Financial Services (Implementation of Legislation) Bill [HL]

Committee (1st Day)

Motion

That the House do now resolve itself into a committee on the bill.

My Lords, I beg to move.

Amendment to the Motion

Tabled by

Leave out from “do” to the end and insert “not resolve itself into a committee on the bill until the Committee stage of the Trade Bill is set down in House of Lords Business”.

My Lords, I shall speak to the amendment in my name on the Order Paper. It is a Christmas miracle: I now have evidence that Santa Claus exists. The Trade Bill finished Second Reading on 11 September, and with the looming date of 29 March, I thought, “Gosh, we are going to get it back in October”, but there was no Trade Bill to be seen. It had to be November, but there was no sign of the Trade Bill anywhere. It must be December, then, but no sign of the Bill. So, on 19 December, I went to see the clerks and put down this amendment. I know many of my colleagues also started to ask to questions about the Trade Bill. It is a miracle: we get back from Christmas, and we have four days for Committee at the end of January.

This is part of a wider political strategy. I understand that some incompetency is involved in this—of course there is Chris Grayling—but this is part of a bigger strategy. Six months ago, the Government adopted a kick-the-can-down-the-road strategy, where every day when they got up they hoped something better would happen. When they realised that was not going to happen, they adopted a new strategy, called the cliff-edge strategy. We saw it at the weekend with the Prime Minister’s media interviews, and with the Answers to Questions yesterday from the Minister the noble Lord, Lord Callanan. The strategy is that “Either you agree with me, or I will wreak chaos and havoc on this House and this country”. It is never true when people tell you there is only one way. There are always other options, and the possibility of preventing chaos.

While I say today that I will not be moving this amendment and pressing it to a vote, I put the Chief Whip the noble Lord, Lord Taylor, on notice: if there are any further delays in legislation, any holding up of Bills that should go back to the other place, any dumping of hundreds of SIs without the time given to debate them, I will have no hesitation bringing such a Motion or amendment back to the House.

Amendment to the Motion not moved.

Motion agreed.

Clause 1: Power in respect of EU financial services legislation with pre-exit origins

Amendment 1

1: Clause 1, page 1, line 3, leave out “or” and insert “and”

My Lords, for the purposes of the Committee stage of this Bill, I declare my interest as in the register as a director of the London Stock Exchange plc.

This Bill, as was elaborated at Second Reading, is intended to provide a way to land so-called in-flight legislation. However, as many noble Lords also observed during Second Reading, the scope for amendment of that legislation is wide and not limited to the type of onshoring provisions of the withdrawal Act. Indeed, there is no promise of onshoring at all. This point is noted by the Delegated Powers Committee in paragraph 17 of its report on this Bill. The fact is that there is just a wide power to make legislation related to any of the provisions in any of the legislation in subsection (2) or specified in the list in the Schedule. There are no provisions defining how close it must be to that legislation, and the power is not anchored only to withdrawal from the EU.

We should not lose sight of the fact that the mechanism is an alternative to primary legislation. Although the power is time-limited, I do not consider that that is sufficient control to replace primary legislation entirely. It cannot be left open for the Government to cherry pick, to diminish, to add or to do things that depart from expectation, in terms both of the policy in the EU instruments that the power covers and the policy that has been laid out by government with regard to relations with the EU after Brexit.

The doubt starts right at the opening words, which state:

“The Treasury may by regulations make provision … corresponding, or similar, to … any of the provisions, of any specified EU financial services legislation”.

The use of “or” clearly implies that the regulation may make provisions that are corresponding but not similar. A simple suggestion may be to make a penalty for a failure in a corresponding position, but not the same penalty. So, too, could it be the other way round: a provision may be similar but not corresponding. A penalty may be moved to somewhere else or attached to a different provision. We often talk in particular about criminal penalties, when we are equalising them out between different types of provisions.

My Lords, I shall speak to Amendment 3. At Second Reading, there was much discussion of the wide powers that the Bill gives to the Treasury via secondary legislation. All the amendments in this group deal with that issue.

Clause 1 contains clear Henry VIII powers. It allows the Treasury to make policy and new laws entirely by means of statutory instrument. It even allows such new laws to be wholly unrelated to the UK’s exit from the EU. Unusually, it allows these new laws on to the statute book without any parent primary legislation. There will be no parent Acts for these new laws: no context, no detailed parliamentary discussion and no effective parliamentary scrutiny.

We should be clear that the affirmative SI procedure does not provide proper, full parliamentary scrutiny. SIs are not amendable; they offer only the choice of acceptance or rejection, and rejection by this House is very rare. It has rejected six affirmative SIs in the last 68 years. The prospect of future rejection stands at zero as long as the Labour Party maintains its current reluctance to reject. Amendment 3 seeks to address and limit the use of SIs in the Bill.

As the Bill stands, Clause 1(1) gives the Treasury absolutely unrestrained discretion over the creation of new laws and new policies by SI. The words “adjustment” and “appropriate” do not restrict the Treasury’s room to act. Both these words are capable of very wide interpretation, and, in any case, the Treasury is to be their interpreter. My probing amendment sets limits on how these words may be interpreted in this context. It sets limits to prevent the creation in law of entirely new policies by SI. It does this by requiring that the exercise of the Treasury’s regulation-making power does not extend to significantly altering, expanding or running contrary to the primary purposes of the specified EU legislation. I am advised by the Legislation Office that inserting this restriction in page 1, line 8 after “legislation” means it will also apply to the words “adjustment” and “appropriate” in lines 9 and 10 on page 1. That is certainly its intent.

There is no justification for giving the Treasury unfettered power to make new financial services policy and law by delegated legislation. That is especially true when these SIs would be orphans. They would have no relevant parent Act and no meaningful scrutiny. Amendment 3 moves the powers closer to those of Section 8 of the EU withdrawal Act, which allows only changes necessary to remedy defects of the incorporation of EU law into UK law after the UK leaves the EU.