Baroness Bowles of Berkhamsted (LD)

My Lords, Amendment 10 says simply: “An investment strategy under subsection (3)(b) may not specify preferences between comparable or competing investment vehicles”. This concerns the same part of the Bill that we were discussing in the previous group. In other words, if the Government are taking powers over what assets pension schemes may hold, even if that is a reserve power, those powers must not discriminate between comparable routes to access those assets. It is a defensive amendment. Why do I need to table such a basic safeguard? It is because, later in the Bill, in new Section 28C of FSMA, the Government do discriminate for DC default funds. It excludes listed investment companies even when they can hold exactly the same underlying assets as the favoured long-term asset fund, the LTAF wrapper. That is how creeping cartels begin. Who is to say such direction will not next be targeted at a local authority pension fund, many of which have historically favoured listed investment companies as ideal for local infrastructure investment? The Minister’s letter, which arrived on Friday, explains how the Government are now creeping the cartel onwards. The letter puts this front and centre. The Minister confirms that the exclusion of listed investment companies is deliberate and that the purpose of these powers is to “support the Mansion House Accord”. We have already been alerted to the competition law risks around the Mansion House Accord. An article by competition lawyer Matthew Hall in the Times last May warned that the accord risked co-ordinated investment intentions that could raise competition law concerns, and that government encouragement does not create a legal exemption. Those comments came before we learned about exclusions. Government legislation—which would mean regulations, not just the framework of this Bill—could override competition law, but only with a clear public interest justification and far more scrutiny than cosy discussions behind closed doors. Let us look at the public record. In public, the accord—from the ABI, the City of London and the Pensions and Lifetime Savings Association—refers simply to “allocating at least 10% to private markets … and within that, at least 5% … to UK private markets”. At the bottom, it defines UK private markets as being “where the underlying assets are based in the UK”. Thus, it is not looking at the wrapper they sit in; it does not exclude listed investment companies; and it does not require the use of LTAFs. It explicitly acknowledges looking through to the underlying assets. In the Bill, that has been transposed to an exemplary asset list and a definition that deliberately excludes listed securities, and for that to cover listed investment companies, despite the fact that they are slightly different and as they have exemptions for growth markets. Rhetoric has followed that anything listed is excluded. If the accord does not say it and no consultation or public document has said it, but according to the Minister it is being done in the name of the accord, something has happened in private—what and with whom?