Arrangement of Business
Announcement
The Deputy Chairman of Committees (Baroness Fookes) (Con)
My Lords, Members are encouraged to leave some distance between themselves and others and to wear a face covering when not speaking. If there is a Division in the Chamber while we are sitting, this Committee will adjourn as soon as the Division bells are rung and resume after 10 minutes.
Grand Committee
Arrangement of Business
The Deputy Chairman of Committees (Baroness Fookes) (Con)
My Lords, Members are encouraged to leave some distance between themselves and others and to wear a face covering when not speaking. If there is a Division in the Chamber while we are sitting, this Committee will adjourn as soon as the Division bells are rung and resume after 10 minutes.
National Security and Investment Act 2021 (Monetary Penalties) (Turnover of a Business) Regulations 2021
(3 years, 1 month ago)
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Lord Callanan
That the Grand Committee do consider the National Security and Investment Act 2021 (Monetary Penalties) (Turnover of a Business) Regulations 2021.
Relevant document: 13th Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, in moving that the draft National Security and Investment Act 2021 (Monetary Penalties) (Turnover of a Business) Regulations 2021 be approved, I will speak also to the draft National Security and Investment Act 2021 (Notifiable Acquisition) (Specification of Qualifying Entities) Regulations 2021, which were laid before the House on 6 September this year. The commencement date for both SIs is 4 January, which is the same date as the full commencement of the National Security and Investment Act 2021.
Before I turn to the detail of the SIs, I will say a few words to remind the Committee of the purpose of the National Security and Investment Act and why it is vital for the UK’s security. The UK economy thrives as a result of foreign direct investment. Over the past 10 years, more than 665,000 new jobs have been created as a result of more than 18,000 foreign direct investment projects. However, as I am sure your Lordships will agree—and indeed as the House demonstrated through its agreement to the Act—an open approach to investment must include appropriate safeguards to protect our national security and the safety of our citizens.
The NSI Act therefore provides the Government with updated powers to scrutinise and intervene in acquisitions to protect national security, as well as to provide businesses and investors with the certainty and transparency they need to do business in the United Kingdom. The Act establishes a call-in power for the Secretary of State to scrutinise qualifying acquisitions, a voluntary notification option for firms which wish to gain clarity on whether the Secretary of State will call in their acquisition, and—the subject of these regulations—creates mandatory notification requirements in 17 sensitive sectors of the economy where it is considered that national security risks are more likely to arise.
Starting with the draft maximum monetary penalties regulations, this SI sets out how the Secretary of State will calculate a business’s turnover when calculating monetary penalties resulting from non-compliance. We generally expect compliance with the Act to be high and the need for the Secretary of State to issue penalties to therefore be rare, but it is important that the Act comes with sufficient deterrents to non-compliance.
This SI is laid under the delegated powers pursuant to Section 41 of the Act. Sections 32 and 33 create offences of completing a notifiable acquisition without approval and failing to comply with an interim or final order. Both these offences can result in the imposition of a monetary penalty.
The maximum fixed penalty that can be imposed on a business for an offence under Section 32 or 33 is the higher of 5% of the total value of the turnover of the business and £10 million. The maximum amount per day for a daily rate penalty that can be imposed on a business for an offence under Section 33 is the higher of 0.1% of the total turnover of the business and £200,000.
With these regulations, we have ensured that global turnover is taken into account when calculating the total turnover, so that no efforts to get round the penalties—for example, through changing accounting approaches—will be successful. These are important and well-balanced regulations, necessary for the effective functioning of the NSI Act.
Turning to the notifiable acquisition SI, which was of some interest to your Lordships during the passage of the Act, the SI has also been noted by the Secondary Legislation Scrutiny Committee as an “instrument of interest”. These regulations specify descriptions and activities of qualifying entities, the acquisition of which must be notified to the Secretary of State—a notifiable acquisition. Acquisitions in scope of mandatory notification that complete without the approval of the Secretary of State will be void and therefore have no effect in law. These are important changes to the UK’s investment screening system and sectoral expertise has been vital to ensure that mandatory notification is proportionate and targeted. The Government have therefore taken great care and time to get these regulations right.
Alongside the introduction of the NSI Bill in November 2020, the Government ran an eight-week public consultation on the proposed descriptions of the 17 areas of the economy referred to in the draft regulations, after which the Government published revised definitions in March. The Government then undertook further targeted engagement with stakeholders in these key sectors—such as communications, data infrastructure and synthetic biology—to refine and narrow the proposed descriptions to provide businesses and investors with further clarity.
As the Minister for Small Business, Consumers and Labour Markets did in the other place, I place on record the Government’s appreciation of the extensive input we have had from across sector organisations in helping to develop these regulations. They strike a careful and appropriate balance between ensuring that our national security is safeguarded and keeping the number of businesses caught by the mandatory notification requirements to a necessary and proportionate level. In addition, these regulations allow parties themselves to identify objectively whether they are in scope of mandatory notification or not.
In addition, to monitor the impacts on businesses and investors, particularly small and medium-sized enterprises, the Government have chosen to include a shorter three-year post-implementation review within the SI, instead of the more standard five-year period. The Government engage on a daily basis with a wide range of businesses to help them understand the requirements of the Act, and we will of course continue to do so. Furthermore, extensive guidance across all 17 areas of the economy specified in these regulations will shortly be published to further assist parties in understanding the effect of the requirements on their planned activities.
In conclusion, these are detailed and technical statutory instruments which give effect to the purposes of the NSI Act. They have been carefully developed and tested to ensure that they give maximum clarity to businesses, while allowing us to protect the UK’s national security. I commend the draft regulations to the House.
Baroness Bowles of Berkhamsted (LD)
My Lords, I thank the Minister for introducing these statutory instruments. As has been said, they follow on from the National Security and Investment Act 2021 that we concluded earlier this year. Indeed, most of the things that could be said were said during those proceedings. The basics of what is covered by these instruments, such as the level of fines, was set out in the Act, but how turnover is calculated for the purposes of the fines is now laid out in more detail. As has already been explained, the maximum fixed penalties for offences are the higher of 5% of the total value of the turnover and £10 million, or a daily amount that is the higher of 0.1% of the total turnover and a cap of £200,000.
Clearly, it is important to define how turnover will be calculated for the purposes of fines, and I am glad to see that it is globally based—indeed, I think we were told that that was the intention. Whether the formulations actually laid out are right remains to be seen. I hope that, if they do not work, they will be adjusted, and that the Secretary of State will be prepared to intervene and overrule—as he can—on the companies’ turnover calculations, should they be unrealistic or if there have been manoeuvres to minimise exposures, which can be different from just accounting measures and moving things around globally if it covers the creation of special companies, subsidiaries and a whole gamut of things that will probably be beyond everything that we could list now.
I also have a reservation, which I think I expressed during the Bill proceedings, concerning whether the maximum fines have been set too low. As they are presently fixed, the percentages will bear down in totality more heavily on SMEs, which will tend to fall under the percentage calculations, than on large, international businesses, which will hit the maximum and be able to enjoy—if that is the way to phrase it—a cap. I am sure all noble Lords hope that the penalties do not need to be used all that often and that, as the Minister said, it is rare. Nevertheless, there must be a strong deterrent; it cannot be seen as a risk worth taking. The fact is that I can think of some deals where £10 million is not a lot in the scale of things and given the charges that are levied by advisers. In my view, the cap, if there is one, should be proportionate. I hope that the Government will hold on to that thought, and perhaps the Minister can say what thinking there has been in the Government and the department around that.
Obviously, it is unrealistic to expect the Government to revise figures that have only just been passed in the Act, but under Section 41, it is possible to vary them. Could the Minister explain how such adjustment possibility is viewed, looking forward? Will it be used simply to adapt to inflation or, as I have suggested, will it be used if the deterrent is, as it turns out, not quite strong enough for the largest multinationals?
I turn to the second SI and the specification of qualifying entities. The definitions contained in the schedules have been refined in response to stakeholder feedback following the consultations which took place as the Bill was proceeding and subsequently—all of them have been refined, which is good to see. The outcome seems to have been broadly welcomed, with more focus and narrowing but also some occasional broadening. However, I gather there are still some industries with concerns about them being too broad. Perhaps it is a case of saying that not every possibility is covered. The challenge there is the make the reserve call-in power both functional and reasonable, without making it look like it has become protectionist.
It is in fact difficult to understand the legislative detail, how and why the various changes have been selected, and who has been listened to, as the contributions are not available for scrutiny; we cannot really scrutinise that aspect of the job. It is almost certain that large companies and their advisers will have been the most active. I am not criticising that involvement in any way; they have both the resources and the expertise to keep on top of the job and their input is valuable. However, can the Minister inform me how suggested changes are then back-tested, in particular for small businesses, and whether what fits the larger businesses and comes as advice from lawyers and other advisers fits across the piece?
Overall, the situation is that we must accept the assurances that efforts have and are being made to get things right and that the Government and the department will do their best to issue advice and assist companies. It is of some comfort that the review period has been shortened, as the Minister said, to three years, rather than the usual five.
In the debate in the Commons, the Minister said that the investment security unit in the department will be able to offer advice and give forewarning, and the Minister here has said similar things. I would like to know a little more about how that works, especially for SMEs. Is there helpline advice, separate from guidance, and can it be relied upon, or is it the case that there will inevitably end up being a larger number of precautionary notifications than are really needed, because that is the point at which you can get some definitive feedback? Will the Government be able to publish what has been positively cleared and other advice given once it is no longer time sensitive to a prospective deal? I recognise that it cannot be done in real time, but will something of that nature happen retrospectively?
Finally, as I have already referenced, the Secretary of State is given powers to call in other transactions not covered by the 17 sectors. I am conscious, as I said, that it is necessary to demonstrate that the UK is an open economy, but on the other hand, recent experience with Covid, Brexit and other geopolitical issues has drawn more attention to security of supply. Will there be a capacity and appetite to monitor transactions generally and take action where needed? What other measures are being taken around issues of greater security of supply?
Lord Lennie (Lab)
My Lords, I thank the Minister for outlining the regulations. I say at the outset that the Labour Party also supports these necessary instruments. Taken together, they provide for the operation and running of the NSI Act and the provision of a safeguard for the UK. The SIs identify, as we have heard, 17 sectors in which national security could be at risk—the so-called sensitive sectors—and establish how the Secretary of State would establish the worth of each business when calculating the value of monetary returns it would be required to make. The offences cover both completing an acquisition without approval and failing to comply with a final order when required to do so, with resultant penalties, as we have heard, of £10 million or 5% of turnover, whichever is the greater, or a daily rate of 0.1% or £200,000.
However, there appears to be no effective early warning system or method to forewarn businesses considering acquiring a business that they may be in breach of these regulations. Have the Government considered putting such a system in place to alert businesses that they may risk putting themselves in breach by continuing with an acquisition?
The current thinking about the destination of the funds raised by this instrument is that they will go to the consolidation fund. Surely more creative thinking is possible, such as using them for the specific purpose of funding start-ups and innovators to help build up UK resilience. Is this set in stone, or could the Government reconsider the destination of the funds and ally them to the problem that the instruments are designed to prevent?
As the noble Baroness, Lady Bowles, said, there is also some concern about the breadth of what is captured by this legislation; in particular, the biodiversity sector believes that the definition is cast too wide and covers industries not associated with security matters. Could the Minister look at the concerns raised by the biodiversity sector to be sure that the reach of the regulations is only as broad as is necessary and not more widespread than it needs to be?
Some concerns have been raised about how the Government engaged to build these better regulations. For instance, when considering issuing guidance to particular sectors, which the Minister said would happen shortly, he should be aware that SMEs do not have access to large legal firms to advise them on these matters and therefore require straight, clear guidance rather than obscure, legalistic wording. Can he explain this process to the Government when they are issuing such guidance?
Finally, do the Government believe that food security forms part of national security? I ask because they have shown little interest in the recent takeover of Morrisons, which will in turn undoubtedly act as an encouragement to others to consider similar purchases in this country.
While we support the regulations, they require a more muscular approach in some areas while in others a lighter touch is required. Getting this balance right is tricky but important to the UK’s inward investment programme and opportunities.
Lord Callanan (Con)
My Lords, I am grateful to both noble Lords for their valuable contributions to this debate. I will endeavour to respond to the points that were made; first, to those made by the noble Baroness, Lady Bowles of Berkhamsted, and then to those made by the noble Lord, Lord Lennie.
In response to the points made by the noble Baroness, Lady Bowles, about the maximum monetary penalties, some businesses may argue for the lowest possible turnover, for obvious reasons, and it is important that the Secretary of State retains the flexibility to set what would be a reasonable and effective fine. Of course, in all decisions the Secretary of State must act reasonably under public law duties, so it does not exactly give him a free pass. However, I am very happy to provide the noble Baroness with reassurance that, if there is any disagreement between the Secretary of State and the business that would be subject to the penalty, it will be for the Secretary of State to determine the relevant turnover in question.
In regard to the noble Baroness’s point about whether penalties are set too low—I do not often get to hear that criticism—the largest penalties are up to £10 million or 5% of turnover, whichever of those is the higher amount. I am sure the noble Baroness will appreciate that, to any business, £10 million is a substantial amount of money. However, as a civil financial penalty, it is only one of the possible forms of punishment. The noble Baroness will be aware that criminal sanctions are also available, and those criminal penalties may well include a prison sentence of up to five years, so we are satisfied that the appropriate disincentives exist to flouting the regulations.
The noble Baroness referred also to some of the sector definitions. I am happy to reassure her that we have engaged extensively on them in a number of different ways. We have changed the descriptions and amended them in communications with regard to qualifying entities carrying on activities in the UK. For critical suppliers to government, two of the five limbs of the definition set out in the government response were amended, and we made some changes in data infrastructure. We clarified some of the infrastructure activities with regard to energy, and, on suppliers to the emergency services, some of the limbs of that definition were amended and narrowed to provide an objective list of activities, as well as in the field of synthetic biology.
On points raised by the noble Lord, Lord Lennie, with regard to the funds, as was discussed—these points were also raised in the other place on 20 October—any funds received will go to the consolidated fund, as is standard practice. However, the noble Lord will be aware that we have a wide range of support schemes for businesses in other areas, particularly for establishing new technology.
On publishing the details of clear cases, we are of course required under the Act to publish an annual report setting out the numbers and sectors of cases that are notified and cleared. To ensure that mandatory notification works proportionately and that the Act is future-proof, the Secretary of State will of course keep this under constant review and will seek to amend the list of acquisitions that would be in scope in the future through additional secondary legislation to reflect evolving national security risks and technological changes. The noble Lord will be aware that, following the practice of previous Governments, we have never defined what national security is, and he will also be aware that of course I cannot comment on the additional case that he mentioned.
Both these SIs are essential for the effective operation and running of the NSI Act and for the provision of a safeguard for the United Kingdom. The Government have ensured that the proposed descriptions within the notifiable acquisition regulations will enable potential acquirers to self-identify for the purposes of the mandatory notification requirement.
The noble Baroness, Lady Bowles, also raised the point about communication and the possibility of a helpline. We do not think that that is necessary; officials remain available in the investment screening unit within BEIS for consultations, if necessary, on a confidential basis with businesses both large and small, if anybody is unclear about a particular acquisition. Advice is being provided at the moment and will be provided in future to any business that wants to call or email the team responsible for leading this. Sectoral expertise has been a vital part of the development of these regulations, and we have taken great care and time to get it right.
In response to the comments that the noble Lord, Lord Lennie, and the noble Baroness, Lady Bowles, made about available support for SMEs, as I said, we continue to engage directly with businesses around the NSI Act. I have done a number of consultation meetings, and I know that officials have done a lot as well. The first tranche of detailed guidance has already been published to assist businesses, investors and advisers in understanding the Act to comply with its requirements. We have established an expert panel, which I have met with on a couple of occasions, as well as officials, which includes business representative organisations, higher education bodies, investment associations and law societies, all of which will have an interest in having these provisions correctly interpreted. They are giving us constant and detailed feedback on the draft guidance and ensuring that the guidance is fit for purpose.
Our second tranche of guidance will be published ahead of regime commencement—as I mentioned, the regime will commence on 4 January—to continue to aid the interaction of parties with the new investment security unit and to ensure compliance, including on how to submit a notification form and guidance around notifiable acquisitions. We are also holding a communications campaign, which will focus on delivering teach-ins and guidance to a wide cross-section of businesses and organisations to build understanding of the Act in the United Kingdom and internationally. The Government have conducted targeted and extensive engagement with organisations which are most likely to be affected by the Act, including companies that invest or acquire entities in the 17 mandatory sectors.
Tailored explanatory materials have been sent to around 100 industry bodies and mandated areas of the economy, 70 major law and financial services firms, 36 international investors and 550,000 businesses via Companies House. We have taken great care to reach small and medium enterprises through associations such as the Federation of Small Businesses, British Chambers of Commerce and the CBI, which, taken together, have networks of something like 580,000 businesses.
I hope that I have been able to provide sufficient clarification and assurance to both noble Lords who spoke on this, and I commend the draft regulations to the Committee.
National Security and Investment Act 2021 (Notifiable Acquisition) (Specification of Qualifying Entities) Regulations 2021
(3 years, 1 month ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Callanan
That the Grand Committee do consider the National Security and Investment Act 2021 (Notifiable Acquisition) (Specification of Qualifying Entities) Regulations 2021.
Relevant document: 13th Report from the Secondary Legislation Scrutiny Committee
Republic of Belarus (Sanctions) (EU Exit) (Amendment) (No. 2) Regulations 2021
The Earl of Courtown
That the Grand Committee do consider the Republic of Belarus (Sanctions) (EU Exit) (Amendment) (No. 2) Regulations 2021.
The Earl of Courtown (Con)
My Lords, the instrument before us was laid on 14 October, under the powers provided by the Sanctions and Anti-Money Laundering Act 2018, also known as the sanctions Act. It amends the Republic of Belarus (Sanctions) (EU Exit) Regulations 2019 to introduce new measures to the financial, trade and aviation sectors.
The regulations we are debating today revoke and replace the Belarus sanctions regulations laid in August 2021. These contained an error that had the effect of deleting a prohibition on the transfer of restricted technology to Belarus; this means military and interception or monitoring technology, and technology used for internal repression. The regulations we are debating today correct this error. I can assure noble Lords that there was no continuity gap between the effects of the two regulations.
The Government, along with international partners, decided to increase targeted sanctions because the situation in Belarus continued to deteriorate. On numerous occasions, Lukashenko and his regime have violated democratic principles and the rule of law, and violently oppressed civil society, democratic opposition leaders and independent media. This includes the forced diversion of Ryanair flight FR4978 on 23 May in order to arrest a journalist, Roman Protasevich, and his partner Sofia Sapega. Lukashenko sent a MiG fighter jet to force the Ryanair plane to land, endangering not only Protasevich and Sapega but everyone on board. This also showed a flagrant disregard for international aviation law. The couple remain in the custody of the Belarusian authorities. The UK Government reiterate our call on the Belarusian regime to release them, and to release all those held on political grounds.
The regime has enforced the arbitrary detention of more than 35,000 people and imprisoned more than 800 people on political charges. The United Nations and the Organization for Security and Co-operation in Europe have recorded many credible reports of physical mistreatment, including torture, by the penal and security forces in Belarus. Opposition figures have been harassed and forcefully expelled, and, this year, Belarus introduced new legislation to further suppress media freedoms and peaceful assembly.
The United Kingdom supports all those working for a more democratic future for Belarus. As such, we were delighted to welcome Sviatlana Tsikhanouskaya, leader of the Belarusian democratic opposition, to the UK on 3 August. During her visit, Ms Tsikhanouskaya met the Prime Minister, Foreign Secretary and Minister for Europe, who reiterated our support. Ms Tsikhanouskaya emphasised the need for further sanctions on the Belarusian regime and commended the UK for taking action.
The instrument we are debating today enshrines in law our increased sanctions measures on the Belarusian regime, showing that we stand with the people of Belarus. Our sanctions are carefully targeted to build pressure on Lukashenko, state institutions and those around him while minimising any unintended consequences for the ordinary people of Belarus, who are suffering under authoritarian rule.
The measures introduced by this instrument are as follows. They prevent any UK business from trading goods and services with Belarus in sectors that are key sources of revenue for the Lukashenko regime. They also limit the regime’s access to items that could enable the internal repression of the Belarusian population. The measures cover potash, petroleum products, interception and monitoring goods and technology. They also cover goods used in cigarette manufacturing and dual-use goods and technology for military use. We have also imposed a prohibition on the provision of technical assistance to aircraft where this would benefit persons designated for that purpose. This ensures that UK companies cannot provide services in relation to President Lukashenko’s fleet of luxury aircraft.
Financial measures prohibit dealing with transferable securities and money market instruments issued by the Belarusian state and public bodies, as well as those issued by state-owned banks, and the provision of loans. This measure puts additional pressure on the Belarusian regime, including by preventing future Belarusian government bonds being listed on the London Stock Exchange.
This comprehensive response also includes prohibitions on the provision of insurance and reinsurance to Belarusian state bodies, and it removes a licensing ground under the arms embargo that permitted the export of biathlon rifles.
The aviation measures prohibit Belarusian air carriers from overflying or landing in the UK. This continues the temporary measures that we put in place after the events of 23 May.
Finally, the measures also give us the power to designate persons for providing support for, or obtaining an economic benefit from, the Government of Belarus. Since this came into force in August, we have made a further designation under the Belarus sanctions regime under this criterion.
UK sanctions actions, together with our allies, aims to encourage the Belarusian regime to respect democratic principles and institutions, the separation of powers and the rule of law in Belarus. The sanctions aim to discourage the regime from actions, policies or activities that repress civil society in Belarus, and encourage it to comply with international human rights law.
I should note that we regularly review sanctions and would consider lifting them if we saw significant progress. However, in the case of Belarus, we have seen no progress; in fact, the situation continues to deteriorate.
Sanctions are most effective when implemented in co-ordination with international partners. Our measures were co-ordinated in June with the EU, the US and Canada, and we will continue to work closely with them on Belarus. Similarly, sanctions work best when combined with other diplomatic and economic measures. The UK has assisted independent media and civil society in Belarus, which continue to face unparalleled levels of pressure from the regime. By the end of this financial year, our programme of support to Belarus will have almost tripled since 2019.
The UK unequivocally condemns the appalling campaign of repression waged by the Belarusian regime against the rights and freedoms of the Belarusian people. The regime has oppressed civil society, rejected democratic principles and violated the rule of law. These regulations expand our sanctions in response to the situation on the ground. They demonstrate that we will not accept such egregious violations of human rights. They enable us to stand with our international partners and, most importantly, with the people of Belarus, in working towards a peaceful, prosperous and democratic future. I welcome this opportunity to hear the views of noble Lords on these regulations, and I commend them to the Committee.
Lord Russell of Liverpool (CB)
My Lords, I welcome these sanctions. In part, I welcome them because I speak both as a Member of this House and as a member of the Parliamentary Assembly of the Council of Europe. In that capacity, I had the great privilege, in November 2019, of going to Belarus as part of a team monitoring the parliamentary elections—although to describe them as either “parliamentary” or “elections” is stretching the definitions rather a long way. At the end of a rather interesting day, we were, on the one hand, watching ballot box stuffing, but, on the other hand, being kept as far away as possible from where the counting was going on—so we could not actually see anything.
In the last polling station that I and my Armenian colleague went to, at the end of a very long day, I witnessed five candidates on the ballot paper. They had a photograph of each candidate and a brief description. There were four males of indeterminate age, all looking rather similar, and a much younger, very attractive woman. Who came top of the ballot for that constituency? Surprise, surprise—the young woman. The young lady in question turned out to be the—at that time—22 year-old Maria Vasilevich, an ex-Miss Belarus, which was one of her qualifications for being elected. The second qualification—and perhaps the clincher—is that she was the current mistress of the then 64 year-old President Lukashenko. Our Prime Minister has a way of putting his friends into this House; President Lukashenko has his own way of putting his friends into their Parliament.
I should say in addition that the UK delegation to the parliamentary assembly is very concerned about the situation in Belarus and is committed to trying to help. Quite a few of us have adopted prisoners in Belarus who are currently suffering; we write letters and hope that they get through to them and their families. Just this morning, the leader of the UK delegation to the parliamentary assembly, John Howell, Conservative MP for Henley, sent me a WhatsApp message saying that he has just adopted a lady called Iryna Zlobina, who is in prison because she was guilty of collecting money to go towards paying the legal expenses of those who had been arrested for taking part in what the Government regard as illegal demonstrations. She is now serving time in prison.
On these sanctions, I welcome the fact that this has resulted from working closely with the EU. Her Majesty’s Government, for various reasons we will not go into, seem to have a slightly tortured, love-hate relationship with the European Union at the moment—clearly, something fishy is going on. It is incredibly important that we work in lockstep with the EU; President Lukashenko is hoping above all that the unity among those appalled by what he is doing will fracture over time because we have not got our act together and are not acting as one. Please remember that.
There is an opportunity to take further action against the families of some individuals who have vast sums of money, some of which is domiciled in the UK, usually through offshore companies. The son of a gentleman called Mikhail Gutseriyev—a Russian oligarch who is very involved in Belarus—who is a UK citizen and, even worse, I am ashamed to say, an old Harrovian, for some strange reason happens to own a £40 million office block in London. It is not immediately obvious why, but I suppose that is the sort of thing one happens to have if one has a very rich father and access, through the Panama papers, to all sorts of offshore trusts. We could and should do more to demonstrate that that sort of egregious behaviour by extended families of clearly corrupt people will not be tolerated by this country.
I also ask that we continue to support the UN High Commissioner for Human Rights as much as possible to make sure that she has the support and funding to carry out her important work in Belarus and that human rights observer groups are supported. Every time we hear of arrests, intimidation and egregious events such as that, we must not stay silent but must say something. It will get noticed.
Finally, the impossible-to-pronounce leader of Free Belarus—I have written it out phonetically; I might let the noble Earl borrow it next time—Sviatlana Tsikhanouskaya, is the wife of the opposition leader who was going to run in the election, as noble Lords will know, until President Lukashenko decided the easiest way to win was to put his main opposition rival in prison, which is quite a neat way of doing it. It is very important that we formally recognise her as the effective leader of Free Belarus and assist her, invite her over here, and engage with and listen to her as much as possible. That is all I have to say.
Lord Purvis of Tweed (LD)
My Lords, it is a pleasure to follow the noble Lord, with his direct experience of his visits to Belarus; it was fascinating to hear about that. I have not been to Belarus but am active in the All-Party Group on the Abolition of the Death Penalty; we have sought to engage with those brave individuals, including former parliamentarians, who have sought to work with us for the abolition of the death penalty there. Belarus is the only country in wider Europe which retains it. I understand that four people were executed in 2018.
That is one element of a whole range that the noble Earl indicated in justification of these measures, which I and my party support. The justification is not only in the high-profile events we have seen in recent months but, as the noble Lord alluded to, in a pattern of practice which is diminishing democracy, reducing people’s ability to have properly elected representatives and opening up the concern that there will be internal repression of its own people.
Lord Collins of Highbury (Lab)
My Lords, as the Minister said, the regulations before the Committee maintain the current sanctions on Belarus but extend the measures and amend a series of errors in the previous regulations. I reiterate that these measures, and certainly this SI, have the full support of the Opposition.
As I told the House during a debate in July, the Government’s policy towards Belarus should be to stand with the incredible defiance shown by activists and opposition leaders. I not only hope that these instruments are a signal of that but echo the point made by the noble Lord, Lord Russell, that it is important that our voices in this Parliament are heard by those people in Belarus. It certainly has an impact, and we need to make sure that that is the case.
As the Minister highlighted, the situation in Belarus has deteriorated. It took a sinister turn in May when a Ryanair flight was forcibly diverted to Minsk so that pro-democracy activists could be arrested. Obviously, as is pointed out in the explanatory note to the instrument, human rights in general have deteriorated even further in the country. I was therefore pleased that last week the United Kingdom’s representatives at the United Nations signed a joint statement calling on the Lukashenko regime to end its repressive practices. However, such statements have to be paired with co-ordinated action.
On some specific points in the regulations before the Committee today, as the Minister noted earlier, the purpose of this order is to correct previous errors while adopting additional measures in response to the deteriorating behaviour of Lukashenko and his regime. The financial sanctions under Part 3 are particularly welcome given, as the noble Lord, Lord Russell, reminded us, the extensive reports of dirty money from Belarus in London. What is the Government’s assessment of that, and in particular of the Belarusian Government’s use of the London Stock Exchange for financing purposes?
On Part 5 of the regulations, which relate to Belarusian aircraft, as the Minister highlighted, can he confirm or advise the Committee what support the Government have offered to the Civil Aviation Authority, both to advise and to exercise these new responsibilities? Needless to say, as the noble Lord reminded us, these measures are effective only if implemented jointly and as widely as possible. In those circumstances, can the Minister tell us about what our response is to the ongoing disagreements between some members of the EU on this in particular? What steps are the Government taking to encourage counterparts to apply the sanctions to Belarus in full?
Given the analysis that many international sanctions on potash, Belarus’s main export, affect only a small proportion of potash products, can the Minister advise the Committee whether that assessment is correct and whether these regulations go far enough?
Global sanctions can be one of the most effective tools at our disposal to bring pressure on the regime, and I am glad that many measures are also being implemented by other national Governments but, if the UK is to stand for the people of Belarus, the Government’s policy must extend beyond these measures. We need to ensure that there is ongoing, co-ordinated international pressure at the UN and other multilateral institutions, particularly working with the European Union, to ensure that pressure is put on the Lukashenko regime and we stand by the side of the brave activists and opposition leaders.
The Earl of Courtown (Con)
My Lords, I am grateful to all noble Lords who have contributed to today’s insightful and timely discussion, and I should like to address the important questions they have raised. The noble Lords, Lord Collins, Lord Purvis and Lord Russell, all mentioned in their own way how this is affecting the individuals in Belarus—whether in the Opposition or the media—and the whole of civil society, and how important it is that we give whatever help we can. As I said earlier, we have increased our funding in that area to try to improve the situation as much as we can, but as all noble Lords all said, it is a pretty dire situation that we find ourselves in.
I also thank the noble Lord, Lord Russell, for his tales from the ballot box, which were very interesting, and enlightened us, as he gave the Committee his first-hand experience of what happened in the elections. He and the noble Lord, Lord Collins, also mentioned how important it is to have regular discussions with our partners. I can confirm to all noble Lords—the noble Lord, Lord Collins, mentioned the European Union in particular—that we have continuous discussions with the European Union, the United Nations, and our partners in the sanctions, including the US and Canada, and the sanctions are continually kept under review.
The noble Lord, Lord Purvis, started his speech by talking about the death penalty, and he knows quite well the position of this country—this Government and all parties in this country—that we abhor the use of the death penalty in any circumstance. He also mentioned two particular issues relating to immigration and travel bans. The travel ban operates through the Sanctions and Anti-Money Laundering Act and regulations made under it, which allow us to make people excluded persons for the purposes of the Immigration Act. I hope that clarifies the point for him. He also considered the timeline of the orders. They did not overlap as such; one order revoked the other.
The noble Lord, Lord Purvis, also mentioned dual-use goods and Northern Ireland. I have some lines on that, but if there is anything more that can be contributed, I will write to him. The regulations apply across the whole of the United Kingdom, including Northern Ireland—but I will check that there is nothing more we need to add to that.
The noble Lord, Lord Collins, asked about the London Stock Exchange. The new regulations prohibit dealing with bonds issued by the Republic of Belarus after the sanctions came into force where they have a maturity exceeding 90 days. This includes a prohibition on assisting in issuing such a bond.
The noble Lord, Lord Collins of Highbury, mentioned potash imports from Belarus. He asked why the UK has only partially banned potash imports and why all potash tariff codes are not included. These measures are carefully targeted to build pressure on Lukashenko, state institutions and those around him, while minimising—this is the important thing—any unintended consequences on the wider population in Belarus and the UK economy. He also mentioned support for the CAA. The Department for Transport work closely with the CAA on sanctions implications—so there are ongoing discussions with the CAA when sanctions are imposed. If I have not answered all the questions, I will of course read Hansard and reply to any I have missed.
As I set out in my opening speech, the regulations give us the power to impose sectoral sanctions with real impact, which is magnified in co-ordination with our international partners. They ensure that we can target the sectors of the Belarusian economy and the key figures in the Belarusian regime that generate funds for the regime. This includes those who provide support for, or obtain an economic benefit from, the Government of Belarus who have not been designated previously. They demonstrate that the UK will not stand by in the face of the regime’s unacceptable behaviour; that we are ready and willing to act as part of a network of liberty and will stand with those who believe in democracy. I beg to move that the Committee has considered the regulations.