House of Commons (28) - Commons Chamber (18) / Westminster Hall (6) / Written Statements (4)
House of Lords (14) - Lords Chamber (14)
My Lords, I regret to inform the House of the death of Lord Williams of Baglan on 23 April. On behalf of the House, I extend our condolences to the noble Lord’s family and friends.
(7 years, 4 months ago)
Lords ChamberTo ask Her Majesty’s Government what plans they have to prevent leaseholders whose leases do not permit the short-term subletting of their properties from registering those properties with holiday letting firms.
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest as in the register.
My Lords, the Government support the sharing economy. Individual leases and tenancy agreements are a matter for landlords and tenants. Tenants should always seek permission before subletting where that is contractually required.
One only wishes that was the situation. Too often, these are illegal lets, quite contrary to the tenancy agreement and the lease. Will the Minister consider, as he is still working on regulations, allowing people to have some access through the council whereby they could apply for a certificate indicating that they had the right to a short let? Then people would know that those were legal rather than illegal.
My Lords, the Government are not intent on interfering with freedom of contract. It is a matter between landlords and tenants. I must make it clear that we are not considering regulations in this area at all.
My Lords, as the Minister will know, the Residential Landlords Association says that there are now 33,000 listings on the Airbnb website for holiday-type and short-term lettings. Alarmingly, 65% were available for more than 90 days a year, which is the point that the noble Baroness, Lady Gardner, is really getting at because that is in breach of planning law. Will the Minister please say whether central Government have made any assessment of what that has done to the housing market? Is it sufficient to leave it to local authorities, which do not enforce this? We make laws and we do not enforce them.
My Lords, breach of planning regulations is very different from the issue of freedom of contract. In relation to that matter, I have met with Airbnb. It does not now carry anyone who lets their property for more than 90 days at a time unless they have planning permission to do so. That is the company’s rule and it has contacted all those who propose to let property to let them know that. Since then, the Minister for Housing and Planning has written to all the other suppliers indicating that they should do similarly and that if there is a contractual provision they should abide by that as well.
Why not just reduce the time from 90 days to a lower number?
My Lords, the 90-day limit was set in the Deregulation Act. Other towns throughout Europe might have different limits. Outside of London, there is no limit. Ninety days was the limit set in the Deregulation Act.
No, indeed it does not, but we are not going to.
My Lords, I refer noble Lords to my entry in the Register of Lords’ Interests. The noble Baroness, Lady Gardner of Parkes, raised an important issue. Will the Minister say a little more about why they are not prepared to act?
My Lords, it is very clear that it is up to individual landlords. In the case of Nemcova v Fairfield Rents Ltd in 2016, just a year ago, a landlord enforced a provision in the lease to ensure that the tenant did not act in breach of the lease. It has never been the case that any Government would interfere with freedom of contract where parties are open to go to court in relation to a contractual matter. This is not a planning issue.
My Lords, in four years’ time Annington Homes, which controls all of the Ministry of Defence’s married quarters, will be able to reassess the cost for rent and letting these back to the MoD. There is bound to be a huge increase. Does the Minister not think that we need to look at this, because it will impact yet again on the defence boat and there will be even fewer ships?
My Lords, I am pleased to see that over the Recess the noble Lord has not lost his ability to get questions relating to defence under the radar, as it were. I will of course ensure that he gets a full response.
My Lords, is the Minister aware that in some cases people coming in are endangering lives and threatening long-term residents in blocks? Is he also aware—I think I have drawn the House’s attention to this before—that in New York and Berlin blocks that have long-term residents are not allowed to do short lets at all? All the short lets have to be done in places that are designated as such and therefore do not destroy the lives of people. I know personal cases where people have lived in these blocks for more than 50 years and they find that their front door is smashed and they are threatened. It is really quite a terrifying situation.
My Lords, the whole House will of course sympathise with the situation that the noble Baroness is in if she is suffering from these sorts of situations, but there is a whole panoply of criminal law to deal with these issues. This is nothing to do with Airbnb; it is a breach of the law relating to violence and criminal damage. It is not a matter for Airbnb. I note what she says about other cities, but that is not the provision here. The provision set in the Deregulation Act specifically for London is 90 days. If companies are acting within that, as Airbnb is, we can ask little else of them.
My Lords, the noble Baroness raised a really important issue. Why can the noble Lord not say that he will have a look at those matters?
My Lords, for any criminal damage, which is admittedly a very serious issue, there is of course a panoply of the law, such as the Criminal Damage Act, to deal with such a situation. Breach of contract is a matter for the landlord and tenant to sort out between them. The Government have no role in enforcing contracts.
(7 years, 4 months ago)
Lords ChamberTo ask Her Majesty’s Government what measures they intend to take to promote United Kingdom–Africa trade and development co-operation in the transitional and post-Brexit periods.
My Lords, unlocking barriers to trade to reduce poverty is an important part of our economic development strategy. As we leave the EU, our priority is to ensure that we do not disrupt vital trading relationships, including with our African partners.
I thank the Minister for his reply. I hope he is aware of the Africa All-Party Group’s report on UK-Africa trade, which underlines the potentially damaging impact of Brexit on African economies. Will the Government consider carefully the report’s recommendations, in particular the need to prioritise a transitional regime to maintain preferential, non-reciprocal market access to the UK for those African economies?
I thank the noble Lord for his Question, but I do not accept his pessimistic outlook. We have said that the economic partnership agreements we have in place through the EU are working well and we want them to continue. We set that out in the exiting the EU White Paper. Our intention is to have other measures in place by the time that exiting happens. The great benefit of this is that we will not be bound or limited to the trade preferences currently through the EU. We can have a broad new arrangement that will benefit African countries as well as our own.
My Lords, I am glad that the Prime Minister has made clear her commitment to the 0.7% figure. That is terribly important. As the House will be aware, while there is global growth, poverty is growing in Africa, where there is increasing inequality. What are the Government doing to ensure that trade and development policies are inclusive and pro-poor? Will the noble Lord agree that, as we step up our trade relationships, we must ensure that they enhance sustainable and inclusive development?
That is right. All those points were made by the Secretary of State when she launched the economic development strategy in Ethiopia in January. We have taken this matter forward seriously. No country has ever successfully defeated poverty without economic development and economic growth. We want to be at the forefront of ensuring not only that there is FDI but that those countries can have access to our markets on the most preferential terms.
My Lords, does the Minister recognise that the relationship with the African, Caribbean and Pacific countries which we have as a member of the EU covers a lot more than just trade and aid? It also covers guaranteeing the export receipts from primary materials and sugar. What plans do the Government have to look after those aspects when we have left the European Union?
Those are all important points, as the noble Lord will know, which is why we want to make sure that arrangements relating to all matters covered by the EPAs continue not just until the point at which we leave but beyond. We want also to take the opportunity to discuss with our bilateral partners in Africa, the Caribbean and elsewhere how we can improve on the current arrangements so that they might work better for those in poor countries.
My Lords, further to the point that my noble friend the Minister has just made, can he confirm that African exporters to Britain face the high EU external tariff and that, after Brexit, there will an opportunity to review that and therefore to increase trade between the UK and Africa?
My noble friend is right to raise that point. The lowest-income countries are able to come in duty free and tariff free under the Everything but Arms agreement, but there is more to be done on the middle-income countries. There is now more flexibility: we are leaving the EU, but we are still embracing the world. We want to put free trade at the heart of everything that we do—that has been set out clearly. The opportunity for free trade to lift ever more people out of poverty around the world is something that we will grasp with full measure.
The Minister may know that I am a regular visitor to Zimbabwe, where my diocese has links with four of the five Anglican dioceses there. How do Her Majesty’s Government propose to respond to the preponderance of Chinese investment both there and in other African nations, both in infrastructure and major economic undertakings?
I do not think that we see investment in Africa by any country as a problem. We see a significant gap in finance and investment, which Africa needs. The gap to meet the global goals is some $2.5 trillion per year whereas aid flows amount to only some $150 billion. The gap has to be filled by private investors. We welcome them from wherever they come. As the right reverend Prelate will know, we are certainly playing our part in Zimbabwe to encourage investment and to identify investment opportunities in both directions.
My Lords, in January this year, Dr Rob Davies, the South Africa Minister of Trade and Industry, reminded the Government that the United Kingdom is the major destination among EU nations for South African investment. It invests more here than in any other EU country. The UK also accounts for 20% of South Africa’s wine exports and 30% of its fruit exports under the current EU economic partnership agreements. What specific actions are the Government taking to allay South African concerns and to maintain the strength of what is a key strategic market post Brexit, when the UK will be excluded from some of those treaties?
That conversation happened when Liam Fox, the Secretary of State for International Trade, was in South Africa talking about how we could enhance trade co-operation between our two countries. It is important that we do that. We also need to see Africa as a tremendous opportunity—I know that the noble Lord shares my view on this. Africa will be a market of some $30 trillion by 2050 and will have a middle class the size of Europe. It is in our enlightened self-interest to build those strong links and maintain free trade.
Does the noble Lord accept that the elephant in the room in this debate is a country called China? China is growing very fast in Africa and says quite explicitly that it thinks it very important that the main Chinese relationship will be with the EU. Instead of saying that everything in the garden will be lovely, would not the Minister find it more useful to think how the constructive relationship with EU countries and the EU as such will continue?
I totally agree but refer to the point I made before that the problem in the crisis we face at the moment, particularly in sub-Saharan Africa, is a shortage of investment rather than too much. All the investments made by other countries and private investors are of course a matter between that particular country and the investor making those decisions. We do not want to get in the middle of that. We want to encourage as much investment as possible in that area so that growth can happen.
My Lords, the key to what the noble Lord said is that there are opportunities here but principles must govern them. The most important principle is a pro-poor and pro-development policy. Can the Minister assure the House that his department will be heavily involved in future trade negotiations with Africa? I do not have confidence in the Minister responsible for international trade to carry through those principles.
That is the reason we set up a cross-government programme including the prosperity fund to build economic trade and development. It is why we hosted the Commonwealth Trade Ministers’ meeting here last year. It is the reason the Secretary of State for International Trade is travelling round the world with his other Ministers, trying to put in place the groundwork for these trade agreements in future. We all recognise that free, unfettered trade is one of the best routes out of poverty ever known and we need to do more to encourage it so that people get the opportunity to come off aid dependency and into a self-sustaining economic future.
My Lords, today is World Malaria Day. I do not expect the Minister to have read and digested the report published today, Global Britain and Ending Malaria: The Bottom Line, compiled by Malaria No More and Ernst & Young, but it sets out that malaria costs this country £765 million in lost trade opportunities with the most affected countries. Does he agree that investment in malaria control not only saves lives and improves the economies of the affected countries but is a major benefit to this country in terms of life sciences investment and boosting British trade?
I am very happy to do that on World Malaria Day. I have not seen that particular report but the World Health Organization’s annual report, published in December, pointed to the fact that malaria-related deaths have reduced by some 60%, which means about 6 million lives have been saved as a result. That was why the Secretary of State announced in September that we will invest a further £1.1 billion in the global fund to tackle AIDS, TB and malaria, which is another demonstration of this Government’s commitment to the poor.
(7 years, 4 months ago)
Lords ChamberTo ask Her Majesty’s Government what steps they are taking to improve standards of literacy in the workforce.
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare my interests as listed in the register.
My Lords, we know that strong literacy skills are fundamental to people’s education and employment prospects. That is why we have taken steps to improve literacy standards for people in the workforce by embedding English into our major education and work-based training programmes. We are also providing full funding for adults to access free English courses up to the equivalent level of GCSE, supporting community and workplace programmes, and working to improve the quality of English teaching for adults.
I thank the Minister for that Answer, but 9 million adults in England suffer from poor literacy and would struggle to send a simple email or fill in a basic job application form. The CBI’s 2015 business survey shockingly showed that the problem was getting worse, not better. Some 50% of businesses reported a workforce literacy deficit, up from 40% in 2009. The Learning and Work Institute and the Joseph Rowntree Foundation estimate that an extra £200 million needs to be spent on adult literacy every year to ensure that by 2030 all adults will have sufficient basic skills. Communication, numeracy and digital skills all depend on literacy, so does the Minister agree that scaling up local literacy interventions in the 100 worst-performing constituencies, as identified by the National Literacy Trust and Experian, is a prerequisite to fulfilling the post-Brexit industrial policy? Would he agree to prioritise adult literacy—this is an important question—and provide the necessary funds to address this chronic and worsening problem?
Noble Lords: Too long!
The noble Baroness is absolutely right to highlight this important issue, which is why we are increasing funding for adult skills participation by 40% from 2015-16 to 2019-20. We have integrated English study requirements into 16-18 education, future technical routes and apprenticeships, and we are working closely with employers to ensure that courses and qualifications meet their needs. I also agree with the point the noble Baroness makes about the importance of local provision, which is what our focus on opportunity areas and the importance of a local offer is all about.
My Lords, there are also children who drop out of school before they become adequately literate but who would nevertheless really like to work. Could the Minister arrange to make apprenticeships more open to those who need to further develop their literacy skills?
The noble Baroness makes a very good point and we are doing this; for instance, the Maynard report was very focused on the issue. There has in fact been a doubling of pupils who did not have their grade C in English at 16 achieving it by 19—the number of pupils who have caught up has doubled since 2010.
My Lords, if the Government are really determined to tackle the question of literacy, can we see a more vigorous defence of our libraries as well as a more vigorous intervention in our prisons where many of our young men and women are left with deep literacy problems?
I agree entirely about the importance of books and libraries. We have seen some library closures but this is a responsibility for local authorities, and there are many good libraries. As far as prisons are concerned, the Prison Safety and Reform White Paper has committed to assessing on entry all prisoners’ education needs, including maths and English, in order to create a personalised learning plan and to focus very much on their literacy skills. I agree it is absolutely essential that we educate prisoners so that they can gain employment after their sentence.
My Lords, the Minister says he accepts that this is a major problem. Does he intend to find £250 million to address it, as was highlighted in the report?
I think that we have made significant progress. I have talked about the 40% increase in funding over the next five years. We know that the OECD told us that our 2012 school leavers were among the most illiterate and innumerate in the developed world after more than 11 years in education up to 2012. We have made considerable progress on that, which is partly what our apprenticeships and T-level reforms are all about.
Does my noble friend not think that at the root of this problem is the poor performance of teachers in many of our schools? They simply do not seem to be interested in teaching the basic skills of literacy and other subjects. Perhaps while they are at it, they could also, with benefit, teach some of their pupils how to ask a question briefly and succinctly and not stand and read it for hours on end.
On the last point, I entirely agree with my noble friend about the benefits of précis. I remember spending a lot of time at school studying précis and I am sure that many people, including civil servants, could benefit from some training on that. But I pay tribute to our hard-working teachers who have supported with enthusiasm our phonics programme, which has resulted in many more children being on track to be confident young readers, and of course we now emphasise the importance of grammar in our curriculum.
My Lords, the Minister will confirm that literacy levels are the highest they have ever been, and that is thanks to the dedication of our teachers. However, a small number of young people slip through the net and there are some enlightened employers who help their workforces to develop their literacy skills while they are at work. That not only gives them greater employability but helps with their personal confidence. Sainsbury’s is an example of a company which does that. Will the Minister look at how other companies might be involved in similar schemes?
The noble Lord is quite right and is always well informed on this. We now have a higher proportion of young people than ever leaving compulsory education with a C or equivalent in English. We also work with organisations such as Unionlearn and the Learning and Work Institute to promote literacy training for people in the workplace. But I shall certainly look at the points he has made and I would be delighted to discuss them with him further.
(7 years, 4 months ago)
Lords ChamberTo ask Her Majesty’s Government what plans they have to allow British citizens who have lived outside the United Kingdom for more than 15 years to vote in the forthcoming General Election.
My Lords, I beg leave to ask the Question standing in my name on the Order Paper and I declare an interest as the mother of an expat of more than 15 years.
My Lords, legislation scrapping the 15-year rule will not now be introduced in this Parliament. I understand the disappointment of those affected. However, it is my hope that this will be delivered in the next Parliament, so that those who have lived abroad for more than 15 years will be able to participate in future elections.
My Lords, I thank the Minister for his reply, but I do not think that hundreds of thousands of disenfranchised British expats will thank him. The Government have been in place for two years now. Why have they not fulfilled their promise in the 2015 manifesto to give votes for life to these people? Is it not because the Government are afraid of how they might vote, given that the Government have ruined the lives of many of them who live in other parts of the EU by choosing a hard Brexit?
My Lords, when Members of Parliament, including Liberal Democrat Members, voted overwhelmingly last week that this Parliament should come to a premature close, it was inevitable that certain measures would not be introduced in this Parliament. However, I hope that if this measure is introduced in the next Parliament, it will have the full support of the Liberal Democrats, in view of the interest that the noble Baroness has just shown.
My Lords, I refer noble Lords to my entry in the Register of Lords’ Interests. Can the noble Lord tell the House what additional resources the Government are providing to enable local government to register more citizens to vote? What representations are they making to the Residential Landlords Association and the Association of Residential Letting Agents to encourage them to bring it to the attention of their tenants that they could be eligible to vote—because tenants in the private sector are one of the most underrepresented groups at elections?
The noble Lord is quite right that a number of groups are unregistered in the current regime. Over recent years, the Government have devoted resources to trying to increase registration of those groups, particularly students. We have also made it much easier for people to register to vote: you can vote online in about three minutes. A number of initiatives are also being taken by the Electoral Commission, focused on some of the groups that the noble Lord rightly mentioned, to encourage them to vote. Over forthcoming weeks, the Electoral Commission will of course have an additional campaign as part of its responsibility of informing people how and where to register to vote.
I have asked the Government on many occasions to expedite this important matter, and the disappointment will be widespread and great among our fellow country men and women living abroad. When will the Government reach decisions on the issues set out in their policy statement relating to this area, which was published last October?
My noble friend is quite right to draw the attention of the House to the progress that we have made in this Parliament by publishing the Ministerial Statement on 10 October. That Statement made it clear that our plan was to have the policy implemented before the next scheduled parliamentary election. Discussion is now taking place on how to register and who will be eligible to register. I hope that Ministers, if they are indeed returned after the next election, will be able to take this initiative forward.
My Lords, the Government will recall that in the referendum campaign a number of voters living abroad did not receive their postal vote in time to vote. There was much discontent over that. Can the Government make sure that on this occasion, those who wish to vote while living abroad and who are registered are provided with the opportunity to vote in good time?
My Lords, I understand that I said earlier that people could vote online; I should have said that they could register online. I am happy to put the record straight.
When people tried to register before the last referendum, there were times when the system could not cope. Since then, steps have been taken not only to increase the capacity of the system but to build in extra safeguards against any attempt at sabotage.
My Lords, would it not be more important to give the vote to 16 and 17 year-olds, whose future is in this country, than to people who have left this country, do not pay taxes and seem to have no interest in us?
Since the last election, the issue has been discussed on several occasions in the other place. Each time that it was put to a vote, the proposition that the noble Lord has just referred to was voted down. We are in line with most mature democracies in having a voting age of 18, which is aligned with the age for jury service. I do not detect a huge public demand to lower it.
My Lords, what efforts are being made by different agencies and government to ensure not only that there is participation in terms of registration to vote but that those people who will be on holiday on general election day can vote?
My noble friend takes a keen interest in matters psephological. He is quite right that a large number of people who have retired will be taking their holiday in June. The Electoral Commission is aware of this propensity and, as part of its campaign to encourage people to register to vote, it will be taking on board the necessity to remind people who are going to be away that they should vote by post. I suspect that the political parties will be taking similar initiatives.
Will the Minister explain what principle he is defending? He seems to be saying that someone who has lived and worked abroad and has not paid taxes or lived in the United Kingdom for, let us say, 50 years, and has not even been on an electoral register in the United Kingdom to tie him or her to a particular part of the United Kingdom should have exactly the same rights in determining who the Government of the United Kingdom should be as a lifetime resident of this country.
British citizens living abroad have been entitled to vote ever since I have been a Member of Parliament. Initially, it was 20 years, which was then reduced to 15 years. So the principle that the noble Lord seems to object to has already been conceded; the debate is where you draw the line. At the moment, it is 15 years. My party stood on a manifesto to increase it. Those who have lived abroad for more than 15 years quite often have families in this country and connections in this country, and in many cases they may want to return to this country, so it is perfectly right that they should be enfranchised for future elections.
(7 years, 4 months ago)
Lords Chamber(7 years, 4 months ago)
Lords ChamberMy Lords, this Bill is integral to the Government’s ambitious reforms for creating a world-class technical education system. These reforms will help to ensure that technical education in our country provides everyone with the skills and opportunities they need to succeed and gain skilled employment on a long-term basis, and at the same time they will serve the needs of our economy and reduce our skills gap. The Bill’s further education insolvency regime will also protect students at FE colleges in the event that their college faces financial difficulty.
I am very grateful for the interest and input from noble Lords across the House on the Bill, and in particular how they have helped strengthen the Bill and its related policy areas. It is quite clear that the Bill has strong cross-party support. I am glad that the Bill returns to this House for further debate on two amendments from the other place. I will deal with these amendments in turn. Given the volume of business we need to get through today, I will try to keep this brief, and I hope other noble Lords will join me in that endeavour.
Noble Lords will know that Lords Amendment 1 was rejected in the other place on the basis of financial privilege, and I request that this House respects the decision reached there. However, I would like to acknowledge the sentiment behind the amendment and to address some considerations. First, I understand that a drop in household benefits income and a shift of income from parents to a young person can be difficult to manage. However, we should give parents credit for supporting their children to enter apprenticeships and develop their own financial independence and long-term careers. The numbers testify to this: last year more than 200,000 young people under 19 were in apprenticeships.
Secondly, during the Bill’s passage, the Opposition compared the financial support available to full-time students and that available to apprentices, while giving very little attention to the matter of remuneration. Full-time students are forgoing employment and income opportunities to gain qualifications, often while paying to invest in their future. Apprenticeships are paid jobs, with high-quality free training. The 2016 apprenticeship pay survey showed that the average wage for all level 2 and 3 apprentices was £6.70 an hour. Apprentices are also increasing their future employment prospects and earnings: on average, level 2 and level 3 apprenticeships increase earnings in employment by 11% and 16% respectively.
Finally, we must target resources. The cost of the amendment is estimated at over £200 million per year by 2020. The benefits system quite rightly targets financial support towards greatest need, including for example dependants in low-income families. Benefits awards must take other sources of income into account. We also target funds carefully to support apprenticeships among key groups. We pay additional amounts to training providers in the most deprived areas. We also steer funding towards providers and employers for the youngest apprentices and for care leavers, as well as for those with learning difficulties and disabilities. As the new funding system beds in, we will continue to review how funding is targeted, including to support access to apprenticeship jobs for those from disadvantaged backgrounds.
Amendment 6A was tabled in the other place in lieu of an amendment tabled on Report by the noble Lords, Lord Storey and Lord Watson, and the noble Baroness, Lady Garden. The amendment proposes a new clause to the Bill which will require Ofsted to consider the quality of careers provision when conducting standard inspections of further education colleges. I am grateful to noble Lords and the noble Baroness for raising the issue of careers guidance in colleges and giving the Government the opportunity to consider this important matter further.
As the noble Lord, Lord Storey, explained so eloquently on Report, one of the most important things we need to do for young people is provide guidance and knowledge about careers. He rightly pointed out that this is particularly true for young people from disadvantaged backgrounds, who may not have access to networks of support to inform them about options and perhaps provide opportunities for them to do work experience. That is why it is vital that FE colleges—which take many students from areas of educational disadvantage—should make high-quality careers advice available to everyone.
Of course, there are a number of colleges already leading the way in this. Gateshead College embeds careers in all aspects of a student’s learning. JobLab provides dedicated support to help their students develop practical employment skills, and Career Coach provides labour-market data and maps out education, training and career options. I also recognise Ofsted’s commitment to evaluating the quality of careers advice and guidance in further education. Matters relating to careers provision feature in all four graded judgments that Ofsted makes when judging the overall effectiveness of a college. However, the Government are persuaded of the need to go further to ensure that young people can benefit from the best possible preparation for the workplace and acquire the skills and attributes that employers need. The amendment will send a clear signal that a high-calibre careers programme must be embedded in every college.
I hope I have reassured noble Lords that we agree wholeheartedly with the principle of the original Lords amendment. The drafting changes serve only to ensure that the amendment achieves its intended effect and that the language conforms to current legislation. The amendment now includes an explicit requirement for Ofsted to comment on the quality of the college’s careers provision in the inspection report.
I urge noble Lords to accept this amendment in lieu. It is our chance to ensure that all FE students can access the support they need to help them to achieve their full potential. As discussed earlier, I also ask noble Lords to respect the other place’s decision to reject Amendment 1 on the grounds of financial privilege. I beg to move.
My Lords, I acknowledge that the Bill is a better one than when it began its progress through both Houses. We shall not seek to impede its journey to the statute book.
The addition of the amendment promoted by the noble Lord, Lord Baker, and others, represents an important step forward in ensuring that school pupils have explained to them the full range of options, not just those whose choice of an academic route might benefit the school’s coffers. It should not have been necessary for an amendment to be passed to secure that, because strong careers guidance is critical to promoting apprenticeships in schools. If the Government’s target for apprenticeship starts is to be achieved and sustained, as we all hope, then it is crucial that young people are alerted early enough in their school life to the importance and attraction of technical routes.
However, it is disappointing that the Government have not been willing to accept Amendment 1 passed by your Lordships on Report. The decision to exclude apprenticeships from the category of approved education or training will serve as a deterrent to some young people, particularly those from disadvantaged backgrounds. The Minister for Apprenticeships and Skills said last week:
“The crucial point is that the vast majority of level 2 and 3 apprentices are paid more than £6.30 an hour, and 90% of them go on to jobs or additional education afterwards”.—[Official Report, Commons, 19/4/17; col. 714.]
But that is not the crucial point; in fact, he has missed the point. At least 90% of university graduates go on to jobs or additional education, so there is no difference in that respect. And whether apprentices earn £3.50 an hour—the legal minimum, which, as I said on Report, not all of them get—or £6.50 an hour, their parents are still disqualified from receiving child benefit. That is the nub of the issue. Clearly, though, we have not been successful in convincing Ministers of that point.
It was interesting to read last week of the Minister for Apprenticeships and Skills, in defence of the Government’s position, coming up with a figure of some £200 million a year by 2020-21. So apprentices—the young people we need to train in order to fill the skills gaps that we know exist—are to be treated unfavourably compared to their peers who choose full-time study because of the cost. The Government can miraculously find £500 million to create new grammar schools yet cannot find £200 million to ensure that the number of apprentices from the poorest families rises from its current very low level of just 10%. If there is logic in that policy stance, it escapes me. The noble Baroness, Lady Buscombe, said in Committee that she would discuss this issue with ministerial colleagues in the DWP. By Report there had been no such meetings, and we learned from the debate in the other place last week that those meetings have still not taken place. So where did the £200 million figure appear from, if not the DWP?
In passing, I say to the Minister that I submitted a Written Question asking for the Government’s workings that produced the £200 million figure. As I understand that those Questions disappear on Dissolution, I ask him to write to me with the answer so that we can gain an understanding of the foundation on which the Government have erected the barrier to treating apprentices as “approved learners”.
On Amendment 6, initially I was dismayed that the Government were unwilling to accept the will of your Lordships’ House on careers advice in further education colleges, although that was perhaps not too surprising as the Minister told us on Report that it was not necessary. However, the Government’s amendment in lieu actually appears to be stronger than the original amendment. First, it goes further than further education colleges and refers to “FE institutions”, which of course covers all training providers on the register.
Secondly, the original amendment in the name of the noble Lord, Lord Storey, which your Lordships’ House voted for at Report, called on Ofsted to “take into account” the careers advice made available to students by colleges. Government Amendment 6A states that Ofsted must,
“comment on the careers guidance provided to relevant students at the institution”.
For that reason, I welcome Amendment 6A, as Ofsted will be obliged to be proactive in reporting what it discovers in FE colleges that it inspects. That is certainly to be welcomed, although it comes with the caveat that it will apply only to those colleges that Ofsted actually inspects. How many will be? Realistically, how many can it be?
At Report, I asked the Minister to give an assurance that Ofsted would be adequately resourced; I fear that he did not reply. Mr Marsden asked the same question of the Minister for Apprenticeships and Skills, and he did not reply, so perhaps the Minister can now tell noble Lords how many additional staff Ofsted will have to enable it to inspect as many training providers as possible out of the 2,000 likely to emerge. It cannot do that with its existing staff, and we have a right to know what additional resources Ofsted will receive to enable it to cope with large new demands. I look forward to his response on that. I suggest that he must have one because it is surely inconceivable that he and/or his officials have not met Amanda Spielman or her deputy, Paul Joyce, to discuss the resources that they will require as a direct result of the Bill.
We are now at the end of a process that has produced the Bill, which will strengthen the sector but could have achieved much more. I thank all noble Lords who have participated in our debates, as well as Ministers, who have moved some way, if not as far as we would like, during our deliberations.
My Lords, I shall speak to Amendment 6A. The Minister has put it better than I could, so I shall be very brief. I have always thought that the key to making the Bill successful was twofold. First, there was breaking the logjam of mainstream schools not allowing for or understanding the important role of technical education, whether it be FE colleges or university technical colleges. The acceptance of the amendment of the noble Lord, Lord Baker, was a crucial step forward. Secondly, there was careers. You can have all the courses in the world, but unless young people get a successful career at the end of it and an understanding of what is available to them, it is all for naught. I am delighted with the amendment. It sends a clear signal not only to the further education sector but to schools themselves. The explicit wording in the amendment means that there is no hiding place.
This is an important Bill, and I congratulate the Minister and his colleagues on carrying it through the Chamber in such a sympathetic way. I also thank the civil servants, who have been exemplary in the support that they have given us all. We could not wish for anything better. Finally, I thank my noble friend Lady Garden—she cannot be here—who led for my party on the Bill, and other colleagues who have supported us.
My Lords, I thank the noble Lord, Lord Watson of Invergowrie, for deciding not to press his amendments on this case. I know how strongly he feels about it, but it will be possible to revisit that after the whole principles of apprenticeships have been set up. I think that it is generally agreed by all sides of the House that this is an important Bill and a beneficial Bill. It is a major step forward in improving the technical education of our country. It has been handled very well by the Minister and his department, and we should speed it to the statute book.
My Lords, I have discussed the Government’s response to the two amendments that have returned to this House from the other place and asked noble Lords to agree the Motions from the other place on those two amendments. In response to the noble Lord, Lord Watson, about where the £200 million estimate came from, I can say that it is estimated by the DfE, HMRC and HM Treasury, using apprenticeship participation data and HMRC child benefit data—HMRC, not the DWP, pays child benefit—but I will still write to him on the matter he mentioned.
As for Ofsted, I have personally discussed this with it. It is satisfied that it is adequately resourced at the moment, but we will keep this under review. As I said, the Bill has strong cross-party support. Several noble Lords from across the House have mentioned that previous Governments have attempted unsuccessfully to raise the status of technical education—I remember a particularly powerful speech by the noble Baroness, Lady Morris, on this—but I am confident that under the leadership of Minister Halfon, who I am delighted to see is in the House today, we will seize this opportunity to raise the status of technical education in this country.
I thank again all noble Lords for their participation on this Bill. I am absolutely sure that the legislation is in much better shape thanks to their scrutiny, as always. I commend the Bill to the House.
(7 years, 4 months ago)
Lords ChamberThat this House do not insist on its Amendment 12 to which the Commons have disagreed for their Reason 12A.
Commons Reason
My Lords, I wish to update the House following the consideration of the Lords amendments to the Neighbourhood Planning Bill in the other place on 28 March. There are two matters before your Lordships’ House that will be discussed today: pubs and planning conditions. I shall be brief in relation to those two areas.
I turn first to planning conditions. As highlighted during the Bill’s passage, the power to make regulations prescribing what kind of conditions may or may not be imposed and in which circumstances is already constrained in the clause. To reiterate, new Section 100ZA(2) already provides that the Secretary of State may make regulations under subsection (1) only if he considers that these regulations are appropriate to ensure that conditions imposed on a grant of planning permission meet the policy tests in paragraph 206 of the National Planning Policy Framework, which states:
“Planning conditions should only be imposed where they are necessary, relevant to planning and to the development to be permitted, enforceable, precise and reasonable in all other respects”.
The amendment originally proposed by the noble Lord, Lord Stunell, sought to restrict the Secretary of State from using this power under subsection (1) to prevent a local planning authority imposing a condition that would otherwise conform to the National Planning Policy Framework. At the heart of the amendment sits a test of whether the regulations prevent a local planning authority imposing a condition that meets the National Planning Policy Framework and, in particular, those policy tests in paragraph 206.
It is right that the Government do not intend to use the power to prevent local authorities imposing planning conditions that accord with the National Planning Policy Framework. However, the specific amendment is unnecessary, as subsection (2) has the effect already that any regulations made under these powers must be consistent with the long-standing policy tests for conditions. Indeed, the subsection makes it clear to those reading the legislation that the power seeks to ensure conformity with those tests. The position of the other place during the consideration of the amendment was that it agreed with the Government that the amendment was unnecessary, and there was no Division on this point. Therefore, I ask noble Lords not to insist on the amendment.
On consideration of the other matter, planning protection for pubs, I am sure I need not remind noble Lords of the amendment introduced by the noble Lord, Lord Kennedy of Southwark. I thank him and others who have worked so constructively with me on this issue, in particular, my noble friends Lord Framlingham, Lady Cumberlege and Lord Hodgson and the noble Lords, Lord Shipley, Lord Tope, Lord Scriven, Lord Berkeley and Lord Cameron of Dillington, the noble Baroness, Lady Deech, and the most reverend Primate the Archbishop of York. The Government have carefully reflected on the points raised during the Bill’s passage about the importance local communities place on valued community pubs. I hope noble Lords will agree that we have reflected the will of this House in bringing forward our amendment in lieu, which sets out the detail of the changes we will make to protect and support pubs.
We will amend the Town and Country Planning General Permitted Development (England) Order 2015 to remove all existing permitted development rights for the change of use or demolition of A4 drinking establishments, including pubs. This will include the rights to change to a restaurant or café, financial or professional service, a shop or a temporary office or school. We believe that this is best achieved by retaining the A4 drinking establishments use class for pubs, wine bars and other types of bar. Our intention in doing so is to allow pubs to develop within this use class—for example by opening the pub garden—without facing uncertainty about whether planning permission is required. I hope noble Lords will recognise the benefit of the Government’s approach.
Separately, we have listened to points made in this House about the need for pubs to be able to expand their food offer to meet changing market needs and support their continued viability. Therefore, as part of our support for pubs, we will introduce a new permitted development right to provide them with an additional flexibility. The right will allow the pub to expand its food offer beyond what is ancillary to the pub business without planning permission being required but, importantly, it will not allow the pub to become a restaurant with only a token or ancillary bar.
The changes we are bringing forward address the long-standing call that proposed development which would result in the local pub ceasing to operate should be considered locally, allowing the community to comment on the future of its local pub. It is important that local planning authorities have relevant planning policies in place to support their decision-taking. Noble Lords will be reassured to know that both the Campaign for Real Ale and the British Beer and Pub Association have welcomed our proposed approach and personal commitment to helping our pubs survive and prosper. Noble Lords will be keen to see regulation as soon as possible, to prevent any further loss of pubs without local consideration. I can therefore commit to laying secondary regulation immediately after Royal Assent, to come into force before the end of May.
Noble Lords will be reassured to know that the regulations will contain provision to guard against opportunistic use of the permitted development rights before they are withdrawn. Under the current regulations, a developer must first make a request to confirm whether the pub is nominated or listed as an asset of community value. Where a request has been made fewer than eight weeks before the order comes into force, the order will not allow development to take place. I therefore ask noble Lords not to insist on Amendment 22 and to agree with our amendment in lieu. On that basis, I ask the noble Lords to withdraw the points they made earlier in relation to these two matters and to agree with the two Motions put forward by the Government.
I thank the Minister for what he has said. I remind the House that the matters in Clause 12 have been debated at each stage of the Bill. There is widespread understanding that this is a good Bill and it has a lot of support, but to many noble Lords Clause 12 seemed out of place. It either gives new powers to the Secretary of State to regulate, as he sees fit, the decisions of local planning authorities—which it is feared could be at the expense of the National Planning Policy Framework—or it is of nil effect because the NPPF already provides the boundaries and constraints. The critics have tended to the first view and the Government to the second. The critics, including me, feared that this Government, or a future one, might use this regulatory power in a way that undermined the capacity of local planning authorities to use the NPPF as it was intended. The Government have, quite understandably, taken the contrary view, which the noble Lord, Lord Bourne of Aberystwyth, has just put.
This House accepted my amendments limiting the Secretary of State’s ability to regulate. That came not just from this quarter of the House—it had widespread cross-party support. Indeed, beyond cross-party, the most reverend Primate the Archbishop of York also contributed to the debate on Report and supported us in the Lobby. Therefore, this is not in any way a party political or partisan issue; rather, it is about firmly entrenching the right of local planning authorities to set planning conditions in accordance with the NPPF and without fear of being second-guessed or overruled by the Secretary of State’s regulatory power. Putting it another way round, it establishes, or was intended to establish, the primacy of the NPPF as the touchstone of legitimacy in judging planning conditions rather than the latest fad of the spads in the DCLG. That is what my amendment did. The Minister—the noble Lord, Lord Young—was very helpful on Report, as far as his brief would allow, but not sufficiently eloquent to persuade your Lordships of the Government’s point of view, and the amendment was passed.
I thank the noble Lord, Lord Bourne, for the work he put in subsequent to that and the discussions that we had. We clearly did not have a full meeting of minds, which was probably as much my fault as his. However, gradually, the essence of the argument made across parties at each previous stage of the Bill has seeped into our proceedings and on to the record.
The noble Lord, Lord Bourne, referred to the letter that he circulated, and we see it in the reasons before us for rejecting your Lordships’ original view on this matter. It is extremely important that it is clear that it will always remain lawful and legitimate for conditions to be imposed by local planning authorities provided they conform to the requirements of the National Planning Policy Framework. Indeed, that is the reason before us for the Commons rejecting the amendment. I remind your Lordships that the reason states:
“Because section 100ZA already has the effect that the regulations must be consistent with the tests for planning conditions in the National Planning Policy Framework”.
That is clearly the Government’s view and the view of the other place. I hope it will turn out to be the view of all future Governments and Ministers and, in the case of dispute, that the courts will share that benign view and interpretation of Clause 12. I believe that the Government’s declared intentions would be far clearer with the amendment that was originally proposed. However, on this occasion, with grateful thanks to those around the House who supported the original amendment on Report and valiantly joined me in fighting the fight, I will not press the matter any further.
My Lords, I rise to say a word or two on the drinking establishments —pubs—amendment. I was very concerned about the direction of the debate in your Lordships’ House because this sector is under pressure and the more legislative restrictions that are placed on it, the less likely it is that people will invest in it. I accept that the will of the House was not with me. However, I am grateful to my noble friend for considering the matter further. We have reached a reasonable compromise that will provide a way forward. It is obviously a very good thing that both CAMRA and the BBPA have accepted and supported it. It is important that we find a point at which those who own and operate pubs can draw a line under the further changes that may be made to the regulatory environment, given that there is already talk of needing to change the Pubs Code regulator as it is not satisfactory. That came in a couple of years ago. For the moment, however, this is a good compromise that will enable both sides to emerge from the discussions with honour.
My Lords, pubs are a vital part of our nation’s life. I am delighted that the Government have decided to take this action, as I am sure are both CAMRA and the British Beer and Pub Association. The Minister has been the essence of competence and courtesy throughout the whole of this debate and I am extremely grateful to him. I trust that in due course glasses will be raised in pubs up and down the land to both the Minister and the Government.
My Lords, first, I thank my noble friend Lord Stunell for his work on the amendments in relation to the National Planning Policy Framework and for his contribution today. We shall see in the months ahead whether the solution proposed by the Minister manages to hold up against any challenge.
As we have heard, as the Bill progressed we had several lengthy debates in this Chamber on pubs and permitted development for alternative uses. I, too, am grateful to the Minister and to the Government for listening so carefully to the views from across this House and for this revised amendment from the other place, which will help greatly with the protection of pubs at risk. It has the advantage of introducing a permitted development right where the proposal is to extend the range of food to be offered while maintaining the pub itself. Beyond that, planning permission will be required before a pub can be demolished or face a change of use. That puts powers into the hands of local people and local planning authorities—here, I remind the House of my vice-presidency of the Local Government Association—and that has to be beneficial.
I pay tribute to all those who have campaigned on this issue, including the Campaign for Real Ale and the British Beer and Pub Association, and to those from all parties—including my colleague in the other place, Greg Mulholland—who have spoken and campaigned in support of it. I am very pleased to commend the Commons amendment.
My Lords, as this is my first contribution on these matters, I refer Members to my declaration of interests in the register. I declare that I am an elected councillor in the London Borough of Lewisham, a vice-president of the Local Government Association and the vice-chair of the All-Party Parliamentary Beer Group.
In respect of Motion A, I am disappointed that the other place did not accept the amendment from the noble Lord, Lord Stunell, although I accept the point made by the noble Lord, Lord Bourne, that the other House did not divide on the issue. I hope that the noble Lord, with his colleagues in the department, will keep this matter under review so that, if it turns out that the provision needs to be strengthened, we can return to it at a later date. The noble Lord, Lord Stunell, made a very important point about the primacy of the NPPF.
In respect of Motion B, I am delighted that the Government have listened to the campaign both inside and outside Parliament. I pay tribute to two Members of the other place—Charlotte Leslie, the Conservative Member of Parliament for Bristol North West, and Greg Mulholland, the Liberal Democrat Member for Leeds North West—for their campaigning over a number of years to bring about this change.
I also thank all the Members of your Lordships’ House who supported me in the debate and in the Division Lobbies. I particularly want to thank those Conservative Members who voted with me and those who kindly abstained, as that played an important part in getting a large majority when I tested the opinion of the House. I also thank the noble Lord, Lord Bilimoria, for his generous support in the debate, as well as others, such as the noble Lord, Lord Cameron of Dillington, the noble Baroness, Lady Deech, and the most reverend Primate the Archbishop of York. I am also grateful for the support that I received from the noble Lords, Lord Shipley and Lord Scriven, and others.
The amendment proposed by the noble Lord, Lord Bourne, corrects a loophole that was of great harm to successful pubs, and it protects and helps them. In the previous debate I was very clear that the intention behind what I proposed was never to keep open a pub that was not a successful business but to support successful businesses.
I like pubs and I like a pint. Like the noble Lord, Lord Framlingham, I probably should have bought a few shares in the odd pub or brewery; I have certainly spent enough money on beer over the years.
I also pay tribute to the fantastic work done by Tim Page, the chief executive of CAMRA, Amy O’Callaghan, its senior campaigns officer, and all the members of CAMRA in branches across the country who emailed and phoned us and Members of the other place.
This amendment is important, and I am grateful to the Government and the noble Lord, Lord Bourne, for listening. It is an example of the House of Lords doing its job well. By winning the argument on the original amendment, we created the conditions for the Government to think again and we have a great solution today that I am delighted to support.
My Lords, I thank all noble Lords who participated in this debate on Motions A and B; I will not detain the House long. I genuinely thank all noble Lords who participated in the discussion on this important piece of legislation. I also thank my right honourable friend in the other place, Sajid Javid, and my honourable friend Gavin Barwell, the Minister for Housing, who have been very supportive and helpful.
Turning first to Motion A, I thank the noble Lord, Lord Stunell, for his generosity of spirit. I agree that there is a difference between us on the way that this is to be interpreted. I believe that the National Planning Policy Framework provides the necessary security, but I am most grateful for his generous words and the very fair summary that he gave.
Turning to Motion B, I first raise a metaphorical glass to my noble friend Lord Hodgson on his birthday. Perhaps there will be an opportunity for people to exhibit support for this new position after the debate. I thank him for what he said about our having harnessed the support of both CAMRA and the British Beer & Pub Association, as well as this House. I also thank my noble friend Lord Framlingham for his extremely kind words and the noble Lord, Lord Shipley, for his support of this amendment. He has been a pleasure to work with throughout this legislation—always fair and always with good advice.
I join the noble Lord, Lord Kennedy, in thanking Charlotte Leslie and Greg Mulholland in the other place for their help, and I thank the noble Lord for what he has done in this legislation and what he does for pubs on a continuing basis; it has not gone unnoticed and has certainly helped the sector greatly. I thank all noble Lords very genuinely, as the noble Lord, Lord Kennedy, said, for having demonstrated the House of Lords at its best in looking at and amending this legislation, and in moving forward very sensibly, not least in respect of matters raised by my noble friend Lady Cumberlege. On that note, I commend Motion A.
That this House do not insist on its Amendment 22 and do agree with the Commons in their Amendments 22A and 22B in lieu.
Commons Amendments in lieu
My Lords, I omitted to thank my noble friend and co-pilot, who has more air miles than most, for his support on this. I beg to move.
(7 years, 4 months ago)
Lords ChamberThat this House agrees with the Commons in their Amendment 1.
My Lords, it will also be convenient at this time to speak to Amendments 2 to 4, Amendment 6, Amendments 12 and 13, Amendments 15 to 19 and Amendments 21 to 23. These amendments cover a range of issues demonstrating the variety of important topics debated during the passage of this Bill through both Houses. I know that all noble Lords will agree that bus passengers should be at the heart of this Bill. Its provisions will enable improvements to bus services where they are needed, and help grow passenger numbers. By working together, local authorities and operators can tackle key transport issues such as pollution and congestion. They can support local businesses and help drive the local economy.
I recognise that congestion in particular can have a major impact on local bus services. This brings me on to Amendment 1, which relates to powers to enforce moving traffic offences. The other place debated the changes made to the Bill by this House, which confer powers to enforce moving traffic offences such as those in yellow box junctions on authorities that have established an advance quality partnership scheme. However, it was recognised that Part 6 of the Traffic Management Act 2004 already provides the Secretary of State with the ability to confer powers to enforce moving traffic offences on authorities. It was also further acknowledged that local authorities already had the ability to address issues of congestion, be that through using new infrastructure measures or technological solutions or by enforcing moving traffic offences in bus lanes. Additionally, through franchising and partnership schemes local authorities and bus operators will be able to further work together to address local congestion in a more targeted way.
A key concern remains that such powers could be misused to generate revenue for local authorities rather than for traffic management purposes. Instead, we shall be encouraging local authorities and bus operators to use the powers in the Bill to develop local solutions to local congestion pinch points.
Amendments 2, 6 and 15 respond to what I know were well-intentioned moves by this House to seek the greater use of low-emission buses. We are all in agreement that we should encourage these sorts of behaviours. Following early discussions in this House, the Government set it out explicitly in the Bill that emissions standards may be included as part of both franchising and partnership schemes. However, I believe that the Bill needs to strike the right balance between giving authorities the right tools for the job and being overly prescriptive about how improvements are to be achieved. There is a real danger that requiring all new buses used to deliver services as part of a partnership or franchising scheme that come into service after 1 April 2019 to be low emission would simply mean that bus schemes could become prohibitively expensive, with the real risk of authorities being unlikely to pursue these schemes at all. This could lead to less bus use and, with that, worse environmental outcomes than would have been achieved without these provisions. I hope that my further explanation as to why we have taken the approach that we have to these subjects will mean that noble Lords can support the current Motion.
I turn now to Amendments 16 to 18 on the open data provisions. There has been a positive welcome to Clause 18, which will facilitate the provision to passengers of information about timetables, fares, routes and tickets, and live information. Since the Bill was last in this place, my officials have held workshops to develop further the practical delivery of these provisions. Stakeholders have stressed the importance of two existing datasets that are currently maintained by local authorities which accurately and uniquely describe and locate all bus stops in a common format. These datasets are vital to the production of meaningful journey-planning information for passengers. However, they are currently maintained by local authorities on a voluntary basis. These amendments simply ensure that if it becomes necessary, regulations could be made that require local transport authorities to provide information other than in the context of franchising, and information about stopping places to be provided by local transport authorities or operators.
I turn now to those who work for local bus companies. In this House we quite rightly had a great deal of debate about the importance of consultation in relation to bus partnership and franchising schemes and who must be consulted. The Government accepted and were happy to include Transport Focus and the national park authorities as statutory consultees. Special thanks must go to the noble Lord, Lord Judd, who is not in his place this afternoon, for his passionate advocacy of the latter’s importance.
We also introduced amendments to require authorities to consult employee representatives about proposed franchising schemes. The noble Lord, Lord Whitty, provided helpful input to our thinking on this matter. I completely understand the need for employee representatives to be consulted on franchising schemes, as those proposals could have a direct impact on bus industry employees in such an area. Following a debate in the other place, it was agreed that some of the potential duplications in the Bill relating to the consultation of employee representatives and trade unions on franchising schemes should be clarified. This is reflected in Amendments 12 and 13. It was also felt that authorities should have greater freedom on who to consult in relation to the advanced quality partnership schemes than had been provided for in the Lords text. This is reflected in Amendments 3 and 4. The Bill, therefore, now provides for an authority to be required to consult employee representatives on franchising schemes, and it may choose to do so for partnership schemes should it consider that appropriate.
Finally, this group contains Amendments 19 and 21 to 23, which address housekeeping matters and remove the privilege amendment. The latter is a procedural technicality. I hope noble Lords feel that I have given the variety of topics justice here and will agree to support the Motion to approve these Commons amendments.
My Lords, throughout its passage, the Liberal Democrats have supported the principles behind the Bill and we believe that it is a long overdue response to a fairly chaotic situation with bus services in many parts of the country outside London. Indeed, while we have been debating the Bill, the number of bus services and miles covered by those services throughout England outside London has reduced significantly as the number of local authorities’ subsidised routes has reduced and some bus companies have ceased to function. There is a desperate need to do something and we agree with the general tenor of the Bill.
We would have wished to make the Bill more radical, as I have made clear on a number of occasions. We would have wanted more devolution and powers to local authorities, more action to assist disabled passengers, more measures to protect the environment and the health of our citizens and more consultation. Indeed, some of our amendments were accepted and have remained in the Bill throughout the Commons process, but not all of them. I am disappointed that so many were removed.
However, we are grateful that in this group there are government amendments to clarify the role and independence of auditors. The first amendment in the group was put forward by my noble friend Lord Bradshaw in relation to giving local authorities powers over moving traffic offences. The Minister said just now that the Government feared that local authorities would use that power simply to make money. That is a fairly flimsy excuse for rejecting the idea because it would be so easy for the Government to produce an amendment that restricted local authorities’ ability to do that. That could have been dealt with within the regulations that will flow from the Bill or within the Bill itself.
In relation to the Minister’s comments on emissions and the speed with which we can replace bus fleets, London is of course well under way with the process, as are several other local authorities and cities. The technology is there. The alternative fuels are there. It is the Government’s role to at least push businesses into operating in the most environmentally friendly way. On bus emissions, of course there is the pressing issue of the health of our citizens. The Government are only too aware, despite their failure yesterday to produce a plan to address this issue, of the need for urgent action on this. Not only am I disappointed that the Government failed to meet the legal timetable for producing a response on air quality in general, I am disappointed that they have taken the view on this particular Bill that there does not need to be a stronger government steer on the issue of emissions from bus services.
I support the Government’s changes on the provision of data. That is very important. Evidence shows that many people are deterred from becoming bus passengers because of a lack of knowledge and information about where the bus stops and how they pay for a ticket. How one pays for a ticket can vary from one local authority area to another. That kind of information can be so easily supplied and the Government have rightly emphasised that in the Bill. We support that.
Having said all that, we are grateful for the hearing the Minister gave us and for the way many organisations involved in bus services across Britain engaged in the process of the Bill so we could use and harness their knowledge and expertise, which has helped. My final point is that we shall not seek to oppose the changes made in the Commons, but we accept them with some sadness.
My Lords, I thank the Minister for listening to and taking away the concerns I raised with my noble friend Lord Shipley on independent audit. It is an important point. These schemes, however welcome, are potentially extremely expensive. The risk, as always, will fall on local council tax payers and therefore robust independent audit is key. We look forward to seeing the regulations and guidance as they emerge.
My Lords, I remain generally supportive of the thrust of the Bill, but I have been dismayed by some of the measures taken by the Government in the Commons with some of the amendments in this group and others. It is regrettable because during the process of the Bill in this House there has been a high degree of consensus and the Minister has been very helpful in a number of respects. However, in some areas he has been chopped off at the knees by his colleagues steamrolling it through the House of Commons.
I echo what the noble Baroness, Lady Randerson, said on the low emissions provisions. If the Government were concerned about the timescale and the economics, they could have amended the timescale and put in a few qualifications. Instead, they have deleted the requirements in Amendments 2 and 6 that new vehicles should meet new low emissions standards. This is a very poor signal. As the noble Baroness said, it comes a day or two after the Government’s attempt to use the election to defy the previous court injunction that a new air quality strategy should be produced because of the inadequacy of their earlier air quality strategy produced by Defra.
The Government’s record on this is shaky and they are extremely vulnerable. Buses are one of the main diesel-based pollutant vehicles in many of our towns and villages. There was an opportunity to put in the Bill that we would do what a number of local authorities in London and elsewhere are already doing and replace those buses immediately when a new vehicle is brought on with one with high-quality emissions standards. As I said, we could have put in slightly different dates and slightly greater qualifications, but nevertheless that needed to be in the Bill. It undermines the Government’s commitment to do something about air quality on which they have been and will continue to be widely criticised. I regret that and I think the Government will come to regret it too. As was said in this House yesterday by my noble friend Lady Nye, it is a major public health issue. There are provisions for avoiding the purdah prohibitions concerning air quality that were already in the Bill when it reached the Commons. The Government chose, wrongly, to delete those provisions, and I regret that profoundly.
I also regret the deletion or dilution by Amendments 3, 4 and 13 of the provisions we inserted in this House that worker representatives in the bus industry should be clearly consulted on any changes, whether an advanced quality partnership or the new franchising operations. The Minister has continued to make positive noises in that respect, and I appreciated his acceptance of the principle in our earlier proceedings. However, his colleagues seemed to have deleted most of that, which is a mistake. We are talking here, whether the Government like it or not, of a pretty highly unionised sector where by and large there are good relations between the bus companies and their employees. Anything which deletes a continued commitment to those outcomes makes some of these provisions more problematic when they never needed to be. Again, the Government may live to regret that; I hope not. I know that the unions intend to be constructive and by and large welcome the objectives of the Bill, but from a long list of those who are required to be consulted about these changes, the people who are omitted are the ones who actually drive and operate the buses. That seems to me a triumph of ideology over common sense and the Government should not have done it.
The Minister will no doubt be relieved to hear that I intend to intervene only once on this Bill. I have some concerns about the third group of amendments in relation to the reinstatement of the clause which prohibits local authorities from setting up their own companies. That is a restriction on local authority strategic decision-making. I do not intend to belabour that point because we will come on to it in a moment.
I hope that the outcome of the Bill is positive. It is regrettable that these changes have been made by the Government at this relatively late stage because they make it more difficult to achieve what the Minister himself set out as the objectives when he introduced the amendments. Taking the changes together, I hope that in the coming weeks the population will recognise that even in this relatively minor area of legislation the Government have decided, contrary to what was a pretty consensual view in this House, to delete commitments on environmental standards, commitments on the rights to representation of workers, and commitments on flexibility and devolution of powers to local authorities. All of that amounts to an unnecessary and significant reduction in my enthusiasm for what in general is a positive Bill.
My Lords, I intend to speak relatively briefly on this group of amendments. The Opposition have generally supported the overall aims of the Bill. We have welcomed it and see it as an important step towards increasing the number of bus journeys, particularly outside London where there has been a collapse in the number of journeys in recent years. Like the noble Baroness, Lady Randerson, we would have liked the Bill to have gone further, but equally we accept that we have made welcome progress on it; as I say, we support its overall aims. Like other noble Lords, we generally accept the changes on data. The deletion of provisions in respect of emissions is regrettable. Air quality is now a very big issue in terms of people’s health. The number of deaths which can be attributed to poor air quality is something we should all be concerned about and I think that the Government have taken a retrograde step.
My noble friend Lord Whitty mentioned consultation of employees. That is very important and again it is a shame that the Government have largely deleted or watered down the provisions in that regard. Whether the Government like it or not, the bus industry is heavily unionised, which has generally been of benefit to it. The unions work well with the various bus companies and seek to provide a public service. I do not see any benefit in what the Government have done. As my noble friend suggested, I suspect that other forces in the Commons are at work here who do not quite see it that way. What the Government have done is a mistake. I will come on to other things I regret when we consider further amendments.
My Lords, first, I thank all noble Lords for participating in this short debate and for the broad support for the Bill. Indeed, that was quite clear during its passage through your Lordships’ House. Particularly on the issue of data sharing, I thank both the noble Lord, Lord Kennedy, and the noble Baroness, Lady Randerson, for their evident welcome for data sharing, which we all believe is a positive step forward. On the issue of emissions, I suggest that this is not a low priority given that quite specific reference is made to it in the provisions in the Bill. Indeed, local authorities can specify this element in any proposals they make when procuring bus services.
Finally, the noble Lord, Lord Whitty, talked about me being cut down at the knees. When you stand at only about five feet six you are quite protective of your knees anyway so any further cutting down is not welcome. I assure the noble Lord that the sentiments of your Lordships’ House were fully expressed and I challenge the assumption that employee representatives are not being consulted. On the contrary, they will be. I suggest to the noble Lord that trade unions are an important employee representative. Of course, trade unions fall within the scope of what an employee representative body is, so in that sense I disagree with him. In saying all that, I again welcome the contributions that were made during the passage of the Bill and the broad support for the proposed Commons amendments.
That this House agrees with the Commons in their Amendments 2 to 4.
That this House agrees with the Commons in their Amendment 5.
My Lords, I will also speak to Amendments 7 to 11. Bus franchising has received a great deal of attention both in your Lordships’ House and in the other place, as well as across the country. In particular, there has been discussion about which local authorities in England should be able to access the franchising powers within the Bill.
It was felt in your Lordships’ House that in the spirit of fairness, all local authorities should have automatic access to these powers regardless of whether a local authority is serious in its intent to franchise and without any consideration of its suitability to take franchising forward. Moving to franchising is a serious step and should not be undertaken lightly. That is why Amendments 5 and 7 are so important. During the debate in the other place, there was significant concern that the ability of any local authority to move to franchising at any time would lead to operators across England thinking twice about their investment decisions, thus reducing the quality and attractiveness of local bus services. Given this risk, it was agreed that automatic access to franchising powers should be available only to mayoral combined authorities.
I am sure that noble Lords who wish to see franchising happen want it to be successful, as indeed we all do. We want to ensure that franchising powers can be made available to authorities which have the ability, powers and, most importantly, the financial capacity to make a success of franchising where that franchising will benefit passengers. Combined authorities with mayors, when established, will provide clear, centralised decision-making for transport across a relatively wide local area, such as a city region. However, let me stress that other areas should also be able to access franchising powers where they are well placed to make franchising a success and have a clear plan to benefit passengers. These amendments enable other authorities to apply to the Secretary of State to access the powers.
Let me be clear: the Secretary of State will not take the final decision on whether franchising proceeds in those areas. That will be a local decision. The Bill sets out clearly the process that any authority needs to follow before the mayor or a named individual such as a council leader can take the decision to move to franchising. This refresh of bus franchising powers honours our devolution deal commitments. Included in this process is the development of an assessment of the proposed franchising scheme—essentially a business case. Within this assessment, the authority would need to consider value for money and the affordability of the proposal.
Amendments 8 to 11 clarify further the independence of the auditor—a point we covered briefly in the previous debate—that a franchising authority is required to use to produce a report on certain aspects of its proposed scheme. This report must set out whether, in the opinion of the auditor, the authority has relied on information of sufficient quality in its assessment as well as whether its analysis is of sufficient quality.
My Lords, I will say just a few words about this group of amendments. I do not wish to repeat anything I said during the passage of the Bill. My scepticism about franchising without proper funding is on the record. I say in passing—contradicting myself—that if the rest of the country received the sort of money that London receives for its franchising, it might be worth while. Without that sort of financial backing, I do not think it would be.
I thought that the Minister was, for once, less than generous with his comments on Amendments 8 to 11. If it is sensible to ensure that the auditor is independent of the franchising authority—which it is, in my view, and I said so during the passage of the Bill—why did he oppose it at the time? I would like to think that it was my own wise words that swayed the other place to change the Minister’s mind for him, but I fear I would be deluding myself. The fact is that the Minister was against the amendment on independence, which I supported during the passage of the Bill. If I may say so, there have been some comments about his stature. His stature did not diminish—like me, he can ill afford for such a thing to happen. But I am surprised, given his customary fairness, that he did not refer to the fact that he had obviously changed his mind about the amendment.
Like other noble Lords from both sides, I hope the Bill does improve bus services. Again, consulting passengers is something that we do not often do. The latest independent survey of thousands of bus passengers throughout the country indicates that around 80% of them are satisfied with existing bus services. In my view, that does not reflect the sort of discontent with bus service standards that was mentioned during the passage of the Bill. But there was virtual unanimity among those passengers about the problems of congestion, which are countrywide. If the Government are not prepared either to tackle congestion themselves or to give local authorities the proper powers to tackle it, those fears widely expressed by bus passengers are not likely to be allayed. I talk about the war on motorists that this Government’s Ministers have sometimes waged. In my view, this is not helpful so far as improving bus services is concerned.
I repeat that I hope the Bill brings about the improvement in bus services that the Government so obviously desire, and that the amendments that were passed in the other place, as well as the debates that have taken place in your Lordships’ House, have helped improve the Bill from when it was first introduced.
My Lords, I too was uncomfortable with the idea that the appointment of the auditor should have rested with the franchising authority. This would have allowed the franchising authority to be judge and jury of its own proposals—to mark its own homework, if you will. Auditing a franchise assessment is perhaps one of the most critical steps on the road to franchising. If the auditor says that the franchise stacks up and meets all the other—let us face it—quite onerous requirements, there is little more to be said. For that reason, the person carrying out the audit should have no ties with the franchising authority and certainly no vested interest in seeing the franchise proceed, or otherwise. On something as important as this proposal, which could see bus operators lose their businesses, surely we must have something that is very transparent and democratic—and, perhaps just as importantly, is seen to be transparent and democratic. In my view, these amendments do just that.
However, I wonder whether I might push my noble friend the Minister a little further to ensure, perhaps through guidance, not only that the auditor is independent of the franchising authority but that he or she has no recent commercial relationship with the authority. That would really cement the concept of a truly independent auditing process.
My Lords, as this group of amendments refers to mayoral combined authorities I should probably remind the House of my declaration of interests. I am a locally elected councillor and a vice-president of the Local Government Association.
Generally, these are wider issues in respect of local authorities and combined authorities but we have now brought them into the Bill. I accept that it is through another department, but there is an obsession in government with mayors and it needs to be dealt with. I have never yet had it explained to me clearly why, to get these powers, you have to have such a mayor. I still do not understand why, although we keep asking. I am sure we will get something today, but I am not sure whether the Government are clear why they have to have this: you may be a combined authority, but unless you have a mayor, you cannot have these franchising powers. We are still not clear on that, and they will have to deal with their obsession with mayors at some point.
This makes a wider point about the question of the devolution of local government in England, which is, to say the least, now very confused. I remember that in an earlier debate the noble Lord, Lord Lansley, who is not in his place at the moment—I am sorry, he is in his place—explained that there would now be four tiers of local government in Cambridgeshire. That seems to me at least one or two tiers too many. I accept that that goes wider than the issue of mayors in these authorities today, but it will have to be dealt with.
Franchising is the way forward. It has been enormously successful in London. I am delighted that these authorities with mayors can get these franchising powers and I hope that other authorities, if they come together to apply for them, will be successful. But at some point the Government will have to look at the much wider issue of what bus services they want in England. I think they will have to go further down this route; equally, I accept that they have made a move in the right direction here.
My Lords, I once again thank all noble Lords for their contributions during this brief debate. Perhaps I may briefly pick up on a few points.
First, the noble Lord, Lord Snape, raised the specific issue of congestion and said that the Bill perhaps still does not address this. I disagree with him. The new types of partnership and franchising powers give authorities new ways to work with operators to improve journeys for passengers.
On the issue of the independent auditor, I accept the fact that the Government’s position differs from when we introduced the Bill—that point was made by the noble Baroness, Lady Scott, among others. As a Minister, I feel that it is sometimes odd—I am sure I am not alone in this, whether among Ministers from a previous Administration or the current one—first, that Ministers are told that they do not listen. Then, having listened and reflected, if we make a change which perhaps reflects the feelings of Members, as it did on this occasion in your Lordships’ House, we are told that we are taking a contrary position to what we had originally after we have listened. I suppose there is a lesson for all in that. It is important that what is said, discussed and debated in your Lordships’ House is reflected in the discussions we have in government, and I am pleased to say that the very discussions and debates we had in your Lordships’ House are reflected in the amendments that the Government have made in respect of the independent auditor.
I understand the point my noble friend Lord Attlee makes about the need for the auditor to be independent. As ever, we will fully consider his helpful advice as part of the guidance. I thank noble Lords for their broad agreement on this issue.
My final point is addressed to the noble Lord, Lord Kennedy. This is not an obsession with mayors or mayoral authorities. As I have said before during the passage of the Bill, the route to franchising is open to all authorities which can make a justifiable business case. We have previously detailed the criteria required, and that remains the case.
That this House agrees with the Commons in their Amendments 6 to 13.
That this House agrees with the Commons in their Amendment 14.
My Lords, Amendments 14 and 20 reinstate the original provisions of the Bill which prohibit local authorities establishing companies for the purpose of operating local bus services. The role of municipal bus companies has received a good deal of debate in your Lordships’ House and the other place. There are a few fundamental points worth making. First, we all agree that there are some very good municipal bus companies, such as Reading Buses and Nottingham City Transport. They deliver a high standard of service, and I expect they will continue to do so. Let me assure noble Lords that their ability to operate will not be affected by this provision.
However, very few municipal bus companies remain, with many having been sold to some of our more successful private bus companies—for example, in February, Thamesdown Transport in Swindon was bought by the Go-Ahead Group after many years of making a loss—so I do not think this amendment is likely to impact on the plans of many, if any, local authorities. The Bill is all about improving services for passengers, and authorities should now start thinking about utilising the knowledge and skills of existing bus companies to get the best results. This amendment ensures that we get the balance right between local authority influence and private sector delivery in order to ensure both are incentivised to deliver the best services for the benefit of passengers.
I hope that noble Lords will understand that, because of the importance of this balance to the overall Bill, our view remains that passengers will see most benefit where the commissioning and provision of bus services are kept separate, and we do not think that authorities should be able to set up new bus companies. I hope that noble Lords will agree these amendments will enable the important business of the implementation of the measures contained in this Bill, which we all acknowledge to be important, to begin so benefits to bus services and, more importantly, bus passengers can start to be delivered on the ground. I beg to move.
My Lords, although it is not the subject of the Bill, as it operates in Wales, I shall say a word about Cardiff Bus. It is a municipal bus company with a good record. I still do not understand how it is so important to the Government to remove this power, which has been in the local authority armoury for decades. As the Minister has just pointed out, it has not been used as a general issue at all.
I am also confused as to why these examples of really good bus companies run by local authorities at arm’s length are not a template for possible future development. It is blindingly clear at the moment that local authority finances in Britain are so poor that authorities are not going to be using this power in the near future in some kind of aggrandisement. There is not going to be a mass use of this power by local authorities wanting to build up vast transport empires. It is simply not on the cards.
My Lords, I very much agree that, as we have heard, the amendments in this group are just about party-political dogma, and it is a shame that the Government have reversed the decision we made in this House some time ago. I was disappointed but, again, maybe not surprised. There never was going to be a stampede of local authorities charging off to create municipal bus companies. It was never going to happen and I never really understood why the Government were so obsessed with this particular clause in what generally was, and is, a very good Bill—we welcome the Bill but I just never really understood that.
Like the noble Lord, Lord Ahmad, I agree that there are some very good municipal bus companies, such as Nottingham City Transport, Ipswich Buses and many others, and I accept that this amendment will not affect them in any way whatever. The noble Baroness, Lady Randerson, made the point about what a local authority maybe could do to deal with a problem, even if for a very short period of time, and it is disappointing that that will now not be possible. That is a great shame, particularly in rural areas. For that reason, I think the Government have made a terrible mistake here and I wish they were not going to do this, but clearly they will not listen on this occasion. It is most regrettable.
My Lords, first, I again thank both the noble Baroness and the noble Lord for their contributions. I accept of course that there was great strength of feeling on this issue as it passed through your Lordships’ House, but clearly, when you have a Bill with wide application, there will be areas of disagreement between government and opposition parties. On this issue, as I have already stated, the Government have acknowledged and indeed accepted the important role that existing municipal bus companies play, and that will continue to be the case. However, this Bill is designed to enable bus operators and authorities to work constructively together to deliver better services for passengers, and it is the Government’s belief that the creation of further municipal bus companies would actually significantly stifle competition, particularly in terms of private sector investment in buses. Although we accept noble Lords’ sentiments on this, the Government maintain their position.
That this House agrees with the Commons in their Amendments 15 to 23.
My Lords, I take this opportunity once again to thank all noble Lords, including the noble Lord, Lord Kennedy, and the noble Baroness, Lady Randerson, alongside my noble friend Lord Younger for their support during the passage of the Bill. I thank other noble Lords too; while we may not have agreed on everything, I think we agree on the principle of the importance of getting the Bill through because it is important for improving bus services for passengers across the piece. I beg to move that this House do agree with the Commons in their Amendments 15 to 23.
My Lords, before we do, I would equally like to say that I have very much enjoyed working with the Minister on this Bill. Generally it is very good. I also thank the noble Lord, Lord Younger, the noble Baroness, Lady Randerson, and the Bill team. Generally we are happy. As I say, I have enjoyed working with the Minister; he has been very courteous at all times during the passage of the Bill.
(7 years, 4 months ago)
Lords ChamberMy Lords, the Bill, which has been welcomed across the House, has been the Government’s response to the undoubted need to give law enforcement agencies the necessary capabilities and powers to recover the proceeds of crime, tackle money laundering and corruption and counter terrorist financing. No one could doubt that these are very real problems, and we must ensure that we respond adequately to the threats posed by corruption in its many guises. Throughout the passage of the Bill through your Lordships’ House, the Minister and the Bill team have been very helpful in providing information and explanations in respect of this quite complex legislation. The Government have also tabled some useful amendments as the Bill has progressed.
I am particularly enthusiastic about the potential use that could be made of unexplained wealth orders, which are featured in Chapter 1. There has been precedent for this, provided principally by Ireland and Australia. By and large those orders have been useful, and they have the potential to provide the basis for investigating criminal offences and recovering the proceeds of criminal activity. My concern has always been to ensure that the provisions are as effective as they can be. The opportunities for further legislation in the next few years are going to be very limited, for reasons that the House is only too well aware of. I hope UWOs will be used much more than was suggested. The revised impact assessment indicated that only about 20 UWOs a year might be obtained. The Minister assured me that that was only an estimate, and I hope it was a very conservative one.
Until last Friday we had not seen the promised code of practice relating to UWOs and other provisions in the Bill. Somewhat at the 11th hour, after I had tabled a number of amendments, it arrived. I am grateful to the Minister for providing it, and I will of course factor its contents into my remarks on the amendments in my name and that of my noble friend Lord Hodgson.
We had a number of debates about the safeguards in the Bill. I feel confident that the House is satisfied that they are perfectly adequate, particularly now that there is even a provision for compensation for a respondent whose assets have been wrongly frozen. In addition, there are of course restrictions on the freezing orders that would normally accompany a UWO, and any orders can be varied and discharged.
My concern, however, remains how easy it will be for respondents to deal inadequately with a UWO and render ineffective the Bill’s provisions. It has to be accepted that UWO respondents who have invested the proceeds of tax evasion and/or bribery in specific property will be unlikely to want to be frank about their conduct if they can possibly avoid doing so. Why, then, can it not be appropriate for there to be a power to make an order to compel a respondent to give evidence on oath? It would be only a power, and in many circumstances I concede that a court might be satisfied with a statement, but if the statement is inadequate the very existence of the power, which could be exercised only by a High Court judge, would in my view be extremely salutary.
The Bill sets out the requirements that must be met before an unexplained wealth order is made, and allows a respondent a reasonable excuse for failing to comply with any order. I invite my noble friend to explain to the House why she still thinks it is inappropriate for this power to exist. Nothing in the code of practice gives any answer to that.
The remainder of the amendments with which I am concerned in this group—apart from that which relates to property, particularly in central London—are about provisions in respect of non-compliance. My no doubt simplistic view is that you either comply with an order or you do not. The references to purported compliance seem to leave open the possibility that a respondent could simply go through the motions of providing information and say that they have purported to comply with the order. I take the point that the Bill contains the proviso that a misleading or reckless statement can constitute an offence, but it is not so much the deliberately misleading statement that I am worried about; rather more I fear the short, uninformative, heavily lawyered response which will provide no useful information but may still technically be a purported compliance with the order.
I looked for assistance on this point on the recently provided code of practice. Paragraph 20 states that a respondent will be treated as having failed to comply with a UWO if, without reasonable excuse, he fails to comply with all the requirements imposed by the order. The paragraph continues by stating that it is important to note that where a response is provided to a particular requirement in the UWO but that response is considered unsatisfactory, this does not mean that the respondent has failed to comply with the order; this would amount to purported compliance. That was precisely the point that I was making in the original amendment. A footnote states that an example of this would be where an individual provides nothing more than the bare minimum of information necessary to address each requirement in the order and as a result the agency is not satisfied by his explanation as to the derivation of the property. The footnote goes on to state that, in those circumstances, the rebuttable presumption that the property is recoverable does not arise, but the enforcement agency may elect to take further civil recovery action against the property in the light of evidence or lack of evidence provided by the individual. I should be grateful if the Minister could set out why the Government think it so important, in a number of areas identified in the amendments, to have these provisions about purporting.
Amendment 2 in this group and Amendment 24, which we will debate in the next group, concern a substantial problem: in central London, property—often extremely valuable property—is being bought by overseas companies and then left either empty and dark or occupied for only short periods. Parts of central London are entirely dark at night and, although London is the most obvious example, there is plenty of evidence of buying-up of property in other major cities and in some rural areas. Apart from the fact that it cannot be desirable that property is owned by those whose money has often come from illegal activities, there is the knock-on effect that it is having on the property market in general. Noble Lords are only too well aware of the intense difficulty faced by young people in buying property anywhere remotely near where they work, particularly in London, or indeed buying property at all. There are a number of reasons for this, but the situation is hardly helped when, according to the Land Registry figures, 100,000 properties are registered in the name of overseas companies. Unlike some countries, there is no restriction on foreign ownership of real property, and at the moment there is no sign of any decrease in the enthusiasm with which foreign investors are approaching the possibility of buying property here. Because of our respect for the rule of law and the independence of our judiciary, among other reasons, we are an attractive country in which to invest—particularly, I am afraid, to those who have ill-gotten gains for which they want to find a safe haven.
My Lords, like the noble Lord, we want to see the Bill as strong as possible. I have a few questions on the noble Lord’s amendments but I am grateful to him for bringing these matters back to the House. Amendment 1 would require questions to be answered on oath. Like the noble Lord, I felt that the answer from the Dispatch Box at the previous stage did not take us a great deal further. The Minister said:
“It would already be a criminal offence for the respondent to knowingly or recklessly provide false or misleading information”.—[Official Report, 28/3/17; col. 496.]
Unexplained wealth orders are court orders, so my question—I am not sure whether it is to the noble Lord or the Minister—is: does contempt of court arise here? That is not to support the amendment or otherwise, but to flesh out understanding of the procedure.
On Amendment 2, has the noble Lord been more timid than necessary by referring to the respondent or others having taken the step of registration as a beneficial owner, rather than using the criterion that he is such an owner? I agree on compliance: one either complies or one does not. Surely purported compliance is not compliance. This is quite a difficult area in legislation and it should be clear, and not raise more questions about whether the criteria are fulfilled.
My final question is on government Amendment 6. Will the Minister explain why, unusually, “a person” does not include a body corporate? I was interested to see that it is apparently necessary to include a definition. The definition itself is interesting: if it is read literally, references include bodies corporate and so on, regardless of whether they hold or obtain property. Does that restrict which bodies corporate are the subject of this new provision? I gave the Minister notice of my question so I hope she will be in a position to assist the House. I reiterate our strong support for getting this Bill through. I have spoken as briefly as I can because I know the House wants to get on with it and do just that.
My Lords, I support these amendments. I first came across unexplained wealth orders in Inland Revenue fraud proceedings where people had been accused of not paying their income tax. One of the methods of revealing that is by demonstrating that they suddenly have more wealth than their Revenue account suggests. Therefore, there is a question about whether the assets came from taxable income. That was the presumption at that time. That was before the terrific expansion of other forms of unexplained wealth that could arise. The explanation that someone had done something unlawful would not be a particularly good answer to a tax inquiry but perhaps that was not thought of. Certainly, that was a very useful tool in the armoury of the Inland Revenue in days past and is still so today. It is a very valuable method of dealing with this trouble. I find it very hard, however, to understand what is meant by purported compliance. As has just been said, it seems to me that you either comply or you do not. I must say that the explanation given in the draft practice system does not enlighten me any further. It suggests, indeed, that purported compliance covers certain aspects of non-compliance. It is a difficult definition to put in. I would have thought the measure would be better without it.
I raise questions with regard to the register. It is required to be done within six months of the passing of the Act. However, the commencement provisions of the Act allow the Act to come into force in accordance with regulations or orders made by the Secretary of State. I assume that the passing of the Act in this amendment is intended to refer to its getting Royal Assent. Strictly speaking, however, the Act comes into force only in accordance with orders made by the Secretary of State under the commencement provisions except in relation to certain aspects of that.
I wish to add a few words of my own on purported compliance. I am not quite sure what we are supposed to cover. Obviously, there will be the individual who is potentially made subject to this order who will try his or her best to produce the necessary information. That may not be good enough, in which case the court will allow an adjournment so that a genuine attempt to produce the information can be made. That will then be compliance. On the other hand, some people will obfuscate and deliberately make life difficult to avoid the true facts coming to light. They will say, “That is purported compliance”, but it will not be—it will be a failure. Therefore, the words “purported compliance” simply do not apply and will not help.
My Lords, the noble Lord, Lord Faulks, has raised some very serious issues, expressing the concerns of a number of noble Lords, and he made some of those points at earlier stages. The Government have clearly not satisfied him or many others in the House, and we share their concerns. The noble Baroness, Lady Hamwee, made similar remarks.
The point about “purports to comply” was particularly well made by the noble Lord and others, including the noble and learned Lords, Lord Mackay of Clashfern and Lord Judge. I hope that, in responding, the noble Baroness, Lady Williams of Trafford, will be able to satisfy the noble Lords who have spoken, as well as the rest of the House, that we have got this issue right. We are all very keen to get this legislation on to the statute book as quickly as possible. We certainly support its general aims—it is a good Bill—but the worst thing to do would be to put something on to the statute book that is not very well drafted and would cause more problems or be an aid to people who do not want to comply properly with the orders. This is a very important point and, although we want the Bill to pass quickly, the noble Baroness needs to satisfy the House that we have this measure right.
My Lords, before I begin, I want to make a few comments. Following the decision last week to call a general election, this is likely to be the last opportunity for the House to scrutinise this legislation. As noble Lords have said, it has had cross-party support throughout its parliamentary passage and I am very grateful to noble Lords, through the usual channels, for enabling us to take both Report and Third Reading today. Time is very short, but we all agree that this Bill will deliver valuable powers to fight money laundering, prevent the financing of terrorism and combat corruption. I hope we can maintain consensus on the way forward and return the Bill swiftly to the Commons.
Perhaps I may also take a moment to thank the noble Lord, Lord Empey, who might have brought back an amendment today but, given the shortness of time, has decided not to do so. He would like it placed on the record that this in no way undermines his support for the victims groups that he has supported over many years.
As well as the amendments in the names of my noble friends, this first group is composed primarily of government amendments that seek to fine-tune the Proceeds of Crime Act 2002. These are consequential on matters already in the Bill and should not, I suggest, raise any particular concerns. However, I will address each of them for the benefit of noble Lords.
Amendments 6 and 7 make explicit that unexplained wealth orders can be used in cases where the property of interest is registered in the name of an overseas company. UWOs should be a significant tool to help probe the ownership of UK property with suspected links to illicit funds, and these amendments seek to address the helpful intervention in Committee of my noble friend Lord Faulks about the London property market. Although it is already implicit that UWOs can apply to cases where property is held in the UK but registered overseas, this explicit clarification is helpful. However, it should in no way cast doubt over the other provisions in POCA, or elsewhere in law, where such an explicit clarification is not included. For example, Sections 84 and 414 of POCA define property in respect of confiscation and investigation powers respectively. These have been applied to property registered in the names of overseas companies where persons in the UK hold this property in some way. Those provisions must continue to operate in that way and I fully expect them to do so.
Our amendments clarify that the UWO provisions apply to property held by foreign companies, and our existing provisions already require a respondent to set out,
“the nature and extent of his interest”,
in a property. It is clear from this that a beneficial interest in property will be captured where a UWO is served on a serious criminal or a non-EEA PEP.
Regarding the specific points about the bodies corporate regardless of whether they hold or obtain property, the amendments provide clarity and certainty that the UWO provisions apply in this circumstance. We introduced the amendment, after discussing the point with my noble friend Lord Faulks, to make absolutely clear that UWOs can apply in respect of overseas companies. I made the important point that this clarification does not cast doubt on the normal application of the term “person” elsewhere in POCA or the statute book. I hope that this will address the concerns of my noble friend Lord Faulks in Amendment 2, which goes to the heart of the category of individuals on whom a UWO can be served. We have already previously clarified the wide scope of what is meant by “holding property”, which includes a person who has effective control over the property.
We have carefully considered the categories of potential respondents to a UWO and I was pleased to have the opportunity to discuss this with my noble friend. The Government do not consider that it is appropriate, or indeed proportionate, to add a third category of potential respondents to a UWO, when inclusion in that category is dependent only on the way in which an individual holds property. Property could, of course, be held in this way perfectly legitimately.
I will now refer to other points that were made. My noble friend asked about the annual tax on enveloped dwellings, which we have homed in on before. The annual tax on enveloped dwellings does not enable corporate or foreign ownership of property; it is a reality of UK law. I sympathise with the concerns raised, but I assure my noble friend that there is no evidence that the tax encourages money laundering. Many legitimate companies own property in holding companies.
On the point about the London property market that we have also touched on previously, I assure both my noble friend and noble Lords generally that the UWO is an important addition to the tools that can be used here. We are doing more: BEIS has launched a consultation on a public register of overseas ownership of UK property. Such a register would help to highlight abuses of this sort and deter investments of this type. We have created a public register of beneficial ownership and the register makes publicly available details of those who have a 25% stake or greater in a company’s shares or voting rights. The forthcoming set of money laundering regulations currently out for consultation will require estate agents to conduct customer due diligence on those purchasing property as well as those selling property. This will likely lead to more suspicious activity reports linked to property purchases and create more opportunities to use UWOs.
A number of noble Lords asked about purported compliance. They made the point that either a person complies or they do not. The term exists to balance against the serious consequence of not complying with a UWO. If you do not comply with one, the property is presumed to be recoverable in any subsequent civil recovery proceedings. This is without the need for the enforcement authority to provide evidence that the property is the proceeds of crime. This is reversing the burden of proof, which is a significant and unusual approach in our law, so purported compliance is to recognise that if a person engages with the process by answering all the points of a UWO, they will be protected from the presumption that their property is automatically recoverable, and issues as to whether they have complied or not will fall away. The onus transfers back to the enforcement authority to prove that the property is a proceed of crime in the usual way, and the term provides certainty as to the circumstances in which the presumption of recoverability will arise—which will be important in respect of any further proceedings against the property.
In addition, when the UWO is obtained the applicant agency has a broad scope to tailor the requests for further information and documents required by the order, meaning that the likelihood of a poor-quality response is reduced. Also, if a person provides a response, the UWO has been successful in flushing out evidence. The enforcement authority can decide whether to further investigate on the basis of that evidence or to launch proceedings.
I turn now to Amendments 15, 16 and 50, which clarify our existing provisions to ensure that in Scotland the ability to obtain vacant possession of a property can be dealt with at the same hearing as civil recovery relating to that property. Related to these provisions, Amendments 25 to 31 correct an inconsistency in the Bill. They will allow Scottish Ministers and Northern Ireland Ministers to make consequential amendments to legislation, including UK legislation, that is within their legislative competence. To ensure that any changes do not create unforeseen issues, they would be required to consult the Secretary of State prior to doing so.
The Bill provides HMRC and the Financial Conduct Authority with the power to pursue civil recovery proceedings and with supporting investigation powers. On further analysis, it was unclear whether their existing information sharing gateway powers would allow them to receive information for the purposes of these new functions. Amendments 45 to 48 make that certain.
The remaining government amendments in this group are a series of minor and technical amendments to POCA, particularly in respect of “free property”—that is, property belonging to a defendant that can be liable for confiscation. They insert correct references, ensure consistency of language and remove ambiguity to ensure that relevant powers work as they should.
Finally, I will address the other amendments tabled by my noble friend. Amendment 1 seeks to introduce a possible requirement for an individual served with a UWO to answer questions “on oath”. As my noble friend will recall from our earlier discussions on the Bill, a UWO is a civil, investigative power, and it is already a criminal offence for a respondent to a UWO to knowingly or recklessly provide false or misleading information. If a person engages with the UWO process by answering all the points of a UWO, we believe that it is right that the presumption should not apply, even if it is arguable that the person has not fully complied. The onus transfers back to the enforcement authority to prove that the property is a proceed of crime and can be recovered.
In Committee, I committed to publishing the draft code of practice in relation to UWOs and disclosure orders. I am pleased to confirm, as my noble friend already has, that I have since written to noble Lords who spoke in Committee and enclosed the draft code for their review. When I wrote I also committed to publishing the code on the GOV.UK website. I regret that we have been overtaken by events and that doing so now would not be consistent with pre-election guidance. However, I have placed a copy in the Library of the House to ensure that noble Lords can scrutinise it ahead of the public consultation that will follow in due course.
We will be considering addressing issues such as statements of truth in giving evidence and purported compliance in the POCA investigation code of practice. It will then be open to noble Lords to make any representations relating to that code once a final draft, subject to the required public consultation, and the order bringing the code into force are subject to the affirmative resolution procedure. It will be debated in the House before being introduced.
My Lords, I am grateful to my noble and learned friend and all noble Lords who spoke in this debate, and to the Minister for her response. It is a pity that the Government did not respond to these amendments in Committee. They have received support today and the code of practice does not seem to me to deal with them. On the simple question of purporting to comply, a number of speakers have said that one either complies or does not, and I say with respect that I fail to understand the response to those points. I think it was said that, even if there were purported compliance and not much information was obtained, it would still be technically successful as a UWO. That sounds very much like saying that the operation was a great success but the patient died. However, my noble friend the Minister seems convinced that this is sufficient and I bear in mind the fact that the agencies have no doubt had input into the provisions contained in the Bill.
Likewise, I am disappointed that there is no provision for a requirement to give evidence on oath. The mere existence of that power is likely to inhibit those who might otherwise wish to mislead the court. Of course, if they then came to give evidence, quite apart from the question of contempt of court, they could be prosecuted for perjury. That might give some more teeth to these provisions. I am, however, reassured that it will still be possible to feed some of these ideas into an improved code of practice, and I hope that these debates may have affected the minds of those who seek to improve that code of practice.
On the question of the London property market, I am afraid that I am still in the dark about the envelope tax. The existence of that tax does not seem to be consistent with the overall thrust behind the Bill. Its continued existence is an embarrassment, frankly, to the Government—but there it is. As to the amendment in relation to London property, the noble Baroness, Lady Hamwee, suggested that I had been a little timid in respect of that amendment. In some ways she is right, but the attempt was to tie it specifically to the register that we were told was to come into existence. My noble and learned friend was quite right about the date of commencement—but, for reasons that will be apparent, I do not think that we need to trouble ourselves too much with that.
As my noble friend the Minister quite rightly said, the position is that we are against a time limit. It is important that the Bill becomes law, and any attempt to prevent that would not be helpful since there is all-party support for this. It is very much a step in the right direction and I do not wish to spoil the party. In those circumstances, I beg leave to withdraw the amendment.
My Lords, I am again grateful to the noble Baroness, Lady Stern, and others for their amendment, which allows us to return to the important issue of company ownership transparency in the British Overseas Territories. As noble Lords will be aware, the Government have tabled their own amendment and I am pleased to have been able to discuss this with colleagues prior to today’s debate. The group also contains an amendment in the names of my noble friends Lord Faulks and Lord Hodgson of Astley Abbotts, no doubt prompted by concerns about the abuse of the London property market. I intend to address this in my closing remarks.
Before I turn to the government amendments, I hope I might be allowed to detain noble Lords for a few moments while I reiterate certain important points on company ownership transparency in the British Overseas Territories and Crown dependencies. As part of our international efforts to increase corporate transparency, the Government continue to work closely with our overseas territories with financial centres to tackle money laundering, terrorist financing, corruption and fraud. In Committee, I described the exchanges of notes the UK signed last year with overseas territories with financial centres and with the Crown dependencies, setting out new arrangements on law enforcement access to beneficial ownership data.
These arrangements are due to be implemented by June this year. They will put the UK and the wider “British family” of the OTs and CDs well ahead of most jurisdictions in terms of transparency, including many of our G20 partners and other major corporate and financial centres, including some states in the US, and demonstrate our continued leadership. I reiterate that we should be proud of this fact and of the progress achieved. These arrangements will bring significant benefits in the capacity and information that UK law enforcement authorities will have at their disposal to tackle criminal activity and to investigate bribery and corruption, money laundering and tax evasion. They will prevent criminals hiding behind anonymous shell companies incorporated in the overseas territories and Crown dependencies, ensuring that these jurisdictions are not open to exploitation by those seeking to hide the proceeds of their crimes.
The UK has continued to work closely with the overseas territories on implementing the arrangements. Indeed, we arranged for the London representatives to attend a meeting in the House this morning so that noble Lords could hear about their progress at first hand. I am very pleased to report there have been some further positive developments since I provided an update in Committee which I will briefly share with noble Lords.
The British Virgin Islands will shortly introduce the beneficial ownership secure search Bill, which will be known as the BOSS Act 2017, to its House of Assembly. This will reinforce the existing process for sharing information with UK law enforcement authorities.
The newly elected Premier of the Turks and Caicos Islands has confirmed that legislation will be introduced on an urgent basis to establish a central registry of beneficial ownership information in its existing companies registry, and to determine access to such information. She expects that the register can be established by the June 2017 deadline, albeit that it will take longer to populate the register fully with data on corporate and legal entities incorporated in the jurisdiction.
Montserrat had in fact committed in November 2015 to establish a public register of beneficial ownership. Although Montserrat is therefore not covered by the exchange of notes, we receive regular updates on its progress. Officials advise that a draft companies Bill will shortly be put to its Cabinet for approval.
The NCA has confirmed that it is already seeing enhanced co-operation from some overseas territories, with turnaround times for processing requests for information much shorter than previously. We expect to see this further improved to meet the agreed standards by June this year. This demonstrates what can be achieved by working consensually with the overseas territories and the Crown dependencies. It is reaping benefits and I believe that it will continue to do so.
Rather than imposing new requirements on the overseas territories, the Government believe that we should continue to work with them and to focus our efforts on the implementation of the existing arrangements, including the passage of new primary legislation in the territories and complex technological improvements. I know that noble Lords would like a timetable to be set for public registers. However, the Government respect the constitutional relationship with the overseas territories and the Crown dependencies. As previously noted, legislating for the overseas territories is something that we have done only very rarely, on issues such as abolition of the death penalty which raised issues of compliance with human rights obligations and thus areas for which the UK retains direct responsibility.
While tackling this kind of complex criminality and its consequences is extremely serious, there is a clear constitutional difference in that financial services is an area devolved to territory Governments. In the case of the Crown dependencies, the UK has never legislated for them without their consent. Doing so would be likely to lead to the territories withdrawing their current level of co-operation, jeopardising the progress made and the spirit of working in partnership that we have fostered with them. I hope that noble Lords will see that this is not a course of action we should take.
It is quite right that we should ensure that the territories’ existing commitments are effectively implemented and deliver real benefits for UK law enforcement—this point was emphasised by the noble Lord, Lord Rosser, in Committee. Following careful consideration, I have brought forward Amendments 8 and 32 to address the concerns raised by him and others. The amendments provide for a report to Parliament on the effectiveness of the bilateral arrangements in place between the UK and the Governments of the overseas territories with financial centres and the Crown dependencies on the exchange of beneficial ownership information.
As I noted in Committee, the Government are committed to following up on these arrangements to ensure that they deliver in practice. There is already provision in the exchange of notes agreements with the overseas territories and the Crown dependencies for reviews of the arrangements six months after they come into force—that is, on 31 December this year—and for further reviews annually thereafter. The arrangements also provide for continuous monitoring by both parties. However, placing a review of the first 18 months of operation of the arrangements on a statutory basis will provide further assurance that careful parliamentary scrutiny will be given to their effectiveness and demonstrate that they are being implemented properly, working effectively and meeting our law enforcement objectives.
As I have said previously, the UK is the only G20 country to have established a public register, and it is this Government’s long-term ambition that publicly accessible registers of beneficial ownership will in time become a global standard. At that point, we would expect the overseas territories and Crown dependencies to implement this standard. The government amendment includes provision that, in the review of the effectiveness of the arrangements, we can consider relevant international standards. This further demonstrates our intention to ensure that we and our overseas territories and Crown dependencies remain ahead of the curve on international standards and will continue to consider the bespoke arrangements set out in the exchange of notes in relation to those standards as they evolve.
Given that so many jurisdictions fail even to reach the standards set by the Financial Action Task Force for beneficial ownership transparency, it is right to focus our efforts on persuading others to up their game while ensuring that the overseas territories and the Crown dependencies deliver on what they have promised. We will of course continue to engage with partners through the key international groups such as the FATF and the OECD to increase levels of transparency worldwide.
I pay tribute to all noble Lords who campaigned on this issue. The fight against global corruption is a priority for the Government and we listened carefully to all those who made representations, not least the noble Lord, Lord Rosser, the noble Baronesses, Lady Stern, and the noble and learned Baroness, Lady Butler-Sloss. I hope that the House will recognise the strong rationale for the Government’s proposed approach and that noble Lords will be minded to accept the concessionary amendment we have proposed in light of our debates. I look forward to responding to noble Lords at the conclusion of the debate, when I will also seek to address the amendment in the name of my noble friends Lord Faulks and Lord Hodgson. I beg to move.
My Lords, I will speak to Amendment 14 in my name and those of the noble Baroness, Lady Kramer, and the noble Lords, Lord Rosser and Lord Kirkhope. This amendment has already been discussed in Committee and is unchanged. Since the debate in Committee, I have been fortunate to have had lengthy and very enlightening discussions with the representatives in the United Kingdom of the British Virgin Islands and Bermuda. I also thank the Chief Minister of the Isle of Man and his colleagues for meeting me. I am grateful to the House of Lords Library for its excellent briefings and to Christian Aid and Transparency International for the additional briefings they provided and the work they do in this area.
The background to this amendment is the growing public understanding of how the lack of transparency in offshore financial centres helps the corrupt to find a haven for their ill-gotten wealth and tax evaders to sleep easily in their beds. Those in poor countries feel the effects of this most because they do not have the resources to pursue the money that has been taken from them. The understanding of this need for transparency was considerably enhanced by the publication of the Panama papers in April 2016.
On 8 November, the Chancellor of the Exchequer made a Written Ministerial Statement to Parliament on the work to date of the cross-agency Panama Papers Taskforce, a group of law enforcers set up to pursue the information that related to the United Kingdom about the illegality revealed. He said in his Statement that since the publication of the papers the task force had: opened civil and criminal investigations into 22 individuals for suspected tax evasion; identified a number of leads relevant to a major insider-trading operation; identified nine potential professional enablers of economic crime, all with links to known criminals; placed 43 high net-worth individuals under special review while their links to Panama were further investigated; identified two new UK properties and a number of companies relevant to a National Crime Agency financial sanctions inquiry; established links to eight active Serious Fraud Office investigations; and identified 26 offshore companies whose beneficial ownership of UK property was previously concealed and whose financial activity had been identified to the National Crime Agency as potentially suspicious. In addition to pursuing those 74 individuals, 26 companies, links to eight Serious Fraud Office investigations and other leads on insider trading and sanctions, a number of individuals had come forward to settle their affairs before the task force partners took action against them.
All the law enforcement activity I list is the result in just six months of bringing transparency to the files of just one legal firm in just one country. It gives an indication of the huge extent of illicit activity and illuminates the rationale behind the measures in this very welcome Bill. In passing, with great respect, I ask those noble Lords who oppose public registers whether they feel it is not worth bringing that number of people to justice, or whether they have a proposal other than transparency for achieving that end.
Undoubtedly, government Amendment 8, to which the Minister just spoke so eloquently, is a step forward in trying to curb the criminal activity, tax evasion and laundering of corruptly gained wealth that is illustrated by the work of the Panama Papers Taskforce. It is very welcome and makes clear that the Government look to the overseas territories and Crown dependencies to keep good and accurate information. Let us remember that half the companies disclosed by the Panama papers—some 140,000 of them—were incorporated in the British Virgin Islands.
However, Amendment 14 goes further than the government amendment. In relation to the overseas territories, it aims to bring transparency to their financial operations by allowing public access to registers of beneficial ownership. I note that Montserrat has already agreed to establish such a public register. This amendment would put a timetable in place for the British Overseas Territories to have public registers. It would require the Government to give all reasonable assistance possible to the overseas territories to help with this. If registers have not been made public by the end of 2019, the amendment requires that public registers should be brought in by an Order in Council.
In Committee, the Minister made it clear that she could not accept the amendment. However, in doing so she did not use the argument raised so frequently in discussions on this matter, that requiring the overseas territories to have public registers while other offshore financial centres maintain their secrecy puts them at a competitive disadvantage so that, in the evocative words of the noble Lord, Lord Hodgson,
“the malfeasant … will drift away to still murkier regimes”.—[Official Report, 3/4/17; cols. 898-899.]
I welcome very much the noble Baroness’s rejection of that line of argument. She said:
“The overseas territories may face competitive disadvantage in the short term, but in the long term, the transparent and open way in which the territories intend to work, and we with them, will be to their advantage”.—[Official Report, 3/4/17; col. 911.]
In Committee, her main reason for rejecting the amendment was that there would be a constitutional problem in accepting it. She repeated that today. Yet since Committee, I have been sent many documents on this subject, which I studied carefully. They make it clear that ultimately the UK Parliament could legislate for the overseas territories if it so wished but I understand completely why the Government would prefer to proceed with consent. So would I and I am sure there is wide agreement on that.
I remind the Minister of what she said in Committee: for the purposes of international law, the overseas territories are British. That Britishness is significant. In my various discussions, it has become clear to me that the attraction of the financial services in the overseas territories is primarily related to British identity and language, access to a common-law legal system, final recourse to the Privy Council and the appeal, as it is seen, of the Union Jack. It is worth repeating the words of the noble Lord, Lord Kirkhope, in Committee. He said:
“It is fair to ask those jurisdictions that while their economy and defence depend on the stability and integrity of the UK, they should also be expected to follow the same rules of business and investment that we follow here”.—[Official Report, 3/4/17; col. 888.]
We in the United Kingdom have a public register. It might not be perfect—I am sure that the noble Lord, Lord Eatwell, would agree with me on that—but it is our policy. We have one because we believe it is right and that it helps to prevent serious crime. I hope that by tabling this amendment we have made it clear that we in the United Kingdom understand the huge impact that secret offshore financial services can have on the poor countries of the world, good governance, democracy and security. We understand that the overseas territories are a United Kingdom responsibility and we hope very much that transparency of their financial operations will come sooner rather than later.
Finally, I thank the Minister for the way she has carried this hugely important Bill through the House, and for her support and helpfulness at all times.
My Lords, as one of the signatories to Amendment 14—and its predecessor, which we looked at in Committee—I thank the noble Baroness, Lady Stern, and congratulate her on her amazing vigour and courage and, indeed, her intuition in pursuing this matter, which is so important.
When I spoke in Committee, I made it very clear from the beginning that, first of all—and this is important still—the Government deserve enormous praise for the work they have done both here in the UK and internationally to tackle corruption and tax evasion and avoidance. I credit that also to the previous Government because one of the reasons I have been interested in this matter is that I followed the right honourable David Cameron’s lead when he put this issue very much at the top of the agenda at the 2013 G8 summit and subsequently, as was referred to in an earlier discussion, at the anti-corruption summit in May last year.
Of course, Mr Cameron and others did not refer just to global standards. Indeed, one of my noble friend the Minister’s responses in Committee was to talk about awaiting global standards before any further pressure was placed on overseas territories to comply with the public register or the enhanced register. But the truth is, of course, that the former Prime Minister referred to the gold standard, which the United Kingdom itself was very much in the vanguard of. This was accepted and understood, and it left this country, as it is now, in an enormously advantageous position in dealing with other countries as we go forward.
For my sins, I was one of those involved in the drafting of the fourth anti-money laundering directive. My friends always introduce me as an expert on money laundering. I do not like that description but undoubtedly we are looking in this enormously important piece of legislation at how we respond to the requirements under that fourth money laundering directive as well.
I maintain that the amendment I have co-signed is the best way forward but I also pay tribute to the Minister for the way she has listened to the concerns of those who hold our views. She listened very carefully in Committee—and not just listened. Often I think our Ministers listen but that is about it. She has in fact acted. Therefore, I will refer quickly to government Amendment 8, which is an enormous stride forward. It also gives us the ability, which is so important, to review the situation actively in two years’ time, when we can have reports to see how the overseas territories are getting on with the introduction of public registers. She has also given us good news this evening about developments even since Committee. We should welcome that and thank the Government for their interest in proceeding in that manner.
I am still of the belief that we need a level playing field and we need an agreement with our overseas territories that is at least compatible with and equivalent to the requirements that we place in the domestic setting. It makes no sense not to have that. I recognise the Government’s position on this and I realise they wish to proceed by consent. Of course, we all agree that consent is always better than enforcement. I wish the Government great success with this. As we proceed, I hope we will be getting regular updates and then, in due course, when the reports come in, we will have the opportunity, if necessary, to return to this matter. But this is a very important Bill in so many other regards as well. I certainly wish us to pass the Bill and allow it to proceed from here.
My Lords, I declare an interest: I was Minister for Overseas Development, before moving on to the Foreign Office. I have served both professionally and voluntarily in the development sphere in various non-governmental organisations, including as director of VSO and subsequently Oxfam. To all of us involved in that work, the importance of the Bill, which I very much endorse, and of the amendment that has just been spoken to, cannot be overemphasised. Indeed, I noticed the other day that the Prime Minister, in saying in the Conservatives’ election campaign that they will stand by their commitment on overseas aid, emphasised that what was important was to make sure that the aid was being spent in the most effective way and not wasted.
It is terribly important to recognise that the people of too many developing countries are being robbed by their leaders, and that existing arrangements enable those leaders to get away with it. If we are going to talk about the effective use of aid, it seems to me that where we have the authority to take highly relevant and effective steps, we should do so. Yes, of course, we must put on record that Britain has taken great steps to provide world leadership in this sphere. It is leading the world already. That is why the remaining gaps are very ugly anomalies. I do not like to put it in these crude terms but it always seems to me that people either have some reason for not implementing immediately what is proposed or they do not, and if they do not, let us do it. If they are going to find ways of delaying—having still to work out arrangements and so on—this must raise suspicions that arrangements are going to be made in other respects as well.
From that standpoint, I say simply that, with all my experience in this sphere, this is a crucial matter. I congratulate the noble Baroness and her co-signatories on having stood by their guns. I hope the amendment will be taken seriously because I believe there could be a very important consensus in this House if we are prepared to put ourselves on record.
My Lords, I wanted to intervene earlier in this debate following the speech of my noble friend Lord Kirkhope because I, too, wish to refer to Mr Cameron and the G8 summit.
First, I shall say that Amendment 8 is unnecessary but harmless, so I shall support it—but Amendment 14 is wrong and misguided for a number of reasons. First, we have no right, neither legal nor moral, to seek to impose our rules on law-abiding, self-governing British Overseas Territories. When I hear some of the NGOs outside this House talking about our overseas territories, I am appalled at their old-style colonial arrogance. One notorious campaigner against so-called tax havens has even suggested in his book that they should be closed down and the natives made to depend on overseas aid once again—and he calls himself moral. He is also one of the architects behind these proposals. I believe that we have no moral right because the United Kingdom creates more dodgy shell companies than some of the tightly regulated overseas territories and Crown dependencies. We need to come up to their standard, not the other way round.
Secondly, we should not impose these public register rules because the rules themselves are rubbish, as I shall attempt to explain. Not a single other country in the OECD is implementing this—and they have made clear that they never will. This public register wheeze was invented by my right honourable friend Mr Cameron in 2013. No other country will touch it with a barge-pole and the only reason that he was so keen then to foist this system on the overseas territories was so that he could point to others being in the same boat as himself and would not look isolated.
I was involved in the background at that time and had a meeting with prominent NGOs prior to the G8 in 2013. I asked them why they were not campaigning against the real tax havens of this world—Luxembourg, Delaware, Mauritius et cetera—but targeting the good guys such as our overseas territories. They responded that they had no chance of influencing policy in those tax havens, but that Mr Cameron was so desperate for a win at the G8 that he and the overseas territories were an easy, soft target.
I should make it clear for the record that at that point I was the director of the Cayman Islands office in London but that I have no connection whatever, either financial or otherwise, with the Cayman Islands Government now. However, I still deeply admire the way the territory is run and the exceptional level of integrity that it brings to financial services, which is greater than in the United Kingdom. I shall attempt to justify that.
Why do I say that our UK policy is farcical? Because it says that the way to get at dodgy persons setting up dodgy shell companies is to have a public register so that nosey parker NGOs can trawl through them and out those people. No—what you must do is stop them setting up dodgy shell companies in the first place. Jersey and Cayman are the top jurisdictions in the world, with by far the tightest regulations and checks on people setting up dodgy shell companies.
A few years ago an Australian professor at Griffith University, Professor Jason Sharman, did a huge experiment with his team on setting up shell companies. They created dozens of email and other addresses at different places around the world, from Islamabad, Nigeria and Moscow to London, New York and elsewhere. Many of the locations were highly reputable; others were places where you should hang on to your wallet if you get an e-mail saying you have £10 million to invest within them. The researchers sent messages to hundreds of corporate service providers around the world, which varied in credibility from, “We wish to establish an export base in your country for our long-established company” to messages from addresses in Pakistan saying, “We have a few million dollars and want to set up some companies in complete secrecy and want some fake bank accounts”. What was astonishing, according to Professor Jason Sharman’s research, is that while the majority of CSPs did not respond to the latter, highly suspicious messages—or told them to get lost—a very large number responded and were willing to help.
Professor Sharman’s team invented a rating system for the responses—and guess who came out top as the most difficult, indeed impossible, places in which to set up fake shell companies without supplying beneficial ownership information? Yes, it was little old Cayman and Jersey. I have Professor Sharman’s chart here, with them achieving 100%. Who was at the bottom of the heap, where you could almost walk in with a suitcase full of terrorist cash and set up a company with no questions asked? It was not Panama but individual states in the United States such as Delaware, Montana and Wyoming. They are way down at the bottom of the chart.
There are 2 million new companies created in the United States every single year. If you want to set up a dodgy shell company, you go to the United States—or rather, you go on to email and do it in under half an hour for less than $300. These states have said quite bluntly that they do not care what the President signs up to at federal level or at the OECD; they are in charge of company registrations in their state and will never in a million years go for public or central registers. They will not go for any more scrutiny before setting up companies.
Where does the United Kingdom come into this? Unfortunately, your Lordships can guess who was 13th from the bottom of the heap—below Vietnam, Panama and Ukraine. Yes, the United Kingdom was 13th from the bottom on creating dodgy shell companies, because we do it with insufficient verification of the beneficial owners. So clobbering Cayman, Bermuda and the BVI with rules which only they, not the other 19 countries of the OECD, would follow is misguided and foolish. I agree with my noble friend Lord Hodgson that we do not make the world a better or a more transparent place by hitting the good guys, encouraging the bad and letting all the Mugabes of this world go to the real tax havens to set up accounts.
Neither does the OECD ask for these public registers. The OECD merely wants all legitimate authorities to get speedy access to the relevant information so that the police, security services and financial regulators can check the legality of owners and their transactions. That is the point of access to beneficial information. I know that the Cayman Islands has been providing that information without any objection whatever for the last 10 years and has now implemented a system to give that information to legitimate authorities within 24 hours, seven days a week. That is a far better system than publishing registers.
It is perfectly legitimate for many individuals to create companies and seek to keep the ownership information private. There is no right for the public, nor for anti-capitalist NGOs, to know who owns private companies. But there is a need for legitimate law enforcement authorities to get speedy access to that information—and the overseas territories are in the forefront of providing it. What is more, I know that the information provided by the Cayman Islands, for example, will be verified by the authorities—as opposed to what will be supplied by Companies House, which does not verify the accuracy of anything. It is left to individuals to say to Companies House, “I promise that I’m telling the truth and I am who I say I am”. The overseas territories do not accept that.
So I ask this: will my noble friend the Minister give me an assurance that, in due course, the UK Government will make an attempt to get our beneficial ownership information in Companies House as up to scratch and as good as that in the best of the OTs? Our overseas territories should be lauded, not criticised, for their work on financial services. For these reasons, I oppose Amendment 14 and believe it should be rejected.
My Lords, I declare a simple interest as a former chairman of the Justice Committee in the House of Commons, where we sought to clarify and underline the constitutional relationship. That probably explains why, while I generally support government Amendment 8, I have some doubts as to whether it is desirable to have included the Crown dependencies and overseas territories in the same amendment when their constitutional relationship has a very different history.
Of course, the amendment as framed does not claim to place any requirements on the jurisdictions to which it refers; it simply requires UK Ministers to report to the UK Parliament on how it is all going, which is obviously a good thing and something that we can very much welcome. Parliament needs to know about the effectiveness of information sharing, not only in respect of the overseas territories and the Crown dependencies but in respect of all the jurisdictions in which business is already carried out or to which it might transfer as a result of the steadily improving regulation in some of the territories that have been referred to in this debate.
A lot of the public concern arises from two things. One of them, which was mentioned by the noble Lord, Lord Judd, is the appalling record of corruption in many developing countries. The other is the revelation of much of that in the Panama papers. The noble Baroness, Lady Stern, deserves credit and tribute for her campaigning on this issue. She referred to the number of proceedings being considered or started. Many of them have arisen not from inadequate public registers but from the useful publication of a great deal of information from one law firm. As it happens, it was the biggest law firm in Panama, Mossack Fonseca, both of whose named partners are currently in detention in relation to matters in Brazil.
My Lords, I declare my interests as set out in the register of the House and, in particular, that I was chief executive of a class 1 major reinsurer in Bermuda for a number of years and have very wide experience of financial services in that country and generally.
I pay tribute to the Minister and also to the noble Baroness, Lady Stern, in their respective ways. I am afraid that I can pay tribute to the noble Baroness, Lady Stern, but I disagree with her fundamentally. While I feel that the appalling catalogue of problems that she read out is terrible, worrying, vile and awful, Amendment 14 is not a good way of addressing the issue. She challenged me to try to provide a better way, and I will in the course of my remarks.
People often do not understand how big a jurisdiction Bermuda is. Bermuda overtook London as a centre of reinsurance in 2004. London remains number two in the world. No major insurer in this country would be able to trade without the reinsurance that it purchases from Bermuda. The amount of money, capital and sophistication in Bermuda is enormous. The BMA—the chief regulator there, of which more in a second—is an extremely professional and very tough regulator. Bermuda was not responsible for even one of the revelations in the Panama papers and is a very clean jurisdiction, and it is particularly unfair that it is named in this amendment.
I have four particular points, on two of which I can be very quick. The first is a general point about interference by Westminster in the affairs of these self-governing regimes. I agree with the Minister, and I will say no more. The second is a general point about shifting the problem to another jurisdiction. I agree that shifting a bad thing is a good thing in many ways, but shifting a good company is a bad thing because you are simply damaging the jurisdiction. There are many good companies, and I will explain in a second why this amendment would have the effect of shifting good companies. It would be very wrong for us to impose damage on our loyal overseas territories and possessions.
My third point is about the three things that control and look at naughtiness in financial services, which are the tax authorities, the police authorities and the regulators. As a chief executive of a big company, of course one is worried by tax authorities and policemen, but the person who can walk into your office and stop you trading immediately is the regulator. He has the most power, and he is the toughest. I regret that in the many debates we have had the power of regulators has not really been discussed, nor has how sophisticated they are and how close they are to what is going on. It is not possible for one of these shell companies to be set up without a regulator being involved because that company will require a bank account. Banks are heavily regulated. If the shell company does not require a bank account, it will require a fund manager to look after its money. They are very heavily regulated. A person running the support business in a high-integrity environment such as Bermuda would not allow someone —one bad client—to come in and kill off their whole business. They would be very careful to make sure that that does not happen. You are scared of regulators. You are of course scared of tax and police authorities, and you are more than willing to give up any information that will protect your business because no one client is worth it. Your business is your business; your staff are your staff. That is how everyone feels—I hope noble Lords can hear a level of emotion in my voice.
A sub-point is that in our society we rely on the forces of law enforcement to deal with naughtiness on our behalf. We do not have vigilante posses running around trying to do things. I worry that if everything were publicly available people would suddenly see themselves as being promoted into some sort of enforcement environment. That is wrong. We should leave these things to the professionals—the tax authorities, the police authorities and the regulators—and trust. If they do not do a good enough job, we should bash them. We should not allow vigilante posses.
I move to my fourth point, which is the most worrying point for me. I have mentioned it to the noble Baroness, Lady Stern. For many years, Hiscox, the group I worked for for so long, looked after the possessions of well-off people all over the world. It is also the leading kidnap and ransom insurer throughout the world. During my time at Hiscox, we logged 40,000 man days of kidnap problems around the world. Hiscox’s market share was more than 50%, so it understood the issues. In this country, we are very lucky to live in an environment where we are safe and secure. I will walk home tonight and think nothing of it. I can get into a smart car and think nothing of it. That is not the case in countries such as Mexico. In Mexico, you cannot keep your company with a local bank or keep your money there. In quite a lot of countries, you need to go to offshore environments, and you are a good client because you have earned your money. Hiscox’s perfect client was someone who owned a beer factory in Mexico or something because it knew they were straight and honest and could see how they had made their money. People were very scared. Part of kidnap and ransom is advising clients. Hiscox advised them to keep quiet about it and to be discreet. That is the chief weapon that will stop nastiness going on. When the nastiness happens, it happens not to the guy running the beer factory but to his daughter. It happens in a nasty way. I worry that the effect of this sort of thinking, without a proper impact assessment being sorted out and thought about very carefully, could be that we would be sentencing some people who have made their money honestly to physical harm and the invasion of their homes.
I finish by saying that of course I do not want any of this naughtiness to go on, but I feel strongly that Amendment 14 is not the way to go about it. We should rely on the police, the tax authorities and the regulators to do it for us. We should look very carefully at their performance in all of these countries and carry on, as the Government have been doing so successfully, getting incremental improvement. This House should make sure we carry on pushing the Government to push the authorities to get that incremental improvement. But I plead with the House not to support Amendment 14.
My Lords, first, I declare an interest as chairman of the Jersey Financial Services Commission and therefore the person responsible for the beneficial ownership register in Jersey. The question addressed in Amendment 14, of public access to registers of beneficial ownership, is not one for me, and I will not address the value or otherwise of making a register public—that is a political issue. The regulator in Jersey is independent, and I therefore have no role in those political decisions, but I am concerned about whether a register of beneficial ownership is accurate and therefore useful.
A number of speakers have referred to the public availability of the register of beneficial ownership here in the UK—essentially the Companies House register. As I pointed out in Committee, that register is not a useful one, since it is not verified and, because of that, the information in it can be seriously misleading. Indeed, because it is not verified, the people in developing countries and indeed civil society as a whole are on their own with respect to attempting to identify wrongdoing through the structure of the register. The register does not do the job. Regrettably, the UK is not a leader in providing verified, accurate information about beneficial ownership.
I want to address two issues with respect to the amendments. First, what I have just said will make clear why I regard Amendment 14 as seriously defective in not including the word “verified”. The characterisation of the information in proposed new subsection (4) is of a,
“publicly accessible register of beneficial ownership”,
with information “equivalent” to that under the Companies Act. The word “verified” does not appear. Therefore, the information can be inaccurate and misleading, with nobody required here to check it.
For the second point, I go back to the Minister’s amendment. Amendment 8, which has not been discussed very much up until now, says not only that “relevant” territories will provide information to the UK and we will have a report on how that information is provided but that the UK will provide “beneficial ownership information” to the relevant territories. I presume that includes my registry in Jersey. But I would like to know what information is going to be provided. If it is the Companies House information, we should really not bother; if it is some verified information, I will be very pleased to receive it. I would be grateful if the Minister, when she sums up, could tell us exactly what information is going to be provided by the UK, whether it is going to be verified and, if so, by what authority. Only if we have accurate information will the objective of those supporting Amendment 14—the revelation of wrongdoing —be achieved. If information is not verified, that goal is not achieved. Amendment 14 is defective in that respect, and I would be grateful if the Minister, when summing up, would tell me exactly what sort of information will be provided by the UK to my registry in Jersey and by whom it will be verified.
My Lords, the Minister rightly wishes the United Kingdom to be ahead of the curve. In relation to Amendment 8, which is the principal amendment that we are considering, she is absolutely right. If she is saying that the objective is co-operation on beneficial ownership information in order to deal with tax evasion and stamp out corruption, money laundering and terrorist finance, that is greatly to be welcomed and is welcomed, as far as I can see, by those in the overseas territories. I will come back to this in a minute, but the amendment will mean that the overseas territories have, as I understand it, committed themselves to provide real-time, 24-hour information in response to requests from the legal authorities in the United Kingdom. That is a massive step forward in this area of great difficulty and challenges and is to be welcomed.
However, I too am concerned about some of the detail of this new clause. It is unfortunate that a clause of this importance has appeared in the Marshalled List so late in the process. Of course, I recognise that my noble friend on the Front Bench is in some difficulty in that this is a major Bill and here we are at the 11th hour having to look at an absolutely vital amendment, and one has to make some allowance for that. But I share the view of the noble Lord, Lord Eatwell, about exactly what information is going to come from the UK and who on earth will verify that information. The overseas territories have every right to be told exactly what the information is and how it has been verified. In addition, there seems to be a great rush to have this work done in the next period so that it will all be based on one year’s experience. This is a major step forward and I wonder whether 12 months is enough. We have heard this evening from my noble friend that the Turks and Caicos Islands are hoping to get started soon, but one year is really asking an awful lot, and not many statisticians would work on the basis of one year’s information. Nevertheless, we are where we are.
I have one other concern. Proposed new subsection (2) states:
“The report must include an assessment of the effectiveness of those arrangements, having regard to such international standards as appear to the relevant Minister to be relevant”.
We do not know who the Minister may be in the next Government or what international standards are to be used. I do not blame my noble friend for this, but I suggest to her that when the report comes forward, we shall want to have great clarity about what international standards are being used and whether they are being consistently used in the analysis of implementation that flows from the new clause in Amendment 8. However, the basic point is that there must be great joy both in the overseas territories and in the law enforcement agencies of the United Kingdom that they are now going to get a first-class service which ought to have a major impact on the areas that I have described.
I have had the privilege of working overseas in Pakistan, India and Sri Lanka, and I spent part of my national service in Canada. Certainly when I was in commerce, with the Reckitt & Colman Overseas group, one of the bugbears about international trade—I am talking about several decades ago, but I am afraid it has not changed—is that it is not a level playing field. Here we are, approaching Brexit and hoping to trade internationally, but the tragedy of the situation is that somehow neither we in the United Kingdom nor other countries have ever managed to persuade the United States, Hong Kong and Singapore to have a central, non-public register. We have not even got that far. Even on the basis of what we are doing now, we have rivals. Make no mistake about it: most of our overseas territories are in the Caribbean, their main competitor is the United States and they do not even have a central beneficial ownership register. Not only will they lose business if we go too far but if the other parties, particularly the US, Singapore and Hong Kong, take business from our overseas territories, the net result will be that where we are getting information out of our overseas territories, if the business goes elsewhere then the co-operation that the UK gets from those territories—which is good and is going to be even better—will be totally undermined. Frankly, we will not get any information from the US, Hong Kong or Singapore.
On Amendment 14, which keeps reappearing, I certainly do not think that Her Majesty’s Government are committed to producing anything on a public register at the end of the review on beneficial ownership. The review should be solely on that subject, and there may well need to be further amendments or extensions to that situation. I remind noble Lords that neither the law enforcement agencies nor the tax authorities support public registers. UK intelligent law enforcement is a key part of our foreign policy, and we look for co-operation from friendly countries across the world. That will be jeopardised still further if there are these public registers.
So I say to my noble friend on the Front Bench that I support very much what she has done on the Bill and the way that she has pushed forward progress with the overseas territories. However, let us be quite clear: beneficial ownership is one thing, and it is very important, but in my view public registers are totally à décours.
My Lords, I support government Amendment 8. I apologise to the House for the fact that I have not been here for the earlier proceedings because, among other things, I have been visiting one of the overseas territories, Gibraltar, as I am chancellor of the new university there. As a former Governor of Gibraltar I am probably the only person in the Chamber who has been a governor of an overseas territory, so I thought I ought to say something in this very important debate.
The noble Baroness, Lady Stern, and all those who have added their names to the amendment have done a service to the House in ensuring that we debate the vital issue of standards of regulation in overseas territories. After all, at the end of the day it is our Government who are ultimately accountable to Parliament for the performance in our overseas territories. Therefore the Government must satisfy themselves that the standards both in this country and in the overseas territories meet those required by the OECD and elsewhere, so I congratulate my noble friend on the leadership that she has shown in ensuring that we debate this issue.
However, there is a delicate balance to be struck—from listening to the debate, I think the House understands that—because we are now in a non-colonial era. I remember that after I became Governor of Gibraltar, the late Robin Cook became Foreign Secretary two or three months later and one of the first things he did, very sensibly, was to drop the term “colonial” from our overseas territories so that we have the title we use at present, “British Overseas Territories”. We have to approach these issues in a very non-paternalistic and non-colonial fashion. To my mind, that is essential. The danger with the devolved powers that we have in these overseas territories—quite rightly, in my view—is that if we try to impose in a paternalistic fashion our views and policies upon them, we will be doing them a great disservice. Above all, we want to avoid having to impose direct rule, which could be the implication of taking some of these measures. At the same time, we have to ensure that there is a level playing field, which includes us as well, and that in making progress on this we do not do so at the expense of the overseas territories.
The Government have shown tremendous initiative in responding to the amendment from the noble Baroness, Lady Stern, with their Amendment 8 because it provides a framework with which we can move forward in negotiation and dialogue with the overseas territories over the next two or three years to try to move the whole issue forward. Many of the overseas territories, as we have already heard today, have made good progress. I congratulate the Government on this and strongly support their amendment.
My Lords, I support very much what the noble Lord, Lord Luce, has just said and respectfully associate myself with it. I strongly support Amendment 8. If I may put it this way, I think the Government, and particularly the Minister, have been extremely shrewd in taking the sting out of the points made by the noble Baroness, Lady Stern, who has very wisely brought these issues to this House. The Government have picked them up and produced what seems to me to be the right approach to dealing with the overseas territories. The amendment provides a useful nudge to the overseas territories that the Government are looking at what they are doing, without imposing what is unacceptable upon these independent countries with their own constitutions and parliaments.
I do not agree with Amendment 14. I was at the meeting this morning where representatives from a number of overseas territories explained to us what they were doing. We have already heard about Bermuda and the Cayman Islands, the British Virgin Islands, which are doing very good work, and from Anguilla and Montserrat about the efforts they are making. We have heard from the Minister about the Turks and Caicos Islands, which with their new Government are now working to get this through. So the areas contained within Amendment 14 are already on the way, if not ahead of us in some cases, and it is not necessary that they should be referred to specifically in it. I do not want to hold everyone up. I support Amendment 8 and I do not think Amendment 14 is really necessary now.
My Lords, I shall speak to Amendment 24 in my name and that of my noble friend Lord Hodgson of Astley Abbotts in this group. It concerns the setting up of a public register of beneficial ownership of UK property by companies and other legal entities registered outside the UK. Those are more or less the words that are the subject of a call for evidence issued by the Department for Business, Energy and Industrial Strategy in April this year. I do not know but I assume that the Home Office did a great deal to bring forward the publication of that report in the light of the debates which took place in Committee about the concern that was generally expressed about corruption and the acquisition of property in central London by overseas companies hiding behind anonymity.
The establishment of a public register was indeed a commitment made by the Government. Why do we need a register of this sort? I can do no better than quote briefly from the call for evidence, which says,
“the government is concerned about the potential for illegal activity to take place through overseas companies investing in the property sector. Some properties are owned through off-shore companies in order to obscure their true owners. This can make it difficult for regulators, legitimate businesses and the general public to know who the true owners are and can make it very difficult for law enforcement agencies to carry out effective investigations … Greater transparency of property ownership will make the job … easier and will discourage criminals and the corrupt from choosing the UK to hide or launder their money”.
It is made quite clear that the Government intend to introduce a register of beneficial owners of overseas companies but, as it is a call for evidence, it does not seek to prescribe the nature of that register but calls for advice and information to assist it in formulating the register. It may well be influenced by what the noble Lord, Lord Eatwell, said about verification to make any such register particularly useful.
The amendment in my name and that of my noble friend Lord Hodgson simply asks the Government to do that and make it a part of the Bill. If we do not, there is real feeling that there will not be legislative time even in the Parliament that may start in June. I ask the Minister to reassure us that the register will be set up in short order.
My Lords, I was not here for Committee and I apologise for rising at this late hour. I thank the Minister for her attendance at our meeting this morning, which was very productive. I admitted then that I had not seen government Amendment 8. Now that I have read it—in fairness to the noble Baroness, Lady Stern, I know that people have said that it is very welcome—it is actually quite disappointing for the aid organisations that have been campaigning. That should be on the record. It is really a restatement of existing government policy, and is not a compromise in that sense. I prefer to support my noble friend and others on Amendment 14 because it is only common sense. If we look back to discussion in Committee, we see that all they are asking is for the Government to complete their own programme of persuading the OTs to adopt public registers. This was a worldwide campaign, which we admire the Government for leading. It is now intended to include the overseas territories, although I fully recognise that there has been a slow take-up and that Orders in Council may be required.
I have worked with Christian Aid and many other organisations, as has the noble Lord, Lord Judd, which support the proposed new clause in Amendment 14. They are, to my mind rightly, concerned that the need for transparency should apply to overseas territories and developing countries just as much as to us. I hope the Minister now recognises that and will see her way to further compromise in future. The aid agencies feel strongly about this—after all, they are thinking of the majority of people living in those countries, not those sitting on the money.
Finally, I quote one informed reaction from Christian Aid to the new amendment. It states:
“The Exchanges of Notes signed between the UK Government and Overseas Territories in April 2016 on sharing beneficial ownership information already provide for a joint review of the operation of the arrangements six months after their coming into force, and thereafter on an annual basis. The report envisaged by amendment 8 is therefore already committed to. All this amendment does is put an existing commitment into law”.
The amendment does not mention transparency; nor does it mention developing countries. I therefore see no reason why we cannot support Amendment 14 and Amendment 8.
My Lords, I have added my name to Amendment 24, which is about the UK register of overseas property. Before I speak to it, as the noble Baroness was kind enough to refer to my remarks in Committee about drifting away to murkier regimes, I took it from the way that she quoted it that she did not approve of that. I was relieved that my noble friend Lord Blencathra quoted it with approval, which shows that you cannot please all the people all the time. However, I do not want my noble friend, or indeed the noble Baroness or the House, to think that that remark was made in isolation.
I said that the status quo was unsustainable and that at least three issues should be tackled as part of the new regime: first, there should be a register; secondly, our law enforcement agencies should have full-hearted access to it in a way that is prompt, helpful and consistent with a working relationship; and, thirdly, the Government should be satisfied with the probity and effectiveness of the register regime in the overseas territories and Crown dependencies. It seems to me that government Amendment 8 meets those tests, which is why I support it. Rather than talking about drifting away to murkier regimes, I should be saying that we must not let the best become the enemy of the good.
With that, I turn to Amendment 24. It is important not to see the issues raised by my noble friend Lord Faulks as a problem for only central London and the inner suburbs. There is a knock-on effect from what is going on in central London with continuing overseas investment in London properties. That makes the urgency to which my noble friend referred a moment ago all the more pressing. First, there is a ripple effect on properties in the south-east of the United Kingdom: as the settled population sell their properties closer to the middle of London, they have further money to buy properties elsewhere in the region. A very interesting article in the Financial Times on Monday 3 April pointed out that house prices have increased by 102% since 2002, compared to a 38% increase in earnings; that Londoners now need to pay 12.9 times their earnings, up from 6.9 times in 2002, to buy a London house; and that if you wish to buy a house in Kensington and Chelsea, the heartland of the area that my noble friend has in his gunsights, you now need 31 times the median salary to afford it. There is a real sense that we need to get a grip and some clarity on what is going on.
There is a second impact because, as London has become more expensive, foreign investors have begun to look at other cities. The Times of Friday 7 April pointed out that Number One Cambridge Street in Manchester, a development of 282 flats over 29 storeys, has investment purchasers from Azerbaijan, China, Japan and Zimbabwe—18 nationalities. Only two of the 282 flats are owned by Britons. The developer wrote:
“The generously proportioned apartments … appeal to owner-occupiers, investors and renters. In other words, the scheme is appealing several sectors of the market, including those looking to make the step towards getting on to the housing ladder and more established owner-occupiers”.
I must say that I think first-time buyers in Manchester might wonder whether 99.2% overseas investors and 0.8% local ownership is a fair reflection. Here I offer my noble friend Lady Stern some comfort: one investor based in the British Virgin Islands has purchased 125 flats. A company called OFY paid £25.7 million for those properties.
Although the amendment is no silver bullet, it sets out an important direction of travel, which is why I support it.
My Lords, there have been many speeches and I, too, was unable to speak at an earlier stage, so I shall be brief. Amendment 8 is good, but Amendment 14 is better. The reason it is better is simply this: it adds greater certainty to the idea that we and the British Overseas Territories are doing our level best to destroy this scourge of corruption which infests so many countries and does so much damage throughout the whole world. It may be that we are at the start of this process—I think the Bill is the very beginning of a process—but we have to start somewhere, and this is where we should start.
My Lords, I have the privilege of being a name added to the amendment moved by the noble Baroness, Lady Stern. I will use this opportunity to congratulate her not only on raising the issue but on pursuing it with so much energy. We can see from some of the results that the argument has moved; the profile of this issue has been very significantly raised and I think that government will struggle to ignore it going forward. We have had a small concession from the Government. I agree very much with the noble Earl, Lord Sandwich, that it would have been encouraging to have a stronger response, because this is indeed the encapsulation of existing government policy and existing notes of exchange into statute. It is better to have it in statute than not to have it in statute. There is a little bit of movement forward, but it is extremely small.
What has disappointed me in a lot of the debate today is the range of views expressed opposing transparency. I am very appreciative of those who have spoken out who recognise the importance of transparency. The Panama papers have been an extraordinary illustration of what transparency can do, and does, to engage regulators and enforcement agencies to pursue what is not just naughtiness—it runs far deeper than that. It is real misbehaviour that distorts economies, including our own. Amendment 24, from the noble Lords, Lord Faulks and Lord Hodgson, in many ways illustrates the distortions that have happened in property markets in the UK, with huge consequences for many of our young people and many of those on lower incomes. There is a very big knock-on beyond just the initial misuse of bank accounts and investments.
I made a much longer speech on the issue in Committee, which I shall not repeat, but we have to face the reality that many of the problems that we face across the globe, including civil war in Syria, hunger in Africa, the absence of democracy in countries such as Russia and the impact of withdrawn democracy in places such as Turkey, depend on the capacity of those who are politicians or Governments who abuse their people and who are corrupt—vast criminal networks that exploit in every way—to take advantage by moving illicitly obtained money into the legal financial sector. When we look at anywhere around the world that functions in any way as a haven or portal for that transition from the illicit world to the legal world, we are facing a situation where we have to try to close down the ability of those funds to move. The impact of that would be huge in so many ways across the globe, including for us.
I very much support—and I am sad that not everyone did—the work that the previous Prime Minister, David Cameron, did in this area, and the stand that he took, saying that, first, we have to make the kinds of changes that give us central registers. I am very glad that this Government continue to move to make sure that that extends right across all our overseas territories and Crown dependencies. Many of them are ahead of us, as has been said—but this will now be a universal description of the UK, with its overseas territories and Crown dependencies. But I am sad that the principle of public registers is now being so thoroughly challenged. We all know that if we wait for a global standard we will wait generations. Secrecy provides the kind of cover used extensively by all those whom we would wish to stop. They are the people who will be very pleased today that Amendment 14 is not going to be put to a vote and potentially carried. They will be absolutely delighted, because that is the cover that enables them to continue to make the transfer between the illicit world and the legal world.
This is a path down which I am sure that the noble Baroness, Lady Stern, who has been so vigorous on this issue, is going to continue. There will be many others around this House—we have heard from the noble and learned Lord, Lord Judge, and the noble Earl, Lord Sandwich—who will continue, and I hope that the noble Lord, Lord Rosser, will be in that group as well. We must achieve that transparency. If we do not take leadership, there is no way that we can turn around to the United States or any other location and insist that they carry out those same measures, when we say that we are not willing to do it ourselves or to use our relationship with the overseas territories and Crown dependencies to achieve that goal.
I wish that the Minister could tell us more about a timetable to achieve greater transparency. That would give us a great deal of comfort, but there does not seem to be one with much force or energy behind it, which I find exceedingly sad. But this is a day when we recognise the pressures and needs delivered by wash-up, so I very much accept the need to support government Amendment 8, and recognise with regret that we are very unlikely to have an opportunity to push on Amendment 14.
First, I start by making a reference to the amendment in the name of the noble Lords, Lord Faulks and Lord Hodgson of Astley Abbotts. We certainly support the objectives of the amendment; it is a matter that we, as well as the two noble Lords, have raised in Committee, Unless I have misunderstood its intention, the amendment says that action should be taken within a certain period of time, which I think is described as within six months of the day on which the Bill is passed.
When the matter was discussed in Committee, the Minister referred to the fact that the Government had announced at the London anti-corruption summit last year that the Government’s intention was to create a register of overseas company beneficial ownership information where the company owned UK property. On behalf of the Government, the Minister also said that the Government intended to publish a call for evidence that would set out the policy proposals in full in the coming weeks, and would also introduce legislation to implement the register as soon as parliamentary time allowed.
As the noble Lord, Lord Faulks, said, the call for evidence on a register showing who owns and controls overseas legal entities that own UK property or participate in UK Government procurement has now been issued; it has come from the Department for Business, Energy and Industrial Strategy. But I imagine that the key concern, from what the noble Lord said, is about how long it may take for anything to happen with regard to setting up the register. I assume that the Minister will probably not be in a position to say very much about that. She could, of course, tell us what the intentions would have been of this Government—but they will not be around for very much longer. There will be a new Government after the election, and it will be an issue for that Government to decide what priority they are going to give to it.
Certainly, the omens do not necessarily seem very good, since there seems to be a general view that much of the legislative time that any Government have after the next election will be taken up with the issue of the implications of our withdrawal from Europe. I hope that the Minister will at least be able to say what the intentions would have been of this Government when she comes to respond to the specific point raised in the amendment spoken to by the noble Lord, Lord Faulks, about putting a time limit on when something is actually going to happen and not leaving it as something that may well drift well into the future.
I thank the Minister for moving government Amendment 8, which is clearly—at least in part—a response to Amendment 14, spoken to by the noble Baroness, Lady Stern, and to which my name is attached. I do not intend to reiterate the arguments and points made by the noble Baroness, with which I fully concur. I will concentrate my comments on government Amendment 8. As the noble Baroness, Lady Stern, has already said, this does not go as far as Amendment 14, since it contains no reference to the Government having to bring forward an Order in Council by the end of 2019—or, indeed, by any other time—and then taking all reasonable steps to ensure its implementation, requiring any overseas territories listed in Amendment 14 that have not introduced a publicly accessible register by the end of 2019 to do so. The government amendment provides for a report to be prepared before 1 July 2019 with an assessment of the effectiveness of the arrangements in place between the UK Government and the Government of any of the Channel Islands, the Isle of Man or any relevant overseas territory for the sharing of beneficial ownership information, having regard to such international standards as appear to the relevant Minister to be relevant.
Will the Minister give more information on the criteria against which the Government will assess the effectiveness of the current arrangements? I ask that in the context of what the view would have been of this Government on that issue. We are presumably all seeking to reduce the incidence of money laundering and corruption in particular, as well as the avoidance of paying tax, either by illegal means or through elaborate schemes that have not been cleared by the tax authorities. Will the level of such reduction achieved, or not achieved, in these areas be a key part of the assessment of the effectiveness of the arrangements in place, and will that be reported on in specific terms in the report to be placed before Parliament, to which reference is made in the government amendment?
Further, is it this Government’s intention that there should be a debate on the report in both Houses of Parliament in government time? What does the reference to,
“having regard to such international standards as appear to the relevant Minister to be relevant”,
actually mean? What do the Government consider the relevant international standards are at present, and how would those standards at the end of 2018 be determined? Are international standards internationally binding agreements, and is an international standard what is being achieved by the country with the best record of effectiveness and transparency in this area or by the one with the worst? I believe that the Minister said that the regard to international standards would be to the highest standards, but I would be grateful if she would confirm that when she responds.
A concern that has been expressed during the course of our discussions on this issue has been the potential or actual use of overseas territories and Crown dependencies by corrupt individuals, organisations or people in positions of real power in other countries to cream off money for themselves that was intended to be used for the benefit of a nation as a whole, or a significant part of a nation. An advantage of a publicly accessible register of beneficial ownership is that people and organisations in such countries would have access to such a register, which would help them identify where, and by whom, corruption and money laundering may be taking place and thus be better able to expose what is going on—the prospect of which would, in itself, also act as a potentially significant deterrent.
The Government’s amendment refers to an exchange of information between the Government of the UK and the Government of each relevant territory. How will this government amendment address the issue of the use of overseas territories and Crown dependencies for corruption and money laundering purposes by individuals, organisations or people in positions of real power in countries outside the United Kingdom? Does the amendment mean that the UK Government would seek information on beneficial ownership from a relevant Crown dependency or overseas territory in respect of individuals, organisations or people in positions of power in countries other than the United Kingdom? Where a credible request for such information comes from individuals, organisations or Governments within those other countries, is it the intention of this Government that the information on beneficial ownership obtained would be passed on unless there were overriding reasons why to do so would jeopardise life or security?
There is a basic difference between ourselves and the Government. The Government believe that a process of persuasion will lead to publicly accessible registers of beneficial ownership in line with what is to be UK practice—albeit I note the trenchant comments of the noble Lord, Lord Eatwell, about the lack of verification of the register in the UK. However, the Government do not want to set any time limit for when the voluntary approach has to have delivered, following which legislative action would be taken. We are not convinced that this approach will deliver the required outcome, particularly in light of the Government’s change of stance from the days of the previous Prime Minister, so the commitment now appears to be to expect overseas territories and Crown dependencies to follow suit only if publicly accessible registers of beneficial ownership become the international standard.
In other words, it appears as though the United Kingdom will not be taking the lead as far as the overseas territories and Crown dependencies are concerned. This Government expect them only to “follow suit”. Can the Minister at least indicate that, while there are no time limits in the government amendment within which the voluntary approach to the introduction of publicly accessible registers of beneficial ownership should be implemented, the Government will nevertheless not resile from taking legislative action to achieve that objective at some undefined point in the future if that were shown to be necessary?
We are now in a situation where this Parliament is about to end, pending the general election in June. As has been said, the Bill has received widespread support, in both this House and the Commons, where the areas of difference of view have been over what the Bill does not include rather than over what it does. In this situation, a judgment has to be made. The Government have been persuaded to move further with Amendment 8, providing for a report to Parliament to be prepared by the middle of 2019. This will enable the issue to be kept alive, and for the case for, and objective of, publicly accessible registers of beneficial ownership in both overseas territories and Crown dependencies to continue to be pursued. This is assuming that the Government of the day do not come to the conclusion themselves that firm action needs to be taken to deliver that objective in the light of the progress—or lack of it—being made by the voluntary approach and the effectiveness—or lack of it—of the arrangements in place for the sharing of beneficial ownership information. The amendment does represent progress, albeit not as much as we would have liked.
Nobody wants to see this Bill, or even significant parts of it, actually bite the dust. We do not believe that, an election having now been called, government MPs are going to do anything other than support their own Government’s Amendment 8 at the expense of Amendment 14—assuming that that amendment could still have been carried in this House in the light of the Government’s amendment. For the reasons I have given, we will support Amendment 8. It does not go as far as we would wish—that position is reflected in Amendment 14—but it does represent progress and we thank the Minister for her work in that regard.
My Lords, I thank all noble Lords who have spoken so passionately on Amendments 8 and 14. I particularly thank the noble Baroness, Lady Stern, for all the work that she has done in promoting her Amendment 14. I also thank all noble Lords who attended the meeting with the overseas territory this morning. I hope they found it was useful and that they can see that progress is already being made.
I begin with Amendment 24 in the name of my noble friends Lord Faulks and Lord Hodgson of Astley Abbotts, which would provide for the creation of a public register of beneficial ownership of foreign companies that own property in the UK. I am pleased to have the opportunity to return to this issue. The clear abuse of the London property market and high-value properties across the country—I was particularly interested to hear about the properties in Manchester—to launder money, including the proceeds of corruption, has to be stopped. We must not allow this city to be a haven for kleptocrats hiding their ill-gotten gains. That is why the Government share the ambition of creating such a register. As my noble friend Lord Faulks told us, on 5 April, the Department for Business, Energy and Industrial Strategy published a call for evidence on our proposed register and how it will work. In the call for evidence, the Government sought views on the design of the register and how it will interact with the UK property market to ensure that it is effective.
This policy enshrines the UK’s position as world leader in corporate transparency policy. However, as this register is novel and ambitious, its development should not be rushed. The UK will be considered world leading in this agenda only if the register works. The Government have therefore taken time to develop effective proposals and ensure that they deliver full transparency without creating undue burdens on business or adversely impact commercial property transactions. Publishing the call for evidence earlier this month demonstrated the Government’s ongoing commitment to this agenda. Subject to the outcome of the general election, it remains our intention to introduce legislation to create the register as soon as parliamentary time allows. I hope this provides my noble friends with the reassurances that they seek.
Moving back to the overseas territories and Crown dependencies, I welcome noble Lords’ recognition of the value of the Government’s amendments. They will help us to ensure that the jurisdictions successfully implement their commitments and that the UK law enforcement agencies can pursue investigations into money laundering and corruption as a result. As I have previously noted, a key feature of the Government’s approach is that it creates a level playing field between all the overseas territories with financial centres and the Crown dependencies. By taking a different approach to the Crown dependencies and overseas territories, the noble Baroness’s Amendment 14 would risk disrupting this level playing field, creating weaknesses in certain jurisdictions that could be exploited and damaging the spirit of co-operation we have been able to create between them. The Government’s amendment has the merit of treating all relevant overseas territories and the Crown dependencies on an equal basis, ensuring that they are held to the same standard and are subject to a level playing field.
The noble Lord, Lord Rosser, asked whether the information provided to UK law enforcement agencies can then be shared with operational partners in other countries, including those where grand corruption is rife. The exchange of notes are bilateral agreements with the overseas territories and Crown dependencies to enable the exchange of accurate and timely beneficial ownership information. On an operational case-by-case basis, and subject to each agency’s legal position, the UK agencies may share this information with operational partners in other countries. If a subsequent UK law enforcement investigation recovers property that relates to criminal activity or corruption in another country, we may also seek to return it to such a country under the terms of existing agreements or memoranda of understanding.
Noble Lords should also note that, if we were to impose legislation in a field of activity that is devolved to the overseas territories, we would need to ask ourselves to what degree we could ensure that such legislation would be implemented successfully in practice. Although Westminster has the legal power to legislate, enforcing practical implementation of legislation in this case would be fraught with difficulty. We could, in fact, significantly undermine the progress that we are making in return for little or no real benefit.
The noble Lord, Lord Rosser, asked what the review will cover. It will take into account the impact on law enforcement outcomes such as the number of cases concluded, the quality of evidence received and the overall impact on combating economic crime. He also asked whether there would be a debate in both Houses. He will understand that I cannot commit the next Government to scheduling a debate on the report but this will, of course, be a matter for business managers in due course. However, I am sure that interest in this issue will remain in both Houses and there would be considerable support for such a debate at the relevant time. Of course, there is no bar to such a debate being held in your Lordships’ House.
The noble Lord, Lord Eatwell, asked about data being provided to overseas territories being verified, and another noble Lord talked about verification. The UK’s persons with significant control register is publicly accessible and is accessed more than 1.2 billion times a year. This enables information to be cross-checked with other data sources to improve accuracy and the quality of information on an ongoing basis. This is the information which will be shared with overseas territories and Crown dependencies under the exchange of notes. The legislation that underpins the UK register includes its own statutory review clause, which will require its effectiveness to be reviewed and a report to be provided to Parliament by 2019.
My noble friend Lord Naseby asked which international standards would be considered for the statutory review. As he stated, the statutory review provided for in Amendment 8 will take into account evolving international standards such as new FATF standards. The UK will be assessed against the new FATF standards over the next 12 months. Other jurisdictions such as the overseas territories will be assessed at a later stage. While the exchange of notes is focused on improving law enforcement outcomes rather than emerging assessments against international standards, our review will, of course, take into account the wider context.
The Government have listened and brought forward a concessionary amendment. I hope noble Lords will be satisfied that the issue of company ownership transparency will remain a high priority in the next Parliament, and that the statutory review, which will be laid in Parliament, will ensure that this is the case. On that basis, I hope that the noble Baroness and my noble friends will feel inclined not to press their amendments.
My Lords, we now come to a group of government amendments relating to improvements to the operation of Chapter 2 of Part 1 of the Bill. I hope the House will agree that these are technical and uncontroversial.
Clause 9 permits extensions to the moratorium period for suspicious activity reports, and Clause 11 allows the National Crime Agency to apply for a further information order. These powers will be available in all the UK jurisdictions. However, we have consulted the Scottish Government, who have confirmed that the wording in the Bill does not accurately reflect the common-law position in Scotland, which recognises the role of the Procurator Fiscal in directing criminal investigations. Amendments 9, 11 and 12 reflect that principle in Scotland so that the moratorium extension and further information orders should be applied for only by the Procurator Fiscal.
Clause 10 permits, on a voluntary basis, the sharing of information between regulated-sector entities for the purpose of tackling money laundering. This currently allows those entities up to 28 days to share information following an initial notification and to provide a report to the NCA. Following further discussions with the regulated sector, we have concluded that more time is needed to ensure more effective sharing in complex cases, where numerous banks, for example, may hold relevant information. Amendment 10 increases this time limit to 84 days, which will still maintain a proportionate limit on how long these companies have to share information.
Finally, Amendment 49 amends POCA to ensure that extensions to the moratorium period and further information orders that are issued in one jurisdiction in the UK, such as Scotland or Northern Ireland, will be recognised in the others. I beg to move.
My Lords, I am glad that the Government have taken account of the special situation in Scotland.
My Lords, I should start by thanking the Minister and her officials for being so generous with their time over the last couple of days. I am extremely grateful for her courtesy and patience. I also want to acknowledge that this is not the ideal timing for debating an issue that has so many complex aspects. We had all expected to have more time to do this.
Amendment 13, which stands in my name and that of the noble Lord, Lord Mendelsohn, sets out to help the FCA. A key part of the FCA’s job is the detection and punishment of misconduct. Another key part of its job is instilling and incentivising a culture of fair treatment of clients and a respect for the regulations in both spirit and letter—in other words, trying to prevent cultures in which financial misconduct is winked at or incentivised. The amendment aims to help with both those tasks.
The FCA has certainly been very busy with the business of the detection and punishment of misconduct since it took on its current form and mandate in 2012. In the four years from 2013 to 2017, it has imposed penalties on 82 occasions. The fines on firms in this short period amounted to over £3 billion. The latest fine was £163 million, imposed in January on Deutsche Bank. In fact, the headline fine was £230 million, but the FCA awarded a discount of 30% for prompt settlement of its action against the bank, and that is an entirely typical arrangement. Sixty-six out of the 82 enforcement actions brought by the FCA were settled at the first stage of the enforcement process and received a 30% discount. Eight were settled at the second stage and received a 20% discount. Eight were contested and received no discount at all. In all, the FCA in four years has given firms early settlement discounts of almost £1 billion and the amendment simply proposes to put this gigantic sum of money to better, or at least additional, use.
When the FCA reaches a settlement, it will impose conditions, some of which may call for internal disciplinary proceedings to be taken against those responsible for the misconduct. The amendment would ensure that those disciplinary proceedings took place. It mandates the withholding of a proportion of the discount until the offending firm has demonstrated conclusively, and to the satisfaction of the FCA, that proper and proportionate disciplinary action has in fact taken place. The substantive burden here lies with the firms and not with the FCA. This mechanism will free the FCA from the cost and use of resource that any follow-up investigation of non-compliance would require. In any case, it is not clear whether substantive follow-up investigations are routinely undertaken.
The FCA mission statement, published last week, talks about revisiting cases. On page 15, under the heading “Evaluation”, it says that,
“post-implementation analysis is not cost free. Additionally, the dynamism and complexity of the market means it is often difficult to isolate the impact of our actions against other factors”.
It goes on to say:
“Where it is less cost-effective to conduct detailed analysis, we will monitor and publish key indicators that help to demonstrate the impact of our interventions”.
I entirely sympathise with that sensible and realistic approach. I have spoken in this Chamber before about my concerns that the FCA is underresourced, underpaid, undervalued and overburdened, and the amendment helps in that kind of situation. It effectively automates, or nearly automates, the process of compliance with settlement conditions. It removes the need for substantive reinvestigation by the FCA and, instead, places a burden on the offending firm to demonstrate compliance. It offers a powerful financial incentive for doing so at no additional cost to the FCA or to the taxpayer.
My Lords, I rise briefly to speak in support of Amendment 13, proposed by the noble Lord, Lord Sharkey, and to which I have added my name. He has raised a very important point in relation to how the discount is applied and we are all very grateful to him. He has made a compelling case, and I should like to make a couple of comments in this context.
Since the financial crisis, $321 billion has been paid out globally in fines, compensation and legal costs, and the UK has contributed some $60 billion of that. KPMG reported in 2015 that, between 2011 and 2015, 60% of bank profits had been paid in fines, compensation and legal costs. Since the financial crisis in general, payouts in legal fees, fines, compensation and bonuses are basically equivalent to the entire profits generated, with all the consequences for shareholders, corporate governance, the reputation of the financial sector and losses to the taxpayer. At its very core, the attempt to deal with culture, conduct and, in some cases, apparent contempt for customers has lacked one key element: accountability. Using the discount to emphasise this element of accountability is one of the compelling parts of this proposal.
We on this side do not agree with the argument that the FCA is not up to the job; nor do I believe that it has not used its powers or that its procedures are flawed. The noble Lord, Lord Sharkey, has found a very important gap, which needs to be plugged: there is an incentive that does not work because there has been no downside. Even the FCA has moved towards the senior management regime to support the noble Lord’s central argument.
I, too, am grateful to the Minister for her openness and engagement and for the provision of officials—a quite copious amount of officials—to try to help address these sorts of matters. We have enjoyed those discussions and are looking forward to them continuing. Further openness on the cases where the discount has been applied would be extremely beneficial. As the FCA moves towards pursuing less significant fines, and has limited resources to both police and investigate, the approach of the noble Lord, Lord Sharkey, is helpful in ensuring compliance, and places a sensible responsibility on the financial sector. It can mean that we can feel confident—and I hope that I am not tempting fate—that when the most egregious fines and compensation sums are probably now behind us, the lower aggregate level of cost does not allow us to believe that the industry is properly policed. Only the accountability and responsibility in this amendment will do so.
My Lords, I start by thanking the noble Lords, Lord Mendelsohn and Lord Sharkey, for the time that they have taken in entering into discussions with me and officials and representatives of the FCA, both today and yesterday. The discussions were very helpful but, as the noble Lord said, we have more to go.
Amendment 13 basically requires the FCA, as the noble Lord has said, to withhold a proportion of the discount to a penalty applied to a financial firm until that firm has completed any internal disciplinary actions agreed in the settlement. I really welcome the noble Lord’s objective of improving compliance and the culture across the financial services sector. The Government share this objective and we have made significant progress in the area in recent years. We have, for example, introduced the senior managers and certification regime, to which the noble referred. This will, where appropriate, ensure that the FCA can take action against individuals where they are at fault. I know that the culture at firms is also a priority for the FCA, which has observed that it is both a key driver and a potential way of mitigating risk, and therefore plays a role in the achievement of its statutory objectives. The senior managers and certification regime is a key workstream in the FCA’s work programme on culture, as is the FCA’s focus on those aspects of remuneration policy that drive individual behaviour and culture.
Noble Lords spoke about disciplinary action to be taken against individuals working for firms. At the outset, I want to emphasise that if the FCA thinks that a disciplinary action should be taken against individuals, it can and does take action itself, as opposed to leaving it to the companies to do so. The FCA and other enforcement agencies have powers to fine individuals, or to take other action such as prohibiting them from continuing to operate in the financial services industry. This approach can be seen in a number of high-profile cases, including those involving LIBOR manipulation. The FCA settled eight cases with firms totalling £758 million. It is also conducting a number of separate enforcement actions against individuals. There have been seven completed actions against individuals in cases that involved settlements with firms in relation to LIBOR or Euribor, but others are still ongoing. More generally, the FCA issued fines against 64 individuals between 1 April 2013 and 24 March 2017 totalling £15.5 million. They might be the cases that the noble Lord was referring to. Many of these were connected to previously settled cases against firms, although I am afraid that I am unable to provide noble Lords with an exact number.
That said, the FCA also expects firms to consider what action they themselves should take. If a firm has not taken appropriate action by the time the FCA imposes a penalty on it, the FCA can increase the penalty as a result. We went through a lot of that today. I am saying that not for the benefit of the noble Lord, but mainly for the benefit of the House, because we have been through this. Of course, in appropriate circumstances, the FCA can impose a requirement that a firm consider further whether it needs to take any additional action to remedy the breaches identified.
The noble Lord asked me today whether it would be a better arrangement to have an automatic system of withholding a proportion of the discount, so as to make it directly in the interests of the firms to take the action that they are supposed to take, rather than the FCA having to make an assessment later of whether it ought to impose an additional penalty. I commend him on his ingenuity, but having consulted with operational partners and Treasury officials, the Government’s view is that the existing regime gives the FCA the flexibility to apply penalties and impose requirements on a case-by-case basis. It allows it to leverage those requirements wherever needed in order to ensure that the firm acts appropriately. While there might be options to enhance this approach and better achieve the outcomes that we all seek, we should be clear about the potential benefits before pursuing any such options. That is kind of where we left it today.
I trust that noble Lords will agree that we should not seek to reform or amend without exploring the implications, both the advantages and any unintended or undesirable consequences. For instance, we are concerned that this amendment would weaken the incentives for firms to settle early with the FCA, given that the settlement would not be final, subject to the full discount being granted. As a result, they might instead choose to engage the FCA in costly and protracted action rather than all being involved in focusing on remedying the underlying issues.
Moreover, further detailed consideration would need to be given as to how this amendment would interact with established principles of employment law. In particular, when a firm disciplines an individual, it needs to follow due process rather than agreeing in advance a predetermined course of action. For the amendment to work effectively, consideration would need to be given as to whether the FCA would need to be given a power to require firms to take such action against their employees; otherwise the amendment would put the FCA at risk of liability when undertaking the duty the amendment creates. Moreover, appropriate amendments would also need to be made to the Employment Rights Act 1996 to ensure that such action does not give rise to unfair dismissal claims by relevant employees against their firms. It is also not clear whether the proposed approach would be the best way of achieving the aim of improving the culture of firms.
In summary, we can all agree that this an extremely complex issue, which seemed to be made even more complex as discussions went on today. We share the same objectives of improving compliance and the culture in the banking sector. Ultimately, the FCA already has significant powers to address the issues underlying the noble Lords’ amendment, not least the power to sanction relevant employees in appropriate circumstances. I trust that the House will see that it is far from clear that the amendment would deliver the positive outcomes that have been described. That being said, I found the discussions today to be very interesting, as did the relevant officials, and hope this has been an equally insightful discussion to the two noble Lords. There might be ways of enhancing the existing regulatory system; the FCA is, in fact, conducting a review of its penalties policy at present, and I know that it would welcome the opportunity to continue this discussion with both noble Lords.
I can confirm that, subject to the outcome of the election, I expect that the Government will consider how best to facilitate further discussions on this issue, and, as I outlined to the noble Lord, Lord Sharkey, this would be my intention. I am very grateful to the noble Lords for their amendment. However, I ask them to withdraw it so that action not be taken in haste. I hope they feel comfortable to do so following some of the undertakings I have given.
I am very grateful for the Minister’s response. She will not be surprised or, I hope, offended when I say that I am still not entirely convinced by some aspects of the situation. However, I acknowledge that the issues raised are very complex and that there is certainly a need for further in-depth discussions. I very much welcome the Minister’s proposal to facilitate a meeting for further discussions with her, myself, the noble Lord, Lord Mendelsohn, and her team. As was mentioned, the FCA and the Treasury have very generously expressed an interest in joining those discussions, and we would welcome the Treasury’s presence. Under those circumstances, I beg leave to withdraw the amendment.
My Lords, in moving Amendment 20, I will speak also to Amendments 21 and 22. With these amendments we return to an issue we discussed in Committee in a somewhat different format, but the underlying purpose this evening is the same: to increase the effectiveness and value for money of the current money laundering regime. Let me make it clear again, as I did in Committee, that this is not an attack on the utility of money laundering regulation in the fight against financial crime. However, I argue strongly that the present regime encourages mindless compliance, whereas it should be encouraging principled behaviour. As a consequence of this, the money laundering regime enjoys a very low level of public support and is too often regarded as a form-filling joke. That is a bad place for a regulatory regime to find itself. Its efficacy would be greatly improved if it were able to win over the hearts and minds of people, as opposed to earning their solemn acceptance.
Why do I think the present regime is ineffective? It is based very largely on the SAR regime—the suspicious activity report regime. Last year, just under 400,000 SARs were delivered. In the years since the present regulations were introduced in 2007, probably over 2 million SARs have been recorded. Consider the cost of their preparation and analysis. According to a freedom of information request, the outcome was that there were no convictions at all under the regulations in the first five years, from 2007 to 2012, and only four convictions and five more proceedings in the five years since. The National Crime Agency managed to recover assets totalling only £25 million last year, but claims that there are billions passing through London illegally all the time. If that represents success, I find it hard to think what failure would look like.
There is a Faustian pact between, first, the regulators, who are pressed to gather even little scraps of information, no matter how irrelevant; secondly, the compliance departments of the regulated firms, which are enjoying the opportunity for untrammelled growth in their activities and personnel; and thirdly, the professional firms that enjoy the fees earned from checking these ever-increasing compliance activities. No one ever steps back to get perspective and to see how this undoubtedly important activity could be done more effectively.
In Committee, I argued that to break into the cycle the National Crime Agency should be required to follow the principles of best regulatory practice, as laid out in Amendment 21, which we are discussing tonight. My noble friend would not, I am afraid, accept this line of argument, saying that:
“The NCA can and will act where there is criminal activity relating to money laundering. However, it does not have a regulatory remit, and to require it to have one would deflect it from its purpose of tackling serious and organised crime”.—[Official Report, 28/3/17; col. 532.]
I am not sure that I follow exactly that line of argument, but never mind—we have moved on from there. Now, we have the new body: the office for professional body anti-money laundering supervision, or OPBAS. It clearly should follow the principles of best regulatory practice. Amendment 20 requires the Government to set this body up within six months. This is an important body with an important role and therefore we need to get on with it, and to give Parliament sight of its structure and remit by means of requiring its establishment through an affirmative statutory instrument.
Amendment 22 lays down the principles that the body must follow. It must be proportionate, accountable, consistent, transparent and, most importantly, targeted at cases in which action is needed. Amendment 22 also lays down a series of processes by which the new body will ensure that the bodies it is responsible for regulating follow these principles. There is a series of ways of doing that, including publishing advice and guidance, and carrying out investigations to ensure that the operation is working effectively.
Before I conclude, to underline the seriousness of the situation we now find ourselves in, let me give the House a couple of examples of the mindlessness and the consequent drawbacks of the present regime. My most recent money laundering inquiry included a couple of dozen questions. Among them was the following: “We see you have links with a company called NS&I. Please explain these”. Since the inquirer had access to my bank account, they could see that it was an entry of £25 alongside NS&I. NS&I is, of course, National Savings & Investments. It was a premium bond winning; sadly, not £1 million, but never mind—every little helps. Does the NCA really think that the Government’s own saving authority is involved in money laundering?
A second question was: “We see that you worked in North America in the 1960s. What were your earnings?”. That was half a century ago. It is hard to think that I started money laundering the year after I left university and have so far carried on for more than 50 years, undetected. I was sufficiently irritated to answer this second question with the words, “I haven’t a clue”. Patently, that was an inadequate response, but comeback there was none. Perhaps the form was not read and just filed and the box ticked, or it was read and it was concluded that this was not an important or relevant question. Either way, it was an awful waste of the bank’s and my time. This is going on thousands and thousands of times around the country.
One can laugh about my case, but for many people triggering a money laundering inquiry catapults them into a Kafkaesque world where no one can discover who is accusing them or what they are being accused of. Since we last met in Committee, I have been sent various examples but will give only one this evening. A 43 year-old ex-soldier with a 16-year good-service record built up a capital sum of about £69,000 from his Army redundancy and other sources. On 14 February it was paid into his account at the bank where he had banked for 20 years. On 27 March, when he tried to withdraw part of the money to make his annual ISA subscription and to buy a car, he was told that the account had been frozen. Now, a month later, it still is. He has missed the opportunity to make his ISA investment because the tax year has ended. The bank will not—perhaps cannot because of the regulations—tell him what the problem is, and the Financial Ombudsman appears unable to intervene. He is also concerned that this incident will damage his future credit rating and he will have no way of obtaining redress. So there are very serious cases where this money laundering regime is not working effectively to catch the individuals it should really be aiming at.
In Committee, I referred to the increasing prevalence of de-risking by regulated entities. Under pressure from the money laundering authorities, they close down whole categories of accounts irrespective of their behaviour and performance because they might be risky from a money laundering point of view. I referred to a long-standing friend of mine who lives in Pakistan—a British citizen—who has had his account unilaterally closed. Since Committee, I have heard more examples of smaller charities about how they are finding it difficult to operate overseas because of money laundering regulations. Most recently, the Gurkha Welfare Trust is having difficulty obtaining banking facilities to transmit money to ex-Gurkha soldiers living in Nepal who have fallen on hard times. They live in Nepal and that is a red flag.
In the event that my noble friend cannot accept my amendments, although I am sure she is going to—
I am extremely interested to hear—I fear that I did not hear it in Committee—about the proposal in Amendments 21 and 22. But how does the noble Lord see this office of professional body anti-money laundering supervision working, for instance in the case of the man whose money has been frozen? It is an interesting idea but I just wonder, as a former lawyer, how it would work in practice.
I am grateful to the noble and learned Baroness for that intervention, but I can glide this down to third man, if I may use a cricketing analogy, because this is a government proposal. The Government are proposing to set up this new body, so I am sure my noble friend, when she comes to wind up, will have all the detail of how this body will work. I merely wish to ensure that it is sent down the right channels. I know that my noble friend, with her usual aplomb and ability, will deal with that by stroking it effortlessly to the boundary, if I may continue the cricketing analogy.
It is important to do some serious re-engineering of the general approach to money laundering to increase its effectiveness and public confidence in it. That the National Crime Agency can, in its annual report, trumpet the fact that SARs went up by 7.82% over the last year as a badge of success without any reference to the impact it is having, shows that there is much to do. I beg to move.
My Lords, when the noble Lord responds to the debate, will he tell the House whether he thinks “I haven’t a clue” is purported compliance.
In light of the last comment from the noble Lord, Lord Hodgson of Astley Abbotts, one can only hope that the points he made will not leave the Minister stumped. I hope it gets better.
I thank the noble Lord and the noble Lord, Lord Faulks, for tabling these amendments, since they enable me to raise a concern that I expressed in Committee about the Government’s intention to create a new office for professional body anti-money laundering supervision through a statutory instrument, without any apparent reference to such a body in the Bill that we are currently discussing—which is why the noble and learned Baroness, Lady Butler-Sloss, had to raise her question. Nobody has a clue what the Government intend because they have not chosen to put anything in the Bill to enable us to have a discussion about it. It was only in a government document issued around the time of the Bill that the Government declared their intention to set up this body.
A briefing that no doubt we have all received from the Solicitors Regulation Authority refers to the amendment from the noble Lord, Lord Hodgson of Astley Abbotts, as “proposing” the creation of an office for professional body anti-money laundering supervision—which could, perhaps wrongly, be interpreted as meaning that the Solicitors Regulation Authority was unaware that that is what the Government were already proposing, albeit keeping rather quiet about it as far as proper parliamentary scrutiny is concerned.
My Lords, I congratulate my noble friend Lord Hodgson of Astley Abbotts on neatly batting off the question asked by the noble and learned Baroness, Lady Butler-Sloss—I could not resist; we have all made cricket jokes. I thank noble Lords for their interest in the outcomes of the Government’s recent review of the anti-money laundering supervisory regime. As a result of this review, the FCA has agreed to create a new team—the office for professional body anti-money laundering supervision, otherwise known as OPBAS—to strengthen the regime and help to ensure that professional body AML supervisors, such as the Law Society and the Institute for Chartered Accountants in England and Wales, comply with their obligations in the money laundering regulations. It is important to note that OPBAS will be a new team hosted in the FCA and is not in itself a new regulatory body.
Amendment 22 would require that the FCA would have powers to directly monitor and advise all practitioners subject to criminal finances legislation. This would be a significant extension of the FCA’s responsibilities. Rather, our intention is that the FCA’s new objective will be carefully targeted to address weaknesses identified through last year’s call for information, while preserving the existing strengths of the regime by focusing on helping to ensure that professional body AML supervisors comply with their obligations in the money laundering regulations. The noble Lords’ proposals would duplicate the role that existing AML supervisors play in safeguarding the UK’s financial system and would increase unnecessary burdens on businesses.
Amendment 21 would also require the FCA to have regard to regulatory best practice principles in delivering its new objective. However, I assure the House that the FCA will comply with its existing governance and safeguards as it goes about delivering its objective. As such, this amendment would be redundant and duplicate existing requirements on the FCA.
Lastly, Amendment 20 would require the powers the Government will pass to the FCA to fulfil this objective to be subject to an affirmative statutory instrument. It is our intention that this will instead be achieved in line with existing precedent; previous regulations to grant similar powers to the FCA have been subject to the negative procedure. I hope colleagues agree that we should follow that precedent on this occasion. Subject to the outcome of the general election, the Government intend to publish draft regulations for consultation over the summer before laying the relevant secondary legislation to underpin OPBAS later in the year.
To pick up on some specific points noble Lords have raised, my noble friend Lord Hodgson talked about de-risking being excessive and impacting disproportionately on normal people, as he has previously. He gave some compelling examples. The Government encourage the financial sector to take a proportionate approach based on the risks faced. Guidance for the financial sector, which is written by industry, is being updated for the latest money laundering regulations and is open for consultation until the end of this week. It is of course open to my noble friend to make his views known through this process.
The noble Lord, Lord Rosser, asked why the Government are not splitting the supervisory and advocacy functions of professional body supervisors. I can advise him that the 2017 money laundering regulations, which transpose the fourth money laundering directive, will require all professional body anti-money laundering supervisors to ensure that their supervisory functions are exercised independently of the advocacy functions, including, for example, the Law Society and the Solicitors Regulation Authority.
The noble Lord also made the point that the Government are subverting scrutiny by using the negative procedure. As I have mentioned, providing the FCA with new powers via the negative procedure is not new. It is in line with the wider transposition of the fourth anti-money laundering directive. There are a number of other powers that have been conferred to the FCA by the negative procedure. For example, the Money Laundering Regulations 2007 and the Money Laundering (Amendment) Regulations 2012 provide the FCA with powers to oversee financial institutions’ compliance with the money laundering regulations. The current set of MLRs provide the FCA with supervisory powers to oversee financial institutions’ compliance with the money laundering regulations. These include enforcement powers and supervision powers.
I am very grateful to the noble Lords for allowing me to address their points, which I hope I have. I hope, on that note, they will feel happy not to press their amendments.
My Lords, I thank the noble and learned Baroness, Lady Butler-Sloss, for her helpful intervention and my noble friend for her very full response. There is a really serious issue here that needs to be tackled. It is not just about bureaucracy and cost, but about unnecessary interference with people’s lives. Increasingly, it is also about damage to this country’s reputation as a place where you can get clarity. The question will be whether the new body can bring focus. The proof of that pudding will be in the eating. We shall have to wait to see whether it happens. My noble friend encouraged me to make my views known to the review. She need not worry; I have not missed that opportunity. I have written a letter already, so it has my views. We will have to see how it develops, but it will require vigilance, focus and care by the FCA to improve the regime, which is currently not working as well as it should. With that, to continue the cricket analogy, I will return to the pavilion and withdraw the amendment.
My Lords, I recognise that the hour is very late. I will try to be brief. Noble Lords will also be delighted that my knowledge of cricket is so limited that I shall have to abandon that theme.
This amendment is on whistleblowing. I tabled it in Committee. Essentially, this is a very similar amendment that does two things. It would provide for the regulator to give additional protection to whistleblowers in the financial services industry and require the regulator, as part of those powers, to provide mandatory compensation to whistleblowers who provide original information that leads to prosecution or sanction with financial consequences for the institution. This is very much modelled on Dodd–Frank and a much longer tradition of mandatory compensation for whistleblowers in the United States, which underpins its very successful culture of whistleblowing and tackling financial crime by financial institutions.
When I brought this amendment forward in Committee, the objection was to creating an office of the whistleblower, so under this revised version the powers would go to the FCA, which may decide how it would like to set up that arrangement. I recognise that this has no future in this Bill because we are in wash-up, but this is another of those issues that will carry over to future pieces of legislation, essentially for three reasons that I will touch on quickly.
First, the way we have dealt with whistleblowers in the financial industry is, frankly, an utter disgrace. Since I moved the amendment in Committee, I have been put in contact with more people in the industry who have been whistleblowers whose lives have been completely destroyed. People have lost all employment and had to rely on spending their savings and assets. They have faced serious attack from the highly skilled, very capable and aggressive lawyers of the financial institutions and have, frankly, been let down by the regulator. In many cases, I think no one would question that kind of description of the experience that whistleblowers have had to deal with in the industry.
I support what the noble Baroness, Lady Kramer, has said in setting out the case for her amendment. She has already made reference to recent further examples of serious concern over the approach to whistleblowing and whistleblowers—she referred specifically to the situation at Barclays Bank in the light of apparent actions by its chief executive in seeking to unmask a whistleblower. There are meant to be strict regulations in the financial services industry for encouraging and protecting whistleblowers, but it does not look as though they are very effective.
It is difficult to believe that the apparent attitude at the top of Barclays Bank is an exceptional one-off, as opposed to being indicative of a rather more widespread culture, to which the noble Baroness referred, in the financial services sector. The reality is that whistleblowers will not come forward if they think that the reaction of the people at the top will be to try to find out who they are rather than investigate the issue to which they have drawn attention. Neither will people come forward if they think that being identified as a whistleblower will jeopardise their future employment prospects in the financial services sector, which is alleged to be the reality in that sector in particular. I hope that the Government in response will be able to offer something more than claims that existing arrangements and procedures address the concerns raised by this amendment, when it is clear that it is not the case.
My Lords, I thank the noble Baroness for bringing forward this amendment, which would introduce new regulations so that the FCA could undertake the administration of arrangements to facilitate whistleblowing in the financial sector.
The FCA is already a prescribed person in relation to the financial sector. It actively promotes the whistleblowing framework to employees and employers in the sector so that prospective whistleblowers know where to turn and firms have appropriate internal whistleblowing policies in place. Other prescribed persons related to financial services include the Bank of England, the Serious Fraud Office, the Financial Reporting Council and the Prudential Regulation Authority. To each of them, whistleblowers will be one of several sources of information and intelligence about potential malpractice in support of their regulatory activities.
The Government believe that the right body to investigate the concerns of a whistleblower is the body that regulates the issue about which concerns are raised—I know I have said that before. That body is in the best position to see the disclosure in context; for example, to judge the seriousness of the allegations, to make connections with any related investigations under way and to consider whether some regulatory action is appropriate to prevent occurrence.
The amendment that the noble Baroness proposes would introduce a power to award compensation to any worker voluntarily providing information on wrongdoing to organisations in the financial sector. As I set out in Committee, we do not think that money is the main motivator for genuine whistleblowers. I do not think the noble Baroness thinks so either, but she expressed views on how a financial incentive system to encourage whistleblowing works well in the US. I can advise noble Lords that the FCA and Prudential Regulation Authority whistleblowing management teams visited the US in late 2013. At the time, there was limited empirical evidence of incentives leading to an increase in the number or quality of disclosures received by regulators. Introducing incentives would require a complex and costly governance structure.
Incentives could also undermine effective internal whistleblowing mechanisms, a requirement the FCA introduced in September 2016 for banks, insurers and deposit takers. If the FCA were to incentivise whistleblowers to report to the regulator, it could discourage them from reporting internally within their firms. It would risk delivering mixed messages by encouraging firms to set up costly systems which it then undermines by incentivising whistleblowers to disclose directly to the FCA. However, the FCA is considering reviewing the case for incentivisation again in financial year 2017-18. I would be happy to provide an update following that review.
The amendment also contains a provision with regard to retaliatory action against whistleblowers. I reiterate and reassure noble Lords that such a provision is unnecessary. Workers who have evidence that their employer has provided a negative reference, have been unfairly dismissed or have otherwise suffered detriment for making a public interest disclosure already have a route to seek compensation against their employer through an employment tribunal.
Some concerns were raised that we have seen a decline in the number of whistleblowing cases for the second year in a row, from 1,340 in 2014-15, to 1,014 in 2015-16 and 900 in 2016-17. The FCA does not have a target for the numbers of whistleblowing reports. Its aim is simply to ensure that those who prefer to report to an independent body know about its role and that, if they need to take the often difficult step of reporting on an employer, they and their information will be treated sensitively and professionally. New rules came into force in September 2016 that require banks, building societies and insurers to have internal whistleblowing arrangements in place and to appoint an internal champion. We understand many firms began to implement these measures earlier than the commencement date, so we believe that this has affected the numbers going directly to the FCA. This is a positive message as many complaints are resolved earlier and without regulatory intervention, or lead to self-reports by firms themselves.
I want to address one point made by the noble Baroness: how we became aware of the issue regarding the investigation of the whistleblower’s identity by the CEO of Barclays and what action the FCA is taking. I recognise the concern that the noble Baroness raised about the Barclays example and I agree that behaviour of the kind she described does not serve the reputation of the industry nor the interests of the country. We must do all we can to prevent this type of behaviour. As the noble Baroness said, I realise that time is short but this issue is not going away. I ask whether she would be amenable to withdrawing her amendment, fully aware that I will hear more about the subject after the general election, should the outcome return a Conservative Government.
I am delighted that the noble Baroness seems to take a personal interest in this issue. While 1,000 sounds a big number, the substantive cases have dropped to below 100. Given the size of the industry in the UK, that is a worryingly low number; I suspect that even the FCA is significantly worried about it. I am very glad that the noble Baroness said that the Government would look at this issue again. I hope to pursue that but it is good news that we did not have before, frankly. On that basis, and with thanks to the noble Lord, Lord Rosser, for his comments on this issue, I will obviously withdraw.
I am not sure whether I should come in now but I just take this opportunity to thank the Minister and her ministerial colleagues in the Bill team for their willingness to meet and engage in what have been constructive and helpful discussions on not only provisions that are in the Bill but also provisions that are not, since it is with the latter that most differences of view or approach have centred. I also thank my Front-Bench colleagues for their hard work, not least—although he is not in his place—my noble friend Lord Kennedy of Southwark, who has not been exactly short of commitments in respect of other Bills as well. Finally, I thank the staff in our own office, not least Grace Wright, for their help and advice in navigating our way through this Bill.
My Lords, I echo those thanks to the Minister and the Bill team. As several people have said—most frequently the noble Lord, Lord Rosser —it is what is not in the Bill that has exercised us most. I can see an enormous amount of material for Private Members’ Bill in the next Session if we do not have government Bills that we can tack our—“demands” would be the wrong word—concerns on to. But the Minister has done an absolutely sterling job and I hope she gets five minutes to have a bit of a rest before she sets out campaigning. We have the luxury of knowing that we will be back to pursue these interests.
As always with Bills such as this, it is what is not in the Bill. Also, sometimes we should have gone further. But we have had a challenge in this Bill and in the main the challenge has been lack of time, not of consensus. I place on record my thanks to the Front Benches—the noble Lords, Lord Rosser and Lord Kennedy, and the noble Baronesses, Lady Kramer and Lady Hamwee—and my noble friends behind me, who have kept me on my toes. I thank noble Lords for being so accommodating about having so little time to get through the business of the past 24 hours.
(7 years, 4 months ago)
Lords Chamber(7 years, 4 months ago)
Lords ChamberTo ask Her Majesty’s Government what steps they are taking to support the steel industry; and what role it will have in the Government’s industrial strategy.
My Lords, I am very grateful to those who are participating in this debate. We have a very distinguished group of speakers with tremendous experience and wisdom in these areas, and I look forward to hearing your Lordships’ contributions. My own detailed experience of the sector is only recent. Like so many issues brought to the attention of this House, one can get a rudimentary understanding, but it is rare to get the feel of an industry. I know that the Minister has such a feel for these issues and I am grateful that he has made himself available for this debate. He has always had a very open and thoughtful mind when it comes to matters relating to the steel industry, and his participation is appreciated.
When Greybull bought the long products division of Tata Steel, I was intrigued. I was interested in what a very capable turnaround team saw in this opportunity. What has become British Steel is the dream of Nathaniel and Marc Meyohas, the principals of Greybull, who are operators of the highest capability and have brought new life into the industry and the business. I was fortunate to visit their main plant in Scunthorpe last year, where I met the extraordinary team that they have assembled, steeped in expertise, who have transformed its prospects. Recruiting Roland Junck, the globally respected industry figure, as executive chairman was particularly inspired, but the whole top team, who have served the plant for many years, were deeply impressive.
I was struck by two things when I visited. The first was the extraordinary quality of the staff, not just in skill and capability but in motivation. I visited the blast furnaces. In the Scunthorpe plant they are known as the Four Queens. I met the blast furnace manager. With colossal pride, as the molten steel streamed out, he nudged me and said, “You see that? That is schools, hospitals, roads and bridges—all our country’s needs”. The second thing that struck me was the extraordinary technology that is applied there. There are hugely capable and trained staff dealing with all sorts of technologically sophisticated approaches in these very large sites, with large equipment and large sales. The facility has computers almost everywhere and it is able to produce products with the imperfections almost entirely removed and to ever-higher specifications. It is a highly technologically developed business.
British Steel has committed nearly £40 million in new investment and is now making regular quarterly profits. It reversed the pay cut that was taken by the workforce as a means of ensuring the survival of the plant, and it did it as early as it could.
We have witnessed many closures in recent years—some preventable, possibly—with the resulting impact on communities. We have not served them entirely well with their transition. Last year our domestic market share fell to its lowest level on record, with only 39% of the steel used in the UK being produced here. Since 1995 employment in steel has fallen by 59%. I am sure there has always been a debate about what sort of size the market share should be and I think there is a case for 50%, but it is important that that 50% is profitable.
The global production footprint of steel suggests that the UK will not become a global leader in production but it is certainly desirable and deliverable that steel as a strategic necessity for our economy can be achieved, with the right policy framework. It still acts as a vital foundation industry for our world-class automotive, defence and construction sectors, and many others. It is an important part of our innovation and research base and it remains a crucial provider of highly skilled, quality and fulfilling work for more than 30,000 people, with an estimated four times that number in the supply chain.
It is notable that while other European steel industries have also suffered in the face of global headwinds, the UK has fallen furthest and fastest. We have gone from the second-biggest European producer in the 1960s to the fifth-biggest now, behind Germany, Italy, France and Spain. There remains a range of domestic barriers holding back our industry. As the BIS Select Committee in the other place pointed out,
“other European countries have both better valued their domestic steel industry and have been able to withstand global competition more effectively than … the UK”.
Put simply, the cost of doing business here is higher than in most of the rest of the continent.
The UK steel industry has suffered from a series of pressures relating to overcapacity, unfair trade and a competitive disadvantage with European competitors. There is broad agreement among everyone that we have to do a number of things to help: we have to promote UK steel’s use by government and business; we have to tackle unfair trade to ensure free and fair trading practices; we have to provide funding mechanisms for energy-efficient projects; and we have to work on what investment and support is needed in the long term, including skills and education in local communities. Most importantly, and the industry has been right to frame the problem in this way, the unilateral costs that are a direct result of historic UK government policy around electricity costs and business rates are utterly crucial. I believe that the recent initiatives which the Government have undertaken to compensate producers for high energy costs and to encourage government departments to procure UK steel are welcome steps in addressing the fundamental barriers facing UK producers.
However, this is about the fundamental business model. UK steel makes money, but not enough. There is a return on capital gap which is required in order to sustain this industry. For the sort of investment required in new plant, we need to ensure that it has the right level of profitability. It is well established that energy prices and business rates are two areas where we have an uneven playing field. Even after the Energy Intensive Industries compensation package, a 2016 analysis by UK Steel showed that British producers pay an extra £50 million per year in energy costs when compared to their EU competitors. The differential between the UK and Germany has been calculated as an extra £17 per megawatt hour. According to UK Steel, if that differential was removed, British firms would have increased their EBITDA by 70% in the period 2012-14, protecting jobs and enabling crucial investment.
UK steel-makers face business rates of up to 10 times those in France and Germany. We should not be in a situation where building a new blast furnace attracts a six or seven figure hike in rates. The current regime acts as a tax on investment that is not borne by European competitors. For example, in 2010 France reformed its new equivalent of business rates to remove plant and machinery from calculations to deal with exactly this problem; it has worked very well.
I am sorry that it took the steel crisis of 2015-16 to act as a trigger to focus attention. The Government have made some progress but it is too limited at this stage. This is not particularly partial criticism of the Government. There are certainly some matters which are not easy and straightforward. This will take a lot of political will and some careful thought but there is a pressure on whoever comes into government after the election—we can guess who might or might not—to show some renewed effort. There was some previous criticism of the industry’s managers and owners, but since the crisis it is clear that that has changed. New entrants have emerged and the existing quality management has been liberated. The workers in the industry and its trade union have shown not just capability but adaptability and a willingness, as they always have, to be part of a team accepting sacrifices and giving of their labour nothing but sheer excellence.
The industry is in good shape but the policy and regulatory environment is not, and this is where we must focus. We are in times where we can make changes. There have been changes which show that we can take a different approach. It is not just about leaving Europe; there is the opportunity of the industrial strategy. It is not just about the adoption by the Conservative Party of a price cap on energy markets or about progress in energy demand measures. All of these things suggest why doing more on the supply-side measures can be doable and timely.
The steel industry is the epitome of a modern, technologically-driven industry. I would argue that there are more high-tech, highly paid jobs in steel than in the IT sector in general. In business, the achievement is more important than the announcement. In government, it sometimes feels that the announcement is more important than the achievement. We have to set the course straight for what we are going to do to help steel. Others deserve our gratitude for keeping the industry alive and fit for purpose. It is the role and duty of those who make policy decisions on the regulatory environment to take the next steps. I am sure that all Members of the House will work with the new Government to that end.
My Lords, I support my noble friend Lord Mendelsohn’s approach to the steel industry. He has put a coherent and positive challenge to the Government in a most committed manner. For Britain to retain her national greatness, we will always need a steel industry. A great nation must have the capability to defend itself in a time of war. The summation of that is the “defence of the realm”. It is hard to envisage a Britain without a steel industry being capable of defending itself from a hostile nation or nations.
I see that steel is a foundation industry. It is the basic industry and all else flows from steel, even in a digital age of global influences. For our armaments, our manufacturing and our services, steel must always be there. Last year, there was a serious question mark over the British steel industry’s future. Port Talbot, a mighty and productive steel plant, was at risk. Port Talbot has had a great steel record in modern times. It has met every challenge concerning productivity, including the challenges of demanning. Today, Port Talbot is a manufacturing linchpin in Wales, and it must remain so. It is a British manufacturing priority and it deserves to remain a respected steel producer worldwide for its workforce to have secure employment and decent pensions.
I pay tribute to my noble and learned friend Lord Morris of Aberavon, who has been a most successful, long-standing advocate for Port Talbot steel, and I see that my noble friend Lord Brookman is in his place. I humbly say that he was a fine leader of the steel workers’ union for many years. Indeed, he was the lion of the Ebbw Vale steel plant, and at the steel plant in north-east Wales he was highly regarded when a general secretary. He faced up to massive changes in Britain’s steel industry and to many tens of thousands of steel redundancies—a great cascade, almost all at once. He faced up to it, like the workforce he led, in a most noble way.
Britain has four nuclear-armed submarines at the heart of our defence strategy. The Ministry of Defence is currently considering the next nuclear-armed submarine defence strategy. For the life of me, I cannot see Britain backing this core defence strategy without a viable, confident, productive steel industry. Surely Her Majesty’s Government will confirm their commitment to a long-term British steel future, especially emphasising the centrality of Port Talbot in British and Welsh steel production. This is surely a strategic requirement.
In the time remaining, I must praise the north-east Wales steel plant of Shotton, which is my homeland. It is a hugely efficient and most profitable plant. The Shotton team is collaborative and co-operative and always delivers on time. It has won recent significant investment, even at a time of great insecurity for steel both in Wales and globally. It deserves its recent vote of confidence. As a finishing plant employing hundreds, it is, of its kind, the jewel in the British steel crown. Whatever the challenge, the Shotton steel team never falters. We remember when in a previous era it employed some 13,000 steel-workers. Historically, ours has been an industrial steel culture.
I see that the Minister, the noble Lord, Lord Prior of Brampton, is in his place. In another place, quite some time ago, I recollect a Cabinet Minister bearing the same name. The then Secretary of State James Prior was a good Minister in the early 1980s. I faced him across the Dispatch Box, and in those days he was facing the challenge of retraining and employing tens of thousands of redundant steelworkers. He did his best, always, but surely a viable steel industry is now a matter of national security and a priority.
My Lords, I am grateful for the opportunity to take part in this debate in support of the future of our UK steel industry. I thank the noble Lord, Lord Mendelsohn, for initiating the debate and for his supportive words this evening and acknowledge the Government’s industrial strategy, which gives us cause for optimism—not having one would be a missed opportunity.
I declare that I am an elected councillor on North Lincolnshire Council and chair of the Scunthorpe task group overseeing the Government’s commitment of up to £9 million to support Scunthorpe steel-workers and the local economy through retraining and support for companies in the local area to grow and create new jobs.
Through the good times and the challenging times there is always a sense of spirit and community togetherness—I speak from personal knowledge, as my father worked all his life in the steel industry. Community spirit breeds a determination always to rise to the many challenges that have come along over the years, and I look forward to steel-making continuing in Scunthorpe for generations to come, creating many job opportunities and prosperity for the small and medium-sized enterprises in the supply chain.
Revitalising the steel industry is needed not simply to avert a crisis but because it also represents a great opportunity for steel, which is embedded at the heart of the UK’s high-tech future and is critical to the success of any modern manufacturing renaissance, which the UK requires to compete in a post-Brexit world.
Greybull Capital took over the Scunthorpe steel plant last year after many months of great uncertainty, and a new name emerged: British Steel. The business has developed rapidly, as the noble Lord, Lord Mendelsohn, alluded to earlier, employing hundreds of new people and securing a series of significant new contracts and capital investment of nearly £40 million.
The Business Secretary, Sajid Javid, visited British Steel for the launch on 1 June, and I am pleased to say that during the year there has been regular dialogue with government departments, including the Department for Business, Energy and Industrial Strategy and the Department for International Trade, with British Steel actively contributing to the Government’s industrial strategy.
A key strand of that transformation has seen the company placing great emphasis on engaging with stakeholders. The Scunthorpe plant employs more than 4,000 people in the UK, but it is estimated that more than 16,000 people are employed in the supply chain, working together for all to share the future successes.
Times are changing in the steel industry. Steel has been fundamental in creating iconic awe-inspiring structures around the world. Continuing that means planning for the future for our young men and women, so I am pleased to see the emphasis on training over the past year: already 140 trainees, including 57 apprentices, have been engaged. British Steel Scunthorpe has come a long way in a short space of time and has been buoyed by the pace of change. However, this is the beginning of that journey, and there are areas in which support could be looked at.
Steel is an energy-intensive industry. There is no doubt that energy is a key area and therefore continual dialogue is needed with the Government. Energy remains a major cost: the oft-quoted figure is that the industry pays £17 per megawatt hour more for electricity than some of our European counterparts, so I am pleased that North Lincolnshire Council has secured a government grant to explore ways for the steelworks to become more energy efficient. With new procurement rules, it is vital that we see regular transparent evidence that the public sector is following the new guidance.
New data published for the first time show how the Government plan to use 3 million tonnes of steel in infrastructure projects by 2020, with an emphasis on ensuring that social, environmental and economic factors are taken into account within the procurement procedure. Looking at the capacity and capability, given the fragmentation of the UK steel industry, we think it is also important that the benefits of a partnership approach, rather than having a sole supplier, are embraced. British Steel Scunthorpe wants to work together with its fellow manufacturers and thinks this should be encouraged.
As I have alluded to, times are changing in the steel industry. Steel has been fundamental not only in creating iconic awe-inspiring structures around the world but in research and development. Innovation is key to steel’s future. A great example is Zinoco, the first product of its kind to be manufactured in the world, which creates a premium coated rail product that is 108 metres in length—an excellent example of the ability of the steel plant in Scunthorpe to meet its customers’ needs. Some two-thirds of the steel produced in the UK is in forms that were not invented 20 years ago. However, more support is needed to ensure that British steel provides value to customers that imports cannot.
Business rates, too, have had a significant impact on capital-intensive industries, particularly as many of their competitors abroad pay little or no business rates, so I am pleased with the Government’s response of granting transitional relief to the Scunthorpe plant, which will save it circa £4.8 million over the next four years. Thankfully, measures have also been taken to reduce the dumping of steel.
With the implementation of a bold industrial strategy driving the UK economy forward, we must ensure that the opportunities arising in the next few years are captured as much as possible by our steel industry and that the barriers preventing a fair playing field are addressed and, importantly, resolved to bring further confidence to the business sector.
Steel-making began 127 years ago. British steel has a future. Not only that, it has to have a future. It is a strategic industry, a key foundation industry for construction, automotive, aerospace, defence, rail, oil and gas, renewables and nuclear. Steel is all around us and something we rely on every day and every hour. I wish to see “Made in Britain” stamped on steel used around the world. To those highly skilled, dedicated steel-workers I say: carry on doing what you do well for our strategic industry here in the UK—particularly in Scunthorpe, of course—now and for the future generations to come.
My Lords, I declare my interest as chairman of WMG at the University of Warwick. When I started my engineering career back in the 1960s, British steel was respected around the globe. From Bessemer’s processes to Goodeve’s BISRA stainless steel, Britain was the home of global steel innovation.
However, no other nation has treated its steel industry the way that we have since. We did not just throw the baby out with the bath-water, we threw away the bath, the taps, the pipes and sewers. First, we had three decades of contradictory, inconsistent and underfinanced industrial strategies, then three decades of no strategy at all. That left us exposed so that the steel crisis hurt British producers more than our competitors. It is a global crisis. There are over 200 anti-dumping measures listed at the WTO against one country alone. We are at 30% global overcapacity and flat demand, yet steel capacity is increasing by more than 5% a year.
The world steel market is clearly distorted. So local action to ensure a level playing field for British producers is essential. I quote a former steel-worker on what must be done. He said that the Government needed to take “three tangible steps”: first,
“ensure low exchange and interest rates”;
secondly, reduce the “excess costs” that British steel faced versus its European competitors; and, thirdly, take,
“urgent, quick action to bring in anti-dumping measures”.—[Official Report, Commons, 21/10/1998; col. 1201.]
Perhaps President Trump has been listening. The insightful former steel-worker was the Minister, speaking in 2001.
More than 15 years later, we still need urgent action. Ministers described their own business rates policy as “bizarre” two whole years ago, but we still have not heard what will change. The Government said before the previous election that British steel-makers pay twice as much in energy costs as German firms, yet last month, we heard that action on the renewables obligation still needs European approval. In strategic industries, when times are tough, the Government need to offer fast relief. If European agreement is needed, why is steel a low priority in our Brexit negotiations?
I hope that I did not embarrass the Minister by citing his speech. I am delighted that he has been appointed to his job: we need Ministers with passion for their brief. Perhaps I may make amends by telling him that he has an ally in No. 10. The Prime Minister’s chief of staff wrote last year:
“We do not have to accept ‘dumping’”,
and has called our energy policy,
“a monstrous act of self-harm”.
He seems keen to deliver the urgent action that the Minister wanted.
If we are to do more than just slow steel’s decline, our industrial strategy must look well past the current crisis. Since the end of the war, British steel has suffered from underinvestment and instability. We have created a short-term, inward-looking industry. In the 1970s, we spent about the same on R&D as France and Germany, but we did not implement the results. By 1980, we had the lowest proportion of continuous casting of any major steel producer. Under Governments of all parties, steel was left exposed and uncompetitive.
Even now, producers struggle with that legacy, whether on pensions—although we hope that that is now sorted out—or on business rates, energy costs or weak infrastructure. Tata Steel invested more than £1.5 billion since buying Corus. I was heavily instrumental in that. Much of it has gone to correcting the errors of the past. When Tata felt that it had to close last year, it was because it was losing £1 million a day. It knew that much more investment was needed. All it was offered by the Treasury was tea and sympathy. However, there has been some change in attitude in the past year.
That is why our steel industry has declined to the point where Canada, Poland and Belgium all produced more than us last year. This is not a case of a productivity gap—British steel workers are productive and flexible. It is very seldom that they have gone on strike. It is a lack of long-termism, investment and innovation which fetters them.
To put that right, we need to do three things. First, we need to focus on future market requirements. Total steel demand is stagnant, but demand for specialised and advanced, lightweight, high-strength steel will only increase. Further, as a mature market, we can anticipate future trends in reuse, recycling and steel waste. Excellence here will encourage foreign investment as carbon emissions come under greater pressure.
Secondly, we need better infrastructure and procurement. Port Talbot’s lack of proper port facilities hampers its exports, but there is little help for steel producers on future procurement by the Government. Finally, we need to do more to make our innovations impactful. We are doing globally significant materials research in the UK, and we need it to reach the market. The promised steel sector strategy should support investment in steel recycling, advanced materials and improved production processes. The research being done now shows that there are opportunities.
At WMG last month, one of our PhD students won the American Association for Iron & Steel Technology prize for best metallurgy paper by a student, for a paper given on peritectic steel. I would explain what peritectic steel is, but I am sure there is no need. The Economist noted last month that WMG’s research on belt casting and advanced materials could reduce energy used in steel production by one-third. We rightly hear of the need for more diversity in British science and technology; both the research projects that I mention are by women. As the Economist says, this kind of innovation is why producers are considering a new steel plant in the UK.
We need immediate action on this crisis. We also need to support long-term investment, anticipate future needs, increase the commercial impact of our material innovation, and protect our steel market against dumping. That is a huge problem, not just here but anywhere in the world. That is why Trump has just introduced anti-dumping measures. We have had enough White Papers; perhaps it is time for a little bit of white heat. To put this right, we must look at the future market requirements: steel demand is stagnant, but demand for specialised and advanced, lightweight, high-strength steel will only increase. Further, as a mature market we can anticipate future trends in reuse, recycling and steel waste. Excellence here will encourage foreign investment as carbon emissions come under greater pressure. Furthermore, we need better infrastructure and procurement. Now that the problem at Port Talbot has been solved, with the unions and owners agreeing on a 10-year strategy, the lack of Port Talbot’s facilities hampers exports, while there is little help to steel producers on future procurement by government.
Finally, we have to do more to make our innovation impactful. We rightly hear of the need for more diversity in British science and technology, so it is worth saying that both research projects that I mentioned are by women. That is the kind of innovation that we need, and perhaps that is why the Government should spend more time not on talking but on white heat.
My Lords, when the Government published their steel pipeline and new procurement guidance, my university contemporary, the Business and Energy Secretary Greg Clark, said that the Government were,
“absolutely clear that we want to do all we can to support our world-class steel industry … This strategy will ensure we make the right investments in science, research, skills and infrastructure so that British industry wins contracts by producing the best goods and services”.
The Minister at the Cabinet Office, Ben Gummer, said:
“By updating our procurement approach on these major infrastructure projects we are creating a level playing field for UK steel”.
I thank the noble Lord, Lord Mendelsohn, for initiating this important debate. The history is there: employment in the steel industry was at 320,000 in 1971 and has now plummeted to 31,000. We export £4.7 billion-worth of steel from the UK and import £5 billion-worth—so there is a small trade deficit there—and 52% of UK steel exports are to the EU, while 69% of UK steel imports are from the EU. So the implications of Brexit for the industry are enormous, and there is uncertainty over future trade relationships with the EU, which will be absolutely crucial.
The All-Party Parliamentary Group for the Steel and Metal Related Industries produced a report this year in which it talked about an “existential crisis”, as the noble Lord, Lord Bhattacharyya, said. The APPG recognised,
“the vital role that the UK steel industry plays in the UK defence, aerospace, automotive industries, and supporting key infrastructure investments in the UK economy”.
It referred to an industrial strategy for steel and said:
“Our economy is unbalanced, tipped in favour of financial services and London and the South East. Essential to building an economy of purpose and resilience will be a renaissance for manufacturing, and for that steel is a key foundation industry”.
In the UK Steel Manifesto in 2016, it was noted again that there was a reduction of almost 60% in the number of people employed in steel since 1995, a 10% drop in UK steel production compared with 2014, and yet an increase of almost 400% in Chinese steel exports compared to 2009. It said:
“The result of the EU Referendum was a blow to the steel industry”,
in the UK. The disparity in energy costs, as mentioned by the noble Lords, Lord Mendelsohn and Lord Bhattacharyya, between the UK and our competitors is shackling the steel industry and preventing it being competitive. The Government must eliminate that price differential in the short term if we are to have a future. They must ensure that major procurement projects use British steel as much as possible, giving the industry confidence, and bring business rates for capital-intensive firms in line with their competitors by removing plant and machinery from the calculation. Does the Minister agree with that? There are barriers to this industry growing—cap ex, new investment and skills. Do we have the necessary skills and R&D, which I will come to later?
The British Government have been accused of disgraceful behaviour for labelling certain industries, including the struggling steel sector, as low-priority before detailed talks about leaving the EU. Can the Minister confirm that? I am a proud manufacturer of Cobra beer, with my joint venture partners, Molson Coors. We are one of the largest brewers in the world. We manufacture in Burton upon Trent in the largest brewery in Britain. Yet the 10 pillars of the Government’s industrial strategy make no mention of manufacturing. Manufacturing was 30% of our GDP in the 1970s; today it is 10%. India has a target to increase manufacturing from 16% to 25% of GDP. We have no such target. Will the Minister say why we do not?
As to the nature of the challenge, according to the Government’s industrial strategy:
“The UK has grown strongly in recent years—by over 14 per cent since 2010, second only to the United States”,
and yet the Government admit that,
“the UK needs to address the productivity gap with other leading countries”.
The Government proudly announce that they are increasing R&D investment by £2 billion a year. We invest 1.75% of our GDP in R&D and innovation, yet the United States and Germany invest 2.7% and 2.8%. If we were to just catch up with them we would have to invest £20 billion a year, not £2 billion. Does the Minister agree? The industrial strategy talks about the impact of universities. Once again, we underinvest in our universities as a proportion of GDP, compared to the OECD and EU average—forget America, which is way ahead of us—yet our universities are the best in the world. Just imagine if we invested the same amount. The industrial strategy mentions encouraging trade, yet the last Budget made no mention of the word “export”.
We know that the steel industry has halved and that China has quadrupled its production since 2000. Yet, as the noble Lord, Lord Bhattacharyya, said, there is a global capacity that exceeds demand by 600 million tonnes per year. The noble Lord, Lord Bhattacharyya, mentioned Tata Steel. Britain should be grateful to Tata for its billions of pounds of investment in British steel over the years. It is one of the largest manufacturers in Europe and has strong links with universities. It has endowed a chair at the University of Cambridge. I declare my interest as chair of the advisory board of the Cambridge Judge Business School. Some 60% of Tata Steel’s sales are to UK manufacturers and 25% are to the EU. The most important thing about the company is that it tries to be innovative. It has said that you must continue to drive innovation, but it pleads for a level playing field on energy costs, anti-dumping and business rates. Does the Minister agree with that? Tata Steel says that the success and future of the steel industry depend on innovation and skills and that the Government need to support periods of transition when the steel industry goes through ups and downs. In the past, the Government have said they would support this industry, yet when the Prime Minister went to India in November she did not even meet anyone from Tata.
The University of Cambridge produced a paper entitled A Bright Future for UK Steel. Once again, this talked about innovation but it also mentioned that half the steel used in this country is in construction. This sector, which has a plan for building lots more homes, employs 250,000 people from the European Union. What are we to do when Brexit happens? I am delighted by the recent news that:
“The UK steel industry has welcomed anti-dumping duties announced by the European Commission on some Chinese products”.
Can the Minister expand on that?
In conclusion, an article in the Financial Times asked:
“Is UK steel really a strategic industry”?
It said that it is to a town such as Port Talbot, but asked how strategic it is when it represents a small proportion of our economic output. Paul Forrest, head of economic research at the West Midlands Economic Forum—I am chancellor of the University of Birmingham—said that 260,000 jobs in his region are part of the steel supply chain. Local sources of steel production are helpful to the UK’s manufacturing ambitions. Nissan’s factory in Sunderland, which is the largest car plant in the UK, buys 45% of its sheet steel from Port Talbot.
Professor Andy Neely, a fellow of Sidney Sussex College and head of the Institute for Manufacturing at the University of Cambridge, said:
“Steel is undoubtedly foundational for so many products—but so is cement or plastics. You can … make the case that steel is a strategic material”.
But what if you can get the supplies from elsewhere? The reality is that the steel for Trident nuclear submarines is supplied from France and the latest generation of Ajax armoured vehicles will use Swedish steel. According to Philip Dunne, the Defence Procurement Minister at the time, no UK steel manufacturer could meet the requirements. There are some implications for sectors such as automotive, which require just-in-time availability, and, where it is available, UK steel plays a role in equipping our Armed Forces. Our latest Queen Elizabeth-class aircraft carriers are built by Tata Steel.
John Louth of RUSI said:
“The quality of British steel has made a big difference to the UK defence industry”,
including for our aircraft carriers. Close to 60% of steel used in the UK is imported, while two-thirds of UK output in the past couple of years has been exported.
I conclude with the words of Professor Andy Neely of the Institute for Manufacturing in Cambridge, who said that while steel may no longer be a vital input, it is part of the strategic argument over the shape of the UK economy. He said:
“If the UK says it cannot compete on steel, where does that process stop? The danger is that you end up saying the same in other sectors and we end up with a hollowing out of the British economy”.
My Lords, I was a steel-worker from Ebbw Vale in south Wales. My first Member of Parliament was Aneurin Bevan. Growing up as a young kid, I listened to him in the Palace cinema. He was a wonderful man. The works is no longer there. Many people became unemployed, including many of my relatives, so I know a little bit about the difficulties that steel-workers have had in the United Kingdom. I thank the noble Lord, Lord Jones, for his comments about our relationship during my stewardship of the then named Iron and Steel Trades Confederation.
The Question in the name of the noble Lord, Lord Mendelsohn, is relevant. What will be the future of steel? What will be its role in relation to the industrial strategy that we will consider in due course, whoever forms the next Government? I recall a debate in this House on the future of the steel industry. That debate in June 2003 lasted three and a half hours. Therefore, it was much longer than today’s debate and many more noble Lords were present to listen to what was said. It was an interesting debate on the future of steel and manufacturing in general. Some people—not people I can name publicly—believe that we were, and are, living in a post-industrial society, and that steel is not a key issue for the British Government of the day. I am not reading from notes but saying what I feel about the future of steel and manufacturing in general.
The Steel 2020 report of the All-Party Parliamentary Group on Steel and Metal Related Industries has been referred to. I was impressed by that first-class report, which was researched and drawn up by Dr Ian Greenwood. It would be worth the while of everyone who is interested in the future of manufacturing and the steel industry to read it carefully. Dr Ian Greenwood’s work is first class and I am proud to be associated with the all-party group’s efforts to support the steel industry. A group of MPs associated with the APPG—Tom Blenkinsop from Middlesbrough, Jessica Morden, Tom Pursglove, Anna Turley, Angela Smith and Stephen Kinnock—are working night and day to try to ensure that we have a powerful, strong steel industry to support manufacturing.
The facts are pretty clear, and the previous speaker mentioned some of them. The UK steel industry directly employed 320,000 people in 1971, compared with 21,000 in 2015. The report that I referred to points out that the figure is now about 18,000. So let us be honest with ourselves. Are we, and have we been, fighting a losing battle? Are the British people concerned, as noble Lords this evening seem to have been, about the future of the steel industry and manufacturing? I have my reservations about the views of some people on the future of the steel industry, but I am very pleased with my own union. Roy Rickhuss, the current general secretary, has been very active and effective, as have his key officials such as John Paul McHugh, the union’s assistant general secretary. They are fighting tooth and nail to ensure that we in this country have a strong, workable steel industry for the future.
It is some years since I instigated a debate on this matter and I should be interested to hear the view on the position today. In that debate, strongly represented by people from this House, everybody said that we did not have a successful arrangement with the Government of the day for a powerful industrial base, including a strong steel industry. That is central to what we are talking about tonight and it will be in the future. That is why my noble friend’s opening remarks were so relevant. We need to understand clearly what the Government will do to support the very thing that many noble Lords have spoken about today—a strong, competitive steel industry that can hold its head up high in world business.
My Lords, I welcome the opportunity to speak in this debate. As we look forward to another election, we should not let issues that do not dominate the agenda slip out of focus, and this is a particularly important issue. It is important, I think, not just for the industry that it concerns but for the wider issue of the industrial strategy. Unlike many in the other place, I think that most noble Lords here will have memories of the old days when the industrial strategy occupied a more central role in government and, indeed, had an entire department structured around it. If the former Members for Chingford and Henley were present, they would have more knowledge than me about that, having been the Ministers responsible. Trade tariffs and dumping were vexed and vexing questions then, and little seems to have changed.
Through the years, I have stuck to the uncompromising view that low tariffs and minimal impediments to trade are the most effective policies for improving growth, and they have the pleasing effect of helping those at both ends of a deal who, after all, are exchanging one thing for another of higher value. The steel industry is an interesting case in point. After we leave the EU, I hope that we will be subject to some sort of deal. It appears that customs union membership will not be part of that, and Ministers will be hassled by the Opposition and special interests to whack up steel tariffs in a post-Brexit round of reviews of industrial policy. However, I feel that to do so would be completely the wrong approach.
Before I make the substantive case, I will make one comment against certain jingoistic points that I have observed. You can indeed buy British steel to build roads and hospitals, but if British steel is consistently more expensive, you will have to build fewer roads and fewer hospitals with your limited budget.
An industrial strategy that works will need to be focused on the work of supporting winners, not picking them. In the post-war economy, which was far more heavily subsidised than now, productivity and efficiency rocketed as subsidies were withdrawn. Services are our real comparative advantage, and they are outgrowing almost all other sectors. They must be helped to grow and expand by our trade strategy. We should insist that all free trade deals on goods be accompanied by some agreement on mutual recognition of regulatory quality of services, or mutual recognition of degrees. Services must feature in the industrial approach to trade.
The primary benefit of this strategy, rather than subsidies, or trying to grow industries from scratch, is that it puts relatively little pressure on the Exchequer. A few guarantees like additional export finance may be put in place, but are tiny to heavily subsidised industry. If the market sees fit for an industry to survive, it will step in with the necessary investment, as ArcelorMittal is showing with Welsh steel plants. Supporting industries with large subsidies when they may not even be close to returning to profitability is an expensive folly. If other countries choose to pursue that policy and then let us benefit from cheap exports, that subsidy has been passed to us and need not be retaliated to. Inefficient industries supported well beyond their time create huge issues. It is not just that they soak up capital that could be used more efficiently, but that the planning is never put in place for their eventual demise.
We should take the lesson of the 1980s and make strong plans for industries in a declining phase. Workers must have strong support and meaningful alternative career options. In this post-Brexit world with lower immigration, there is plenty to do.
My Lords, I have given notice to the Minister that I intend to raise questions on the future of Port Talbot steel. I hope that the Minister will reply either tonight or in writing. I have no present interest to declare, but I was the Member of Parliament for the area for more than 41 years. My first job as a young Minister in 1964 was to supervise the drafting of the steel White Paper on bringing the industry into public ownership. One of the driving forces was the cyclical pattern of world markets and the need to protect the national interest. Have we not seen many cycles since then?
It was my privilege to look after the interests of my constituents working in that part of the steel industry. The lion’s share of my political life was dominated by it. I still maintain—although I am slightly removed—a close interest in their welfare and the future of the plant. I lived through the huge job losses of the 1980s when the labour force came down from 16,000 to under 4,000. The paramount interest of the labour force was to maintain confidence in continuing long-term investment in the plant. The unions, the works council and the management under Sir Brian Moffat saw off the temptation of industrial action and instead put the working conditions of the plant on a firm, workable and economic basis. They worked together to ensure their future.
I had the privilege of opening the huge investment in the continuous casting plant, which I had done a little to secure, as well as opening the reconstructed old harbour. I was a privileged Member of Parliament from the days of a previous Labour Government that built the new harbour at Port Talbot. Port Talbot had all going for it. From the published reports, I see that history is repeating itself and the trade unions have agreed to lower pensions in return for the promise of a long-term future for the plant. However, the pension liabilities of the firm remain—to the extent, we are told, of £15 billion for its 130,000 members.
It is reported that Tata Steel is trying to hive off its liabilities before merging its European steel operations with thyssenkrupp. The talks between Tata Steel, the Pensions Regulator and the Pension Protection Fund have dragged on for month after month. What are the views of the Government about the role of the Pensions Regulator? Is spinning off the pension scheme practicable or would the Government prefer for it to enter the Government-backed lifeboat? I surmise that the latter would be disadvantageous to pensions in the future, although it should not affect the existing workforce, as I understand it. Could the Minister confirm a report that Tata Steel has offered £520 million to the United Kingdom pension scheme in return for relinquishing a guarantee it holds over the company’s assets?
There are significant issues still to be resolved, and the workforce is entitled to know. I raised some of these issues in my remarks during the debate on the Queen’s Speech and the debate on the referendum on 6 July 2016. I criticised the processes of the European Union in its tardiness to take effective and timely action to counter the dumping of exports of steel from China. There are recent reports that President Trump has signed an executive order to assess the impact of steel imports on his military build-up in the United States. The state-owned Chinese steel industry represents half the world’s steel-making capacity. What is the view of the Government on dumping? I ask specifically: given that we are still in the European Union, what representations are they making or have they made in recent years to ensure that the European Union is as resolved as the United States in maintaining British steel in the face of the turbulence of dumped imports?
My Lords, it has been a very full debate and we have all appreciated particularly the personal experiences we have heard from the noble Lords, Lord Jones and Lord Brookman, the noble Baroness, Lady Redfern, and the noble and learned Lord, Lord Morris. There are a couple of themes that I would like to pick up in contributing to the debate. The noble Lord, Lord Bhattacharyya, said that we had wasted three decades for this industry through poor decision-making and a lack of long-term thinking. The noble Lord, Lord Bilimoria, spoke very much about the dangers of the distraction of Brexit and the impact it will have on this industry by damaging the whole sector. I would like to deal with both those points.
In the general election, the Government will promise the country strong government and stability. I would agree with that if it was being applied in the steel industry. The only problem is that the Government promised that at the last election and, within a year, we no longer had an economic plan and we have had all the uncertainty that followed the referendum, which will continue over the next couple of years. What we want in this debate—what everybody has spoken about—is a commitment to a modern, innovative manufacturing sector in which steel will play a full part and where we can genuinely compete with Germany. Steel should be an important component of that future. As we know, currently, our whole automotive industry depends on a huge output of steel from the Port Talbot works.
The other area where we have to look at our competitive advantage is that of specialised steels, which the noble Lord, Lord Bhattacharyya, mentioned. But that needs a long-term plan and long-term commitment. I give some credit to the Government for identifying the problems and raising the questions, but will they address those? They have looked at energy costs, but we know that there are huge problems with energy costs in the sector. They are looking at business rates. I do not know whether the Minister will say anything on that and what help they will provide for manufacturing. To be fair, the Government have also published various documents on improving procurement planning, which are all important. But as we go forward, like every other industrial sector in this country, improving R&D investment and getting a return from that, raising productivity and concentrating on skills development will see this sector prosper.
But what will we get in the next two to five years? We will get complete uncertainty. We have seen that just in the last year with the devaluation of the pound. That creates further uncertainty in the steel sector. Okay, it improves its competitiveness on pricing, but it also adds to its costs. We have no idea what will emerge from the single market free-trade negotiations. As we know, steel components cross borders repeatedly as they find their way into the final manufactured goods.
When the European Community was first set up, I thought that steel was at the heart of it, and so was coal. One of the reasons for that was overcapacity and unproductive resources in both those sectors. To actually get rationalisation was going to be difficult unless there was co-operation and partnership. We know in this sector particularly that if we do not have some form of international co-operation and understanding, the owners, who are huge international combines, will simply pick off individual Governments. Some 52% of steel exports go to Europe. What will happen when we start negotiations on our access to the single market in the Brexit negotiations? The Germans, Spanish, Italians and French will defend their interests. We will lose the co-operation that we have built up over the past few years in Europe trying to address some of these problems.
Those in favour of Brexit will argue that we can take action ourselves against uncompetitive practices and we can get involved in dealing with dumping. But the reality of that is a myth, frankly. If we look at Chinese dumping, China’s total exports exceed the total production of the top five European steel-producing countries. We know that the British Government themselves resisted supporting protection orders in the EU because they were worried about a future relationship for other trade with China. What will happen when everything is up for grabs? Will the steel industry be one of those that will be cast aside in the desperate interests of trying to improve exports to China in other sectors? Brexit is a major distraction for this industry at a vital time. It will encourage the continuation of short-term thinking when we need long-term thinking and it will provide a distraction from trying to deal with the issues that have been raised in this debate.
Greg Clark has done some good work on the industrial strategy, continuing the work done by the coalition, but unless we actually get involved in the detail and deliver the answers to some of the questions and problems that that work is raising, we will not make the progress industrially that this country and particularly the steel industry want. The major problem going forward will be that the Government themselves will be totally distracted by the Brexit negotiations when they should be dealing with some of the problems in this sector.
My Lords, I begin by thanking the noble Lord, Lord Mendelsohn, for bringing this debate to the House. It is extremely important. Steel is very close to many of our hearts in this Chamber. It is very good to have the chance to debate it.
I have not yet visited Scunthorpe under the new management of Greybull, but I very much look forward to doing so and meeting the team that the noble Lord met when he was there a few months ago—although I do not imagine he got his new suntan when he was in Scunthorpe. I also mention my noble friend Lady Redfern, who lives very close to Scunthorpe. She mentioned the community spirit and the importance of the supply chain. She mentioned that the jobs of 16,000 people were dependent on the supply chain of the Scunthorpe steelworks, so when we talk about steel we are talking about many other industries as well.
The noble Lord, Lord Jones, referred to steel as a foundation industry. He is absolutely right. He spoke about Shotton. I visited Shotton only a month ago. It is wonderful to see the coatings plant there, but it is pretty sad to see where once there was a great integrated steelworks.
The noble Lord, Lord Bhattacharyya, mentioned that when he was growing up as a young engineer in the 1960s Britain was seen as the home of steel. He said that for many years, really since the war, the British steel industry has suffered from underinvestment for all that time. I think he said that in 1980, despite having invented continuous casting in this country, which was a fundamental technological breakthrough for the steel industry, we had the lowest percentage of steel made through continuous casting—a pretty damning condemnation of our industry at the time. I think of how much investment went into two steel plants, Llanwern and Ravenscraig: both were undersized, in the wrong place and underinvested. However wonderful and flexible the labour force is, if the strategy is fundamentally wrong, as those two plants were, in the long run nothing can save them.
Listening to the noble Lord, Lord Brookman, I could almost see in my mind two people that I am sure he remembers from those days: Bill Sirs, who was general-secretary of the ISTC, and Hector Smith, who was general-secretary of the National Union of Blastfurnacemen at the time. He spoke with great passion about Ebbw Vale.
I did not agree with many of the words of the noble Lord, Lord Bilimoria. I did not recognise his characterisation of our industrial strategy Green Paper; I did not see where he was coming from. We are absolutely committed to a strong and competitive manufacturing sector in this country. I reassure the noble Lord, Lord Stoneham, that we are calling for a modern, competitive industrial sector in this country. It has to be long-term; there is no point having an industrial strategy for the length of just one Parliament. Whoever wins, I hope that after the next general election we can have some consensus over that. If we cannot have consensus over the long term, how is industry to have it?
The noble and learned Lord, Lord Morris, raised pensions. I have to declare an interest as a member of the British Steel pension scheme, so I cannot address his particular issues. If the officials can write to him after this debate, I will arrange for that to happen.
For me this is Groundhog Day. When I joined British Steel in 1980 we were producing 15 million tonnes of steel a year. We had five integrated sites. About 200,000 people worked in the industry. Since then, 30 years have passed. What makes it Groundhog Day is this: the problem in 1980 was fundamentally one of overcapacity, which led to low prices. In the trading year 1979, British Steel lost £309 million. I could not find the figure, but my recollection is that in 1980 it lost £700 million. In today’s money, that is £3 billion to £4 billion.
In those days, new capacity was coming on, largely from Japan, closely followed by South Korea. Japan installed 100 million tonnes of capacity. It was low-cost capacity; it was all on deep water. It was all highly productive; it was new technology. It was all continuous casting and of great quality. To our shame, most of the steel that went into the pipelines in the North Sea to bring ashore oil and gas was made in Japan and not by British mills. Much of the steel going into the Ford Motor Company at the time had to come from abroad because we could not meet the quality requirements.
Today, we have a similar problem but from a different country: it is of course China. Its steel production capacity is hard to measure, but it is probably around 1 billion tonnes. If we put that against our total UK production in 2016 of a little over 7 million tonnes, it sets our industry in some kind of context. Chinese steel production has increased sixfold since 2000.
As China has exported into other Asian markets so they, too, have exported in return into the western European markets. In a high fixed-cost industry such as steel, the temptation to marginally price is hard to resist, so we have had extremely low prices for a long time.
As has been pointed out by noble Lords this evening, particularly the noble Lord, Lord Bhattacharyya, we had an extraordinary inheritance. The Industrial Revolution started here. The iron and steel industry started here. There was the open hearth process and continuous casting. We invented stainless steel. British-made steel products are seen in iconic buildings and structures all over the world.
Despite that, since the war, with the uncertainties of nationalisation and denationalisation, we suffered from persistently low levels of investment. Where we did invest, I am afraid that the involvement of politicians was not a happy one. We would not have had Ravenscraig here and Llanwern there had it not been for, with hindsight, mad political interference. At Redcar, we had a one-blast-furnace operation. That is not a viable strategy for the long run. The whole concept of producing on Teesside low-value, semi-finished slabs from iron ore and coal coming in from Australia and Brazil, and then re-exporting those slabs back to Thailand, was hardly a strategic decision of great genius. Even today—if we are honest—although the configuration with two integrated sites is where we need to be, those two sites are not ideal. It is not ideal to have coating plants at Shotton and hot rolled coil being made at Port Talbot. It is not ideal to be making blooms and billets at Scunthorpe and to have the finishing section mills on Teesside. While those plants are not ideal, they can be competitive, but we must be realistic that they will not be as competitive as those fully integrated plants that we see on deep water, with modern equipment and modern investment, in other parts of the world.
Nevertheless, we have reached the point where we have two integrated plants in the UK and not five, which is a huge improvement. We also have a very important scrap-based electric arc business in Sheffield and south Wales. Again, given the right investment, these should be competitive given the availability of scrap. We export 7 million tonnes of scrap a year from this country. Surely we can do better by melting more of that in the UK.
The overall numbers for the UK are grounds for encouragement. UK steel demand is around 10 million tonnes a year, which is roughly in line with our capacity. If we add in the steel of imported manufactures, we see that we consume 22 million tonnes a year. If some of that manufacturing can be reshored to this country over the next five to 10 years, then that gives even bigger opportunities for our domestic producers.
Much has changed since this House was last formally updated in April 2016. As noble Lords mentioned, Greybull Capital acquired Tata’s long products business based in Scunthorpe. In September, the two Scottish plate mills, at Dalzell and Clydebridge, re-opened under Liberty Steel’s ownership, following their acquisition from Tata. More recently, Liberty Steel announced it had agreed a sale and purchase agreement with Tata for the speciality steel business in South Yorkshire. At the same time, Tata Steel Europe remains in negotiations with regard to a possible joint venture with thyssenkrupp. So much is going on in the ownership of the steel industry but in a sense having a clear separation of special steels, long products and strip mill products is no bad thing. They are three very different businesses with different markets and different manufacturing processes.
I also acknowledge the efficiency savings and productivity improvements realised at Port Talbot by the Tata workforce. The noble Lord, Lord Bhattacharyya, and others referred to the flexibility and spirit of the workforce both at Port Talbot and in Scunthorpe.
I then turn briefly to the actions the Government have taken. We are compensating energy-intensive manufacturers such as steel for the costs of renewables and climate change policy. To date, we have paid over £151 million to the steel sector. We secured flexibility over the implementation of EU emissions regulations. The Government introduced revised steel procurement guidance, as has already been noted, to ensure that UK steel producers have the best possible chances of competing for public sector work. We provided a procurement pipeline for steel to ensure that the UK sector has every opportunity to prepare to meet this future demand. We also successfully pressed for the introduction of trade defence instruments to protect UK steel producers from unfair steel dumping. There are now 41 in place in the EU. Yet in my experience of anti-dumping, it is always too little, too late—it always takes too long because the damage is done before the actions can take place.
I have not got much time and it is late in the evening. We are open to a sector deal for steel. Anyone who thinks that steel is a low priority has misread the runes. We put it to the UK steel industry that it is in its hands to come forward with a proposal for a sector deal. Of course, it is entirely up to the industry what is in that sector deal but I would certainly expect it to focus on: technology; investment, clearly; training; how we can go further up the value chain; how we can look at new products—the new rails at Scunthorpe were mentioned and that is exactly the kind of thing we should do—lower energy uses; and how we can make better use of the surplus scrap available in the UK.
There can never be a guarantee about the future of any industry at a time of such extraordinary technological disruption as is going on in our markets. However, this industry in the UK has been resized. I must believe that there is a long and profitable future for the UK steel industry. We are committed to a strong manufacturing base in this country and steel is a vital part of a long-term supply chain for many industries. You cannot build a manufacturing base buying on a spot basis from overseas. That is not a viable way of securing that. So I am optimistic about the future. It has been a long and traumatic journey and struggle for this industry. Many lives have been ruined along the way because of poor strategic decisions taken in the past. However, now the structure of the steel industry and the commitment of companies such as Tata to it give me great hope for the future.