My Lords, I find this a somewhat naive and shocking part of this small Bill, in the sense that the clause under debate has two objectives. The first is to reduce the powers of the NEDs and the second is to reduce the powers of Parliament. Both of those goals I regard as reprehensible. As the noble Lord, Lord Tunnicliffe, set out, these issues were debated extensively in this Chamber with respect to the Financial Services Act 2012. We went through them in great detail and, in particular, we followed the advice of the Treasury Select Committee of another place.
It is obvious that this measure is designed to reduce the powers of the non-executives, but perhaps I may comment on the second point that I made about the
powers of Parliament. That derives from the statement by the Treasury Select Committee of another place, which at that time was referring to a new supervisory board. That, in debate, was transformed into the oversight committee. The Select Committee said:
“Our recommendation that the new Supervisory Board have the authority to conduct retrospective reviews of the macro-prudential performance of the Bank should, if operating successfully, provide”,
Parliament,
“with the tools for proper scrutiny”.
Those “tools for proper scrutiny” are being removed in this clause. I think that Mr Carney’s explanation of the role of the Independent Evaluation Office, which can be summoned into action only by the oversight committee, is particularly revealing.
It has also been argued that, in some sense, the Bank now has two boards—the court and the oversight committee—and that this is causing confusion and reducing the effectiveness of the Bank. That is a very foolish argument. The notion that there should be an independent non-executive committee reviewing the activities of a main board is commonplace, particularly given that the reviews are specifically defined by legislation to be retrospective and not to question the contemporary acts of the court. That process is one that the best unitary boards have embodied in their codes of practice. I am amazed and, as I say, shocked that the Government are attempting to reduce the powers of non-executive directors in this way and, in particular, to reduce the powers of Parliament.