > :06:50.sea and the Libyans are struggling to control that route at the moment

:06:51. > :06:55.with that present resources. We know from experience elsewhere that in

:06:56. > :06:59.fledgling democracy is and troubled states that are rife with armed

:07:00. > :07:06.groups that often corruption and conflict become drivers for each

:07:07. > :07:11.other. We also know that there are people who can sort through Livia.

:07:12. > :07:14.If the Foreign Secretary right to minimise the relevance of a

:07:15. > :07:22.humanitarian and civil contribution at least in the medium term? I say

:07:23. > :07:28.Libya is not a poor country. There are tens of billions of dollars of

:07:29. > :07:32.Libyan assets owned by the Libyan people available to the Libyan

:07:33. > :07:37.Government wants the UN decides to unfreeze control of those assets. I

:07:38. > :07:42.don't believe Libya needs humanitarian support in the

:07:43. > :07:44.conventional sense. What it needs is technical support to build the

:07:45. > :07:46.Government structures that will allow the UN to release its own

:07:47. > :07:59.money to it. Could the Foreign Secretary say

:08:00. > :08:04.something about the use of embedded troops in any future operation? And

:08:05. > :08:13.with the House be consulted on any British military personnel embedded

:08:14. > :08:16.in the forces of other nations? The statement that the Defence

:08:17. > :08:20.Secretary made yesterday clarified this point. Where troops or

:08:21. > :08:27.personnel are embedded in the military forces of other nations,

:08:28. > :08:33.they are treated as being part of those forces, they are not covered

:08:34. > :08:38.by the commitment we have made, to come back to the House, it would be

:08:39. > :08:42.absurd if a British pilot embedded in the US Navy, for example,

:08:43. > :08:48.retaining our carrier -based skills ahead of the commission of our own

:08:49. > :08:51.carriers in 2018, had to be the subject of a debate in the House of

:08:52. > :08:58.Commons because of a decision taken by the United States government.

:08:59. > :09:02.In answer to a question last week the Foreign Secretary's ministerial

:09:03. > :09:08.colleagues said they would facilitate a visit of UK victims of

:09:09. > :09:14.terrorism that involved Semtex, in the near future. Is there any

:09:15. > :09:20.indication or timescale as to when we can expect this visit?

:09:21. > :09:25.I do not think that the conditions would be right, right now, to

:09:26. > :09:30.facilitate such a visit. And I can't see exactly what the point of such a

:09:31. > :09:34.visit with the bat this stage. Once the government of National Accord is

:09:35. > :09:37.established, with access to its records and competent civil

:09:38. > :09:43.servants, then I am certainly prepared... And once our own

:09:44. > :09:49.ambassador is back in Tripoli, then I would be prepared to see what we

:09:50. > :09:56.could do to facilitate such a visit. Point of order, Mr Andrew Quinn.

:09:57. > :10:00.In Treasury questions earlier, a minister, inadvertently or

:10:01. > :10:16.vertically, besmirched the work of the House of Commons library. --

:10:17. > :10:19.advertently. Given that their work is usually valued by all sides of

:10:20. > :10:22.the House and the servants of this House are able to come into this

:10:23. > :10:27.chamber to defend their work, how can we put on the record that

:10:28. > :10:31.members of Parliament of all political persuasions of value and

:10:32. > :10:37.respect the work and research of the House of Commons library?

:10:38. > :10:40.I am grateful for the point of order. I would not seek to comment

:10:41. > :10:48.on the merits or otherwise of a particular report, suffice to say

:10:49. > :10:56.however, I think the House of Commons library service is held in

:10:57. > :10:59.universal esteem. I have always had the highest regard to the

:11:00. > :11:07.professionalism, the competence, the Internet, and the analytical skill

:11:08. > :11:12.of those who work in the service -- intellect. I was told, before

:11:13. > :11:16.employing researchers, first Sea and realise the benefits that the

:11:17. > :11:21.library service can bring. I was told that 19 years ago. It was true

:11:22. > :11:29.then and it is true now, I am sure nobody would suggest otherwise. If

:11:30. > :11:36.there are no more points of order we come to the ten minute rule motion.

:11:37. > :11:40.I beg to move that they should be given to bring a bill that requires

:11:41. > :11:44.the labelling of farm produce sold in the UK to include country of

:11:45. > :11:50.origin, and whether produced in accordance with designated animal

:11:51. > :11:54.welfare standards. I am asking for more transparency so that the

:11:55. > :11:55.British consumer can make a more informed decision about what they

:11:56. > :12:06.are buying. The current situation is confusing,

:12:07. > :12:11.bolted on to EU legislation, with some other offering greater clarity

:12:12. > :12:15.than others. It took a Europe-wide scandal on horse meat finding its

:12:16. > :12:20.way into our food chain to jolt the commission into action. It was a big

:12:21. > :12:22.wake-up call to the meat industry. New EU rules are already being

:12:23. > :12:28.implemented in the UK regarding country of origin labelling for

:12:29. > :12:33.unprocessed pork, lamb, and poultry meat. And I stress, unprocessed,

:12:34. > :12:36.because there's more confusion surrounding imported meat that is

:12:37. > :12:39.processed into sausages then labelled as a British product but

:12:40. > :12:45.that is a can of worms for another day. Although there are better rules

:12:46. > :12:49.on the traceability of meat product of this is not true for milk used in

:12:50. > :12:54.dairy products. Our dairy farmers are having a tough time of it and

:12:55. > :12:59.now dresses are very low. With Britain operating under current EU

:13:00. > :13:06.rules we cannot unilaterally bring in mandatory country of origin

:13:07. > :13:09.labelling -- prices are very low. So far the government has not been able

:13:10. > :13:13.to convince the commission, which is regrettable. The commission and the

:13:14. > :13:17.favours a voluntary code on dairy products and a recent EU report

:13:18. > :13:22.covering dairy indicated it felt that producing such a measure would

:13:23. > :13:27.be costly and bureaucratic. However our own farming Minister has said, I

:13:28. > :13:32.do not accept the argument that it would be too complicated to do this,

:13:33. > :13:35.it might be on some dairy product but an butter, cheese, and some

:13:36. > :13:41.staple product, you could deliver country of origin labelling

:13:42. > :13:46.relatively inexpensively. But we are not going very fast on this agenda.

:13:47. > :13:51.Doctor Judith O'Brien, Chief Executive of dairy UK said, there

:13:52. > :13:55.obvious consumer demand the clearer information on the country of origin

:13:56. > :14:01.of food product is demonstrated by existing rules on fresh meat. A

:14:02. > :14:06.mandatory labelling system would help the dairy industry showcase its

:14:07. > :14:10.product and reassure consumers on its provenance. Clear mandatory

:14:11. > :14:14.labelling is what other government wants. It is in the interest of

:14:15. > :14:17.British farmers and consumers. The UK Government has said there is

:14:18. > :14:21.great potential for significant long-term growth in the dairy sector

:14:22. > :14:27.with the global market expected to grow at over 2% per year for the

:14:28. > :14:34.next ten years. In or out of the EU British dairy farmers should have a

:14:35. > :14:37.bright future. A farm prices report said that it is unacceptable that

:14:38. > :14:42.consumers cannot buy British in confidence and could be misled as to

:14:43. > :14:46.country of origin when they are buying food in the supermarket. It

:14:47. > :14:49.is essential that labelling and produce is improved and I wholly

:14:50. > :14:56.agree. Those consumers who cared deeply about animal welfare need

:14:57. > :15:00.clearer labelling regarding animal rearing processes as well. Consumers

:15:01. > :15:04.do care about how animals in the food chain RKO for in their short

:15:05. > :15:15.lives. There are specific EU requirements and the keeping of

:15:16. > :15:21.pigs, hence. -- hens. It specifically ruled out the use of

:15:22. > :15:30.individual stalls for pregnant sows in 2013. They were banned for

:15:31. > :15:35.cruelty reasons in the UK in 1999. Specifically banned in the rest of

:15:36. > :15:41.the EU from 2013. Shockingly, more than two years on from this, six EU

:15:42. > :15:44.countries are still officially noncompliant with their own key

:15:45. > :15:48.welfare standards. This wilful noncompliance cuts cost for those

:15:49. > :15:57.farmers but the picture it misery for the animals. -- perpetuates. The

:15:58. > :16:01.consumer has a right to know if pork has been reared in band conditions.

:16:02. > :16:10.A campaign group said, the country is -- countries failing to comply

:16:11. > :16:13.France, Cyprus, Greece, Finland, and Slovenia, saying it is appalling

:16:14. > :16:24.that the EU commission fails to enforce its own band. -- ban. We

:16:25. > :16:30.need a level Langfield and production and animal welfare. --

:16:31. > :16:34.playing field. The German of the rural affairs select committee

:16:35. > :16:43.accused the European Commission prevaricating -- chairman. Giving EU

:16:44. > :16:51.farm is an unfair flouting of the ban on sow stalls. 60% of our pork

:16:52. > :16:56.is imported, undercutting our own farmers. If the consumer wishes to

:16:57. > :17:03.be sure that their pork is cruelty free then clear, mandatory labelling

:17:04. > :17:08.is essential. We know that the EU has been slow in obliging states to

:17:09. > :17:13.adopt high welfare standards, perhaps this is why the strategy

:17:14. > :17:18.does not plan to extend their welfare labelling beyond eggs, it

:17:19. > :17:21.would certainly shame some key EU countries about unacceptable farming

:17:22. > :17:26.practices. The animal welfare foundation said that as demand for

:17:27. > :17:27.livestock continues to surge particularly in developing

:17:28. > :17:31.countries, the importance of ethically sourced food is more

:17:32. > :17:38.important than ever as more animals are farmed. In this country we

:17:39. > :17:44.already have a voluntary scheme demonstrating clear animal welfare

:17:45. > :17:47.and labelling. It demonstrates high quality British produce and that

:17:48. > :17:52.food has been farmed, processed, and packed in the UK. It is Europe's

:17:53. > :18:02.food is traceable, safe to eat and produced responsibly. -- it ensures

:18:03. > :18:08.that. It is not ) that European countries can dodge welfare issues.

:18:09. > :18:12.-- it is not fair. They can hide anonymously behind inadequate

:18:13. > :18:16.labelling. If British consumers were made aware of the lower welfare

:18:17. > :18:21.standards in many European countries I believe they would choose to buy

:18:22. > :18:25.British and by compassionately. We would know where our milk has come

:18:26. > :18:30.from, where an animal has been reared, and how well it was treated

:18:31. > :18:35.in its life and potentially even how it was slaughtered. By championing a

:18:36. > :18:39.robust, sustainable, compassionate British farming industry we are

:18:40. > :18:44.delivering jobs, prosperity, and it's during our own food security.

:18:45. > :18:47.This is what the public wants and I would like to see our government

:18:48. > :19:02.ring a ill in that they do exactly that. -- bring a bill in.

:19:03. > :19:13.As many of that opinion say aye? On the contrary, no? The ayes have it.

:19:14. > :19:23.Who will bring in the bill? Stephen McPartland, will weaken,

:19:24. > :19:49.near Paris, Nigel Evans, and myself. -- Neil Harris.

:19:50. > :19:57.Farm produce labelling requirement will.

:19:58. > :20:04.On what day? Friday, May six.

:20:05. > :20:12.The Kirk will now proceed to read the orders of the day.

:20:13. > :20:15.Bank of England public services built to be considered.

:20:16. > :20:18.We begin with new clause 12 with which it will be convenient to

:20:19. > :20:24.consider the new clause and amendments are listed on the revised

:20:25. > :20:30.selection paper. To move new clause 12.

:20:31. > :20:37.Thank you, Madam Deputy Speaker. I moved government new clause 12, and

:20:38. > :20:42.emphasise how the Treasury Select Committee is an esteemed committee

:20:43. > :20:46.of this House and provides exceptional scrutiny of the

:20:47. > :20:52.government and its regulators. Through its programme of

:20:53. > :20:55.pre-commencement hearings its questions several appointees before

:20:56. > :20:58.they start work. After they have started that they can expect to

:20:59. > :21:04.appear regularly before the committee and the public can expect

:21:05. > :21:07.them to be held firmly to account. The government welcomes this

:21:08. > :21:12.scrutiny of appointees, it is a critical democratic function. That

:21:13. > :21:15.is why we have tabled the new clause to guarantee that in statute the

:21:16. > :21:21.committee always has the chance to scrutinise a new chief executive of

:21:22. > :21:26.the SCA before they start work. Since tabling the amendment... I

:21:27. > :21:36.give way. Will this be setting a trend? Which

:21:37. > :21:39.other important posts or city institutions would now be

:21:40. > :21:46.appropriate for a similar process of approval?

:21:47. > :21:53.I am speaking very narrowly to a particular new clause 12, I am sure

:21:54. > :21:57.it will be something that other committees and the Treasury Select

:21:58. > :22:00.Committee looked at again in future. I expect it to be part of the

:22:01. > :22:04.ongoing discussions between Parliament and the executive. But I

:22:05. > :22:11.speak to the very narrow characteristics of our government

:22:12. > :22:14.new clause 12 this afternoon. Since we tabled the amendment and there

:22:15. > :22:20.have been further discussions with the chair of the Treasury Select

:22:21. > :22:25.Committee over the role of the appointment of the Chief Executive

:22:26. > :22:31.of the SCA and I'm pleased to announce we have found a way of

:22:32. > :22:34.scrutinising further than the context of this legislation, indeed,

:22:35. > :22:38.today the Chancellor has written to the chair of the committee agreeing

:22:39. > :22:43.that the government will make appointments to the Chief Executive

:22:44. > :22:47.of the SCA in such a way to ensure that the Treasury Select Committee

:22:48. > :22:51.can hold a hearing before the appointment is formalised. I give

:22:52. > :22:57.away. I am most grateful. Is the letter in

:22:58. > :23:05.the vote office now, if it has already been penned?

:23:06. > :23:08.The letter is in my binder, and I am very happy, provided the chair of

:23:09. > :23:14.the select committee does not object, to read that out. And if it

:23:15. > :23:18.has not already happened, I will put a copy in the House of Commons

:23:19. > :23:21.library. I am sure that the chair of her select committee will be more

:23:22. > :23:25.than happy to share it. She led me to read it out in full? By popular

:23:26. > :23:35.demand, here is the letter. We have considered the role of the

:23:36. > :23:37.Treasury Select Committee on scrutinising the appointment of the

:23:38. > :23:41.Chief Executive of the Financial Conduct Authority. This scrutineer

:23:42. > :23:45.is important and welcome. I would ensure that appointments to the

:23:46. > :23:48.Chief Executive of the FCA are made in such a way as to ensure the

:23:49. > :23:52.Treasury Select Committee is able to hold a hearing after the appointment

:23:53. > :23:56.is announced but for it is formalised. Should the Treasury

:23:57. > :24:01.Select Committee recommend in his report that the appointment be put

:24:02. > :24:03.as a motion to the whole House, the government will make time for this

:24:04. > :24:12.motion and respect the decision of the House. Additionally, I will

:24:13. > :24:17.speak any future bill to make changes to the legislation governing

:24:18. > :24:20.a to the FCA, CEO, to make the appointees subject to a fixed

:24:21. > :24:26.five-year term. This does not apply to Andrew Bailey library -- recently

:24:27. > :24:31.announced, but would first apply to his successor and I believe these

:24:32. > :24:34.changes will reinforce the Treasury Committee's important scrutiny role.

:24:35. > :24:38.That is the end of the quote in terms of the letter. I give way to

:24:39. > :24:43.the Shadow Chancellor. It would be hobbled to ensure the House that

:24:44. > :24:49.that future legislation would be sooner rather than later. -- it

:24:50. > :24:53.would be helpful. Indeed. And I am sure he will therefore welcome the

:24:54. > :25:00.addition of government new close 12 to the bill today and he will also

:25:01. > :25:04.welcome news that the government will take the appropriate earliest

:25:05. > :25:20.opportunity to reflect that, and indeed, the earliest possible

:25:21. > :25:26.opportunity will be something that the government will consider very

:25:27. > :25:30.carefully following today's session. As I mentioned in the letter, should

:25:31. > :25:34.the Treasury Select Committee follow the hearing, the pre-commencement

:25:35. > :25:40.hearing with a report and recommend in its report that the appointment

:25:41. > :25:44.be put as a motion to the whole House, the government will make time

:25:45. > :25:46.for this motion and, should it result in a boat, the government

:25:47. > :25:53.will respect the decision of the House. As I said in my reply to the

:25:54. > :26:02.Shadow Chancellor, we will also seek an opportunity to alter the

:26:03. > :26:07.arrangement to make the appointee subject to a fixed five-year term. I

:26:08. > :26:10.can confirm that Andrew Bailey, the new CEO has been appointed to a

:26:11. > :26:17.five-year tour which can be renewed, and so, this agreed process would

:26:18. > :26:21.first apply to his successor. This agreement is the right way to

:26:22. > :26:26.reinforce the crucial scrutiny role of the Treasury Select Committee. I

:26:27. > :26:31.give way. I am grateful to the Minister. She is being extremely

:26:32. > :26:36.generous. What the minister says is extremely welcome and a significant

:26:37. > :26:41.step forward. Could the Minister explain why the Chancellor felt it

:26:42. > :26:45.was better not to insert this into the legislation but to have an

:26:46. > :26:52.arrangement through an exchange of letters's the tabled or amendment on

:26:53. > :26:55.Thursday. And as I mentioned in my remarks, there have been further

:26:56. > :26:58.discussions with the Chair of the Treasury Select Committee and I am

:26:59. > :27:03.delighted to be able to announce the result of those discussions today

:27:04. > :27:08.from the dispatch box. I would also like to take a moment to address the

:27:09. > :27:12.question of dismissals of the FCA Chief Executive. I can confirm that

:27:13. > :27:16.the government does not have the power, except in limited

:27:17. > :27:20.circumstances, to dismiss the Chief Executive of the FCA during his or

:27:21. > :27:26.her term of office. I refer the House to schedule one Z a to the

:27:27. > :27:30.financial services and markets Act 2000, paragraph four, which applies

:27:31. > :27:35.to the Chair and external members as well as the CEO. It says, "The

:27:36. > :27:40.Treasury may remove an appointed member from office on the grounds of

:27:41. > :27:46.incapacity or serious misconduct or on the grounds that in all the

:27:47. > :27:48.circumstances, the member's financial or other interests are

:27:49. > :27:52.such as to have a material effect on the extent of the functions as

:27:53. > :27:58.member as it would be proper for the person to discharge", but the

:27:59. > :28:04.lawyers are clear, those are the only reasons the Treasury can

:28:05. > :28:09.dismiss an FCA Chief Executive Tom incapacity, serious misconduct,

:28:10. > :28:15.conflicts of interest. And I hope that offers the House considerable

:28:16. > :28:20.reassurance. I give way. It is worth saying what happened in relation to

:28:21. > :28:24.Maarten Wigley in this regard. He was not technically dismissed but

:28:25. > :28:29.has term was not renewed. The situation was straight forward last

:28:30. > :28:33.year an announcement was made, July 2014 that there would not be a

:28:34. > :28:41.renewal, which would have taken place in March 2016, and as a

:28:42. > :28:47.result, he left his office six months early. I accept that might

:28:48. > :28:49.have been a mutual decision between the Treasury and Mr Wheatley, but it

:28:50. > :28:55.certainly gave the impression that if it was not a fully fledged

:28:56. > :29:05.dismissal, ultimately, the Exeter office came six months before the

:29:06. > :29:10.end of a fixed term. -- the exit from office. The honourable

:29:11. > :29:14.gentleman has stated a fact about the term of office to which he was

:29:15. > :29:21.appointed and the government chose not to renew that term of office. I

:29:22. > :29:24.think it is appropriate to put on tribute what I hope is a cross-party

:29:25. > :29:28.tribute to the excellent work of the acting Chief Executive, Tracy

:29:29. > :29:36.McDermott, who stepped into the role at that time and has carried out

:29:37. > :29:42.that role for almost a full year, absolutely in an exemplary fashion.

:29:43. > :29:46.Any further questions on this section? I am going to move on to

:29:47. > :29:52.the question of evolution, amendments referring to devolution.

:29:53. > :29:56.No further interventions. Madame Liberty Speaker, the next set of

:29:57. > :30:01.amendments in the name of the honourable member for East Lothian,

:30:02. > :30:07.the member for Carmarthen and Andy honourable member for Kirkcaldy and

:30:08. > :30:13.Cowdenbeath forced us to ask exactly who the bank works for. The answer

:30:14. > :30:19.must be the entire United Kingdom. Indeed, this is emphasised in its

:30:20. > :30:22.mission statement to promote the good of the people of the United

:30:23. > :30:27.Kingdom by maintaining monetary and financial stability. To fulfil this

:30:28. > :30:30.mandate the Bank of England goes to great lengths to make sure that it

:30:31. > :30:34.has a comprehensive understanding of the economic and financial situation

:30:35. > :30:40.across all corners of the United Kingdom. The bank has a network of

:30:41. > :30:43.12 agencies which are located across Scotland, Wales, Northern Ireland

:30:44. > :30:50.and the regions of England. Each year those agents undertake some

:30:51. > :30:53.5500 company visits and participate in panel discussions with

:30:54. > :30:59.approximately a further 3500 businesses. In this context,

:31:00. > :31:04.imposing a requirement to have regard to regional representation is

:31:05. > :31:07.unnecessary. A comprehensive framework for regional information

:31:08. > :31:14.gathering already exists. I give way to the normal gentleman. Please

:31:15. > :31:17.inform me who the Welsh representative is because I have no

:31:18. > :31:24.idea who represents Wales on the Bank of England. I will make sure

:31:25. > :31:29.that he or she makes himself or herself known to him with the

:31:30. > :31:36.greatest of speed. It is important to point out that these agents don't

:31:37. > :31:42.engage with us as politicians. I know that the one for the West

:31:43. > :31:45.Midlands and Worcestershire is very engaged with local businesses

:31:46. > :31:51.although I, as a politician, have never met him, and that is no way

:31:52. > :31:56.that it should work. I realise the Minister is trying to be hopeful,

:31:57. > :31:58.but she must recognise the reserve strategic defence between the

:31:59. > :32:03.process of information- gathering through agents and policy-making

:32:04. > :32:08.through the bodies of the bank itself and that is where we are

:32:09. > :32:13.asking for representation. I will be getting to that point as I carry on.

:32:14. > :32:16.As always with the honourable gentleman I am seeking to be helpful

:32:17. > :32:25.so hopefully he will enjoy those remarks when I get to them. In terms

:32:26. > :32:30.of the context he asks, by imposing a requirement as he does in his

:32:31. > :32:33.amendment to have regard to regional representation on the court,

:32:34. > :32:37.effectively the board of directors of the Bank of England, we believe

:32:38. > :32:40.that is unnecessary because of this framework for regional information

:32:41. > :32:46.gathering that already exists, and also, if we were to insist that we

:32:47. > :32:49.find a candidate with the perfect profile for them to serve on the

:32:50. > :32:54.court, only to downgrade them because they lived in an

:32:55. > :32:58.oversubscribed part of the country in terms of representation we did

:32:59. > :33:05.not believe that would be the most effective way to produce an effect

:33:06. > :33:09.of court. I have been clear that in setting both monetary and is

:33:10. > :33:12.financial stability policy the bank must take into account economic

:33:13. > :33:17.conditions in and the impact of policy decisions on every part of

:33:18. > :33:23.the UK. Monetary and financial stability policy must be set on a

:33:24. > :33:28.UK- wide basis. None of the 65 million people this House represents

:33:29. > :33:31.would be well served if different capital requirements applied to

:33:32. > :33:36.banks in different parts of the UK. Monetary policy must be consistent.

:33:37. > :33:41.It is impossible to set different interest rates in one region versus

:33:42. > :33:45.another. Monetary and financial stability are rightly reserved

:33:46. > :33:51.policy areas. The men and women who make up the Policy Committees must

:33:52. > :33:56.have their decision scrutinised, but policy must be set UK - wide. It is

:33:57. > :33:59.this Parliament that must hold them to account. It is this Parliament

:34:00. > :34:04.that holds power of reserved matters as these issues right we are, and it

:34:05. > :34:08.is as Parliament that represents people from every part of the

:34:09. > :34:13.country on an equal basis. Likewise, it ministers who are accountable to

:34:14. > :34:16.this House and who hold positions with the support of a majority of

:34:17. > :34:19.the House of Commons who must be responsible for making the external

:34:20. > :34:22.appointments to the Monetary Policy Committee with each member

:34:23. > :34:26.responsible for considering the impact of their policy decisions on

:34:27. > :34:33.all 65 million people in the UK. Madam Deputy Speaker, we return to

:34:34. > :34:38.the question of the bank was sows hundred -year-old name. It is

:34:39. > :34:41.important to recognise the reputation associated with the name

:34:42. > :34:45.built up over such a long period. During this time the bank has become

:34:46. > :34:50.globally renowned as a strong, independent Central Bank. We should

:34:51. > :34:53.not underestimate the importance of this. International confidence in

:34:54. > :34:59.the Bank of England helps support international confidence in our

:35:00. > :35:02.economy and currency. Turning now to the monetary framework, the

:35:03. > :35:06.government amendment that we have tabled this week is modest. The bill

:35:07. > :35:09.reduces the minimum frequency of monetary policy at the meetings from

:35:10. > :35:14.monthly meetings to at least eight meetings in every calendar year and

:35:15. > :35:17.are meant that are the reporting requirements of the Monetary Policy

:35:18. > :35:22.Committee to match. I give way to the honourable gentleman. I thank

:35:23. > :35:26.the Minister for giving way. She moved on very quickly on the matter

:35:27. > :35:31.of the name. I just wanted to clarify whether or not the

:35:32. > :35:34.government has a view on changing the name of the Bank of England in

:35:35. > :35:37.order to reflect the fact that it is in fact the bank of all of the

:35:38. > :35:43.United Kingdom ommer notwithstanding the fact that in normal everyday

:35:44. > :35:47.parlance it will still be referred to as the bank of England, it's long

:35:48. > :35:52.and proper title surely should reflect all of the nations of the

:35:53. > :35:56.native kingdom. In fact the government was founded by someone

:35:57. > :36:02.from Scotland. He's absolutely right draw attention to the fact that this

:36:03. > :36:04.is an historical anomaly. I would be the first to accept that the

:36:05. > :36:07.monetary policy of the bank of England is set for the whole of the

:36:08. > :36:12.United Ingram, but that does not mean to say that we are going to

:36:13. > :36:15.accept the amendment tabled today to change the name of the Bank of

:36:16. > :36:19.England because we think that it is well established over 300 years that

:36:20. > :36:25.it is called the Bank of England. I think the Treasury are in this

:36:26. > :36:30.instance right not to change the name. The bank of England has a

:36:31. > :36:33.brand and it could be a history lesson for those on the opposite

:36:34. > :36:38.benches. The Bank of England was founded in 19 6094, before I drop

:36:39. > :36:42.the Act of Union that might otherwise have had an impact on his

:36:43. > :36:47.initial name but the brand that it has is important and I would rather

:36:48. > :36:49.hope at least that those on the other parts of the United Kingdom

:36:50. > :36:55.would not feel that their interests are being downgraded just by not

:36:56. > :36:59.appearing in the headline name, not trees that are not least for the

:37:00. > :37:04.reasons that have been set out, that the recognise that it acts for the

:37:05. > :37:13.entirety of the United Kingdom rather than just England. On that

:37:14. > :37:18.point, I hope that his support of the United nature of our kingdom

:37:19. > :37:24.means that his party has now moved on from the discussions of last year

:37:25. > :37:27.were they wanted to break up the United Kingdom, accept the settled

:37:28. > :37:31.will of the Scottish people, that they will continue to benefit from

:37:32. > :37:33.the monetary policy established right across the country. I give way

:37:34. > :37:48.to the gentleman. Further to the point, in that

:37:49. > :37:56.regard, the amendment put forward by my colleague from East Lothian, it

:37:57. > :38:02.actually will address that issue. It is the England and Wales Cricket

:38:03. > :38:04.board, officially, when it comes to the cricket side, but of course, it

:38:05. > :38:11.is named England for promotional purposes. Even if the

:38:12. > :38:16.well-intentioned amendment of my colleague from the Scottish National

:38:17. > :38:22.party, the anchor of England would still for all intent and purposes be

:38:23. > :38:29.known as the Bank of England. -- the honourable gentleman tempts me down

:38:30. > :38:35.a path towards comparisons in terms of sports teams, which I shall

:38:36. > :38:41.decline to be tempted down. In the terms of the amendments we

:38:42. > :38:44.have tabled on the monetary Wallasey committee, the amendment we have

:38:45. > :38:49.tabled is modest. It reduces the minimum frequency of meetings from

:38:50. > :38:53.monthly to at least eight meetings in every calendar year. Our

:38:54. > :38:58.amendments are simply just the reporting requirements to match. The

:38:59. > :39:06.amendment in the name of the member for, and used suggests three add a

:39:07. > :39:11.second policy objective of maximising employment. We conducted

:39:12. > :39:17.a review of the monetary policy framework in 2013. It concluded that

:39:18. > :39:21.a flexible inflation targeting framework was the best approach.

:39:22. > :39:26.Employment is already explicitly part of the committee objectives.

:39:27. > :39:29.The secondary objective is, and I quote, to support the economic

:39:30. > :39:34.policy of the government including the objectives for growth and

:39:35. > :39:38.employment. The most recent monetary policy committee remit letters

:39:39. > :39:44.summarised the government economic policy is, I quote, to achieve

:39:45. > :39:53.strong, sustainable, more balanced route across the country and between

:39:54. > :39:59.industries. I give away. Thank you. She is taking refuge in

:40:00. > :40:04.the existing mandate for the Bank of England, a mandate which we all

:40:05. > :40:08.know, both sides of the floor, has long since become redundant. The

:40:09. > :40:12.inflation target has been dead in the water for years and years and

:40:13. > :40:17.years because inflation is nowhere near 2% and not likely to be that

:40:18. > :40:22.for a long long time. We are looking for other policy measures to replace

:40:23. > :40:26.the 2% inflation target, that is what is implicit in the amendment.

:40:27. > :40:30.Can the Minister please address what future targets the anchor of England

:40:31. > :40:39.should have to address a deflation Iraq rather than an inflationary

:40:40. > :40:42.error, the last 20 years? He asks an important question and there are

:40:43. > :40:48.many opportunities in Parliament, in terms of scrutiny of the bank to ask

:40:49. > :40:53.these important questions, and the mechanism the government chooses to

:40:54. > :41:02.use is the letter process, and the remit. But he and I are both old

:41:03. > :41:08.enough to know how inflation... I know, surely not! How inflation has

:41:09. > :41:12.changed over the years. I think we should all welcome in this House the

:41:13. > :41:18.significant lowering of inflation expectations, and I think we should

:41:19. > :41:21.all remember how important it is that we continue to ask the Bank of

:41:22. > :41:27.England to keep inflation under control and we never return to the

:41:28. > :41:31.kind of impoverishing inflationary policies that so harm to people in

:41:32. > :41:44.the 1970s, particularly the poorest and the oldest in society. Indeed,

:41:45. > :41:47.price stability must take primacy, a single objective is the best way to

:41:48. > :41:51.me sure the inflation target is credible. This in turn anchors

:41:52. > :41:57.all-important expectations and helps keep inflation under control. The

:41:58. > :42:01.system has shown it produces good Labour market outcomes as well.

:42:02. > :42:05.Despite the global uncertainty we have record numbers of people in

:42:06. > :42:09.work. An unemployment rate that is at its lowest in a decade. And a

:42:10. > :42:20.claimant count that has not been lower for over 40 years. Targeting

:42:21. > :42:26.low inflation is yours -- ensures that... I give way.

:42:27. > :42:31.I can remember what inflation was like in the 1970s. It does seem that

:42:32. > :42:35.the Bank of England so monetary policy here is to keep inflation

:42:36. > :42:42.rate down. Surely we must recognise that inflation has been well below

:42:43. > :42:45.the 2% target for a long time now. Does she feel that either there

:42:46. > :42:49.should be a different inflation target, or that there should be a

:42:50. > :43:00.different set of remit of the Bank of England to recognise that,

:43:01. > :43:02.without taking an error if we granted that inflation can ever be

:43:03. > :43:06.vanquished, but recognising that there are other aspects of the

:43:07. > :43:11.economy that the Bank of England in relation to monetary policy should

:43:12. > :43:15.prepare for attention? My honourable friend is an extremely

:43:16. > :43:19.wise and knowledgeable person, I will not refer in any way to his

:43:20. > :43:24.age, he highlights an important point. And emphasises the

:43:25. > :43:32.behavioural characteristic of the recency affect, in that we recognise

:43:33. > :43:36.today inflation is well below the 2% target but it was only in the life

:43:37. > :43:43.of the last Parliament that it was above 5%, so even in the six years I

:43:44. > :43:50.have been a member we have tested the parameters of the inflation

:43:51. > :43:54.target. I do not think there's any need, in these discussions this

:43:55. > :44:00.afternoon, to make any changes to that. If I may just conclude my

:44:01. > :44:06.remarks by speaking briefly on amendments six, seven, and new

:44:07. > :44:11.clause 13. Amendment six states that the controller may enquire into the

:44:12. > :44:13.bank's success in state policy objectives but shall not enquire

:44:14. > :44:19.into the desirability of such objectives being set. The bill will

:44:20. > :44:25.have that exact effect. Amendment six also controls how the auditor

:44:26. > :44:32.general should submit a port. Parliament has designated to the

:44:33. > :44:35.control of the content of national audit office report and the timing

:44:36. > :44:38.of publication. It is important that this independent officer can use his

:44:39. > :44:44.judgment on how Parliament and the public are best served. The National

:44:45. > :44:48.audit act 1983 provides that the controller may report to the House

:44:49. > :45:01.of Commons the result of once he has reported to -- result of any

:45:02. > :45:04.examination, as it mitigates the reports conclusions being overtaken

:45:05. > :45:12.by events. Amendment to seven with this supply restrictions set out in

:45:13. > :45:14.the act of 2000, on the disclosure of protective information in

:45:15. > :45:18.relation to report by the controller and auditor General. Information is

:45:19. > :45:23.specially protected under these rules if it is held by the bank of

:45:24. > :45:29.the purposes of monetary policy. For supporting financial institutions,

:45:30. > :45:32.to maintain stability, or for private banking purposes. Similarly,

:45:33. > :45:35.the amendment in the name of the member for Bishop Auckland would

:45:36. > :45:39.remove three corresponding exclusions in the Freedom of

:45:40. > :45:42.Information Act. I hope to persuade the House that each of the three

:45:43. > :45:47.categories of detected information is entirely sensible. The first,

:45:48. > :45:49.applying to the monetary policy functions, how we communicate

:45:50. > :45:55.monetary policy is extremely important. It moves markets in

:45:56. > :46:00.substantial ways and every detail published minutes is scrutinised for

:46:01. > :46:05.predictions of future changes. Making sure information is presented

:46:06. > :46:08.in a timely way is a vital. That is why the original legislation,

:46:09. > :46:11.creating the committee in 1998, set out the full range of disclosure

:46:12. > :46:18.requirements including publication of the minutes, and of a quarterly

:46:19. > :46:20.inflation report. Since then the tankers implement the

:46:21. > :46:29.recommendations of the review into NBC transparency. -- the bank has.

:46:30. > :46:33.We support the full implication of that review. Financial operations

:46:34. > :46:36.intended to support financial institutions for the purposes of

:46:37. > :46:40.maintaining stability, honourable members will understand that if the

:46:41. > :46:43.bank is to extend emergency liquidity assistance, careful

:46:44. > :46:53.relocation is a critical element of deserving stability. -- preserving.

:46:54. > :46:56.Covert assistance would be reported privately to the committees whilst a

:46:57. > :46:59.broader liquidity scheme is for institutions such as the special

:47:00. > :47:06.liquidity scheme, and the discount window facility, maybe announced to

:47:07. > :47:10.the market. Finally, limited private banking services are excluded from

:47:11. > :47:16.FOIA requests. The Bank of England also provides private banking to

:47:17. > :47:18.customers. It would be entirely inappropriate to subject ordinary

:47:19. > :47:28.bank customer information to disclosure.

:47:29. > :47:34.The appointment of the SCA chief executive. The question is that new

:47:35. > :47:40.clause 12 be read a second time. Thank you, Madam Deputy Speaker. I

:47:41. > :47:46.beg to move amendments six and seven in my name and that of my right

:47:47. > :47:49.honourable friend. But I want to return to the question of new clause

:47:50. > :47:59.one and new clause 12 regarding appointments of the Financial

:48:00. > :48:04.Conduct Authority Chief Executive. To support clause one, giving the

:48:05. > :48:10.selectivity of formal role in the appointment of the chief Executive,

:48:11. > :48:13.and is better placed, in my view, to guarantee the confidence and

:48:14. > :48:18.independence of the regulator than the amendment in the name of the

:48:19. > :48:23.Chancellor, which at our original reading, but too little to change

:48:24. > :48:27.the status quo, and was tabled in response to the amendment forward by

:48:28. > :48:33.the chair of the Treasury Select Committee. We had a similar debate

:48:34. > :48:37.at committee stage on an amendment tabled guarding the appointment

:48:38. > :48:43.process for the Chief Executive of the prudential regulation authority.

:48:44. > :48:48.Select committees have routinely held pre-appointment hearings for a

:48:49. > :48:53.number of public appointments since 2008, with a number of candidates

:48:54. > :48:56.not approved. The previous Coalition Government could develop the

:48:57. > :49:01.scrutiny agenda somewhat when the Chancellor agreed that the Treasury

:49:02. > :49:05.committee could have the power of veto over appointments to the office

:49:06. > :49:18.for budgetary responsibility in 2010. Public Accounts Committee has

:49:19. > :49:24.a veto over appointments of and -- of controller and auditor General.

:49:25. > :49:29.Then subject to a confirmation hearing by the Treasury Secretary.

:49:30. > :49:32.The Treasury Select Committee has power, of course, over the chair and

:49:33. > :49:36.board members in the office of budgetary responsibility, an

:49:37. > :49:39.arrangement that the Chancellor said he would put in place, in his words,

:49:40. > :49:47.because I want there to be absolutely no doubt that this is an

:49:48. > :49:50.independent body. The Minister will be aware that when it examined

:49:51. > :49:57.proposals for the future official conduct authority, back in 2013, the

:49:58. > :50:01.Treasury Select Committee did make a number recommendations on the

:50:02. > :50:03.accountability of the new body to Parliament, including that the

:50:04. > :50:09.legislation provided that the chief executive be subject to the

:50:10. > :50:13.appointment scrutiny. -- pre-appointment. I recall that the

:50:14. > :50:19.Treasury Secretary was disappointed by the government response, in view

:50:20. > :50:24.of the deficiencies in the accountability mechanisms for the

:50:25. > :50:27.Financial Conduct Authority. In the view of the Treasury Select

:50:28. > :50:33.Committee, it was set up, as we heard today, by the letter from the

:50:34. > :50:42.chair, his letter to the Chancellor, on January 26, 2016, following the

:50:43. > :50:49.appointment of the current PRA chief executive is next leader of the

:50:50. > :50:51.Financial Conduct Authority. We had the right honourable gentleman set

:50:52. > :50:54.out the view of the committee that it should have a veto over the

:50:55. > :50:56.appointment and dismissal of the Chief Executive of both the

:50:57. > :51:05.Financial Conduct Authority and the PRA. The letter said that the chair,

:51:06. > :51:09.John Griffiths Jones, told the committee that there was merit in

:51:10. > :51:15.the proposal, when he met the committee members on January 20 this

:51:16. > :51:20.year. I did like this up at committee stage and said it would be

:51:21. > :51:23.helpful to know whether the Chancellor had shared his thinking

:51:24. > :51:29.on calls to extend the appointment hearings and the power of veto to

:51:30. > :51:36.those two positions. -- flag this up. Now we have the reply in the

:51:37. > :51:40.Minister's ring binder. And it was exciting to hear the contents. We

:51:41. > :51:46.got a fantastic insight into the fireside style of exchanges in the

:51:47. > :51:49.government. And on the side of the House we do believe that the

:51:50. > :51:58.Treasury committee should have a greater authority on financial

:51:59. > :52:01.regulation in this country. In relation to the new clause 12 I

:52:02. > :52:11.would say, however, it is not clear what would happen if you she was

:52:12. > :52:14.appointed and appears before the committee- are they left in limbo or

:52:15. > :52:20.in fact settling into their new post? Or practice would simply be

:52:21. > :52:27.business as usual with the Treasury Select Committee not given the power

:52:28. > :52:30.that we all believe it deserves? We do believe that simply requiring any

:52:31. > :52:36.new chief to appear before the committee within three months of

:52:37. > :52:39.appointment delivers nothing particularly new and it is

:52:40. > :52:45.reasonable to expect any new post holder would appear within this time

:52:46. > :52:53.frame, in any event, whether it is currently codified or not. Regarding

:52:54. > :52:57.new clause 12, I am pleased to note, as the Minister herself said, and I

:52:58. > :53:03.have commented upon, is being exciting news, namely that the

:53:04. > :53:06.government, through the means of the Chancellor's letter, communicate and

:53:07. > :53:11.accepts the broad thrust of proposals put forward by the chair

:53:12. > :53:15.of the select committee, and I also note and welcome the Minister's

:53:16. > :53:21.commitment today to introduce the relevant legislation, in her own

:53:22. > :53:25.words, sooner rather than later. I would politely suggest that these

:53:26. > :53:30.changes be introduced in the finance shortly to come before the House.

:53:31. > :53:39.There's an opportunity there not to be missed.

:53:40. > :53:44.In relation to labour's two amendments we tabled following the

:53:45. > :53:48.committee stage and the amendment in the name of the member for Bishop

:53:49. > :53:54.Auckland, each of these amendments in their own way addresses the

:53:55. > :54:00.crucial need for transparency and openness in the Bank of England. The

:54:01. > :54:03.subject of the National Audit Office were the power to investigate the

:54:04. > :54:08.bank has been subject to discussion at each stage of the bill both in

:54:09. > :54:12.the Commons and in the Other Place, the controller and Auditor General

:54:13. > :54:18.was clearly concerned about the proposals in the bill that would

:54:19. > :54:22.have allowed the Court of directors veto over the new powers for the

:54:23. > :54:27.National Audit Office, and there has been, I am pleased to say, clear

:54:28. > :54:30.progress on this issue as the bill has proceeded through both houses,

:54:31. > :54:35.particularly in the Other Place, with the removal of this veto. And

:54:36. > :54:40.the government, in response, as honourable members will recall,

:54:41. > :54:44.posed a memorandum of understanding between the bank and the National

:54:45. > :54:48.Audit Office to establish the draft of which I understand has been

:54:49. > :54:55.welcomed by both sides, so amendments six and seven in the

:54:56. > :55:00.opposition's name seek to extend and clarify the powers of the controller

:55:01. > :55:05.to enquire into the bank's success in achieving its policy objectives,

:55:06. > :55:08.and we believe that this does not encroach beyond the boundaries,

:55:09. > :55:12.questioning the merits of polities that Mac policy decisions or assist

:55:13. > :55:16.the National Audit Office in ascertaining whether the bank is

:55:17. > :55:23.delivering value for money or not. And with regard to new clause to,

:55:24. > :55:33.Labour does seem merits in the proposal for wider geographical

:55:34. > :55:38.representation on the board. Briefly returning to his own close, new

:55:39. > :55:41.clause six, whilst I accept that transparency and openness is the

:55:42. > :55:49.spirit of the age and we cannot move against it, does he not recognise,

:55:50. > :55:55.the Treasury will be at the vanguard of this, I am sure, does he not

:55:56. > :56:00.accept that, at times of great difficulty where there are issues

:56:01. > :56:04.about the stability and functioning of the UK financial and banking

:56:05. > :56:06.system it would be appropriate not just for the Treasury Select

:56:07. > :56:10.Committee but for the Treasury itself to have some say in

:56:11. > :56:16.suggesting that there should be a fully fledged openness, in other

:56:17. > :56:20.words, that the safeguards he has put in place here refer only to the

:56:21. > :56:23.Treasury Select Committee. Does he not see that there might be

:56:24. > :56:27.instances where ministers would, rightly, have concerns about issues

:56:28. > :56:32.stability that should he protected from open transparency at a

:56:33. > :56:37.particular time window might be a move to make these things more open

:56:38. > :56:44.at some point in the future once up to killer threat had passed? -- the

:56:45. > :56:46.particular threat. I thank the honourable member for his

:56:47. > :56:51.intervention. It may be that transparency is not the spirit of

:56:52. > :56:57.the age but also the spirit of the future. I would draw his attention

:56:58. > :57:01.to the fact that the wording is the controller shall submit reports

:57:02. > :57:07.arising from the exercise of his powers under subsection six a, so it

:57:08. > :57:14.is not a completely open book policy in relation to everything else, but

:57:15. > :57:20.in relation to the new clause two, put in the name of the member for

:57:21. > :57:23.East Lothian, we see merit in the proposal for wider geographical

:57:24. > :57:29.representation on the board and our own committee stage amendment, we

:57:30. > :57:32.made this statement for making sure that different stakeholders are

:57:33. > :57:36.represented including dedicated places for customers and the

:57:37. > :57:41.practitioners. And similarly, we do support the amendment tabled by My

:57:42. > :57:45.Honourable Friend, the member for Bishop Auckland, who has a long

:57:46. > :57:50.track record in campaigning for greater transparency in financial

:57:51. > :57:54.services and her amendments it is very well with the opposition's

:57:55. > :57:57.seeking to empower the National Audit Office further by making the

:57:58. > :58:03.case for greater powers for Freedom of Information requests. Now, Madam

:58:04. > :58:07.Deputy Speaker, I turn to new clause three and new clause five put

:58:08. > :58:18.forward respectively by the Scottish National Party and by Plaid Cymru.

:58:19. > :58:21.They have tabled amendments to change the name of the Bank of

:58:22. > :58:26.England. The SNP were so keen to discuss their own amendment that

:58:27. > :58:29.they tabled it twice. We discussed the amendment in committee and it

:58:30. > :58:33.brought it before us again seeking to have the name of Scotland

:58:34. > :58:37.alongside Wales and Northern Ireland as part of the title, and they are

:58:38. > :58:43.now joined by the on-board board member for Carmarthen and four Plaid

:58:44. > :58:46.Cymru who has taken a different tack and removed or national names and

:58:47. > :58:56.removes Ashman refers solely to the bank by the name of the currency and

:58:57. > :59:05.that is sterling with an E and not an I. We are happy to support this

:59:06. > :59:09.as it recognises the unifying role the bank which services all parts of

:59:10. > :59:14.the United Kingdom and we will support this again today, and, Madam

:59:15. > :59:17.Deputy Speaker, in relation to new clauses six and eight and the

:59:18. > :59:23.government amendment three, the amendments do have a number of

:59:24. > :59:27.merits, new clause seven in the name of the honourable member for

:59:28. > :59:33.Carmarthen in with regard to the Monetary Policy Committee sets out a

:59:34. > :59:40.new mandate of objective for the MPC to include maximum employment. New

:59:41. > :59:45.clause six proposes representatives on the MPC from the devolved

:59:46. > :59:48.authorities of Scotland, Wales and England and new clause eight argues

:59:49. > :59:54.that the bank should become more accountable for its decisions to

:59:55. > :59:57.those same bodies. The Labour Party has established a review into the

:59:58. > :00:04.mandate of the Monetary Policy Committee under the former member of

:00:05. > :00:08.the Monetary Policy Committee, David blanch flower, and we have

:00:09. > :00:13.previously said we would look at a wide range of ideas, including what

:00:14. > :00:17.can be learned from the US Federal Reserve. That would include

:00:18. > :00:24.considering the importance of growth, employment, earnings in the

:00:25. > :00:31.committee's double -- deliberations. Indeed, in regard the new clause

:00:32. > :00:35.seven, David Blanchflower has written in city AM that he would

:00:36. > :00:39.consider the importance of maximising employment in his review

:00:40. > :00:46.and David Blanchflower has spoken about the size and crucial we be

:00:47. > :00:48.gender balance of the committee, optimal policy rules, asymmetrical

:00:49. > :00:53.targeting and the relationship with fiscal policy as well as the

:00:54. > :00:57.frequency of meetings, so we do, Madam Deputy Speaker, welcome the

:00:58. > :01:02.proposal for the bank to report to the devolved authorities but are not

:01:03. > :01:06.supporting these amendments regarding the MPC today. We see

:01:07. > :01:09.merit in them as part of an ongoing debate and we look forward to

:01:10. > :01:14.considering and sharing the results of David Blanchflower's review of

:01:15. > :01:25.the MPC in due course and with those comments, I draw my comments to a

:01:26. > :01:30.conclusion. Thank you very much, Madam Deputy Speaker. Can I just

:01:31. > :01:34.say, that was a very good speech and I congratulate the honourable

:01:35. > :01:40.gentleman in covering a lot of ground with a lot of detail and a

:01:41. > :01:45.sense of humour, which I enjoyed. And he saved me the trouble about

:01:46. > :01:49.the OBR and the importance of that as a precedent for what we are

:01:50. > :01:54.discussing today. I would like to say and the sentence, otherwise I am

:01:55. > :02:00.sure that I will be told to be quiet by Madam Deputy Speaker, this is a

:02:01. > :02:07.very good bill. In many respects it implements a good number of the

:02:08. > :02:10.wider objectives of Bank of England scrutiny and accountability which

:02:11. > :02:16.the Treasury Committee has been pushing for, for many years. I just

:02:17. > :02:20.want to take this opportunity to say thank you to those members of the

:02:21. > :02:22.Treasury Committee in the last Parliament, as well as those in

:02:23. > :02:28.this, who pressed with this, it shows that over time things can be

:02:29. > :02:31.achieved if one persists, and it is something about what we are hearing

:02:32. > :02:41.today with respect to the specific amendments which my remarks reflect.

:02:42. > :02:49.I am very pleased that, after quite a lot of discussion with the

:02:50. > :02:54.Minister, I am very grateful for her help and assistance over a number of

:02:55. > :02:57.days and also from the Chancellor of the Exchequer, particularly last

:02:58. > :03:00.night in a telephone conversation which was then followed up by the

:03:01. > :03:10.exchange of letters, that we have now reached agreement, therefore I

:03:11. > :03:16.will not need to take clause one to prevent. The exchange of letters

:03:17. > :03:19.provides most of the objectives we sought on the new clause one. It is

:03:20. > :03:23.worth going through the key points. As the minister clarified

:03:24. > :03:26.effectively by reading out the letter, appointments will be made in

:03:27. > :03:31.a way that ensures the Treasury Committee can hold a hearing before

:03:32. > :03:36.the appointment is formalised. The question about whether it is a

:03:37. > :03:42.pre-commencement or pre-appointment hearing is in my view a distinction

:03:43. > :03:44.without a difference. Secondly, if the Treasury Select Committee

:03:45. > :03:50.disagrees with the appointment, it will report that the House and, if

:03:51. > :03:54.the committee chooses, the government must find time for a

:03:55. > :04:05.debate on the committee report. This would be on a bootable motion to

:04:06. > :04:11.accept the conclusion of the motion -- voteable. The government further

:04:12. > :04:14.angry that they will accept a decision of the House once that vote

:04:15. > :04:18.has been taken. Thirdly, the government will, and this is

:04:19. > :04:21.something there has been some discussion about already this

:04:22. > :04:25.afternoon, at the earliest opportunity change the legislation

:04:26. > :04:32.to ensure that future appointments of chief executives to the SCA are

:04:33. > :04:36.made on a fixed, renewable, 5- year term. I would expect that change in

:04:37. > :04:42.legislation to take place in the next Parliamentary session. I'm not

:04:43. > :04:48.sure that it would satisfy the long title of the bill, but, if it does,

:04:49. > :04:52.we can put it in. I would expect the government to put it in. I also

:04:53. > :04:58.recognise that the Chancellor couldn't fully commit himself to me

:04:59. > :05:02.over the phone, after all, he would have had no time to secure agreement

:05:03. > :05:07.in Cabinet from his colleagues for the legislative time. But I do

:05:08. > :05:12.expect that he would do this as soon as is in. After all, it would be a

:05:13. > :05:16.pretty small, self-contained thing, if that is what it requires. The

:05:17. > :05:27.fourth point, which hasn't so far been mentioned, is that it is his

:05:28. > :05:29.clear view, and I am not in anyway misrepresenting him, that the

:05:30. > :05:35.arrangements we are now putting in place should be the permanent method

:05:36. > :05:40.of appointment. That is, not just something that will disappear with

:05:41. > :05:44.the disappearance of this Chancellor or the helpful minister we have at

:05:45. > :05:49.the dispatch box at the moment, however supportive she may be the

:05:50. > :05:54.proposals. Why has the Treasury Committee devoted so much time to

:05:55. > :05:58.this issue? I would like to give a specific and a general answer to

:05:59. > :06:02.that. First of all, the specifics. There have been widespread concerns

:06:03. > :06:10.at the independence of the SCA, that it has been compromised by the

:06:11. > :06:14.circumstances of his departure, by other apparent interference in the

:06:15. > :06:21.work of the SCA by senior Treasury officials and possibly amongst other

:06:22. > :06:24.things. I have to say that we have explored these in cross-examination

:06:25. > :06:32.in committee, and we have not found any such evidence. The member for

:06:33. > :06:39.the Cities of London and Westminster got right to the point where he

:06:40. > :06:43.credits the perception of interference that nonetheless

:06:44. > :06:51.remains. And that perception makes it harder for regulators to do their

:06:52. > :06:54.job, and it had to be addressed. Bolstering the perceived

:06:55. > :06:59.independence of this key appointment and ensuring that the individual

:07:00. > :07:03.cannot easily be removed by the Treasury, it seemed to us, on the

:07:04. > :07:09.committee, that it was therefore crucial. I give way to my Right

:07:10. > :07:15.Honourable Friend. I want to put it on the record, I do not think there

:07:16. > :07:18.was any undue interference from the Treasury and actually, I am very

:07:19. > :07:23.happy that Andrew Bailey is taking over post I think he will make a

:07:24. > :07:27.very good future chief executive. Nonetheless it was that sense

:07:28. > :07:32.perception within Square mile that we have to have close to our hearts.

:07:33. > :07:39.And can I just briefly say how much I approve of the Treasury accepting

:07:40. > :07:44.the guts of the new clause one and the new clause nine. It is great way

:07:45. > :07:50.to their credit that the not had to go through the House of Lords which

:07:51. > :07:54.happens when amendments are made through House of Lords rather than

:07:55. > :07:59.coming as part of the discussions at the report stage.

:08:00. > :08:06.I would like to touch on one other area with respect to this issue, the

:08:07. > :08:15.apparent statutory protection against dismissal. Which came into

:08:16. > :08:18.question as a result of Martin Wheeler's departure. Whatever the

:08:19. > :08:23.reality, the current protection appeared to be inadequate. That is

:08:24. > :08:30.perhaps because he was only appointed by three year term and it

:08:31. > :08:34.is why a five-year term, a longer term, would provide more protection.

:08:35. > :08:44.To put it even more simply, these changes rectify, in another way, the

:08:45. > :08:46.risk of arbitrary dismissal. If, for example, the committee strongly

:08:47. > :08:51.supports keeping the incumbent after four and a half years, they can make

:08:52. > :08:56.it abundantly clear in a report, and make it clear that they will

:08:57. > :09:02.recommend any other candidate to be voted down to the House of Commons.

:09:03. > :09:11.So in practice I think we have the protection we already wanted. The

:09:12. > :09:20.FCA needs a strong and demonstrably independent Chief Executive

:09:21. > :09:24.countable to -- accountable to Parliament. It has struggled to

:09:25. > :09:34.emerge from the failed FSA, it has since it best staff poached ivory --

:09:35. > :09:38.by the PRA, and has hit the headlines for all the wrong reasons,

:09:39. > :09:44.with the effect of wiping 20% of the share value of the life insurance

:09:45. > :09:52.sector. With what will amount to a requirement for parliamentary

:09:53. > :09:54.approval of future appointments, or dismissals, the incumbent will be in

:09:55. > :09:58.a stronger position to resist pressure from ministers and

:09:59. > :10:09.officials and his authority will be holstered quite a -- bolstered quite

:10:10. > :10:18.a bit. It is not an issue that Pittodrie a great -- perturbs me a

:10:19. > :10:23.great deal, any attempt to circumvent arrangement would lead to

:10:24. > :10:25.a complete collapse of trust between the Treasury committee and the

:10:26. > :10:34.government and I simply do not foresee that happening.

:10:35. > :10:38.Does he not have at least some small concern that by not putting it on

:10:39. > :10:41.the face of the bill, it does not set a precedent, and to go back to

:10:42. > :10:47.an earlier exchange I tried to have, it might therefore give licence for

:10:48. > :10:53.the Treasury to take this as very much a sweet generous case, rather

:10:54. > :10:57.than recognising that the committee should have an important role in the

:10:58. > :11:09.appointments of senior figures within the financial services

:11:10. > :11:12.firmament? -- sui generis. One can turn the ardent on its head

:11:13. > :11:17.without the need for statutory change with other bodies. -- the

:11:18. > :11:26.document. We now feel a statutory double lock for the head of the oh

:11:27. > :11:36.BR was found to be some use in production of the forecast, but

:11:37. > :11:40.which the perception of might have weakened the oh BR. We have a

:11:41. > :11:44.requirement for a resolution before the House prior to the appointment

:11:45. > :11:47.of the chairman to the Office of National Statistics and now we have

:11:48. > :11:55.these arrangement, so we have a battery of different arrangements

:11:56. > :11:59.from which to draw. May I congratulate my honourable

:12:00. > :12:02.friend in achieving this great success for parliamentary scrutiny?

:12:03. > :12:07.And suggest that it is better that it is done in a non-statutory way.

:12:08. > :12:13.Being statute into the proceedings of the House always present longer

:12:14. > :12:17.term problems and therefore to set a non-statutory precedent has lots of

:12:18. > :12:23.advantages. I always like listening to my

:12:24. > :12:28.honourable friend and member of the Treasury committee, and of course a

:12:29. > :12:34.constitutional expert. It is certainly true that in this place a

:12:35. > :12:41.good deal of course I constitutional change tends to take place

:12:42. > :12:47.gradually. -- quasi. Often as a result of informal arrangement. And

:12:48. > :12:51.that is all to the good. And that is what the honourable gentleman is

:12:52. > :12:56.saying. Everybody is trying to get in, whereas I am tried to get to the

:12:57. > :13:04.end. I was almost there, but I will give way.

:13:05. > :13:06.Does he not feel just the slightest hint of disappointment in the

:13:07. > :13:15.intervention of the honourable member? Because it surely was an

:13:16. > :13:20.historic first that he signed a new clause amending the British

:13:21. > :13:28.constitution. Of course the honourable member, is

:13:29. > :13:33.a great and Bernard constitutional expert, will explain this apparent

:13:34. > :13:35.contradiction to the House, in, I hope, a lengthy disposition in a few

:13:36. > :14:00.moments. -- great and learned. Appointees should be put in

:14:01. > :14:05.a position where they are forced to explain their actions before

:14:06. > :14:11.Parliament, and they should also feel accountable to Parliament. In

:14:12. > :14:14.order to achieve that, the means by which they are appointed or have

:14:15. > :14:20.protection from dismissal is very relevant. That is why this type of

:14:21. > :14:27.change, I think, can offer us something. What we have had over

:14:28. > :14:31.decades with successive governments is governments off-loading

:14:32. > :14:34.responsibilities to quangos, leaving the public with the sense that

:14:35. > :14:40.ultimately nobody is democratically accountable for anything. I think

:14:41. > :14:46.that accountability for decisions formally taken, once upon a time

:14:47. > :14:53.taken directly by ministers, which now sit with an elected appointees

:14:54. > :14:55.in quangos, need a very thorough scrutiny and cross-examination and

:14:56. > :15:04.that is what we have been trying to do. This agreement with the

:15:05. > :15:09.Chancellor is a sizeable step in the right direction. Of course, in an

:15:10. > :15:15.ideal world, I would like access to the statute book to write exactly

:15:16. > :15:20.what I feel, on behalf of the committee, should be there. But we

:15:21. > :15:23.live in the real world. I am very happy with the exchange of letters

:15:24. > :15:36.and grateful to ministers for having agreed it and I won't be taking

:15:37. > :15:41.clause one to. -- to a division. I agree with the member for

:15:42. > :15:51.Chichester that there is a law to be commended in this bill. Some of the

:15:52. > :15:58.good things in course of 12 were actually pushed on the government.

:15:59. > :16:04.-- clause 12. And I also think there are things which are still negative.

:16:05. > :16:12.This brings me to a conclusion. Quite a long conclusion. The bill

:16:13. > :16:18.began as a tidying up operation, that is why it was launched in the

:16:19. > :16:25.Lords, it seemed to be just a few things, essentially regards the 2012

:16:26. > :16:29.financial services act. But the longer it went through various

:16:30. > :16:35.stages the more became apparent that it was exposing a whole series of

:16:36. > :16:42.issues in the regulatory system which were not fit for purpose. The

:16:43. > :16:49.government has convinced itself that all has been done to resolve the

:16:50. > :16:53.crisis of 2007, with the exception of a little tidying up. But that is

:16:54. > :16:57.not true. What we have discovered, time after time in going through

:16:58. > :17:01.this, is issues with operation of the Bank of England, the regulatory

:17:02. > :17:05.bodies and how they function and how fit for purpose they are, and new

:17:06. > :17:12.issues emerging only in the last few weeks regarding tax havens. All this

:17:13. > :17:18.has appeared. So actually what see is not this Bank of England Bill

:17:19. > :17:22.putting problems away, but rather the start of a whole series of

:17:23. > :17:26.pieces of legislation until we have got it right. Far from being a

:17:27. > :17:35.tidying up operation we have started something her. -- something here. I

:17:36. > :17:43.moved causes two and three in my name in the name of my colleagues.

:17:44. > :17:47.Because it gets to the nub of this thing we have uncovered. The Bank of

:17:48. > :17:49.England in the last 20 years, particularly the last ten, has

:17:50. > :18:02.acquired an extraordinary range of new powers. Not over forecasting,

:18:03. > :18:05.but fundamental policy levers for running the whole economy have been

:18:06. > :18:10.transferred from this House and the executive to the Bank of England

:18:11. > :18:19.itself. It began with transferring to the bank powers over interest

:18:20. > :18:23.rates in 1997, but of course if you transfer that control to the bank

:18:24. > :18:27.you also transfer the setting of the exchange rate, which nobody seemed

:18:28. > :18:32.to notice at the time. De facto, the bank given control over the external

:18:33. > :18:38.sector. And more recently with the issue of quantitative easing the

:18:39. > :18:41.bank has forced interest rates down to zero, so if you cannot live your

:18:42. > :18:49.monetary policy, what else do you do? -- influence monetary policy. So

:18:50. > :18:51.the bank has influence over large swathes of fiscal policy,

:18:52. > :18:57.essentially housing policy, because housing determines the direction of

:18:58. > :19:03.economic growth. In recent weeks the Bank of England has been deciding

:19:04. > :19:11.between buy to let, or for homeowners. Micro-decisions have

:19:12. > :19:14.been transferred to the bank. My worry is it means we have crossed a

:19:15. > :19:22.line in accountability with the bank. That is not a criticism of

:19:23. > :19:26.individuals within the bank or the governor, who I have a high regard

:19:27. > :19:30.for, but we have gradually allowed the bank to take over from this

:19:31. > :19:37.House far too much of the operational policy directing the

:19:38. > :19:44.economy. That is why I think new clause 12, which I am happy to

:19:45. > :19:50.support, is a step forward. It is beginning to redress the balance of

:19:51. > :19:53.accountability. With the government acceptance of the general line of

:19:54. > :20:01.march from the Treasury Select Committee, we are beginning to move

:20:02. > :20:04.to the point where they -- key members of the regulatory regime are

:20:05. > :20:13.confirmed in the appointment by the House. I want to put on record that

:20:14. > :20:17.the two precedents we now have in that direction, the Treasury

:20:18. > :20:29.committee, obviously, in observing the House, informing the appointment

:20:30. > :20:39.of the director of the O BR, and now this appointment of the head of the

:20:40. > :20:44.FCA being affirmed by this House, I think that is the line of march. But

:20:45. > :20:49.I want to put on record that we see that as a down payment. We are

:20:50. > :20:52.moving in a direction where the governor of the Bank of England and

:20:53. > :20:57.all the key regulatory agencies should be confirmed by this House. I

:20:58. > :21:00.know that it will not take a long time. I know there is sometimes a

:21:01. > :21:07.gentle struggle between the executive and the House in terms of

:21:08. > :21:11.who has the say, but what we are seeing here is a move towards more

:21:12. > :21:16.democratic accountability being held by this House. And therefore I

:21:17. > :21:32.welcome it. Let me move on briefly. Two new clause two. Given the policy

:21:33. > :21:36.powers that lie with the Bank of England, I think we had to make sure

:21:37. > :21:48.that the committees of the Bank of England, above all, the ruling

:21:49. > :21:52.court, democratically accountable. So we moved a new clause that says

:21:53. > :21:58.that nominations to the Court of directors of the bank, still may of

:21:59. > :22:01.the Exchequer, should have regard to the importance of ensuring balanced

:22:02. > :22:06.representation of the nations and regions of the United Kingdom. That

:22:07. > :22:12.clause has been written very carefully. There is no suggestion

:22:13. > :22:17.that the court should be a federal body. What we are suggesting is that

:22:18. > :22:21.in the balance of its make up which would have representation of the

:22:22. > :22:26.entire nation because, rightly or wrongly, and I think more brightly

:22:27. > :22:30.than wrongly, there is a perception that the City of London, and the

:22:31. > :22:34.major banks and financial institutions, have too much sway

:22:35. > :22:41.over the court of the bank, and have had, historically.

:22:42. > :22:47.The honourable gentleman is making a powerful point. Does he not agree

:22:48. > :22:52.that, if it must be significant that the peripheral areas of these

:22:53. > :22:59.nations, their economic performance is also peripheral, and that was

:23:00. > :23:05.Isley goes to his point -- precisely goes to his point. I could not agree

:23:06. > :23:11.more. If you look at the long history of the regions of the UK and

:23:12. > :23:16.the nations, Scotland, Wales, northern England and Northern

:23:17. > :23:20.Ireland, they have suffered in the deflationary cycle because interest

:23:21. > :23:24.rates were set to control inflation that was triggered by the City of

:23:25. > :23:29.London and over lending by the City of London. The result was that the

:23:30. > :23:32.North- South divide was a deflationary line with the nations

:23:33. > :23:37.of the North and the regions of the North of England suffering high

:23:38. > :23:42.interest rates which will not germane to their economic problems,

:23:43. > :23:45.but UK interest rates, most of the post-war period, on average, have

:23:46. > :23:50.been higher than the rest of Europe simply to control and curb over

:23:51. > :23:54.lending by the City of London. The result is that in the industrial

:23:55. > :23:58.regions there was deflation. That might have been mitigated to some

:23:59. > :24:02.extent, if there had been broader representation of the nations and

:24:03. > :24:06.its industries on the bleeding bodies of the Bank of England. And I

:24:07. > :24:13.think we need to -- the leading bodies. I think we need to move in

:24:14. > :24:19.that direction. The court, let me remind on board members, is not the

:24:20. > :24:24.institution of the bank that makes monetary policy or fiscal policy. It

:24:25. > :24:27.has oversight over the whole of the bank 's operations in a sense of

:24:28. > :24:30.getting value for money and above all ensuring that there is not

:24:31. > :24:36.groupthink between the different committees that make operational

:24:37. > :24:41.policy. That is why I think, at that level, we need to begin and at that

:24:42. > :24:48.level we need wider representation on the court. Surprisingly, and I

:24:49. > :24:55.raised this previously, actually, this exists to a small degree,

:24:56. > :24:57.because since World War II, traditionally, a trade union

:24:58. > :25:04.representative has always been on the court of the Bank of England.

:25:05. > :25:07.And still is, to this day. So even the government, successive

:25:08. > :25:12.governments, have recognised that on the court, you can have wider

:25:13. > :25:17.representation, wider social representation. When I put it to

:25:18. > :25:21.ministers that, if they rejected the notion of a court that had a wider

:25:22. > :25:27.representation of the economy, if they rejected that, were they going

:25:28. > :25:31.to move to remove Trajan representation? There was a

:25:32. > :25:34.deafening silence from ministers. That is why I am putting the

:25:35. > :25:37.question again, because if you access the principle that there

:25:38. > :25:40.should be trade union representation, and there should,

:25:41. > :25:46.then you should widen that, which is what I am asking for. I have

:25:47. > :25:56.carefully presented the new clause not to suggest that the court should

:25:57. > :26:00.be federal, somebody representing this and that, but simply that we

:26:01. > :26:05.need a balance, and anybody who has sat on the board of a company knows,

:26:06. > :26:07.the first thing you do is to create some representation of different

:26:08. > :26:14.skills and interests, so that the board can Act as a collective. My

:26:15. > :26:22.point is that the court, and to some extent the new committees do not Act

:26:23. > :26:26.as collectives, they are in danger, because of the power we have given

:26:27. > :26:32.to the Bank of England, beginning to Act with the kind of hubris that

:26:33. > :26:35.central banks, when they get too much power, begin to wield, they

:26:36. > :26:39.begin to think they know that the thing, when they don't. We need

:26:40. > :26:44.democratic accountability in the Bank of England, not in the sense

:26:45. > :26:47.that the Bank of England understands it, but that the nation understand

:26:48. > :26:50.this and the nations of the UK understand it, which is why I have

:26:51. > :26:55.been pressing this particular clause. Madam Deputy Speaker, we

:26:56. > :27:00.have made some progress in this Bill. I feel that the progress has

:27:01. > :27:03.been to discover more what we need to do in improving regulatory

:27:04. > :27:09.structures of this economy, but at least there is more, the debate is

:27:10. > :27:15.more open on where we go next, and where we go next is more

:27:16. > :27:19.accountability. This bill makes a down payment on that accountability,

:27:20. > :27:25.it does not deliver it. That is where we go next. Thank you very

:27:26. > :27:34.much, Madam Deputy Speaker. Obviously, in the new landscape of

:27:35. > :27:37.the city, the head of the Financial Conduct Authority is an extremely

:27:38. > :27:44.important post. And therefore, who fulfils it is absolutely vital. I am

:27:45. > :27:47.extremely pleased with the changes that have been agreed this

:27:48. > :27:52.afternoon, and which the Minister announced from the dispatch box

:27:53. > :27:57.which opens the process up and gives the Treasury Select Committee a

:27:58. > :28:01.proper role, and will, we hope, reinforced the independence of that

:28:02. > :28:04.person. Another person with considerable independence is of

:28:05. > :28:11.course the control and Auditor General. I am pleased that we have

:28:12. > :28:15.got away from the idea that the court should decide which part of

:28:16. > :28:19.the bank 's homework that the control and Auditor General should

:28:20. > :28:25.be allowed to march. There is obviously a parallel here with the

:28:26. > :28:31.role that the FDA has with the BBC. At second reading, we asked Treasury

:28:32. > :28:35.ministers to publish the memorandum of understanding. They have now

:28:36. > :28:39.published that document. It is an extremely useful document because

:28:40. > :28:54.what it does is set out, in advance, and agreed framework for the re-met

:28:55. > :28:59.of the C, and that presents is -- prevents others seeing political

:29:00. > :29:07.interference or inappropriate avoidance of scrutiny of particular

:29:08. > :29:15.areas of the bank's work. I would like to speak about new clause 13,

:29:16. > :29:20.standing in my name, which would make the Bank of England subject to

:29:21. > :29:26.the Freedom of Information Act. It seems to me the Bank of England is a

:29:27. > :29:33.public authority and it is carrying out public policy purposes. So the

:29:34. > :29:37.case, surely, the case for covering it doesn't mean to be made. It is

:29:38. > :29:42.the case against it being covered that needs to be made. And the

:29:43. > :29:49.Minister mentioned important points in her speech about why she has not

:29:50. > :29:54.been minded to access the new clause 13, and I would like to respond to

:29:55. > :29:58.what she said. She picked out three areas in particular. Monetary

:29:59. > :30:05.policy, financial operations and private angling. Now, I'll --

:30:06. > :30:11.banking. I am not entirely sure of all the detail of the Freedom of

:30:12. > :30:22.Information Act, but we all know that local authorities are FOI-able.

:30:23. > :30:26.We know that when you put in Freedom of Information requests to local

:30:27. > :30:29.authorities, we are not able to see the personal report on individual

:30:30. > :30:34.members of staff in those local authorities. So the Freedom of

:30:35. > :30:38.Information Act is not an Act which gives access to this kind of

:30:39. > :30:45.personal information. I would have thought that the same approach would

:30:46. > :30:53.be, would exempt the private banking work of the Bank of England. She

:30:54. > :30:57.also spoke about monetary policy and financial operations. Now, I do not

:30:58. > :31:05.believe that the amendment which I have put down today would run into

:31:06. > :31:10.that area of the bank 's work, and this is because it would, those

:31:11. > :31:21.parts of the bank's work would still be protected by section 29 .1 of the

:31:22. > :31:26.2000 Act. This states, information is exempt information if it is

:31:27. > :31:31.disclosure under this Act would or would be likely to prejudice the

:31:32. > :31:34.economic interests of the United Kingdom or any part of the United

:31:35. > :31:39.Kingdom or the financial interests of any of the administration in the

:31:40. > :31:45.United Kingdom, blah blah blah. I would of thought that as long as we

:31:46. > :31:50.are not amending section 29 of the Act, we would be able to protect the

:31:51. > :31:56.things that the minister was particularly concerned about. The

:31:57. > :32:04.reason I was alerted to this was because of the letter which the

:32:05. > :32:10.Minister herself waved to us in the Chamber in June, which the Governor

:32:11. > :32:18.had written about the sale of RBS shares. I am sure the Minister

:32:19. > :32:23.remembers the occasion very well. In his letter, the Governor said that

:32:24. > :32:31.it was his view that the public interest would be served by

:32:32. > :32:37.beginning to retain RBS -- return RBS to private ownership. Writing

:32:38. > :32:39.this letter was not part of the government financial policy,

:32:40. > :32:44.Prudential policy, it was an intervention in government policy at

:32:45. > :32:50.the Chancellor's request on the issue of a share sale. When the

:32:51. > :32:54.government came before the Treasury Select Committee I ask him about

:32:55. > :33:00.this, and I asked him whether he would share the analysis which

:33:01. > :33:04.underlay the letter which he had written, and he refused point-blank

:33:05. > :33:08.to do so. I am not going to read out the full exchange I had with the

:33:09. > :33:14.Governor on that occasion because I went into that at second reading and

:33:15. > :33:23.it is on the record twice now. But I really feel that, in refusing to

:33:24. > :33:29.give the underlying analysis, the Governor is invading public scrutiny

:33:30. > :33:35.of what is a perfectly proper matter for the public to understand. In the

:33:36. > :33:39.letter, he said, are phased return of RBS to private ownership would

:33:40. > :33:47.promote financial stability, more competitive banking sector and the

:33:48. > :33:50.interests of the wider economy. " None of this is true. It will not

:33:51. > :34:03.promote a more competitive banking sector. We are hoping of course that

:34:04. > :34:09.the Comptroller and Auditor General will secure this analysis but I

:34:10. > :34:17.think a more straightforward way to deal with this which, because the

:34:18. > :34:21.share sales in particular are an issue, the C always looked into

:34:22. > :34:26.share sales, so be might get at the truth on this one occasion, but I am

:34:27. > :34:31.sure there will be other, similar loopholes, and I really do feel that

:34:32. > :34:37.the topicality of seeing this analysis was further undermined last

:34:38. > :34:41.June by the interview in the Financial Times given by Sir

:34:42. > :34:47.Nicholas MacPherson on his retiring from the Treasury, in which he

:34:48. > :34:53.described the sale of more shares from RBS as "Tricky", and he went on

:34:54. > :34:57.to say, "There is a judgment to be made over whether to sell further

:34:58. > :35:04.shares below the 2008 purchase price", so clearly, these are not

:35:05. > :35:10.straightforward matters. They do not fall within the normal room at the

:35:11. > :35:13.Bank of England. They are of public policy significance. They are but

:35:14. > :35:18.one of why it is inappropriate for the Bank of England to be subject --

:35:19. > :35:25.why it is appropriate or the Bank of England to be subject to the Freedom

:35:26. > :35:30.of Information Act. I would like to speak to the amendments in my name

:35:31. > :35:34.in this group, has been clauses five, six, seven and eight. You will

:35:35. > :35:38.be glad to hear that I am going to be as brief as possible because I am

:35:39. > :35:42.desperate to get to the third briefing so that we can have a vote

:35:43. > :35:49.on those. My amendments aim to achieve two things, firstly to

:35:50. > :35:56.secure justice for my country in the formulation of monetary policy and

:35:57. > :36:00.to let that policy better reflect the evolving UK. These are probing

:36:01. > :36:03.amendments and I wish to draw the government's attention to them again

:36:04. > :36:07.cause these are points the government should go away and look

:36:08. > :36:11.at and come back with its own proposals and future given the

:36:12. > :36:15.legislative programme that appears before the House these days. I was

:36:16. > :36:20.glad to hear that Labour are holding a review into these issues and look

:36:21. > :36:24.forward to reading its findings although it would have been handy

:36:25. > :36:31.had it been prepared in advance, and we had been able to discuss these

:36:32. > :36:35.issues during this bill today. The first of my new clauses proposes a

:36:36. > :36:40.change in the name centre of the bank. We believe that the name of

:36:41. > :36:44.the bank should be changed. The Bank of England is the UK Central Bank

:36:45. > :36:46.and time this was reflected to a greater degree not only in its name

:36:47. > :36:52.but also in its structures and practices. This is undoubtedly a

:36:53. > :36:57.contentious issue for me as a proud Welshman that the Central Bank that

:36:58. > :37:02.the sides monetary policy in Wales is named after another country. The

:37:03. > :37:07.Bank of England was created in 1694, before the present British state was

:37:08. > :37:14.disrupted. Wales was annexed in 1536, Scotland in 1707, and Ireland

:37:15. > :37:17.in 1801. The Central Bank was treated to serve a bloody good

:37:18. > :37:22.entity composed of only Wales and England and the fact that Wales was

:37:23. > :37:26.omitted from the title reflects the inferior status that my country

:37:27. > :37:33.enjoyed in 1694 post-op many of those present in the debate will

:37:34. > :37:37.have heard that my schoolboy hero, Sir Ian Botham, on the daily

:37:38. > :37:39.politics yesterday, said that England is an island, and we should

:37:40. > :37:56.be proud. I was going to say, if only! Despite

:37:57. > :38:00.dubious geographical knowledge this is a continuing mistake suffered by

:38:01. > :38:03.those other nations at the hands of those who confuse England with a

:38:04. > :38:10.larger entity. The injustice persist in cricket with Wales denied a

:38:11. > :38:14.national team in our own right, and other nations denied representation

:38:15. > :38:17.on the central bank. If the British state is a partnership of equals in

:38:18. > :38:23.all institutions must reflect that reality. Including the most

:38:24. > :38:27.important institution underpinning the financial system, the central

:38:28. > :38:35.bank. My suggestion is that it should be the Sterling central bank,

:38:36. > :38:38.reflecting the reality we live in, and showing that those in this place

:38:39. > :38:42.genuinely believe in a respect agenda and partnership of equals. My

:38:43. > :38:48.honourable friend from East Lothian has a similar amendment to that

:38:49. > :38:57.effect and I of course will vote in favour if he is minded to press it

:38:58. > :39:08.to a division. I seek to is your representation of the formations on

:39:09. > :39:14.the monetary policy committee. -- ensure. Full income tax devolution

:39:15. > :39:17.to Scotland, or partial income tax devolution to Wales, even though I

:39:18. > :39:24.believe we should have symmetric evolution of powers, the trajectory

:39:25. > :39:26.is clear nevertheless. Fiscal responsibility combined with a

:39:27. > :39:36.genuine no detriment fiscal framework increases accountability

:39:37. > :39:39.of devolved governments and incentivise them to boost economic

:39:40. > :39:44.performance to invest in public services. The coordination of

:39:45. > :39:50.monetary and fiscal policy is vital in any economic policy. Obviously

:39:51. > :39:52.the central bank is independent but there is undoubtedly coordination

:39:53. > :40:02.with the Treasury is with the expected. -- as would be. Similar

:40:03. > :40:04.protocols need to be developed with Scottish and Northern Irish

:40:05. > :40:10.Exchequer is. National parliaments should nominate to ensure those

:40:11. > :40:13.involved in the process have an understanding of conditions and

:40:14. > :40:18.events in Wales, Scotland, and Northern Ireland.

:40:19. > :40:22.Is he aware that in the USA the central bank is called the Federal

:40:23. > :40:29.Reserve for the very simple reason that it it is appointed federally,

:40:30. > :40:33.and the rate-setting committee is a federal committee? So the principle

:40:34. > :40:40.is well established in other jurisdictions.

:40:41. > :40:46.I read full to my honourable friend for that point, I fully agree. -- I

:40:47. > :40:50.am grateful. And to go back to the point made earlier the North- South

:40:51. > :40:56.divide and the effect of policy on that reality, it is no surprise that

:40:57. > :41:03.the UK is the most grotesquely in equal stake in the EU in terms of

:41:04. > :41:07.geographical wealth, and one of the main reasons is that for far too

:41:08. > :41:10.long monetary policy has been determined in the interests of a

:41:11. > :41:17.very small part of it, the Square mile just down the Thames. All

:41:18. > :41:21.members are currently bank staff or one of the four positions nominated

:41:22. > :41:24.by the Treasury. Fittingly, there are four Mac countries in the UK,

:41:25. > :41:33.which should make it ripe for modification. Following on from this

:41:34. > :41:37.I am very interested in the emerging debate on changing the remit of the

:41:38. > :41:43.MPC, in regard of setting interest rates. Clause seven in my name seeks

:41:44. > :41:49.to expand the objective is to include maximum employment. It is

:41:50. > :41:54.already charged with keeping an inflationary target of 2%. Other

:41:55. > :41:57.central banks such as the Federal Reserve, returning to our earlier

:41:58. > :42:03.exchange, have a dual mandate, going and inflation. In 1977 the US

:42:04. > :42:10.Congress amended the 1913 Federal Reserve act and mandated it to

:42:11. > :42:15.tackle long-term interest rates and, critically, maximum employment, as

:42:16. > :42:18.well as inflation. I take as interest the point made by the

:42:19. > :42:23.Minister that the bank does consider government targets in terms of

:42:24. > :42:26.employment, but there is a difference between employment

:42:27. > :42:35.targets and a mandate for maximum, or rather, from employment. Clause

:42:36. > :42:39.eight in my name seeks to bring accountability to Wales and other

:42:40. > :42:44.devolved government. The British state is rapidly changing as powers

:42:45. > :42:47.and responsibility flow from Westminster to devolved countries,

:42:48. > :42:50.although the pace is not as quick as I would want. We are not privy to

:42:51. > :42:56.meetings between the Treasury Minister and his senior team but can

:42:57. > :42:59.safely assume they are frequent. In regard of parliamentary scrutiny, in

:43:00. > :43:03.this place, the governor and his team meet the Treasury Select

:43:04. > :43:09.Committee at least five times a year. As I mentioned a moment ago

:43:10. > :43:14.fiscal powers are already afoot in the devolved nations with more

:43:15. > :43:18.planned. I hope that the central bank and Treasury agreed that it is

:43:19. > :43:23.in their interest to strengthen the relations between the central bank

:43:24. > :43:30.and the devolved government and Parliament. I am not aware of any

:43:31. > :43:34.structure of meetings for ministers of devolved governments, not least

:43:35. > :43:41.scrutiny of the central bank, by the devolved parliaments. In the

:43:42. > :43:50.interest of mutual respect those structures need to be formalised.

:43:51. > :43:57.I had thought I would come along this afternoon to listen, but I have

:43:58. > :44:00.been stung into action by the Minister, particularly by her

:44:01. > :44:07.comment in relation to new clause three, and two. Allow me to start

:44:08. > :44:14.by... I thank my friend for allowing me to

:44:15. > :44:16.intervene. Does he share my sense of regret and bewilderment that the

:44:17. > :44:26.government can so casually dismissed the proposal to end? And does he not

:44:27. > :44:29.agree it is disingenuous of the Conservative government to talk on

:44:30. > :44:33.one hand of a respect agenda embracing the contribution of all

:44:34. > :44:37.the nations of the UK, and yet at the first opportunity it has to

:44:38. > :44:42.recognise that contribution, it refuses to do so and insist that

:44:43. > :44:46.only England should be in the name of this most significant

:44:47. > :44:49.institution? I agree Talia and I think it is

:44:50. > :44:58.fitting that makes the point that this time. -- agree entirely. As my

:44:59. > :45:01.honourable friend pointed out earlier the Bank of England now is a

:45:02. > :45:06.very different kind of bank from that which it was a a few short

:45:07. > :45:11.years ago, it has a more political role, it makes decisions which have

:45:12. > :45:15.a wider impact than before, and surely in that regard the name needs

:45:16. > :45:21.to reflect the impact its decision-making has. The second

:45:22. > :45:25.reason he is entirely correct is because of the changed political

:45:26. > :45:34.climate in the UK. Not just his good self, but the honourable member also

:45:35. > :45:39.made a similar point about the need to recognise the role of Wales in

:45:40. > :45:45.this. This is an important point, not flimsy, at fundamental, for

:45:46. > :45:48.people who want to see that we have a central and important institution

:45:49. > :45:59.that has proper regard for the whole of the nation. All donations that it

:46:00. > :46:02.seeks to serve. -- all the nations. I was looking a short time ago at

:46:03. > :46:09.the Court of directors of the Bank of England, all 11 of them. If you

:46:10. > :46:13.followed that representation you would be inclined to rename the

:46:14. > :46:21.bank, the bank of the City of London. Because it gives a very

:46:22. > :46:29.little proper representation to, not just the nations of the UK, but the

:46:30. > :46:42.regions also. I enjoyed the analogy made earlier by the honourable

:46:43. > :46:45.member for, the cricket analogy, I have some interest in it, I think

:46:46. > :46:52.the Honourable member pointed out that it is the cricket board of

:46:53. > :47:00.England and Wales. As someone who was born not far from where I was

:47:01. > :47:04.born, in Scotland, the one-time became the captain of the England

:47:05. > :47:12.cricket team. Some years ago. Showing my vintage again. I think we

:47:13. > :47:22.have to have proper regard to all of the nations represented in the

:47:23. > :47:28.United Kingdom. I was also stung by the comment of the Minister, when

:47:29. > :47:33.she said that the Bank of England represents, and has always

:47:34. > :47:38.represented, the whole of the UK. I don't think that is true at all, in

:47:39. > :47:42.its policy-making. I think the Honourable member for Bishop

:47:43. > :47:47.Auckland, and the member for East Lothian, made a very telling points,

:47:48. > :47:55.when they pointed out of the way in which it has undue regard for one

:47:56. > :47:57.part of the United Kingdom. Prior to 2008 many commentators would say

:47:58. > :48:01.that the interest rate setting policy of the bank paid and you

:48:02. > :48:16.regard to the City of London and surrounding areas -- and

:48:17. > :48:27.undue regard, and too little regard to Scotland, Northern Ireland, and

:48:28. > :48:31.the like. Representation for the nations that make up the UK, indeed,

:48:32. > :48:38.a short time ago, I had a quick look on the Internet at who the esteemed

:48:39. > :48:45.figures are. Unless I am subsequently proven to be incorrect,

:48:46. > :48:48.or the Internet is incorrect, one of the directors of the Court of the

:48:49. > :48:55.Bank of England is also a nonexecutive director of the FCA.

:48:56. > :49:00.This is the type of interlocking directorships that I do not think

:49:01. > :49:05.serve the economic policy, the financial sector, well. Do we have

:49:06. > :49:17.such a tiny pool of people who are point -- who we are able to point,

:49:18. > :49:20.but we have to have them represented by the same directors? I think that

:49:21. > :49:27.is not a sign of strength in the way we're going at the moment, but a

:49:28. > :49:31.position extreme weakness. Why are these things important? Again in the

:49:32. > :49:35.Honourable member for East Lothian mentioned a word that has cropped up

:49:36. > :49:39.many times and committed discussions, and that is the

:49:40. > :49:43.importance of avoiding groupthink. It is seen in many studies is part

:49:44. > :49:50.and parcel of the Ford decision-making that contributed to

:49:51. > :49:57.the crash of 2008. If you want to avoid groupthink you need to have

:49:58. > :50:02.people willing to think differently. Willing to put down the critical

:50:03. > :50:06.questions. A chairman who is willing to seek out those with alternate

:50:07. > :50:12.views. I do not see it happening today. I remember some years ago I

:50:13. > :50:17.was sitting, observing, sitting within the confines of a company

:50:18. > :50:22.that was considering a very large proposal, and a paper was presented,

:50:23. > :50:27.and the chairman did a quick round up all the directors and said, what

:50:28. > :50:31.are your thoughts? Every single person immediately said, I think

:50:32. > :50:37.this is a really great paper, we should go with that suggestion.

:50:38. > :50:42.Everyone of them. And the chairman, being extraordinarily wise, said, I

:50:43. > :50:45.am extremely uncomfortable that we have got an immediate consensus, so

:50:46. > :50:49.I'm going to postpone this discussion until our next meeting, I

:50:50. > :50:56.want you to go away and generate critical views. That is the wise

:50:57. > :51:00.course of action. Not to be sucked into groupthink. For all those

:51:01. > :51:03.reasons I think that new clause two deserves the support of all those

:51:04. > :51:11.who do not want to replicate the mistakes of the past.

:51:12. > :51:15.Like many others in the chamber, and clearly within the Treasury Select

:51:16. > :51:24.Committee, while I welcome progress, I have serious concerns about this

:51:25. > :51:33.bill and its gradual compromising of the independence of the key

:51:34. > :51:36.regulators, the FCA, and Prudential Regulation Authority. Following the

:51:37. > :51:40.opening remarks, touched upon by many in the House including the

:51:41. > :51:44.Honourable member from East Lothian, I welcome the determination of the

:51:45. > :51:49.government that more oversight is needed in regards to the appointment

:51:50. > :51:53.of the Chief Executive of the FCA by the Chancellor. However I have

:51:54. > :51:58.concerns about the new procedures, is announced. Until the legislation

:51:59. > :52:02.is announced this is very much open for debate and I hope we do so

:52:03. > :52:08.thoroughly. Just as was touched upon by my honourable friend, another

:52:09. > :52:13.consideration would be this. Surely if the appointment is recommended to

:52:14. > :52:17.be put forward as a motion to the House the government could simply

:52:18. > :52:20.whip votes to prove the Chancellor's appointment. Select committees

:52:21. > :52:25.provide substantially more apolitical deliberation of the

:52:26. > :52:29.specialised issues. For this reason, I believe, a direct veto of the

:52:30. > :52:39.appointment needs to be considered. Issues around the Treasury Select

:52:40. > :52:42.Committee approval is even more pertinent following the appointment

:52:43. > :52:49.of Andrew Bailey, something touched on by the right honourable member

:52:50. > :52:51.for Chichester. Prior to his appointment he was the deputy

:52:52. > :52:57.director of the Prudential Regulation Authority. His move

:52:58. > :52:59.between the two regulators at the recommendation of the Chancellor

:53:00. > :53:07.leaves questions as to whether a revolving door may exist. As many in

:53:08. > :53:12.this chamber learned in the wake of the 2008 financial crisis,

:53:13. > :53:18.separation of church and state is of paramount importance when it comes

:53:19. > :53:22.to the banks. I feel the Government is ignoring this critical lesson.

:53:23. > :53:26.One may wonder about the appointment of Mr Bailey's appointment given

:53:27. > :53:31.that his predecessor was allegedly forced a you have the job by the

:53:32. > :53:35.Chancellor, according to commentators, for reportedly being

:53:36. > :53:41.perceived to be too tough on financial institutions. A lighter

:53:42. > :53:46.touch on regulation could mean that selling of Government shares in

:53:47. > :53:51.Lloyds Banking Group and RBS could be less troublesome for the

:53:52. > :53:55.Chancellor. Particularly given the capping of the losses of the

:53:56. > :54:00.mis-selling scandal. The Chancellor stated in the 2016 Budget he expects

:54:01. > :54:06.the Government to be able to sell it share in RBS for ?25 billion.

:54:07. > :54:11.Despite the fact that the Bank arranged ?9.3 billion in high yield

:54:12. > :54:16.energy loans between 2011 and 2014 alone, and its share price currently

:54:17. > :54:21.stands at roughly half of what was paid for it by the taxpayer in 2008.

:54:22. > :54:23.Clearly the Chancellor faces a serious challenge. There are two

:54:24. > :54:34.clause in this particular contained in the Bill as outlined which I

:54:35. > :54:41.believe are particularly detrimental to the maintenance... Part 2 clause

:54:42. > :54:47.18 states the Treasury is required to make recommendations regarding

:54:48. > :54:53.economic policy as it pertained to the regulator at least once a year.

:54:54. > :54:57.Part 1, 13 states the Treasury at any time can make recommendations to

:54:58. > :55:01.the Prudential Regulation Authority regarding economic policy. As it per

:55:02. > :55:07.Ince to the objectives of the PRA. That is the maintenance of stability

:55:08. > :55:13.within the financial sector. These recommendations made by the Treasury

:55:14. > :55:16.are not binding they manifest as increasing the level of political

:55:17. > :55:21.involvement in the function of the regulators which at their inception

:55:22. > :55:28.were intended to be independent of political influence. Given the

:55:29. > :55:36.recent speculation that the FC had bowed to political pressure when it

:55:37. > :55:40.abandoned a probe in 2015, these clauses are concerning to say the

:55:41. > :55:43.least. The particular reference to Part 1 clause 13, the requirement

:55:44. > :55:49.that Treasury make recommendations at least once a year to the PRC

:55:50. > :55:52.creates a greater onus of responsibility on the Treasury the

:55:53. > :55:56.remain aware of the systemic risks in the financial system. I fear that

:55:57. > :56:01.given the track record of this Government, it may well be asleep at

:56:02. > :56:05.the wheel when it comes to management of systemic risks. As I

:56:06. > :56:10.have mentioned previously This Morning chamber, this UK Government

:56:11. > :56:13.has thus far failed to address the source of substantial systemic risks

:56:14. > :56:17.inherent in the financial system and the wider economy, that of leveraged

:56:18. > :56:23.lending to the oil and gas sector, by British banks and US banks active

:56:24. > :56:28.in the UK market. And the slice and dice repackaging of these loans into

:56:29. > :56:34.derivative products, which are sold to investors. Numerous publications

:56:35. > :56:38.have warned for the moment with the stagnation price of oil this

:56:39. > :56:42.structure poses serious risks. With the Financial Times reporting in

:56:43. > :56:47.December 2024, there's a stark parallel with the US property market

:56:48. > :56:53.collapse that heralded the start of the 2008 global financial crisis

:56:54. > :56:57.and... Along the way. There are already signs that the first

:56:58. > :57:03.dominoes may be falling, as default rates on these high yield loans are

:57:04. > :57:11.rising at a startling rate. Wells Fargo said 57% of its loans in its

:57:12. > :57:16.energy portfolio were categorised as at risk of default. Based on these

:57:17. > :57:26.figures 24 billion of which is at risk of default. UBS analysts have

:57:27. > :57:29.put sales notices on Wells Stock. In the United States the Federal

:57:30. > :57:34.Reserve has stepped up its review into lending which could lead to

:57:35. > :57:38.systemic risks. However, the systemic risk involved This Morning

:57:39. > :57:41.lending has been ignored by the Conservative Government here.

:57:42. > :57:47.Political influence on the regulators was a key factor as

:57:48. > :57:51.touched on earlier and the failure of the regime to predict the

:57:52. > :57:59.financial sector and the wider economy to the systemic risk which

:58:00. > :58:01.led to the 2007-08 crisis. This Government has unable to acknowledge

:58:02. > :58:05.systemic risks which is so apparent to so many in the industry today. In

:58:06. > :58:09.relation to the composition of the Court of Directors of the Bank of

:58:10. > :58:16.England, news clause 2, if the Government truly beliefs in one

:58:17. > :58:20.nation Conservatism, new clause 2 should be incorporated. Finally,

:58:21. > :58:25.Madam Deputy Speaker, this Bill has outlined a serious potential to

:58:26. > :58:30.weaken the UK rectory regime and compromise the independence of the

:58:31. > :58:34.regulators, bring us back to a system where banks are seen to be

:58:35. > :58:36.too big to fail. Otherwise known as business as usual. Thank you Madam

:58:37. > :58:44.Deputy Speaker. Thank you Madam Deputy Speaker, I

:58:45. > :58:49.think I will perhaps leave on one side the remarks of the last

:58:50. > :58:54.speaker, because I don't recall him participating in the debate at

:58:55. > :58:59.second reading or at committee or earlier today. I think it doesn't

:59:00. > :59:04.reflect the full view of other parties This Morning House that

:59:05. > :59:09.actually this Bill is a very good Bill. In the words of the Chair of

:59:10. > :59:14.the Treasury Select Committee. But what I would like to do, Madam

:59:15. > :59:19.Deputy Speaker, is respond to some of the points that have been raised

:59:20. > :59:25.in this section of the debate. In particular to put on record how

:59:26. > :59:31.pleased I am that everyone welcomes the Government's new clause 12,

:59:32. > :59:35.which is supplemented by the text of the letter from the Chancellor to

:59:36. > :59:40.the Chair of the Treasury Select Committee, which was sent earlier

:59:41. > :59:46.today and which I read out in my opening remarks. I think this has

:59:47. > :59:53.been an important opportunity to put on record how our amendment

:59:54. > :59:57.recognises the important scrutiny role provided by the Treasury Select

:59:58. > :00:04.Committee and would also put on record the important role that this

:00:05. > :00:09.House has in scrutinising the executive. It is an opportunity

:00:10. > :00:16.again for us to emphasise the importance, the necessity even, of

:00:17. > :00:20.preserving the independence of the FCA chief executive, in terms of

:00:21. > :00:25.their operational role, apart from Government. And the amendment that

:00:26. > :00:31.we have tabled today reaffirms that commitment to continued independence

:00:32. > :00:36.of the FCA. It is absolutely vital that consumers and firms know that

:00:37. > :00:41.regulatory decisions are being taken in an objective and impartial way.

:00:42. > :00:45.The FCA is an operationally independent regulator. It must carry

:00:46. > :00:49.out its functions in line with the framework of objectives and duties

:00:50. > :00:53.established in statute. And the independence of that executive is

:00:54. > :00:57.protected by statute with clear provisions requiring the terms of

:00:58. > :01:01.appointment to be such that the appointee is not subject to the

:01:02. > :01:11.direction of the Treasury or by any other person. And throughout their

:01:12. > :01:14.appointment, the FCA cheer economic is scrutinised to ensure their

:01:15. > :01:18.continued independence. It was notable Madam Deputy Speaker that

:01:19. > :01:24.during the course of this debate nobody was able to point to anything

:01:25. > :01:30.in terms of the allegations that have been made in the press in terms

:01:31. > :01:33.of operational interference. I look forward to hearing the Treasury

:01:34. > :01:37.Select Committee's report, because I though they have done a thorough

:01:38. > :01:41.investigation into this matter. The amendment that we've tabled today

:01:42. > :01:45.ensures that the Treasury Select Committee always has time to

:01:46. > :01:51.scrutinise an appointee before they get their feet under the desk. I

:01:52. > :01:57.have also put on record that once appointed, the legislation is very

:01:58. > :02:01.clear. The Government absolutely cannot dismiss an FCA CEE save in

:02:02. > :02:07.the limited circumstances that are set out in statute. I won't read out

:02:08. > :02:11.again, Madam Deputy Speaker, the schedule 1 ZA to the financial

:02:12. > :02:18.services and markets Act 2000, paragraph 4, but I referred to it in

:02:19. > :02:25.my opens remarks. It applies not only to the CEO but also to the

:02:26. > :02:31.Chair and to the external members as well. In hearing from the right

:02:32. > :02:35.honourable member Chichester in terms of his reaction and his

:02:36. > :02:42.decision to withdraw his new clause 1, he asked a couple of further

:02:43. > :02:47.questions. He asked about whether he could expect that the legislation to

:02:48. > :02:55.outline the five-year term would be in the next session. As he knows, he

:02:56. > :03:01.has our commitment to find an early opportunity to put this into

:03:02. > :03:07.legislation. Indeed, he himself is aware of the strictures that do

:03:08. > :03:12.exist in terms of writing round and getting cabinet agreement. He has

:03:13. > :03:15.that now from the dispatch box. He asked whether the legislation is

:03:16. > :03:20.permanent. That's a very good question to ask. Of course, when we

:03:21. > :03:24.legislate, it is possible that it becomes permanent, but it is also

:03:25. > :03:29.permanent of course for future Government and for future houses of

:03:30. > :03:32.Commons, indeed future Treasury Select Committees to change

:03:33. > :03:38.legislation, so I will make that point. Will the Minister give way? I

:03:39. > :03:42.will on that point. I'm grateful to the more for what she has been

:03:43. > :03:47.saying. The clarification that I'm seeking is that the arrangement, but

:03:48. > :03:54.not the legislation so much, which of course stands or falls like any

:03:55. > :03:58.legislation, the arrangement put in place between the Treasury committee

:03:59. > :04:02.and the Treasury, the Chancellor today and the exchange of letters,

:04:03. > :04:15.will be made permanent. It is intended that that should be a

:04:16. > :04:20.permanent arrangement. Well, as he as the Chancellor says, it is not to

:04:21. > :04:25.ensure permanence, but I can assure him that it is his intention that it

:04:26. > :04:28.remains the case for the length of time that he is able to exert pour

:04:29. > :04:34.and influence over that particular issue. So I hope that answers the

:04:35. > :04:39.question in the spirit in which it is asked. In terms of the points

:04:40. > :04:45.raised by the honourable gentleman from Leeds East, he asked me to

:04:46. > :04:50.clarify that the NAO can look at the bank's success at meeting their

:04:51. > :04:53.Octoberives but not necessarily the desirability of the objectives

:04:54. > :04:58.themselves. Very already said that's exactly what this Bill achieves. The

:04:59. > :05:01.arrangements set out in the Bill have been agreed by the Comptroller

:05:02. > :05:06.and Auditor General and the Governor, and the terms of reference

:05:07. > :05:11.have been made available to the House. The Comptroller and Auditor

:05:12. > :05:15.General is content that the scope of his powers are appropriate and the

:05:16. > :05:19.bank is content they do not go too far. He asked whether the bank

:05:20. > :05:25.should have practitioner representation. The PRA has a

:05:26. > :05:32.practitioner panel which ensures the interests of those are communicated

:05:33. > :05:34.to the PRA. This panel includes representatives of banks, insurers,

:05:35. > :05:40.building societies and credit unions, all of whom widely read his

:05:41. > :05:45.new favourite publication, the City AM. And consumest have an input

:05:46. > :05:50.through the FCA consumer panel, which has a statutory right to make

:05:51. > :05:54.representations to the PRA. The honourable lady from Bishop Auckland

:05:55. > :05:58.asked about the Bank of England and the extent to which it is subject to

:05:59. > :06:05.the FOI Act. To be clear, it is thanks to this Bill that the bank is

:06:06. > :06:10.subject to the FOI Act. There are three specificed exclusions to the

:06:11. > :06:13.Act as it applies to the bank, which as I have explored, explained

:06:14. > :06:17.earlier are entirely sensible. Indeed the Bank of England isn't

:06:18. > :06:28.alone in having particular elements of its work carved out from the Act.

:06:29. > :06:32.Other organisations with specific exclusions include S4/C in Wales,

:06:33. > :06:38.the Competition Commission and the BBC. To her question about the

:06:39. > :06:43.Governor's analysis for supporting selling RBS shares at prices

:06:44. > :06:49.substantially above where shares are trading today, the Governor has

:06:50. > :06:53.explained his analysis is based on confidential information obtained as

:06:54. > :06:58.part of the supervisory responsibilities, where there is a

:06:59. > :07:03.standard exemption in the Freedom of Information Act. The honourable

:07:04. > :07:08.Member for East Lothian, he said the Bill had a lot to be commended. He

:07:09. > :07:13.asked about the range of expertise and perspectives on the court. He

:07:14. > :07:16.raises rt. He raises an interesting philosophical question - in the past

:07:17. > :07:21.the court has been a much larger organisation. Certainly in the views

:07:22. > :07:23.of the Treasury Select Committee, an unwieldy organisation with 19

:07:24. > :07:27.members, but it should represent the views of the entire UK. All members

:07:28. > :07:31.should consider the whole UK rather than acting as a representative of a

:07:32. > :07:35.particular part of the UK. He seems to have forgotten our exchange at

:07:36. > :07:39.committee in which we talked about the trade union representation of

:07:40. > :07:43.the court. I assured him we have not said anything in the passage of this

:07:44. > :07:47.Bill that would change that post war reality. Reality. Reality. Each each

:07:48. > :07:50.the committees of the Bank of England will have a strong ex-term

:07:51. > :07:54.representation and no external member will be able to serve on more

:07:55. > :07:58.than one of which the policy committees at the same time. This

:07:59. > :08:02.answers some of the questions raised by the Member for Kirkcaldy and

:08:03. > :08:08.Cowdenbeath in terms of group think. By legislating for each to which

:08:09. > :08:13.committees and providing that the statutory duties and can be

:08:14. > :08:15.exercised in no other way we empower the varied perspectives of the

:08:16. > :08:26.external members on each. It adds up to a set of protections

:08:27. > :08:29.for oversight that mitigates the risk of just one view emerging from

:08:30. > :08:34.the court or any other bank's committees. Further to the speech

:08:35. > :08:39.from the honourable gentleman from Carmarthen East, and if he wants to

:08:40. > :08:44.get in touch himself, the bank's regional representation in Wales,

:08:45. > :08:48.his agent, Steve Hakes, and deputy agent Ian Derek, I hope he will take

:08:49. > :08:53.the opportunity to do that. Does he wish to ask further questions? I am

:08:54. > :08:57.grateful to the Minister for giving way. She will have heard the

:08:58. > :09:00.heartfelt concerns of those representatives of Wales, Scotland

:09:01. > :09:06.and Northern Ireland in relation to the accountability back to the

:09:07. > :09:10.devolved governments. Would she at least it to a Treasury report or

:09:11. > :09:14.request the Bank of England to put out a report on how they aim to

:09:15. > :09:18.improve their account ability and relations with devolved governments

:09:19. > :09:22.in Parliament? There are a range of different ways, particularly with

:09:23. > :09:29.membership of the Treasury Select Committee in this house, having a

:09:30. > :09:33.member from Scotland, a range in ways this can happen, we welcome the

:09:34. > :09:37.fact that the very coins we have in our pockets are minted in the great

:09:38. > :09:43.country of Wales. In terms of his question about the Federal Reserve

:09:44. > :09:49.'s dual mandate, he identified the Federal Reserve as the example of a

:09:50. > :09:54.bank that adopts a dual mandate. US policymakers judged that right for

:09:55. > :09:57.them. We believe the stability of price is important for anchoring

:09:58. > :10:00.inflation expectations and we are joined by other central banks,

:10:01. > :10:07.including those in Canada, New Zealand and the ECB. I think that I

:10:08. > :10:10.have have the opportunity to respond to a range of issues raised in this

:10:11. > :10:18.party for debate, and I would like to commend the government's new

:10:19. > :10:25.clause to the house and hope it will agree to include that in the bill.

:10:26. > :10:36.The question is that new Clause 12 be read a second time. I think the

:10:37. > :10:43.ayes have it. The question is that the new Clause 12 be added to the

:10:44. > :10:46.bill. I think the ayes have it, the eyes have it. We now come to Clause

:10:47. > :10:52.2. As many of that opinion say aye?

:10:53. > :12:27.Division! Clear the lobby. The question is that the new Clause

:12:28. > :19:02.2 be read a second time. That opinion, say aye.

:19:03. > :24:33.MADAM DEPUTY SPEAKER: Order. The eyes to the right, 246. The noes to

:24:34. > :24:46.the left, 303. Speaker peerk the eyes to the right

:24:47. > :24:53.246, the noes to the left, 303, the noes have it, the noes have it.

:24:54. > :24:56.Unlock. We now come to new clause 9, with which it will be convenient to

:24:57. > :25:02.consider the new clauses and amendments listed on the selection

:25:03. > :25:06.paper. Mr Charles Walker to move. Madam Deputy Speaker, thank you very

:25:07. > :25:10.much. I rise to move new clause 9, which seeks to prevent the

:25:11. > :25:14.restriction or withdrawal of banking services from potentially tens of

:25:15. > :25:20.thousands of people. People that include soldiers and those serving

:25:21. > :25:23.in the armed forces, judges, civil servants, trade unionists, local

:25:24. > :25:27.councillors and their officials, because these people along with

:25:28. > :25:34.their family and associates are deemed to be politically exposed

:25:35. > :25:41.persons for the purposes of the fourth money laundering directive,

:25:42. > :25:46.to be put into UK law. New clause 9 is straightforward in its scope. It

:25:47. > :25:50.seeks to ensure that when exposing the money laundering directive into

:25:51. > :25:54.UK law reasonable regard is given to those parts of the directive that

:25:55. > :25:59.deal with proportionality. New clause 9 makes clear that prior to

:26:00. > :26:04.the directive's enactment the financial services and markets Act

:26:05. > :26:08.2000 is amended so that the Financial Conduct Authority is

:26:09. > :26:13.required to publish clear guidance to the banks, defining what the FCA

:26:14. > :26:20.deems to be proportionate. New clause 9 also makes regulatory

:26:21. > :26:25.provision for peps, who believe they've been treated unreasonably by

:26:26. > :26:33.their banks, to ask that their case is adjudicated by the FCA. Will the

:26:34. > :26:37.honourable gentleman give way? Can I congratulate him for bringing

:26:38. > :26:40.forward this new clause? I understand from topical questions

:26:41. > :26:45.today it is likely to be accepted by the Government, so he's is obviously

:26:46. > :26:50.in the right area at the moment. Does he also, is he also concerned

:26:51. > :26:54.that banks are actually acting in advance of this? There is quite a

:26:55. > :26:58.lot of evidence that they are already gathering information about

:26:59. > :27:02.ordinary law abiding members of the public and using that as an excuse

:27:03. > :27:07.to restrict their banking activities? The honourable gentleman

:27:08. > :27:13.makes a valid point. Banks are derisking at the moment and they are

:27:14. > :27:18.derisking very aggressively. What we need to do is inject proportion alt

:27:19. > :27:24.into their actions. I believe what I'm bringing forward today for this

:27:25. > :27:31.House to decide on will go some way in achieving that. Because what new

:27:32. > :27:36.clause 9 does is it inserts process of adjudication, so where a

:27:37. > :27:39.politically exposed person believes they are being treated unfairly,

:27:40. > :27:43.being denied access to banking services, they can take that

:27:44. > :27:50.concern, that complaint to the FCA and it can adjudicate on that and

:27:51. > :27:52.decide whether the banks are interring the directive

:27:53. > :27:54.overaggressively, and if they are can levy a fine on the bank for

:27:55. > :28:13.doing that. New clause 9 hassing New clause 9 is needed because it is

:28:14. > :28:18.clear that interpreting the money laundering directive banks are

:28:19. > :28:23.making no distinction when determine hag is a politically exposed person

:28:24. > :28:27.from those peps drawn from the hotbeds of Nigeria and the Russian

:28:28. > :28:32.subcontinent and those from developed democracies such as our

:28:33. > :28:36.own with high levels of scrutiny and accountability. May I put on record

:28:37. > :28:40.the thanks of all of enoughs the house for the diligence and the

:28:41. > :28:44.focus and the tenacity of my honourable friend for Broxbourne for

:28:45. > :28:48.bringing this massively important issue to the attention of the

:28:49. > :28:53.Government, and for what we hope will be a satisfactory conclusion

:28:54. > :28:58.today. Does he agree with me that the collateral damage of some of

:28:59. > :29:04.this precipitous action by banks has impacted on people's families, which

:29:05. > :29:07.is therefore having a big impact on their credit worthiness for the

:29:08. > :29:11.whole future? My honourable friend makes a good point. The banks have

:29:12. > :29:19.acted very aggressively in this case. I shall come on to that in a

:29:20. > :29:22.few moments in my #1350e67. Can I also the economics secretary for her

:29:23. > :29:26.time and patience in dealing with this matter? I've been speaking to

:29:27. > :29:31.her about this for four months. On occasions I've got a little

:29:32. > :29:35.overexcited, I admit, and she has always maintained high levels of

:29:36. > :29:41.good humour and patience, so I thank her for that. It is important that's

:29:42. > :29:46.put on the record. Mr Speaker, at the late stage without the

:29:47. > :29:50.intervention of new clause 9, the directive risks blighting the lives

:29:51. > :29:56.of decent people. People working in public life and service, and not

:29:57. > :30:01.just these people but, as my right honourable friend pointed out in his

:30:02. > :30:04.intervention, their partners, their spouses, their children, parents,

:30:05. > :30:10.siblings and in-laws. This is not proportionate. Even more worrying,

:30:11. > :30:15.Mr Speaker, the directive covers the close associates of politically

:30:16. > :30:20.exposed persons. I am aware that one close associate actually is a member

:30:21. > :30:26.of the press lobby and had some problems with an ISA and was subject

:30:27. > :30:31.to close questioning by his bank. When he asked the person at the end

:30:32. > :30:34.of the phone from the bank why are you conducting yourself This Morning

:30:35. > :30:40.way, the response was, because we understand that you are an associate

:30:41. > :30:45.of the Prime Minister. So even the media are caught in this directive

:30:46. > :30:50.or the banks preparing for the introduction of this directive

:30:51. > :30:53.through their derisking. The Financial Action Task Force, whose

:30:54. > :31:01.guidance underpins the directive, and is referred to in the directive

:31:02. > :31:06.repeatedly, states that and I quote, Mr Speaker, for close associates

:31:07. > :31:09.examples include the following types of relationships. I think the House

:31:10. > :31:15.needs to listen carefully to this, because it is quite an odd

:31:16. > :31:19.paragraph. Examples include the following types of relationships:

:31:20. > :31:24.Known sexual partners outside the family unit. EG girlfriends,

:31:25. > :31:30.boyfriends, mistresses. Prominent members of the same political party.

:31:31. > :31:36.Civil organisation. That could be the National Trust. Labour or

:31:37. > :31:41.employee unions as the pep. Business partners or associates, especially

:31:42. > :31:45.those that share beneficial ownership of legal entities with the

:31:46. > :31:51.pep or are otherwise connected. Mr Speaker, my fear is that without

:31:52. > :31:55.clear Government backed FCA guidance as provided for in new clause 9 the

:31:56. > :31:59.banks will continue to draw on the work of the Financial Action Task

:32:00. > :32:04.Force, which goes on the state in paragraph 37 of its 2013 guidance,

:32:05. > :32:08.there should be awareness that middle ranking and more junior

:32:09. > :32:12.official s could act on before of a pep to circumvent controls. These

:32:13. > :32:16.less prominent public function s could be appropriately taken into

:32:17. > :32:19.account as customer risk factors in the framework of the overall

:32:20. > :32:25.assessment of risks. Will my honourable friend give way? I will.

:32:26. > :32:29.I am grateful. The case he is making is so overwhelming, could he tell

:32:30. > :32:34.the House whether he is aware of anyone who is opposed to what he is

:32:35. > :32:39.trying to do? Well, I am sure there will always be people opposed to

:32:40. > :32:45.what I am trying to do, because that is the nature of society. We live in

:32:46. > :32:51.an open society where people are a different point of view on many

:32:52. > :32:55.issues. But actually what the money laundering directive should be about

:32:56. > :33:01.is capturing bad people, not capturing all people, Mr Speaker in

:33:02. > :33:05.its scope. Because if everybody's bad, then it is very difficult to

:33:06. > :33:11.identify who is actually breaking the law. We want to go after the law

:33:12. > :33:18.breakers not people who by accident are described as peps or identified

:33:19. > :33:25.as peps by banks in this country. I am obliged. Does the honourable

:33:26. > :33:31.member share my concern that the rush to implement these actions

:33:32. > :33:39.ahead of the transcription of the legislation indicates a desire by

:33:40. > :33:44.the banks to do what seems to be decisive action to a group of people

:33:45. > :33:49.who are quite easy to target? And actually they'll be less keen to do

:33:50. > :33:57.so for people who are harder to track down? I should say I know the

:33:58. > :34:01.fondness of the right honourable gentleman for East Yorkshire for

:34:02. > :34:07.live music, a fondness that I share, but there are limits.

:34:08. > :34:17.Mr Speaker, I thought it complemented the speech to which

:34:18. > :34:21.honourable member. It was like an opera singing exercising his lungs.

:34:22. > :34:25.LAUGHTER. Banks need to invest their resources, time and energy in going

:34:26. > :34:29.after people who are high risk. Banks know who are high risk. To be

:34:30. > :34:34.perfectly honest whatever people in this country think of their members

:34:35. > :34:37.of Parliament, their trade unionists, their council officers,

:34:38. > :34:41.their council leaders, their Assembly Member, their Scottish

:34:42. > :34:47.Parliament members, these in the main are not bad people in indulging

:34:48. > :34:51.in money laundering. I'm not saying there won't be a bad apple but they

:34:52. > :34:56.don't present the real and current risk. I want the energies of banks

:34:57. > :35:02.not focused on chasing after the good, but as I said a few moments

:35:03. > :35:08.ago, chasing after the very bad. Mr Speaker, as I said, the FATF,

:35:09. > :35:15.Financial Action Task Force, which says even middle ranking people can

:35:16. > :35:18.be involved in money laundering, does basically put everyone,

:35:19. > :35:21.everyone perhaps above the grade of 7 in the Civil Service in the frame.

:35:22. > :35:26.Think of any organisation and you think of people in that

:35:27. > :35:30.Government-backed organisation, trade union, regional organisers,

:35:31. > :35:33.potentially if banks follow the FATF guidance these people could be

:35:34. > :35:37.deemed to be politically exposed persons and have both their banking

:35:38. > :35:41.facility withdrawn or curtailed but those of their families and

:35:42. > :35:46.associates. Mr Speaker, I am going to make progress, because I wasn't

:35:47. > :35:50.planning to speak for so long. Once a pep always a pep, because although

:35:51. > :35:55.article 22 of the directive states that after 12 months have past from

:35:56. > :36:00.the point that a politically exposed person has left office, a bank can

:36:01. > :36:06.decide that that person is no longer a pep. Sounds like good news.

:36:07. > :36:12.However, the article foes on to say, but banks be required to take into

:36:13. > :36:17.account the continuing risk posed by the person and to apply appropriate

:36:18. > :36:23.and risk-sensitive measures until such time as the person is deemed to

:36:24. > :36:27.pose no further risk, specific to politically exposed persons. Mr

:36:28. > :36:32.Speaker, this, or Madam Deputy Speaker, this is the lobster pot

:36:33. > :36:36.from which few will escape, because banks are risk averse, much better

:36:37. > :36:40.to keep someone as a pep indefinitely than take the risk,

:36:41. > :36:44.unless we are obliged to downgrade them to just the status of a normal

:36:45. > :36:50.customer. Madam Deputy Speaker, in short, without the protections and

:36:51. > :36:55.guidance contained in new clause 9, we could see, forget people serving

:36:56. > :37:04.in public life. Let's talk about people who've left public life.

:37:05. > :37:06.Ex-Army officers, ex-judges, ex-training union representatives,

:37:07. > :37:10.volunteers of political parties and former members of Parliament denied

:37:11. > :37:14.the opportunity to serve on charitable and company boards

:37:15. > :37:18.because their presence on those boards would confer the status of

:37:19. > :37:23.politically exposed person on the rest of the board. A state us that

:37:24. > :37:28.is best avoided by individuals not yet stigmatised. And, if conferred,

:37:29. > :37:32.a state us that could lead to a withdrawal of the relevant charity

:37:33. > :37:36.or company's banking services by its bank. This isn't supposition, Madam

:37:37. > :37:40.Deputy Speaker, I'm not making this up, along with the restriction of

:37:41. > :37:44.banking services, the closure of personal accounts, the black bawling

:37:45. > :37:49.of family members, this is happening now.

:37:50. > :38:00.In accepting clause 9 the Government will enshrine that banks have a

:38:01. > :38:06.legal duty to act proportionately. This is the correct thing to do. In

:38:07. > :38:12.conclusion, new clause 9 isn't about protecting politicians. And of

:38:13. > :38:18.course as politicians, we are politically exposed people. Even a

:38:19. > :38:22.PPS in the Treasury has had difficulties with this. But it is

:38:23. > :38:28.not about protect politicians. Although their rights are no less of

:38:29. > :38:33.deserving of respect than anyone else's, it is about protecting the

:38:34. > :38:38.banking and employment rights of the thousands of people whose name

:38:39. > :38:46.appear in the civil service year book and those military personnel

:38:47. > :38:49.that serve our country, and it is about protecting council officials,

:38:50. > :38:55.protecting the rights of trade unionists. New clause 9 not only

:38:56. > :39:00.protects their rights, it protects the rights of their families.

:39:01. > :39:06.Families who had no say in their career choice, but are dragged into

:39:07. > :39:11.the scope of the directive and finally, I do thank the Government

:39:12. > :39:15.for indicating earlier today that it is accepting new clause 9. By doing

:39:16. > :39:21.so, it will reduce the chances of let's say an army officer serving

:39:22. > :39:26.their country, somewhere hot and dangerous, getting a telephone call

:39:27. > :39:31.from his or her spouse, saying darling, why you are being shot at

:39:32. > :39:36.we have had our bank account closed. The Government is doing the right

:39:37. > :39:46.thing and it to be congratulated for doing the right thing today. Thank

:39:47. > :39:52.you. The question is new Laws clause 9 be read a second time. I'm pleased

:39:53. > :39:58.to follow the honourable gentleman, who made an excellent speech on an

:39:59. > :40:03.important subject and showed his characteristic bravery in addressing

:40:04. > :40:08.an issue that many other members wanted to have addressed, but were

:40:09. > :40:15.unenthusiastic to put themselves in the firing line for. The minister

:40:16. > :40:20.said in the debate we had earlier that Edinburgh was happy --

:40:21. > :40:26.everybody was happy with this bill. I feel now we have come to the

:40:27. > :40:30.section on financial services, she may discover that perhaps we are not

:40:31. > :40:40.quite so happy with this part of the bill. The opposition front bench

:40:41. > :40:46.have put forward amendments 18 to 9 and I wish to speak in support of

:40:47. > :40:53.them. I'm also sympathetic to aemd 10 put forward by the SNP. The

:40:54. > :40:59.problem we have is that getting the senior management regime right is

:41:00. > :41:02.vital to reducing the risk of further irresponsible behaviour in

:41:03. > :41:09.the financial institutions, particularly the banks. We all know

:41:10. > :41:15.the devastating impact which their behaviour had on the rest of the

:41:16. > :41:21.economy and anybody who is in doubt about this should see the film The

:41:22. > :41:28.Big Short, it wonderfully described this episode, albefrom it an

:41:29. > :41:34.American point of view. What we see from the senior manager's regime

:41:35. > :41:41.clauses in this bill I'm sorry to say is a retreat from the sensible

:41:42. > :41:45.legislation that was taken in 2012, following the Parliamentary

:41:46. > :41:50.commission on banking standards. Which recognised that one of the

:41:51. > :41:55.ways of changing behaviour and changing culture is to make those

:41:56. > :42:00.people at the top of the banks accept their full responsibility.

:42:01. > :42:08.I'm afraid the clauses in this Bill, which the Government are putting

:42:09. > :42:11.forward, do no longer do this. It is completely sensible for people to be

:42:12. > :42:17.expected to have the same responsibility for the behaviour of

:42:18. > :42:24.those who work for them, as we see in other institutions on for example

:42:25. > :42:29.health and safety. We have seen a number of arguments for the

:42:30. > :42:37.Government decision to... As it were reverse the reversal of the burden

:42:38. > :42:44.of proof. It is rather... An awkward mouthful. But one of the main

:42:45. > :42:51.arguments which has been put forward is that the regulatory burden of the

:42:52. > :42:56.approach which was legislated for in 2012 is too burdensome and I think

:42:57. > :43:02.this really misses the whole point, which is that we want people to

:43:03. > :43:09.spend more time looking at how to reduce risk, rather than a great

:43:10. > :43:14.deal of time on how to make lots and lots of money irrespective of the

:43:15. > :43:22.risk which they are putting into the economy. Not for themselves. Not on

:43:23. > :43:27.their own account. But which affects all over financial institutions. I

:43:28. > :43:31.attended a seminar and there were senior practitioners there from law

:43:32. > :43:37.firms, from accountancy firms, from some of the big asset managers and

:43:38. > :43:44.they were supportive of the original Parliamentary commission approach.

:43:45. > :43:47.And so I said, you know, my feeling was it was disappointing the

:43:48. > :43:52.Chancellor was going back on this. But that he wasn't just doing it as

:43:53. > :43:58.a whim, he was doing it because he had been lobbied to do it. I asked

:43:59. > :44:02.them why they thought he had been lobbied to do it. Of course, it was

:44:03. > :44:06.the naive question and I had no idea what the answer would be. They all

:44:07. > :44:13.roared with laughter and said, well, it is obvious, it is a way of, to

:44:14. > :44:17.facilitate people making millions of pounds without facing any down side

:44:18. > :44:25.risks. We cannot put ourselves in this situation again. The cost of

:44:26. > :44:31.the bailout in 2008 was ?133 billion. We must take serious think

:44:32. > :44:37.lessons which can be learned and that is why the amendments which

:44:38. > :44:41.have been put forward by my front bench and the SNP are ones which the

:44:42. > :44:52.Government should take seriously and accept. Thank you. I would like to

:44:53. > :44:59.take this opportunity to introduce new clause 10 in my name, aimed at

:45:00. > :45:02.safeguarding the free debt sector and this is a broke amendment. I

:45:03. > :45:09.know she is looking forward to responding to it. There has been a

:45:10. > :45:15.long debate over the fee versus principle in debt management plans.

:45:16. > :45:19.It is not my intention to re-open that debate now, although I'm

:45:20. > :45:24.concerned about free providers. Organisations such as pay plan and

:45:25. > :45:28.Christians against poverty operate the fair share model of free debt

:45:29. > :45:36.management, which cease creditors covering the cost of customer plans

:45:37. > :45:45.on a polluter pace basis. In other words schemes that are free to the

:45:46. > :45:51.debtor. Their facing pressure fro fee-charging firms. In one case it

:45:52. > :45:56.left 16,000 debt management clients unsupported and the customers are

:45:57. > :46:02.being signposted to free providers, but that is the last thing you want

:46:03. > :46:06.to happen when you're caught up in heavy debt, that the person who is

:46:07. > :46:11.advising you disappears and you're having to sit down with new people.

:46:12. > :46:16.The debt management sector is nearing a desperation point and the

:46:17. > :46:22.market is becoming inefficient and consumers are treated badly in many

:46:23. > :46:28.cases. Those fair share operate ors have seen their revenue reduce. As

:46:29. > :46:32.more and more fee-chargers leave the market, we will face a situation

:46:33. > :46:37.where fair share operators are unable to provide economically

:46:38. > :46:41.viable plans. Plainly, we are facing a situation in which condition

:46:42. > :46:45.soupers -- consumers will be charged higher fees and their options will

:46:46. > :46:51.be limited. Again going in the wrong direction. There have been efforts

:46:52. > :46:54.over the course of the last Parliament aimed at safeguarding

:46:55. > :46:59.free debt management provision, mainly on the creation of a

:47:00. > :47:04.voluntary protocol and members have tried to make similar long-term

:47:05. > :47:09.changes, reflecting the cross party nature of the issue. Efforts include

:47:10. > :47:16.those of the debt management working group of which I'm a member and I

:47:17. > :47:27.see the chair there I think poised to speak. Efforts have been aimed at

:47:28. > :47:31.free debt management services. I see such an approach may not be

:47:32. > :47:41.feasible. But this making provision for a tweak to the financial

:47:42. > :47:47.services Act mandating all credit or thes to have consumer free debt

:47:48. > :47:51.plans. Many to accept a reduction in the amount due in exchange for a

:47:52. > :48:01.plan being put in place, but some do not. And this new clause seeks to

:48:02. > :48:08.tackle that. While this does fall short of outlawing fee charging

:48:09. > :48:16.plan, it ensures customers can access free debt plans. This is for

:48:17. > :48:22.needed reform and I'm hopeful it with be implemented without delay. I

:48:23. > :48:28.would lank to thank the minister for her interest and her guidance. Every

:48:29. > :48:33.age has its challenges and it may well be that historians will look

:48:34. > :48:42.back at our era and marvel at the levels of debt. This can arise by

:48:43. > :48:46.misfortune, poor choices or by the actions of others. But it vital the

:48:47. > :48:52.right help is at help to help people out of debt. The FCA can make the

:48:53. > :48:57.rule changes contained in this new clause. I would like to thank the

:48:58. > :49:04.Economic Secretary for her patience and kindness and commend this new

:49:05. > :49:12.clause to her and to the House. Thank you. I'm not rising to support

:49:13. > :49:20.this amendment. While I have sympathy with the member in his aim

:49:21. > :49:23.to keep the free to consumer plans going, I don't feel this is the

:49:24. > :49:31.amendment that will do it. I'm unclear as to the early-morning the

:49:32. > :49:35.fee is being use -- I'm unclear as to the term fee, because it is a

:49:36. > :49:43.voluntary arrangement and I'm concerned about what public benefit

:49:44. > :49:52.will it be. Is this actual lay legislative issue. I do have wider

:49:53. > :49:57.concerns, and I do feel there are too few debt providers giving

:49:58. > :50:04.advice, but I feel the landscape is confusing. Broadly, to introduce a

:50:05. > :50:08.statutory funding management for one debt solution, a debt management

:50:09. > :50:13.plan, I don't feel is the right way forward. There are lots of options

:50:14. > :50:23.available for people in debt, including bankruptcy, debt relief

:50:24. > :50:35.warders, debt plans, consolidation. Many of those plans are not funded

:50:36. > :50:42.sustainably. If paid ?35 for each order. That is not a sustainable

:50:43. > :50:46.solution. What I don't want to see is organisations actually offering

:50:47. > :50:49.plans on the basis of how they're funded, not what what is best for

:50:50. > :50:54.the individual. I think that this amendment could lead to providers

:50:55. > :50:59.doing that. I am sure many wouldn't do that, but it may lead to more

:51:00. > :51:03.providers opting to offer the fair shared solution, because it is

:51:04. > :51:07.statutory funded and they make a loss on every debt relief warder.

:51:08. > :51:14.That is not best for the individual in debt. I think we need a proper

:51:15. > :51:19.review of the landscape of the debt solutions that are around. I do

:51:20. > :51:25.believe that it is too complex and it is not properly costed. I also

:51:26. > :51:30.believe that the providers of the debt solutions have insufficient

:51:31. > :51:33.funding. And as the member referred to, there has been a problem with

:51:34. > :51:39.the debt management plan. In fact the review of the fee charging debt

:51:40. > :51:44.management companies said 60% of their clients were actually put in a

:51:45. > :51:47.worse position by going to a fee-charging debt management

:51:48. > :51:53.company. That cannot be allowed to continue and I'm pleased that the

:51:54. > :51:58.FCA are cleaning up the market. "Concerned what will happen is the

:51:59. > :52:01.people who have come off a debt management plan, having taken that

:52:02. > :52:06.big step to deal with their debts and it is a big step, to face up to

:52:07. > :52:09.the fact that you can't pay your bills is a difficult decision to

:52:10. > :52:15.make, they have taken that step, they have gone to a provider and

:52:16. > :52:19.been told your providers was wasn't providing a good service, find

:52:20. > :52:25.somebody else. I worry they won't actually look around and I hope that

:52:26. > :52:29.the Secretary will look at ways of promoting people going to other

:52:30. > :52:33.providers. I also hope that funding will be available for those other

:52:34. > :52:40.providers as well and that they won't be left in the position of

:52:41. > :52:51.having to pick up a large number of people all at

:52:52. > :52:58.I do have sympathy with the motives behind the amendment but I don't

:52:59. > :53:03.feel that this amendment will some of the main problem, which is that

:53:04. > :53:09.many of the debt solutions and many of the providers of these solutions

:53:10. > :53:14.don't have sufficient funding and that this amendment will focus on

:53:15. > :53:18.one solution and my well skew the market in the wrong way to the

:53:19. > :53:27.advantage of the providers rather than the advantage of the people who

:53:28. > :53:35.need the solution. Madam Deputy Speaker, can I refer to clauses,

:53:36. > :53:41.amendments 1 and 2 in my name and in passing amendments 2 and 9 from the

:53:42. > :53:47.Labour benches. I won't be pressing one and two to a vote should the

:53:48. > :53:51.Labour benches move on 8 and consequential 9, we will be

:53:52. > :53:57.supporting them. Can I say briefly to the Minister, I have said in the

:53:58. > :54:02.previous debate there is much in this Bill to commend itself to us,

:54:03. > :54:07.to the House. There is much that will add to the regulatory regime

:54:08. > :54:13.and its performance in the UK. But the worst part of this proposed

:54:14. > :54:19.legislation, the thing that really takes away as a time bomb inside it

:54:20. > :54:27.is the attempt by Government to shift legislation that it put in

:54:28. > :54:34.place only four years ago on the reverse burden of proof for major

:54:35. > :54:41.financial infractions. Here we come to the nub of it. Legislation was

:54:42. > :54:44.put in place four years ago which identified senior managers in major

:54:45. > :54:50.banking and financial organisations. And if on their watch some serious

:54:51. > :54:54.infraction of regulatory rules was encountered, they would be held

:54:55. > :55:01.responsible automatically. Unless they could prove that they had taken

:55:02. > :55:06.due steps to stop that happening. It was put there with a great deal of

:55:07. > :55:10.public support, and support in this House, because it was the one sure

:55:11. > :55:18.way of ensuring that the financial sector at senior level did not do

:55:19. > :55:20.what it had done all through the 200-08 crisis, of blaming everyone

:55:21. > :55:27.else and saying it wasn't their fault. It made senior managers

:55:28. > :55:31.responsible. Just as senior managers in other organisations in utilities

:55:32. > :55:37.become responsible for a major crisis. Now, why would the

:55:38. > :55:44.Government want to change that before it even got into operation?

:55:45. > :55:48.Which was only this month. The point is that graves t graves the wrong

:55:49. > :55:53.signal -- that gives the wrong signal. You put legislation in place

:55:54. > :55:57.and you see if it works, let's try it, we have a consensus behind it.

:55:58. > :56:01.To put the legislation in place and before it is even in operation to

:56:02. > :56:08.say we are going to pull that, to change, that this from a Chancellor

:56:09. > :56:12.whose constant restrain is he has a long term economic plan. This change

:56:13. > :56:18.sends out all the wrong signals. That's the key issue here. The

:56:19. > :56:22.Minister will say well, we think it was disproportionate. Now that we've

:56:23. > :56:27.widened the number of people caught up in the senior management regime

:56:28. > :56:32.to tens of thousands, it becomes problematic about how we could apply

:56:33. > :56:38.it. I know all the explanations. But I put it to the Minister, by

:56:39. > :56:44.reneging on legislation this Government put in place to great

:56:45. > :56:47.fanfare four years ago we are signalling to the world that we are

:56:48. > :56:52.loosening the regulatory bounds. You may think you are not, but you've

:56:53. > :56:57.sent the wrong signal out. It is like another signal this Government

:56:58. > :57:01.has been sending out. Year after year after year the Chancellor and

:57:02. > :57:07.Treasury Minister got up and told us, we should pay lower taxes. Taxes

:57:08. > :57:12.are bad, keep your own money. Then suddenly we discover hounds of

:57:13. > :57:15.thousands of people are setting up offshore secret bank accounts, the

:57:16. > :57:20.Government gets all holy and says, we didn't mean you to do that. This

:57:21. > :57:25.Government speaks sometimes with two voices. I know individual Ministers

:57:26. > :57:28.are very honest and sincere, but sometimes Ministers don't understand

:57:29. > :57:34.they speak with one voice on taxes, one voice on regulation, and then

:57:35. > :57:38.they do the opposite. It sends out the wrong signal. You cannot go on

:57:39. > :57:42.as a Government blaming other people. You are to blame if you

:57:43. > :57:46.change this rule without putting it into force for a few years to see if

:57:47. > :57:51.it works. That's why we have to keep the existing 2012 legislation as it

:57:52. > :57:59.is until it's been proven otherwise that it doesn't work. Thank you

:58:00. > :58:04.Madam Deputy Speaker. I beg to move new clause 14 and amendments 8 and 9

:58:05. > :58:08.and 10 which are a consequence upon amendment 8 in my name and that of

:58:09. > :58:14.my right honourable friend and honourable friends. I would like to

:58:15. > :58:17.speak first to our new clause 14 on combatting abusive tax avoidance and

:58:18. > :58:22.then to our amendments on the reverse burden of proof or the

:58:23. > :58:25.presumption of responsibility as I choose to call it regarding senior

:58:26. > :58:32.managers within the banking sector. Fist of all new clause 14. In the

:58:33. > :58:36.wake of the Panama papers leak, which the honourable member for East

:58:37. > :58:39.Lothian just mentioned, Labour tabled new clause 14, combatting

:58:40. > :58:43.abusive tax avoidance. This new clause sets out that combatting

:58:44. > :58:48.abusive tax avoidance should be established as a new regulatory

:58:49. > :58:52.principle for the FCA, and requires that they undertake in consultation

:58:53. > :58:56.with the Treasury an annual review for presentation to the Treasury

:58:57. > :59:02.into abusive tax avoidance. This new clause makes clear that part of this

:59:03. > :59:06.new principle should be measures to ascertain and record beneficial

:59:07. > :59:10.ownership of trusts, using facilities provided by banks with UK

:59:11. > :59:15.holding companies or entities regulated by the Bank of England or

:59:16. > :59:19.the FCA, control of shareholders and ownership of shares and investment

:59:20. > :59:23.arrangements in an overseas territory outside the UK involving

:59:24. > :59:29.UK financial institutions. Now, honourable members will be aware

:59:30. > :59:33.that Labour has published its tax transparency enforcement programme

:59:34. > :59:41.following the Panama papers leak and the release of information thaws of

:59:42. > :59:45.companies listed in the Mossack Fonseca papers have financial

:59:46. > :59:49.services provided by UK banks. Our programme makes clear that Labour

:59:50. > :59:52.will, and I quote, work with banks to provide further information over

:59:53. > :59:57.beneficial ownership for all companies and trusts that they work

:59:58. > :00:02.for. So, Madam Deputy Speaker, this new clause seeks to establish a

:00:03. > :00:06.procedure to enact that. The Government announced a deal on the

:00:07. > :00:10.global exchange of beneficial ownership information last week,

:00:11. > :00:15.something we welcome as an initial step but something which in our view

:00:16. > :00:20.is insufficient. The measures announced by the EU this week are

:00:21. > :00:24.welcome but do not go nearly far enough, because they only require

:00:25. > :00:29.partial reporting. As my honourable friend the Shadow Chancellor said

:00:30. > :00:34.last week, the turnover threshold is far too high, and Labour MEPs in the

:00:35. > :00:38.European Parliament will be doing the right thing in pushing to get

:00:39. > :00:42.that figure further reduced so that it is still more difficult for large

:00:43. > :00:47.corporations to dodge paying their fair share of tax. Banks need to

:00:48. > :00:52.reveal the beneficial ownership of companies and trusts they work with.

:00:53. > :00:55.That means establishing a record of ownership of companies and trusts

:00:56. > :01:03.supported by UK banks, whether the Europeans are resident in the UK or

:01:04. > :01:09.not. We must ensure that Crown dependencies and overseas territory

:01:10. > :01:15.enforce stricter standards, but where UK banks is involved it is

:01:16. > :01:22.right a record is maintained of the company beneficial owners they

:01:23. > :01:29.advise. Now, the tax experts have written that Jersey, grncy and the

:01:30. > :01:38.Cayman Islands are, to quote, cock whom. They must have registers of

:01:39. > :01:41.beneficial ownership, even for the use of UK enforcement agencies. The

:01:42. > :01:47.shadow chairman said in response it fails to do anything to tackle the

:01:48. > :01:53.tax havens in British overseas territories. Failure to take

:01:54. > :01:57.responsibility for these undermines the effectiveness of this agreement.

:01:58. > :02:03.Similarly, Madam Deputy Speaker, we are aware that the FCA wrote to

:02:04. > :02:08.banks urging them to declare their links to Mossack Fonseca by 15th

:02:09. > :02:14.April. We believe the FCA's call on UK financial institutions to review

:02:15. > :02:18.links with Mossack Fonseca is also welcome, but the regulator should

:02:19. > :02:23.recognise the need for complete transparency to retain public

:02:24. > :02:28.confidence. The FCA shoo-in our view seek full disclosure and act without

:02:29. > :02:33.delay. The slow drip, drip responses of the Prime Minister's office over

:02:34. > :02:39.recent weeks have only served to fuel public concern and have, with

:02:40. > :02:43.respect, been very much a lesson in how to unintentionally raise

:02:44. > :02:46.suspicion. The FCA should publish which financial institutions it has

:02:47. > :02:50.written to and why, what information it has asked them to provide, and

:02:51. > :02:57.what action it will take following now that the 15th April deadline has

:02:58. > :03:01.passed. Importantly, it cannot allow banks and their subsidiaries to

:03:02. > :03:06.conduct an open ended internal investigation but must establish an

:03:07. > :03:11.early deadline to disclose all information on their relations with

:03:12. > :03:15.Mossack Fonseca so the regulator can take all necessary action.

:03:16. > :03:19.Campaigners, Global Witness, responded by saying, these are

:03:20. > :03:24.welcome first steps, but they were concerned that in their words, UK

:03:25. > :03:30.authorities were missing the wider points. Mossack Fonseca is no bad

:03:31. > :03:33.apple, it is just a smaller part of the much deeper problem. So, Madam

:03:34. > :03:37.Deputy Speaker, that is why it is necessary that we have a clear

:03:38. > :03:41.direction of travel to record beneficial ownership of trusts

:03:42. > :03:47.services by UK banks, as we are seeking to do with this new clause.

:03:48. > :03:52.So, given the widespread concerns of tax avoidance, the British public

:03:53. > :03:56.who bailed out the country's banking sector deserve to know the facts

:03:57. > :04:01.regarding the role UK banks have in this unfolding story. So with new

:04:02. > :04:06.clause 14, Labour has made a positive and practical proposal to

:04:07. > :04:09.take steps to increase tax transparency and publicly available

:04:10. > :04:13.information on the beneficial owners of companies and trusts the

:04:14. > :04:19.registered in tax havens. And now, Madam Deputy Speaker, I want to turn

:04:20. > :04:23.to the remainder of the amendments. As set out at second reading and in

:04:24. > :04:29.our committee stage amendments, Labour's position was made very

:04:30. > :04:33.clear. Removing the reverse burden of proof, removing the presumption

:04:34. > :04:38.of responsibility is unreasonable, unwise and, I'm sorry to say, risky.

:04:39. > :04:44.We continue to support the legislation agreed by the same

:04:45. > :04:49.Chancellor and in both houses as recently as 2013, in the financial

:04:50. > :04:53.services banking reform Act. That is why we've retabled our amendments in

:04:54. > :04:58.relation to keeping the presumption of responsibility. And it shouldn't

:04:59. > :05:02.be forgotten, Madam Deputy Speaker, that this measure was a key

:05:03. > :05:05.recommendation of the Parliamentary Commission on Banking Standards who

:05:06. > :05:08.said that it would make sure that those who should have prevented

:05:09. > :05:13.serious Prudential and conduct failures would no longer be able to

:05:14. > :05:18.walk away simply because of the difficulty of proving individual

:05:19. > :05:22.culpability in the context of complex organisations. The

:05:23. > :05:25.presumption of responsibility as currently set out in legislation

:05:26. > :05:30.applies to senior managers. It means that to avoid being found guilty of

:05:31. > :05:33.misconduct when there has been misconduct in an area tore which

:05:34. > :05:38.they are responsible, they'll have to prove they took reasonable steps

:05:39. > :05:47.to prevent that contravention taking place. This Bill removes that onus

:05:48. > :05:50.on senior bankers. That onus is entirely reasonable, entirely

:05:51. > :05:54.proportionate, and as very bitter experience tells the British people,

:05:55. > :05:58.entirely necessary. Misconduct and misdemeanors in the financial

:05:59. > :06:04.services are not merely a tale from history. In 2015, the FCA had to

:06:05. > :06:08.final firms more than ?900 million. There was also the LIBOR scandal,

:06:09. > :06:14.foreign exchange fines and the mis-selling of PPI to the value of

:06:15. > :06:19.up to ?33 billion. The presumption of responsibility is so reasonable

:06:20. > :06:23.and so necessary that the policy was introduced with cross-party support.

:06:24. > :06:28.That cross-party support should not be forgotten. The 2013 Act applied

:06:29. > :06:33.the presumption of responsibility through the senior managers and

:06:34. > :06:39.certification regime to all authorised persons. Today's Bill

:06:40. > :06:43.extends that regime to a wide range of businesses but has watered down

:06:44. > :06:47.the presumption of responsibility to a mere duty of responsibilitiment

:06:48. > :06:50.the vast majority of people working in the financial sector are not and

:06:51. > :06:54.are not affected by the existing legislation as it stands and would

:06:55. > :06:58.remain unaffected should our amendment pass. That is why the

:06:59. > :07:04.legislation was passed by the members opposite in the first place.

:07:05. > :07:07.In December 2013, when speaking of the stricter legislation being

:07:08. > :07:11.introduced by the Government, including the reverse burden of

:07:12. > :07:16.proof, the then Economic Secretary to the Treasury, the right

:07:17. > :07:19.honourable member for Bromsgrove, told Parliament that, in his words,

:07:20. > :07:24.the introduction of this offence means that in future those who've

:07:25. > :07:27.been, who bring down their bank by making thoroughly unreasonable

:07:28. > :07:30.decisions can be held accountable for their actions. Senior managers

:07:31. > :07:35.would be liable if they take a decision that leads to the failure

:07:36. > :07:38.of the bank. The maximum sentence for the new offence reflects the

:07:39. > :07:41.seriousness that the Government and society more broadly placed on

:07:42. > :07:45.ensuring that our financial institutions are manage inside a way

:07:46. > :07:51.that does not recklessly endanger the economy or the public purse. On

:07:52. > :07:53.that I do agree with the right honourable member for Bromsgrove,

:07:54. > :07:59.who is completely right on this occasion. It is a shame there's been