John Glen
MP for Salisbury · Conservative · United Kingdom
“I welcome the Chief Secretary to her new position, but what words of comfort could she give the residents of Salisbury in Wiltshire, a unitary authority? We are not part of a combined authority and we do not have a metro mayor.”
“Sam Moody is my constituent. He is the chief executive of Rockhopper. During my time in this House, he has been absolutely scrupulous in following the laws of this country and respecting the Falkland Islanders.”
“I listened carefully to what the Minister said about the process, and I respect that. But most people who take a pretty level-headed, pragmatic view of the need for a transition over time still cannot get their heads around the short-term reality: when we have so much turmoil in the middle east, why would we extend the time that we are no…”
“It is 55 days till the Budget. Given the market’s reaction to the Prime Minister’s statement on Tuesday, and given that our gilt rates are higher than those of our peers in the G7, could we have a debate on the implications of higher taxes for growth?”
“Before the hon. Lady makes her statement on Thursday, will she, when reflecting on the arrangement in Wiltshire that would embrace Wessex—although we have been told that that is not the Government’s view—address the prevailing concern that the people of rural Wiltshire will be considerably worse off without having the opportunity to embra…”
“I recognise that the Minister wants to come to what the Government are going to do, but does he not accept that the decisions already made in the last two years—with respect to the price of employment and the national living wage, the cost of employment with regard to legislation, and business rates—have depressed the appetite of many sma…”
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“Finally, the draft regulations will transfer to the Financial Conduct Authority the European Securities and Markets Authority’s responsibilities relating to the requirements for the registration of trade repositories, and will amend the rules so that they continue to work in a domestic context. That is appropriate, given the FCA’s current role in supervising and regulating SFTs. Because of limitations in the powers available under the 2018 Act, one of the main provisions of the securities financing transactions regulation cannot be domesticated at this stage: the requirement for firms to report details of SFTs to trade repositories. Depending on the type of institution concerned, that requirement will not apply until 12 to 21 months after the EU’s publication of relevant regulatory technical standards.”
“That means that they will be treated in the same way as other third-country branches operating in the UK, which is consistent with the approach that we have adopted in other financial services SIs laid under the 2018 Act. Secondly, the draft regulations will amend the list of entities that have access to data on securities financing transactions reported to UK trade repositories. EU bodies will be removed, making the list UK-specific to reflect the UK’s status as a third country outside the EU in a no-deal scenario. That will not preclude UK entities from co-operating with EU entities in future.”
“The regulation is therefore crucial to protecting financial stability and ensuring that the benefits of SFTs remain available to firms that use them and to the wider economy. On exit day, it will be transferred to the UK statute book under the 2018 Act. In a no-deal scenario, however, the UK would be outside the European economic area and outside the EU’s legal, supervisory and financial regulatory framework, so the legislation would no longer be operative. The draft regulations will make the necessary amendments to ensure that the relevant provisions continue to work properly in a no-deal scenario. First, they will amend the treatment of EEA branches of financial services firms in the UK, so that after the UK leaves the EU, EEA branches operating in the UK must report their transactions to a UK trade repository.”
“SFTs were not regulated before 2015; there were major concerns about their effect on the economy, especially because during the financial crisis repurchase transactions were associated with increases in leverage and exacerbating boom and bust cycles in the economy. After the Financial Stability Board identified significant risks associated with such instruments, the EU passed the securities financing transactions regulation to introduce a framework under which details of SFTs must be reported to trade repositories, which are effectively databases for reporting transactions. Under the regulation, such information must then be disclosed to investors, and national regulators are required to act where they identify risky practices by firms.”
“They are aligned with the approach taken in all 52 of the statutory instruments that I have laid before Parliament under the 2018 Act: providing continuity by maintaining existing legislation at the point of exit, but amending it where necessary to ensure that it works effectively in a no-deal context. The draft regulations concern securities financing transactions, in which securities such as equities are used to borrow cash or vice versa. A common type of SFT is a repo—repurchase transaction—in which a party sells an asset to another party at one price and commits to repurchasing it at a different price on a later date.”
“I beg to move, That the Committee has considered the draft Transparency of Securities Financing Transactions and of Reuse (Amendment) (EU Exit) Regulations 2019. May I start by saying what a pleasure it is to serve under your chairmanship again, Mr Davies? The draft regulations—like the draft Securitisation (Amendment) (EU Exit) Regulations 2019, which were debated this morning—are part of our programme of legislation under the European Union (Withdrawal) Act 2018 to ensure that if the UK leaves the EU without a deal or an implementation period, there will continue to be a functioning legislative and regulatory regime for financial services in the UK. The draft regulations will fix deficiencies in EU law on securities financing transactions to ensure that it continues to operate effectively after the UK leaves the EU.”
“They are limited and seek simply to onshore existing provisions into domestic regulators and fix deficiencies as they exist. The hon. Gentleman then referred to the reliance on secondary legislation. Those of us who have sat through a number of such Delegated Legislation Committees in recent weeks, including the Whip, my hon. Friend the Member for Calder Valley (Craig Whittaker), all recognise that, under the powers granted by 2018 Act to make all these financial services statutory instruments, restrictions are in place to ensure the appropriateness of their use. The central objective of the SIs is to provide, as far as possible, legislative continuity for firms. No policy changes are intended; the exercise is an intelligent onshoring one.”
“It is not the policy of the Government to get to that point, because we are seeking a bilateral agreement with the EU that would expand the scope of cross-border activity beyond existing equivalence and ensure structured dialogue to manage regulatory change. Our proposal for a future UK-EU relationship in financial services seeks to be both negotiable and ambitious, but it is obviously prudent and necessary for us to have no-deal preparations such as these. The hon. Member for Bootle commented on the onshoring project and the powers used. The 2018 Act does not give the Government the power to make policy changes, as has been spelled out in this SI, beyond those needed to address deficiencies arising as a result of exit.”
“I very much respect the points made by the hon. Members for Bootle and for Inverness, Nairn, Badenoch and Strathspey. I will respond to each of the 10 or 11 points that have been raised in succession. The opening remarks of the hon. Member for Bootle concerned the process with respect to the volume and flow, the adequacy of the resourcing, the capacity and transparency. I will address all of those points, but I will say that the SI is needed to ensure that the EU law on securities financing transactions continues to operate effectively if we leave without a deal or an implementation period.”
“I am happy to say that the FCA has been intimately involved in the whole process. Its objective is to provide continuity to the market and to ensure that appropriate scrutiny of market activities is undertaken. No extension of power is given to the FCA through this process. As the national competent authority, it is simply taking on more responsibilities that were often elsewhere previously.”
“The Government’s priority is to exit the EU with a deal that ensures continued co-operation with EU institutions on all regulatory matters, including SFTs. However, we are working hard to ensure that, in the no-deal scenario that we are seeking to cover ourselves for, we can maintain a degree of co-operation with the EU. Like all such SIs, the draft regulations ensure that we are prepared for all scenarios. I believe that I have answered the points that were raised. I recognise the wider political point about the adequacy of this process, but I hope that Members have found this Committee sitting informative, will respect the answers I have given and will be able to support the draft regulations. Question put.”
“The Treasury is in frequent contact with firms and regulators about their contingency planning for EU exit. Although we have been clear that passporting will come to an end after we leave the EU, we are seeking a relationship with the EU that allows for continued cross-border trade in financial services, as set out in the White Paper. Although I acknowledge that there has been movement of some capital and execution of contingency arrangements, there is a great deal of resilience to the City of London and financial services in the United Kingdom. We need to draw a distinction between wholesale movement of jobs, and capital being located somewhere else but still being acted upon in the United Kingdom and the City of London. The hon. Member for Bootle asked about discretion for mutual co-operation arrangements and market access.”
“The draft regulations were published on 19 December, so people have had two months to examine them. On the unavailability before the debate of a consolidated text, it is not normal practice for the Government to provide consolidated texts for debates on secondary legislation. I think that the hon. Gentleman was making a wider point about the overall need for all financial regulations. Frankly, that would be very difficult to achieve, given the wide range of contingency arrangements that are needed. However, the National Archives will publish an online collection of documents capturing the full body of EU law as it stands on exit day. The SNP spokesman, the hon. Member for Inverness, Nairn, Badenoch and Strathspey, made a point about the volume of capital moving outside the UK and asked what the Government’s response was to that.”
“We usually—I cannot remember circumstances in which we have not—publish the drafts of the SIs in advance of laying them before Parliament, and we have allowed an iterative process to exist. The hon. Gentleman asked, in connection with regulation 4, whether we should use an SI to allow the FCA to issue penalties. The 2018 Act allows that in limited circumstances, with safeguards, including the affirmative procedure. The FCA needs the power properly to supervise trade repositories. He then asked about resourcing, but I have discussed that in response to my hon. Friend the Member for North East Hampshire. The hon. Member for Bootle also asked about consultation. We published a document in June that set out our approach and emphasised the aim of ensuring continuity. That was widely welcomed.”
“In addition, the SI will ensure that regulators have sufficient flexibility to avoid cliff-edge risks for firms. The hon. Gentleman asked about the robustness of the SIs and drew attention to the admission that I made on Monday on the Floor of the House about some minor typographical drafting errors, including one or two that happened previously. There are, I think, 1,000 pages of the SIs. My officials and I have done our best, we have acknowledged where those mistakes were made, and we have corrected them as quickly as we could, but they were not meaningful in their substantive legal effect, with the exception of one case, which has now been corrected. We have engaged with industry on the content of the SIs.”
“Member for Bootle went on to ask whether the change in the SI to how branches are treated will lead to duplicative requirements for firms, but firms are simply reporting the same information at the same time using the same template to the UK and EU authorised trade repositories, so yes, there is duplication, but it is straightforward—exactly the same form is sent to two institutions simultaneously. The hon. Gentleman asked about the suspension of reporting for one year. The draft SI, like other financial services SIs, does not make changes beyond what is necessary to ensure that we have a functioning regime after exit. With regard to the powers to make regulatory technical standards, that reflects an approach that applies across the entire body of onshored legislation.”
“Yes. I can tell my hon. Friend that, for example, 158 individuals or full-time equivalents in the FCA are now working on Brexit matters, which contrasts with 28 such individuals or full-time equivalents in March last year. It will shortly be setting out its plan for 2019-20, which will set out how it is allocating resources. The FCA has the power to increase the levy should it require additional resources. I have sought to address the issue of the reliance on secondary legislation with the inherent restraints placed on the Government in the process. The hon.”
“In summary, this Government believe that the proposed legislation is necessary to ensure that the UK has a workable regime regulating securitisations, and that the legislation will continue to function appropriately if the UK leaves the EU without a deal or an implementation period. I hope colleagues will join me in supporting the draft regulations, which I commend to the Committee.”
“That is appropriate given the FCA’s considerable experience in supervising securitisations and it has been preparing for that role in anticipation of the regulation going live on 1 January this year. The Treasury has worked very closely with the PRA and the FCA in drafting the instruments. It has also engaged the financial services industry and will continue to do so. On 19 December, the Treasury published the instrument in draft, along with an explanatory policy note, to maximise transparency to Parliament and industry. An impact assessment was published on 19 February.”
“The SI also clarifies the definition of “sponsor” in the securitisation regulation to ensure that, when a sponsor wishes to delegate day-to-day portfolio management to a third party, that third party can be located anywhere in the world and not just in the EU. The securitisation regulation currently limits the location of the delegated firm to the EU. The European Commission has acknowledged that that is an unintended effect and is currently developing an EU-wide solution. Finally, this SI transfers several functions carried out by the European supervisory authorities to the Financial Conduct Authority and the Prudential Regulation Authority. Most importantly, the SI transfers responsibilities for the authorisation and supervision of trade repositories and the publication of STS notifications to the Financial Conduct Authority.”
“The overall effect of that change in scope is to support liquidity in domestic securitisation markets while ensuring that UK supervisors retain effective oversight of securitisation as a whole. The SI also introduces a transitional regime for the recognition of EU STS securitisations in the UK during a two-year period after the UK leaves the EU. That ensures that UK investors can continue to participate in the EU market for STS securitisations for that limited period. Any STS recognised by the EU during that two-year period will continue to be recognised in the UK until its maturity.”
“The SI amends that to allow UK counterparties to continue to participate in cross-border STS securitisations where some of the parties are located anywhere in the world, expanding the current scope. That approach is appropriate because most securitisations are structured across borders, and it ensures that third countries are treated equally in the event of a no-deal scenario. For UK securitisation markets to have maximum depth and liquidity while being subject to the same strict rules introduced by the securitisation regulation, it was important not to constrain the UK market by requiring all parties to be located in the UK. I recognise that that expansion of scope is likely to arouse concerns, but it is also clear that the SI requires at least one of the parties to a securitisation to be located in the UK.”
“The securitisation regulation will be transferred to the UK statute book by operation of the EU withdrawal Act on exit day, but in a no-deal scenario the UK would be outside the European economic area and outside the EU’s legal, supervisory and financial regulatory framework, and that legislation would no longer be operative. The SI makes the necessary amendments to ensure that the provisions continue to work properly in a no-deal scenario. The SI amends the geographical scope of the EU regulation to ensure that UK investors can continue to have access to the EU market for STS securitisations and to global securitisation markets more broadly. Under the current EU regulation, all parties involved in an STS transaction must be located in the EU.”
“To respond to concerns about the opaqueness and complexity of securitisation transactions, the EU adopted the securitisation regulation, which is based on international standards agreed by the Basel Committee on Banking Supervision. The EU securitisation regulation simplifies and consolidates a patchwork of earlier rules, and introduces the concept of a securitisation that is “simple, transparent and standardised”, also referred to as an STS securitisation. Under the regulation, those are incentivised through preferential capital treatment. The securitisation regulation is important for protecting domestic financial stability while ensuring that the benefits of those instruments to firms and the wider economy remain available.”
“The approach taken in the legislation aligns with that taken in other SIs laid under the EU withdrawal Act, providing continuity by maintaining existing legislation at the point of exit, but amending where necessary to ensure that it works effectively in a no-deal context. The SI concerns securitisation, a process by which financial assets such as loans can be pooled into a single financial instrument called a security, which can then be sold to investors. Securitisation allows banks to transfer some of the risk associated with the assets they hold to investors, freeing up regulatory capital to facilitate further lending. Securitisations can themselves be used to finance business activities and reduce the concentration of financial stability risks.”
“I beg to move, That the Committee has considered the draft Securitisation (Amendment) (EU Exit) Regulations 2019. It is a pleasure to serve under your chairmanship, Mr Hanson. This statutory instrument is part of a programme of legislation under the European Union (Withdrawal) Act 2018 aimed at ensuring that, if the UK leaves the EU without a deal or an implementation period, there continues to be a functioning legislative and regulatory regime for financial services in the UK. The SI will fix deficiencies in EU law on securitisation to ensure that it continues to operate effectively after the UK leaves the EU.”
“I hope that the Committee have found this morning’s sitting informative and will join me in supporting the regulations. Question put and agreed to.”
“I acknowledge the significant footprint of financial services firms in Scotland, and in Edinburgh and Glasgow particularly. We believe that what is set out will serve their interests well. While we have been clear that passporting will come to an end after we leave the EU, we are seeking a relationship that will allow for cross-border trade in financial services, and allow firms to continue European operations within the UK. I think that those were all the points that were raised. The SIs being brought forward are needed, and the one before the Committee is particularly needed, to ensure that EU law on securitisation continues to operate effectively in the UK if we leave the EU without a deal or implementation period, which is not the Government’s policy.”
“To ensure that the UK regime is operative after exit, the UK regulators maintain full oversight of UK STS securitisations after exit, and will have sufficient enforcement powers where there is non-compliance. The regulators will monitor the market, and the Financial Policy Committee will also play a role in ensuring the functioning of the regime. The hon. Member for Glasgow East raised the issue of moving high volumes of capital out of the UK. The Treasury is in frequent contact with firms and regulators regarding their contingency planning for EU exit. The political declaration reflects the full ambition of our proposals, set out in the White Paper, and is a strong and credible basis for moving our negotiations with the EU forward into the implementation period, to achieve a deal that works in our mutual interests.”
“It is not anticipated that that will create a significant new burden. The FCA has specialist securitisation expertise and has made extensive preparations, including training for supervisors in anticipation of the implementation of the regulation and the onshoring of the requirements. It has also carried out an assessment of the resource implications and will keep those under review to ensure that it can deliver on its responsibilities, so I do not have any significant or meaningful concerns about that. As to checks being made to ensure that the developments in regulation are scrutinised, it is worth noting that the SI does not make any substantive policy changes.”
“Gentleman went on to raise an issue that has been raised previously, and perfectly reasonably, about the adequacy of the resources of UK regulators to handle their new responsibilities. It is important to make clear to the Committee that the purpose of the EU securitisation regulation is to encourage and to ensure that the mistakes of the financial crisis in respect of securitisation are not repeated. By keeping securitisations simple in form and making them more transparent, that will be achieved. Under the regulation that applied from only January this year, the PRA and FCA already carry out most of the functions conferred on them by this SI. The main responsibilities transferring into the FCA relate to the authorisation and supervision of a small number of trade repositories and the publication of STS notifications on its website.”
“Under the EU securitisation regulation, exposures to national promotional banks are exempt from the requirements, so in a no-deal scenario the UK would fall outside the scope of the exemption in the EU and domestic institutions such as the British Business Bank would not be able to benefit from the EU’s exemptions. This SI removes the exemption for EU national promotional banks such as the one the hon. Gentleman mentioned, ensuring that under the domestic regime only UK national promotional banks would be able to benefit from the exemption. This is in line with the Government’s general approach to treating the EU as a third country if there is no deal and no implementation period. We have raised the point with industry and we understand that it is not likely to create significant difficulties for UK firms. The hon.”
“I acknowledge the points made by the hon. Members for Stalybridge and Hyde and for Glasgow East. I accept the wider concerns raised about the extensive use of this mechanism. I have never described it as the perfect solution, but it is a necessary solution to the risk of a no deal situation. I am determined that, by the time we get to the end of this process on 11 March, we will have a functioning regulatory regime in place, but the volume of SIs has been considerable. It was a blessed relief when the hon. Member for Glasgow East convened a three-hour debate on bank closures the other week and gave me a change of venue. The hon. Member for Stalybridge and Hyde raises three specific points. The first was the removal of preferential treatment for exposures to national promotional banks and how that affects UK firms holding such exposures.”
“I beg to move, That— (1) the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 26 February) meet— (a) at 2.00 pm on Tuesday 26 February; (b) at 11.30 am and 2.00 pm on Thursday 28 February; (2) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Thursday 28 February. It is a pleasure to serve under your chairmanship, Sir Edward, and I am sure that of Mr Austin too. I look forward to the scrutiny of the Bill and to our debate in Committee. Question put and agreed to . Resolved , That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.— (John Glen.) Clause 1 Power in respect of EU financial services legislation with pre-exit origins”
“I hope that that will reassure the Committee regarding the limitations that will apply in the formulation “corresponding, or similar”, for which there are precedents. In short, the current wording is already intended to ensure that the powers under the Bill cannot be used to create substantively new policy outside the bounds of the original EU legislation. Without that discretion to implement files in a corresponding or similar way to original EU legislation, the Bill’s power is essentially unworkable. I hope that, in light of those reassurances, hon. Members will withdraw amendments 2 and 3.”
“In practice, of course, the legal interpretation of the two terms can vary, with some judging that ‘corresponding’ affords a wider latitude…on the basis of the current drafting…it will be possible to exercise the power only to achieve the aim of the original EU legislation, with an option to make adjustments to account for the specificities of UK markets, rightly reflecting the fact that we will no longer be a member of the EU. It will not, therefore, allow for wholesale changes to the character and intent of the current legislation.” —[ Official Report, House of Lords, 8 January 2019; Vol. 794, c. 2138.] I reassure the Committee that the formulation “corresponding, or similar” is well established and has been used, to provide recent examples, in the Pension Schemes Act 2015 and the Recall of MPs Act 2015.”
“I do not think it appropriate for the Bill to compel the implementation of legislation that has not yet been drafted and will not have UK input in its final stages. Amendment 3 seeks to restrict the Government to implementing only corresponding EU provisions, as opposed to corresponding or similar provisions. As was discussed at length in the Lords Bill Committee, “corresponding” is taken to mean “‘identical in all essentials or respects’. The term ‘similar’ means ‘having a resemblance in appearance, character, or quantity without being identical’.”
“As the Committee will appreciate, the purpose of the Bill is to give the Government the necessary powers to implement certain pieces of in-flight EU legislation in a timely manner. Mandating implementation within a certain time limit, however, is simply an unnecessary constraint. That is particularly the case given the uncertainty about a no-deal scenario. There might be files that, as it unfolds, are no longer suitable for UK markets, so mandating the UK to implement legislation that in its final form may be unsuitable for or damaging to the UK financial services is inappropriate, in particular as we will not be able to influence the final form of the files in the schedule, which are still in negotiation. The power to adjust under the Bill is limited; it will not allow the Treasury to alter substantially the intent of files.”
“I thank the hon. Member for Glasgow Central for that contribution. I will respond to amendments 2 and 3 together. As she pointed out, they relate to the Treasury’s discretion to domesticate specified EU financial services legislation and the limitations on implementing said provisions. Amendment 2 was tabled by the hon. Lady and by the hon. Member for Lanark and Hamilton East and would require the relevant EU legislation to be implemented in the UK within six months of that legislation being implemented in the European Union. The amendment would limit the Government’s discretion unnecessarily and in a way that might have an adverse impact on the UK’s financial services sector.”
“The JCSI’s role is to ensure that a Minister’s powers are being used in accordance with the provisions of the enabling Act. It reports to the House any instance where the authority of the Act has been exceeded or any that reveal unusual or unexpected use of the powers, where the instrument might require further explanation, or where it has been drafted defectively. It is vital that the Government retain the latitude to make these adjustments to files in a timely way, given that without this power the utility of the Bill is seriously compromised. In consideration of the strengthened reporting requirements and scrutiny procedures in the Bill and the importance of making adjustments to files in a timely way, I hope that the hon. Lady will feel able to withdraw her amendment.”
“Finally, the additional reporting mechanisms in the Bill will require the Treasury to publish a report at least one month ahead of laying any SI, outlining any adjustments or omissions and the reasons that any adjustments are considered to be appropriate, alongside a draft of the SI. That will allow Parliament, including any interested Select Committees, to scrutinise and report on the proposed content. In the Government’s view these reporting requirements, alongside the use of the affirmative procedure with each SI laid, afford sufficient and appropriate parliamentary scrutiny for the proposed adjustments to files in the Bill. I remind the Committee that the Joint Committee on Statutory Instruments will be scrutinising all SIs produced under this Bill, as part of the usual procedure.”
“This is the established process for scrutinising such statutory instruments and that is why it is the model we have chosen to follow. Secondly, the Government have made a clear commitment to consult on each of the SIs laid under the Bill, as appropriate, as stated by the Cabinet Office guide to consultation. Thirdly, the Government publish impact assessments for statutory instruments as a matter of course, and those tabled under the provisions in this Bill will be no different. That will include analysis of economic impacts and equalities considerations, where relevant.”
“I thank the hon. Lady for the amendment. It requires adjustments to files under the Bill to be pre-approved by the House of Commons before the Government introduce the relevant statutory instrument. The Government recognise the importance of parliamentary scrutiny surrounding any adjustments that might be made to the relevant EU legislation covered by the powers within the Bill, but any proposed adjustment to files under the Bill will undergo robust parliamentary scrutiny. First, each statutory instrument will need to be approved by both Houses under the affirmative procedure. That would require laying the relevant statutory instrument before Parliament and then an accompanying explanatory memorandum, setting out the policy intent, before the debate on the SI, and well ahead of implementation.”
“On amendment 12, I am reminded of another debate that took place during the Bill’s passage through the Lords. That debate centred around the Opposition amendment that sought to replace “major” with “significant”, which was later withdrawn. Lord Sharkey, who spoke to that amendment, noted that subsequent to its tabling, he had realised that his dictionary defined “major” as “significant”. I note that the Oxford English Dictionary in turn defines “material” as “significant”. It is therefore clearly possible to interpret all three words as in essence meaning the same thing, in which case the amendment does not have the effect desired by those who tabled it.”
“Under this wording, as agreed in the other place, the Government will be able to make only adjustments that reflect or facilitate the transition to the United Kingdom’s new position outside the EU, but that does not include changes that result in provisions whose effect is different in a major way to that of the legislation. The new wording clarifies limitations on the power to make adjustments, while, crucially, still allowing for some changes that may be needed, as the UK will have been neither at the negotiating table when the files were finalised nor advocating on behalf of the UK financial services industry during that process. Lord Davies’s position on Report was that he and Lord Tunnicliffe were content with the amended drafting. In light of that, I ask the hon. Gentleman to withdraw amendment 11.”
“I start by thanking the hon. Gentleman for his explanation of the intent of the three amendments, which I shall address in turn. I must confess that I was surprised to see amendment 11. The language that it seeks to remove was inserted as a concession to the Labour Front Bench on Report in the Lords. Indeed, the language was directly inspired by an amendment to the Bill tabled by Lord Tunnicliffe and Lord Davies of Oldham in Committee in the other place. Our original drafting reflected the Government’s position that the word “adjustment” is inherently limiting. Following concern in the other place, however, we agreed to insert this language—along with a further limitation, to which we will turn in amendment 13—to clarify what was meant by the term.”
“Members will feel able to withdraw their amendments.”
“The capacity and expertise of the financial regulators will be crucial in the effective implementation, where appropriate, of that legislation. Amendment 5 would remove the ability to delegate to the regulators, because as a general rule, a power to make secondary legislation does not include a power to sub-delegate. An inability effectively to delegate powers to the regulators would completely undermine the value of transposing the relevant EU legislation into UK law. I acknowledge the wider points made about the undesirability of no deal, but this is a contingency arrangement and I believe that the Government have set out clearly the rationale for use of these powers and how they will be used in the circumstance of no deal, which would be wholly different from anything that we are familiar with. Given this context, I hope that the hon.”
“It is clear that, where they are proposed, their necessity must be well evidenced. In the case of the financial services legislation to which the power in the Bill will apply, I feel that such a power is necessary. An inability to amend existing primary legislation—the Financial Services and Markets Act 2000, for example—would make it impossible for the UK to implement the relevant EU legislation. Therefore, both these amendments would render the Bill completely ineffective. Furthermore, as Committee members will be aware, the exercise of many functions under financial services legislation is carried out by the independent regulators, the Financial Conduct Authority and the Bank of England. That was always intended.”
“I thank the Opposition spokespeople for their contributions. I also thank the hon. Member for Colne Valley for her maiden Bill Committee speech. I did not agree with much of what she said, but I will address the substantive points that were made. Amendment 5 seeks to remove the ability under the Bill for regulations to make any provision that could be made by an Act of Parliament. Amendment 14 is more targeted, seeking to remove only the power to effect changes to primary legislation when implementing the EU files in question. An amendment with a similar effect to amendment 5 was moved and then withdrawn by those on the Labour Front Bench in Committee in the Lords. I appreciate that there are many concerns across the House about Henry VIII powers, as the hon. Member for Oxford East set out.”