Grand Committee
Arrangement of Business
The Deputy Chairman of Committees (Baroness Fookes) (Con)
My Lords, I start with the usual warning: if there is a Division in the Chamber, we will adjourn immediately and resume after 10 minutes.
Financial Services and Markets Bill
Tuesday 7th March 2023
(1 year, 9 months ago)
Grand CommitteeRead Full debate Financial Services and Markets Act 2023 View all Financial Services and Markets Act 2023 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 80-VII Seventh marshalled list for Grand Committee - (3 Mar 2023)
Baroness Meacher (CB)
I think we had got on to Amendment 199. Is that correct?
The Deputy Chairman of Committees (Baroness Fookes) (Con)
Amendment 168 is the lead amendment; the other amendments are grouped with it. People can debate any amendment within the group.
Baroness Meacher (CB)
Amendment 168 is the lead amendment; that is absolutely right. I think we had got on to Amendment 199. Is that correct, Minister? Are you happy with that?
The Parliamentary Secretary, HM Treasury (Baroness Penn) (Con)
Noble Lords can speak to any amendment in the group once the lead amendment has been put, I believe.
Baroness Meacher (CB)
One or two people had talked to Amendment 199 and I was just about to do the same. Is that okay?
The Deputy Chairman of Committees (Baroness Fookes) (Con)
It is in order to speak to any amendments in the group.
Baroness Meacher (CB)
I apologise; I am completely confused.
The due diligence system reintroduced for companies under Schedule 17 to the Environment Act is world-leading in its intentions. However, we have to finish the job to end our financing of deforestation. The GRI Taskforce has been unequivocal in its advice that financial actors should conduct deforestation due diligence too for their own sake as well as for everyone else’s. In the meantime, as somebody mentioned last time, Britain’s financial institutions are contributing $16.6 billion to businesses implicated in deforestation.
This is a huge global issue. Experts say that we must end commodity-driven deforestation by 2025 if we are to limit global warming to 1.5 degrees centigrade. At present, as a result of those investments, climate-critical tropical forests are shrinking. This is absolutely appalling. The UN’s high-level climate champions have begun to refer to deforestation as the new coal in investors’ portfolios. There should be no investment in companies involved in deforestation. It is quite simple.
The amendment responds powerfully to the GRI Taskforce’s advice. It has significant cross-party backing in the House of Commons. The Government are inclined to go for a weaker policy against the advice of their own expert task force on deforestation. I hope that the Minister will do all she can to persuade her colleagues in the other place to support Amendment 199 before Report. Rishi Sunak has promised that the UK
“will be the world’s first net zero financial centre”.
His support for Amendment 199 is an obvious step on the way. I thank the WWF, Greenpeace, Global Witness and Mighty Earth for their excellent joint briefing. I call on all noble Lords to support Amendment 199.
Baroness Drake (Lab)
My Lords, I rise to speak to Amendments 168 and 201. I refer to my interests as a trustee of defined benefit and master trust pension schemes.
The loss of financial stability can occur quickly. History shows us that risks that crystallised and caused that instability were often insufficiently captured by regulators and that actions to mitigate their impact were not taken in good time. It would be extraordinary for any Government to believe that financial regulators could deliver the objectives of competitiveness and sustainable growth without embedding in that delivery the finance sector’s response to climate risk.
Climate change brings immense risk, but it is not specifically factored into either the regulatory capital risk requirement for banks or the solvency requirements for insurers. We already see the weaknesses: banks and insurers still retain exposure to fossil fuel investments and a significant number of the largest UK banks do not have interim targets to cut funded emissions. I could quote many other statistics to confirm that weakness.
As the Bank of England stated in the executive summary of the Results of the 2021 Climate Biennial Exploratory Scenario, its assessment is that UK banks and insurers still need to do much more to understand and manage their exposure to climate risks. The Bank admits that there is a lack not only of managing that exposure but of understanding it. That makes Amendment 168 important in calling for a PRA review of capital adequacy and solvency capital requirements, having regard to the full implications of climate change physical, transitional and liability risks and for financial stability.
Failing effectively to factor climate risks into regulatory requirements tolerates the failure of firms that make unwise bets on the continuation of “business as usual”. Inevitably, it necessitates government intervention, socialising of losses and consequences for taxpayers. When a similar amendment was sought previously, the Government argued that the CBES work that I have just referred to would assess the implications of climate change risks for investment, stranded assets and financial stability. However, we have heard from speakers in this debate, including my noble friend Lady Worthington, and read from informed commentators worrying concerns with the work, reinforcing the need for the PRA to review its risk assessment approach and modelling. In a Policy Exchange publication, the former chief economist of ING Group put those concerns succinctly when he concluded that
“central bank scenarios have been based on assumptions and models which ignore or downplay crucial elements of climate risk and critical triggers, tipping points and interdependencies between climate, economy, politics, finance and technology”.
As has just been referred to, the Prime Minister, Rishi Sunak, promised that the UK would create the world’s first net-zero financial centre. However, London recently lost its position as Europe’s most valuable stock market to Paris. The London market is more heavily exposed to unpredictable sectors such as mining and oils and we now see the issue of listings emerging as a problem.
Achieving a net-zero financial sector requires regulators having the necessary mandate and accountability. The finance sector’s practices, as a major investor in companies and as an insurance underwriter, have a vital role to play in the transition towards zero carbon. In an area with which I am familiar, the closure of private defined benefit pension schemes has been followed by an accelerating trend for trustees to enter buy-out financial agreements with insurance companies, paying premiums in return for individual annuity policies covering members, with assets and liabilities transferring to insurers.
Buy-in is also occurring, such as the record-breaking £6.5 billion buy-in recently by the RSA pension scheme. That market saw a £30 billion transfer in 2022 of pension liability to insurers. It could exceed £40 billion in 2023. There were many billions that preceded 2022 and the trend means that there will be many more in 2024. Auto-enrolment means that billions of pounds of defined contributions are being invested each year. The market is consolidating into fewer master trusts, some set up by vertically integrated finance companies that also manage the assets in those trusts, and individual pensioners. Tomorrow’s pensioners will be much more dependent on insurer stability. That clearly reinforces the need for the PRA review and for raising the bar on the investment duties of asset managers, as Amendment 201 seeks, by requiring the FCA to publish guidance on the consideration by investment managers of the long-term consequences of decisions, the societal and environmental impact of investments, standards of conduct in governance and transparency of reporting.
The UK Sustainable Investment and Finance Association reports that it continues to see a common lack of understanding within financial services on the extent to which ESG factors form a core component of investors’ fiduciary duties. The Principles for Responsible Investment Association similarly identified that lack of understanding and recommended further regulator guidance. As a jobbing trustee, for want of a better phrase, there is a part of me that wonders to what extent there is such a lack of understanding, rather than a reluctance to understand, but there is a problem. The investment association found that only 14% of members incorporated ESG across their entire portfolio in 2019, while 44% said that it accounted for less than 25% of their portfolio.
The Government want to see more productive investment by the financial sector. For government to direct how citizens’ private assets are invested would displace fiduciary duties which rest with trustees, providers and asset managers and raise issues of state liability, political expediency trumping best interest and litigation. Amendment 201 could assist regulators, providers and asset managers in considering decisions on productive investment consistent with fiduciary duties and identifying the barriers to aligning these. We can perhaps address some of those barriers on another amendment later in the Bill.
However, the ability of trustees to discharge their ESG and climate risk duties to greatest effect has a clear dependency on how regulators expect asset managers to discharge their duties. We cannot do ours well unless asset managers do theirs well, too. It also depends on central bank scenarios and the regulation of the finance sector’s response to climate risk, because it will influence attitudes and the value of different assets. The whole eco- system needs improvement in both transparency and due diligence. The two amendments that I speak to, on the PRA reviewing its whole approach to modelling, regulating and embedding climate risk, and the contribution that asset managers are required to make to mitigating climate risk, both have merit and are badly needed.
Lord Lilley (Con)
My Lords, I will address the amendments just addressed by the noble Baroness, Lady Drake, and others, which are intended to discourage investment in fossil fuels. There are two routes to net zero: one is to phase out demand, which is the route that we have adopted in this country. My noble friend Lord Deben, who is not here today, provides guidance and forecasts to the Government on how to phase out that demand to meet net zero by 2050. That is the sensible way of doing it. The alternative is to try to phase out supply. If fossil fuel producers invest in more production capacity for those fuels than is needed for declining demand, they will lose money. They may even be left with oilfields that have not been fully depleted —it could not happen to a nicer bunch of people.
I am really touched that so many green noble Lords and noble Baronesses are determined to protect the oil industry from losing money. That is not their real intent, of course; that is to discourage investment and reduce it as fast as possible, if need be by reducing the supply of fossil fuels faster than we reduce demand for them. If they achieve that, we will have a shortage of fossil fuels. We will have rising prices with those shortages and will have done to ourselves exactly what Putin has done at the moment. Is that what they want?
Noble Lords pretend on the first argument that they want to save the banks and the industry from being left with stranded assets. As I say, it is touching that they should be so concerned about them, but why do they think they are better at forecasting the future demand and supply balance for fossil fuels than the oil companies and others whose business it is, or others in the City whose business it is to try to work out whether it is worth investing? I used to be an energy analyst in the City; it was my job to try to forecast these things. In some years, I was the most highly rated analyst in the City on these matters, presumably because I was making long-term forecasts and no one could tell that they would prove wrong. But the idea that the PRC knows better than people in the City—
Baroness Sheehan (LD)
I find the noble Lord’s contributions really very valuable. But on supply and demand, for him to label us people who just do not want fossil fuels is so incorrect. We need more energy, but it does not have to come from fossil fuels. The fossil fuel industry is supported to an extent.
Baroness Sheehan (LD)
It has been supported by Governments, through subsidies, through tax breaks, through decommissioning tax reliefs—any number of routes for support exist. So I say to the noble Lord: please do not try to categorise the noble Baronesses who have spoken on this issue as people who do not like fossil fuels. What we do not want is for fossil fuels to be needlessly supported in the future when they are patently no longer able to support themselves.
Lord Lilley (Con)
I agree with the noble Baroness. I do not want to support fossil fuels. If she looked at the tax revenue levied on the production and consumption of fossil fuels, she would see that it is enormous. To describe that as a subsidy or support is very strange. But to the extent that there is anything that is a subsidy, I am with her: let us remove it, but that is not what these amendments do. They simply aim to make it more expensive to invest in fossil fuels. I do not know whether the noble Baroness, Lady Castle—whatever it is; bouncy castle—is upset at being described as being against fossil fuels. I would have thought that she would be positively flattered. I do not know whether the noble Baroness, Lady Drake, is offended at being told that she is trying to discourage the production of fossil fuels; I thought she was. I am simply saying let us stick to the CCC’s recommendations of phasing out demand and we can leave the supply side to look after itself. We should not pretend that we know better than the industry what is likely to prove excessive or insufficient.
Baroness Sheehan (LD)
Before the noble Lord sits down, perhaps I could say a little about stranded assets; I think we have had this exchange before. If stranded assets transpire—from where I am sitting, I think that is inevitable—what assurance can he give that the cost of those stranded assets will not be socialised?
Lord Lilley (Con)
Clearly, the Government ought to deal with that problem. These amendments do not deal with that problem. If there is a problem, if the noble Baroness thinks that BP or Shell will go bankrupt and be unable to pay for the liabilities it incurred, we should take steps to deal with that situation. I do not think it is likely but if she thinks it is that serious, she should table amendments that would deal with that, but these amendments do not. They simply make it more expensive to invest in things which we are going to continue consuming, according to the Government’s own plans and the CCC’s own projects and recommendations, in considerable quantities until 2050.
Baroness Worthington (CB)
I will interject on behalf on the amendment I drafted, as the noble Lord has completely mischaracterised what we are attempting to do here and has narrowed the debate into a very narrow conversation about oil and gas assets. We are talking here about climatic risk across the whole economy. It is not just oil and gas operators; it is anybody who has any money wound up in any of the sectors that will be affected by the physical risk, the risk of transition and the societal risk when we finally realise that science does not negotiate with oil and gas companies, financial regulators or anybody who pretends to be able to predict the future. We have poor modelling, we have terrible risk assessments, and the PRA and the Government need to issue better guidance so that we can understand the risks we are facing. Let us not reduce this to a narrow discussion about oil and gas interests.
Lord Lilley (Con)
I read the amendment in the name of the noble Baroness. Proposed new subsection (1) refers to
“group undertakings engaged in existing fossil fuel exploitation and production … group undertakings carrying out new fossil fuel exploration, exploitation and production”.
If this is not about fossil fuel exploration, that is not very clear from her amendment. I am dealing specifically—
Lord Lilley (Con)
Hang on, I must have the right to reply to the previous intervention before I take the next. I am not dealing with things other than fossil fuels. I am talking just about fossil fuels. It seems to me that the noble Baroness’s amendment is about fossil fuels, in large measure. My arguments have not been responded to because they are fundamentally logical. They are the whole basis of government and CCC policy. But I give way to the noble Baroness now.
Baroness Worthington (CB)
The amendment lists certain sectors which are likely to be most affected. It does not in any way say it is limited to those sectors, and I think it is egregious to assume that this is a narrow amendment when it is, in fact, a very broad amendment.
Lord Lilley (Con)
My remarks are narrow. The noble Baroness’s amendment may be broad. Can we agree on that and deal with the aspect of fossil fuel investment?
Lord Lilley (Con)
We ought to allow the industry to invest as long as we are phasing out demand. If it invests too much, it is its problem. If it invests too little, it is our problem.
Baroness Altmann (Con)
My Lords, I declare my interests as set out in the register. I support many of the amendments in this group. My Amendment 241A is in this group. I have added my name to Amendments 201 and 237, which require FCA guidance about long-term returns for occupational pension investors. I think that is very important when considering climate change and is very relevant to the remarks of my noble friend Lord Lilley. I have also added my name to Amendment 235 as I think it is equally important for institutional investors in the UK to be equipped with some green taxonomy so that we have some standards by which we can measure the impact of climate investment.
As regards the issues raised by my noble friend, particularly, perhaps, in relation to Amendment 168, when I read that amendment it seems to me to be calling for a review. It calls for the FCA to review and perhaps guide pension schemes and insurance companies, which have very long-term liabilities, on assessing the long-term risks of investing in assets such as fossil fuels. There is a widespread opinion suggesting that over the long term, whether that is 20 years or 30 years —those timescales are relevant for Solvency II and the annuity books of insurers, for example—there is a significant danger in relying on the continued thriving of those large energy companies.
It makes sense. We have been taken by surprise too many times in the financial world by supposedly very small long-term risks which materialise in a cliff-edge event that people had not been prepared for. Whether or not the review concludes that there should be any change, it is appropriate that this review should be carried out, so I support the amendment, but I understand the points made by my noble friend. Perhaps, on a shorter-term timescale, given the need for fossil fuels and the work that is being done by those large companies to try to transition to more green energy, that is an issue that needs to be carefully weighed up by any investor who is considering the potential returns from their investment.
In the interests of time, I will now speak to my Amendment 241A. I hope that my noble friend will be interested in this amendment and, indeed, that other Members of the Committee might consider that there is merit in this proposal. It is a relatively modest reform. It would be deregulatory. It supports the transition to net zero and nature preservation and it would encourage innovation. I hope it would garner more of our domestic institutional asset base to be used for the kinds of investments that all of us who are concerned about the long-term impact of human activity on the climate and nature would want to see happen.
I thank the Public Bill Office and Susannah Street, as well as Peers for the Planet, for their assistance in trying to ensure that the amendment is in scope of the Bill, which was quite a feat. It is a probing amendment; I am not wedded to the wording, but the principle of the proposal would make it easier for funded occupational pension schemes to join together to establish fund managers under a lighter-touch regime that already exists in order to invest in and support climate and nature protection. We all know that there is a growing need to find the funding to rebuild, repurpose or have new infrastructure for low-carbon and nature-friendly projects. Indeed, nature’s impact on and interaction with climate change and net zero is increasingly recognised. These issues feature in the other amendments I have attached my name to, so I hope that the scientific and political consensus that we need urgent action might help my noble friend and the Committee recognise that this could be a win-win for pension funds to get better long-term returns, for pensions to be perhaps better than they otherwise might be, and for the economy.
Much of the investment needed to reach net zero will be in very large long-term projects. It is not always easy to find the money. Normally, perhaps, with a Government who were in a much stronger fiscal position than most western Governments now are, we might look to the majority of this being funded by government, but that is less likely at the moment. Yet we have in this country this enormous pool of long-term assets that is currently being encouraged to invest in assets with a much lower expected return or so-called safe assets—gilts and corporate bonds, for example—shunning long-term growth with equities and projects such as the one I have in mind for this type of approach. Only 100 schemes or so have more than £5 billion worth of assets. Even with the kind of forecast consolidation, it is unlikely that we will have very many of the £5 billion-type scale that is normally suggested to be required to put forward a prudent, risk-diversified portfolio of such infrastructure and other protective investments.
My amendment would facilitate asset pooling for the smaller pension funds as well, so they can all join together in FCA-authorised investment managers specifically for pools of pension assets to benefit from and contribute to the benefits for green growth and sustainable long-term returns for the specific purposes set out in proposed new subsection (3) of my amendment. The Local Government Pension Scheme is already starting to do this, but private schemes would have to use commercial fund managers, which often either deters such investing or incurs much higher costs, whereas big schemes such as USS and NEST are already looking to invest or have the expertise to do so, but they are not joined with the smaller schemes.
I hope that the currently existing lighter-touch regime that the FCA offers in its occupational pension scheme firm rules, which currently apply only to fund management firms that are wholly owned by one pension fund, could be applied to a combination of pension funds that are investing for their own purposes in the various schemes that belong to it. It is not commercially available or available to other members of the public, but it is for long-term pension investing.
I would be grateful if my noble friend considered this modest reform, or, if she feels that there is some flaw in the wording of the amendment that could be changed and still facilitate this, I would be happy if she, or indeed any other noble Lords, wanted to meet to discuss it. As I said, it is deregulatory, it supports the aims of net zero and nature preservation, it would encourage innovation and it should provide better diversification and therefore long-term risk reduction for a number of occupational pension schemes which otherwise could not take advantage of it.
Lord Davies of Brixton (Lab)
My Lords, I support the objectives behind all these amendments. I was going to direct my remarks specifically to Amendment 237, but I want to make a narrow but important point of qualification. I support the principle, but I cannot stop myself responding to the discussion we had earlier, led by the noble Lord, Lord Lilley, about fossil fuels. The important point about fossil fuels is that there are massive externalities—external costs—which are not caught in the market, and, unless we do something now, our children, and their children, will pay the price. It is not just a question of moving the market now; we need to stop using this stuff, which is poisoning the planet.
Lord Lilley (Con)
I was not disputing that; I was saying that we accept that we have to find the route to net zero, but the question is: should we phase out demand for fossil fuels, as the noble Lord’s last sentence indicated, or should we phase out supply? Which does he prefer?
Lord Davies of Brixton (Lab)
Both. I am not really being given that choice but, as I said, it was just a narrow point.
My question on Amendment 237 is: would you take investment advice or guidance from the Secretary of State? Is the Secretary of State even authorised to provide investment guidance or advice? I am troubled by the involvement of the Secretary of State, and I hope that we could perhaps consider a different wording if we wish to raise this on Report. If the Government want something to happen—net zero—as a matter of public policy, they have to accept the risk themselves and not pass it on to private individuals. I am talking about pension schemes, and the underlying point is that the money in a person’s pension scheme is their money, provided to them to be used in accordance with their wishes to provide them with a retirement income. Part of that retirement income depends on solving climate change—that is clear. I do not doubt the importance of taking these issues into account; I simply question the relevance and role of the Secretary of State in that process.
Over many years’ involvement with pension funds, I have seen that, when people see the massive amount of money involved, as highlighted by the noble Baroness, Lady Altmann, they see that the economic power is there, but it is there on behalf of the members’ interests and not, in principle, as a means of implementing government policies—however worthy. They might be in alignment, but the leading factor should be the members’ interests.
Baroness Bennett of Manor Castle (GP)
My Lords, it is a pleasure to follow the noble Lord, Lord Davies of Brixton. Since the noble Lord, Lord Lilley, appeared to be directing a question at me about whether I oppose fossil fuels, I will take a moment to answer that. Do I think that pulling up carbon which has been stored in the ground over hundreds of millions of years, which was a crucial part of delivering the Holocene that gave us 10,000 years of incredibly stable climate in historic terms, and then pumping it into the atmosphere needs to be stopped with great speed? Yes, I oppose pumping out that stored carbon.
More than that, the fact is that extracting, transporting, burning and getting rid of the waste products from that fossil fuel causes huge damage to the health of people on this planet. One in five premature deaths that occur on this planet is as a result of burning fossil fuels—that is based on a study in environmental health in 2021. So do I want to do something urgently to make this a healthier planet for people? Yes, I do. However, that is not what any of these amendments are about. These amendments are to the Financial Services and Markets Bill, and all of them are about trying to stop the crashing of the financial markets, which are also crucial to our security and health in different kinds of ways. That is what all these amendments address.
It is really interesting that we have here a set of amendments which we might, collectively, for the purposes of Committee look at how we can hone and shape—I take the point made by the noble Lord, Lord Davies. But what we have in Amendment 168 are directions to the PRA to review capital adequacy requirements. That is about the security of firms. In Amendment 201, we have directions to the FCA to direct personal pension providers. Picking up on that point, I note the figures from the Pensions Regulator’s most recent survey of defined contribution schemes, which found that more than 80% did not allocate any time or resources to managing climate risk.
Then in Amendment 233, we have sustainable disclosure requirements, so that companies would report to investors what risks they are taking with their money by not dealing with all the sustainability risks which relate to the fact that we are exceeding planetary boundaries—not just on climate but on biodiversity, the loss of ecosystems and novel entities, and on phosphate geochemical flows. All these things are taking risks with people’s money, which is what we are talking about. Amendment 233 might indeed guide us in the direction of each major company having to have a chief environmental officer, who should be of equal status and importance to a chief financial officer because it is about ensuring the sustainability of the company, as well as the sustainability of this earth. Going on to Amendment 235, we are directing the Treasury to provide government guidance on how we achieve all of this.
That is an overview but I want to pick up one specific point. I would have signed Amendment 119, in the name of the noble Lord, Lord Randall of Uxbridge, and others in a full cross-party group, had there been space. When people think about forest risk commodities, they often start by thinking, naturally enough, about timber but, if we look at some statistics, palm, beef and soya production collectively amount to 36% of global deforestation. When Orbitas, an investment body, surveyed 24 capital providers in 2020, all of which had high levels of tropical commodity exposure, not one had screened their loan books and/or investments for agricultural transition risks. I want to major on that point while we debate this today, because if we look at Indonesia, 76% of unplanted forest concessions and 15% of existing palm oil assets could be at risk—that is, financial risk—should Indonesia adopt what is seen as its essential plans to meet its Paris climate commitments.
I said that we need to look at all aspects of planetary boundaries being exceeded. We also must include water risk. Fresh water supplies rely heavy on fossil water aquifers—in the American high plains, in Mexico, in eastern Europe, in Egypt, in Arabia, Iran and China. All agricultural production of food—the big sectors globally and financially—is utterly dependent on fresh water supplies, which are not being replenished. That is a huge financial risk as well as a risk to when any of us can eat in the future, at a basic level.
Finally, I focus on Amendment 168, tabled by the noble Baronesses, Lady Worthington, Lady Drake and Lady Sheehan. I would like to work with them ahead of Report because, as others have highlighted, this focuses particularly, though not exclusively, as the noble Baroness, Lady Worthington, said, on fossil fuel exploration, exploitation and production. We must broaden this out to look at the agricultural sector, because it is an area of enormous financial risk. I draw on the work of the investment group FAIRR, which looks at the extremely high financial risks. The majority of the largest protein producer companies are at high risk for greenhouse gas emissions, deforestation, water and waste. Over 60% of them saw soya feed from areas at high risk of deforestation and have still not set deforestation targets. Fewer than one in five meat, egg and dairy firms is adequately managing the pollution of waterways from manure. Just ask the people of Herefordshire about that if you want to know more.
FAIRR finds that the volume of waste produced by the 70 billion animals processed each year is equivalent to the volume of waste produced by twice the entire human population on this planet. Only 18% of global meat and dairy producers track even partial methane emissions, even though annual methane emissions from global capital and livestock make up 44% of anthropogenic methane emissions.
We are talking about the future of our life on this planet. We are talking about a liveable planet. That is inescapable. However, today we are talking about ensuring that we do not see the next financial crash. Let us remember the last financial crash, when the cash machines were within hours of stopping working. We must do something to stop the next financial crash from being at the point where the size of the carbon bubble, the level of stranded assets across a range of sectors—fossil fuels, animal agriculture and other areas—is such that it suddenly hits the markets. The markets are not counting this now. They must count this in if we are to have a sustainable financial sector.
Lord Naseby (Con)
My Lords, I will not repeat what my noble friend Lord Lilley said earlier, other than to say, speaking for myself and, I suspect, for my colleagues, that we do believe in net zero. That is a target. It is not an immediate diktat, but it is a target that I guess almost everybody in Parliament has accepted.
My noble friend is right that key in the judgment of those of us who have worked in the commercial sector, as I did before I came to Parliament nearly 50 years ago, is that we live in a free society. The answer to this problem is to phase out demand. It is easier to phase out demand than to phase out supply. If they both have the same effect in the end, you might as well take the easier and cheaper route, which does not involve subsidy to remove activity. We live in a free society and unless it is absolutely vital, it should be based not on government diktat, but on competition.
I will also comment on Amendment 199 on forestry. I had better declare an interest; it is hardly a forest, but there are 40 acres of woodland adjacent to my property. It is a wonderful hobby for me to have become someone who now understands woodland, at least; I could not claim that it is a forest.
Lord Tunnicliffe (Lab)
My Lords, this is a cross-party group on the environment. It has no amendments led by Labour, but I have signed Amendment 199 in the name of the noble Lord, Lord Randall, on outlawing someone carrying out a regulated commercial activity that directly or indirectly supports deforestation risk commodities, unless relevant local laws are complied with.
I pay tribute to the noble Lord, Lord Randall, and thank Global Witness for its support on this amendment. My party is committed to securing the highest sustained growth in the G7. That means modernising our economy and financial regulation. We cannot deforest our way to sustainable growth nor a robust financial system.
Leaders across the City of London, along with BNP Paribas, Legal & General, Unilever and Tesco, are supportive of the measure proposed by the noble Lord, Lord Randall. Sir Ian Cheshire, former chair of Barclays and head of the Global Resource Initiative task force, has written to the Minister to remind the Government that the task force concluded its work in May 2022 by reiterating the need for new legislation to provide due diligence obligations for financial institutions equivalent to those that will be in place on supply chain companies under the Environment Act 2021. The Minister has previously argued that enhanced risk reporting eliminates the need for this amendment but the GRI task force has already rejected that argument. Sir Ian’s letter put this issue to bed when he wrote that risk reporting mechanisms, such as the task force on nature-related financial disclosure and voluntary net-zero pledges, are insufficient to prevent deforestation financing.
This expert backing and the desire of the British public to eliminate the scourge of deforestation are key reasons why this amendment has such considerable cross-party support. It would allow us to be global rule-makers, not rule-takers, when it comes to our financial system; I urge the Minister to take it seriously. Beyond Amendment 199, this group contains a lot of common-sense amendments that highlight the expertise of this Committee.
Baroness Penn (Con)
My Lords, I welcome this chance to continue this Committee’s important debate on amendments concerning green finance. As I stated in a previous Committee session, the Government are committed to fostering sustainable finance in the UK and will shortly publish an updated green finance strategy to that effect.
I will speak first to Amendment 168 from the noble Baroness, Lady Worthington. It is of course correct that all models have their limitations in depicting the real world but the Bank of England’s models have considered the views of experts in the field; they therefore do not need to be directed to do so. The scenarios used in the climate biennial exploratory scenario, or CBES, were formed by the Network for Greening the Financial System, an international network of central banks in which the Bank of England plays a prominent role. The scenarios have been produced in partnership with leading climate scientists, leveraging climate-economy models that have been widely used to inform policymakers—not to mention being used by and continuing to be used by the Intergovernmental Panel on Climate Change. These scenarios are updated continually by the Network for Greening the Financial System, which also ran a public survey welcoming feedback on its most recent iteration of climate scenarios.
It is also not the case that CBES is the PRA’s only tool to manage climate risk. It is actively using its position as a supervisor to ensure that firms are not materially undercapitalised for climate risks, setting out its expectations in its supervisory statement published in 2019. Furthermore, the PRA is an active member of two of the leading international standard setters: the Basel Committee on Banking Supervision and the International Association of Insurance Supervisors. The Bank is actively participating in both forums to ensure that the regulatory frameworks for the banking and insurance sectors address potential gaps in the management of climate-related financial risks. This work will flow through to our domestic framework and at the same time ensure international co-operation on what is fundamentally a global issue.
I now turn to Amendment 199 in the name of my noble friend Lord Randall of Uxbridge, which is supported by other noble Lords in this Committee. The Government agree that the financing of illegal deforestation is a serious global issue that must be tackled. However, this amendment would involve implementing a new and untested regulation that would impose a broad supply chain rule on all regulated financial services firms. It would currently be very difficult, time-consuming and expensive for UK financial services firms to ascertain whether firms or products that they invest in are exposed to forest risk commodities in compliance with local laws.
In introducing this amendment, the noble Baroness, Lady Boycott, referred to the provisions in the Environment Act 2021. These provisions will apply to the supply chains of large UK corporates. However, UK-based banks and fund managers engage in lending and investment activities with companies in jurisdictions across the globe, not just commercial activity in the UK. There are currently no consistent, equivalent disclosure requirements to those that will be set out under the Environment Act 2021 in jurisdictions across the globe. Given that, capturing the activity of all of their customers and supply chains would not be as simple as adding an extra stage of disclosure to the regime set out in the Environment Act 2021, as had been suggested. However, I assure noble Lords that the Government are committed to addressing this issue and will work with the financial services sector and those with expertise in tackling deforestation to consider how we can make further progress.
Baroness Sheehan (LD)
Before the Minister moves on to another amendment, I put a question to her on Amendment 199 on deforestation. I hope she is coming to answer it.
Baroness Sheehan (LD)
The question was about the regulations under Section 17 of the Environment Act 2021 that are supposed to be forthcoming. I asked the Minister when she thought they might be ready.
Baroness Penn (Con)
I will have to get back to the Committee on that point. I had picked up the noble Baroness’s other point, which was also referenced by the noble Lord, Lord Tunnicliffe, on the letter from Sir Ian Cheshire on this issue. I looked closely at his report and the recommendations in it. I am happy to place a copy of that letter and my response to it in the Library so that all noble Lords have access to them.
I was going to add something about the importance, in seeking to address this issue, of co-ordinating action internationally. This is necessary to reduce the financing of illegal deforestation and not simply drive it into other jurisdictions.
The noble Lord, Lord Tunnicliffe, referenced the work by Sir Ian Cheshire’s task force and its references to the Taskforce on Nature-related Financial Disclosures, the TNFD. The Government accept that that will not solve this problem on its own but it is important to recognise it as an important building block in creating an international solution. As I have pointed out, other jurisdictions do not have disclosure regimes. The TNFD is an attempt to create a global standard on nature-related disclosures that could be an ingredient in making progress in this area. The UK is the largest financial backer of the TNFD. We support its work to develop a global framework for reporting on nature-related impacts, dependencies and risks, within which deforestation is being considered. Once the task force launches its final recommendations in September 2023, the Government will consider bringing these standards into the UK disclosure framework.
Finally, on deforestation, in response to Sir Ian and the noble Lords who raised it today, as I set out, we are looking at what we can do further in this area. If noble Lords would like to meet to take those discussions forward, I would be very happy to do that.
Baroness Sheehan (LD)
Before the Minister moves on, could I reiterate the strength of feeling across the Committee on deforestation? It is not just about the 12% of global carbon dioxide that is released by burning and cutting down forests; it is also about the destruction of the carbon sink. It is a double whammy. This is an issue that we can and must solve. We have a report by the Government’s own appointed head of the GRI, Sir Ian Cheshire, who clearly lays out how we move forward on this. I wonder why the Government will not accept the findings of their own reports.
Baroness Penn (Con)
I say to the noble Baroness that I absolutely agree. I appreciate the point that the issues concerning deforestation are about not just nature and biodiversity but our ability to tackle climate change. That is why we are such strong supporters of the TNFD’s work, for example. She mentioned Sir Ian Cheshire’s report. I said to the Committee that I have read that report and looked at it very carefully. I do not think that we are in disagreement in wanting to find solutions to this problem. Sir Ian’s report also sets out that work needs to be done to ensure that the solutions that we identify are effective. For example, he refers to ongoing work in other jurisdictions such as the EU and the US on disclosures that would be building blocks towards making the progress that we all want to make. The Government do want to make further progress on this issue and I understand the strength of feeling, so I commit to this Committee to take those discussions further and see where we can build consensus on it.
Baroness Sheehan (LD)
I thank the Minister. On behalf of the noble Lord, Lord Randall, I accept the meeting. I know that he cannot be with us today, sadly. The final point that I leave with the Minister is that Sir Ian Cheshire was very clear in his letter about why he thought the UK should be acting. It is because, as a financial sector, we really matter. We may have 1% of the global emissions footprint but, in terms of the deforestation footprint and the money that passes through London, it is substantial.
Baroness Penn (Con)
The Government understand and agree with those points. That is why we are also seeking to find a way forward on this work and have driven considerable work at a global level to try to tackle deforestation. I hope noble Lords can take some heart from our commitment on that.
On Amendment 232, also from the noble Baroness, Lady Sheehan, my noble friend Lord Naseby will be pleased to hear that NS&I’s retail green savings bonds, which I think have been available for a couple of years, are integral to the continued successful delivery of our green finance programme. We clearly have more work to do in promoting them, so the NS&I will continue to promote them and encourage retail investors to help finance the fight against climate change and other environmental challenges.
The Government committed to publishing a biennial impact report by September 2023, which will detail the environmental impacts and social co-benefits of the green financing programme’s spending. This will include available reporting on greenhouse gas emission reductions of projects financed by the green savings bonds and green gilts. The upcoming impact report will complement the programme’s first allocation report, published in September 2022. These annual allocation reports detail how funds raised from sales of green gilts and green savings bonds contribute to different green priorities such as clean transport and renewable energy.
Amendment 232 proposes publishing an assessment of the scope for future green financing. Decisions on future green financing ambitions are based on eligible green spending commitments and will be taken each financial year as part of wider decisions for the Treasury’s budget. Financing decisions are also influenced by gilt and retail savings market conditions and consultations with investors. Reporting on the future scope of green financing in advance, rather than at the beginning of each financial year, could create the risk that future spending requirements and conditions in the gilt and retail savings market are disregarded. That would make the successful delivery of the green financing programme more challenging.
I turn to Amendments 233, 235 and 236 from the noble Baronesses, Lady Wheatcroft and Lady Hayman, which concern sustainability disclosure requirements, green taxonomy and transition plans. Sustainability disclosure requirements—SDR—are designed to provide an effective and co-ordinated reporting framework for sustainability information. This is already being taken forward at pace. The FCA recently consulted on new sustainability-related disclosure requirements for all regulated firms and more detailed rules for asset managers and asset owners.
The Government’s 2021 road map made it clear that disclosure of transition plans will be a part of SDR. The Government launched the independent Transition Plan Taskforce in April 2022 to develop a gold standard for transition plans. The task force has since made huge progress, having just consulted on its recommendations, framework and guidance, with the final framework and guidance to be published later this year, alongside additional sectoral guidance.
The FCA has already implemented the guidance from the Taskforce on Climate-Related Financial Disclosures for transition plans for asset managers and asset owners, on a “comply or explain” basis. It is continuing to work closely with the Transition Plan Taskforce to develop and implement its recommendations.
As I reaffirmed to noble Lords in a previous debate, the Government are committed to implementing a green taxonomy as part of their sustainable finance agenda and, as I set out in my Written Ministerial Statement to the House on 14 December 2022, the Government will provide an update as part of the green finance strategy. We are clear that the value of a taxonomy rests on its credibility as a practical and useful tool for investors, companies, consumers and regulators in supporting access to sustainable finance.
Noble Lords have only to look at the implementation challenges the EU is facing, including on data availability and reporting, coherence with regulatory frameworks, and international interoperability, to see that this is a complex exercise. We have been clear in the UK that, with the support of our Green Technical Advisory Group and with public consultation, we will take the time to get the taxonomy right to ensure that it is usable and effective.
On Amendments 201 and 237, the Government and regulators are taking steps to improve the UK’s regulatory framework to support more effective stewardship. We have already discussed in Committee the Financial Reporting Council’s world-leading Stewardship Code 2020. This asks trustees and managers to disclose how they have considered environmental and social factors, including climate change, in their investments. The Department for Work and Pensions’ recent stewardship guidance for pension scheme trustees came into effect last October.
In addition to these existing initiatives, the DWP, along with the FCA, the Pensions Regulator and the Financial Reporting Council, has already committed to a review later this year of the regulatory framework for effective investment stewardship, to ensure that it is consistent across market participants and financial products. I recognise that this is a complex issue and recognise the concerns raised by the noble Lord, Lord Davies of Brixton, about the specific framing of the amendments. This is an issue that would warrant further discussion before Report.
On Amendment 241A, tabled by my noble friend Lady Altmann, UK pensions have been at the forefront of tackling climate risk and will undoubtedly continue to play a crucial role. The Government are working hard to drive consolidation among pension schemes so that they deliver increased scale, better value for money and improved access to investments such as green infrastructure. As part of this drive, the DWP recently published a consultation on a value for money framework for defined contribution pension schemes. Furthermore, the pooling of Local Government Pension Scheme assets, from the 86 funds into eight asset pools, has already led to £380 million in net savings to March 2022; these are projected to exceed £1 billion by March 2025.
We are also working hard to lower the barriers for individual pension schemes to invest in green. The DWP is reforming the treatment of performance-based management fees to enable individual pension schemes to invest more easily in assets such as green infrastructure.
Finally, when it comes to the noble Baroness’s amendment, we are aligned in wanting to see more of this pool of capital able to be directed in the way we have discussed in this Committee. It is important that we lower barriers to such projects and solutions. We do not see the benefit in creating a distinct, lighter-touch regulatory regime to support pooled investments in green projects. There may be risks in reducing regulatory oversight in this way.
The UK’s world-leading regulatory standards are important in providing market participants with the confidence to invest and we should be cautious about changes that could undermine that confidence. I say to my noble friend Lady Altmann and the noble Baronesses, Lady Hayman and Lady Drake, that we want to think about how we can make progress in this area. While the specific amendments suggested might not be the right way, we should continue to put our thinking caps on when it comes to how we can guide progress in this area.
With that, I hope that, for now, the noble Baroness, Lady Worthington, is able to withdraw her amendment and that other noble Lords will not press their amendments when they are reached.
Baroness Worthington (CB)
My Lords, I am grateful for the Minister’s reply to this varied group of amendments covering a range of issues that fundamentally speak to the need for the financial sector to take a more serious look at how it can help prevent the exacerbation of environmental challenges, including climate change, and invest in solutions at scale.
I was encouraged to hear that the Government are about to produce their green finance strategy. I wonder whether it might have been a good idea to have done that before the Bill, as then we might have had—
Baroness Penn (Con)
We produced our green finance strategy in 2019 and we provided a green financing road map in 2021. I very much hope that before we reach the end of the Bill noble Lords will have sight of the refreshed green finance strategy.
Baroness Worthington (CB)
That is great, but my point still stands. It would have been good to have had the refresh before the legislation so that we could have incorporated any findings into the Bill.
On my amendment on the assessment of risk in relation to capital requirements, it is not the case that everything is fine in the world of climate modelling. It really is not. If you spend time with climate scientists who are empirical scientists out in the field witnessing the impact of climate on the natural world, they will tell you that the models are not in line with what they are witnessing. That tells you that we have not got a handle on the speed and pace of change in the physical world thanks to decades of unmitigated emissions of greenhouse gases and the never-ceasing increase in concentrations of greenhouse gases in the atmosphere.
The noble Lords, Lord Lilley and Lord Naseby, may well say that it is fine and that we are just going to look at demand. We have been doing that for about 30 years. It has not made a jot of difference. The reason for that is that we have an economic system based on an incumbent power that is very adept at keeping demand for its product healthy and at finding new sources of demand for its product, so we absolutely need to cut with both sides of the scissors. We need constraints on demand and constraints on supply; otherwise, we will carry on with this merry dance and the emissions in the atmosphere, which are what matters, will continue to rise.
I believe that the finance sector is not the place to solve this. We need political will across all member states to pass the legislation necessary to drive capital into solutions and to stave off the continued licensing of extraction. That will take time, but it needs to be done.
In the meantime, if we walk into believing that the finance sector has got this—“Don’t worry; the models are all fine”—we will be making a grave error. These models are not sufficient; they do not take a whole host of measures into account. The noble Lord, Lord Stern, is not here, but he is an expert in these matters and he will tell you how flawed these models are. How can they be sufficient when many of them conclude that a global increase of around 3 degrees will take roughly 5%, 10% or 15% from GDP? That is ludicrous. Do not forget that an average global increase of 3 degrees means warming at the poles at three times that rate and hugely different regional impacts. That is not a safe place to be.
Baroness Tyler of Enfield
“(1A) When exercising its functions under this Part, the FCA may issue a direction to a designated person, for the purpose of establishing a banking hub.(1B) A designated person must comply with a direction under subsection (1A).(1C) A “banking hub” is a facility which—(a) provides cash access and other basic banking services,(b) is facilitated jointly by multiple providers of such services,(c) contains private consultation spaces for users of cash access services, and(d) is established for the purpose of ensuring reasonable provision of cash access services where there would otherwise be a local deficiency of such provision.”Member’s explanatory statement
This amendment would require designated persons to comply with direction given by the FCA for the purposes of establishing banking hubs.
Baroness Tyler of Enfield (LD)
My Lords, this has been a wide-ranging debate and we now come to a very important group of amendments regarding access to cash and other physical banking services. Noble Lords may recall that this issue attracted a lot of interest at Second Reading and, in my view, is fundamental to financial inclusion. I remind noble Lords of my interests in the register.
I am speaking to Amendments 176 to 178 in my name. I also put my name to Amendments 180 to 184 in the name of the noble Lord, Lord Tunnicliffe. I very much look forward to hearing him speak. In addition, I am sympathetic to nearly all the other amendments in this group, which have similar aims.
My amendments are interconnected and cover face-to-face services, which the Bill does not specifically cover. Amendment 176 would require designated parties to comply with a direction given by the FCA to establish banking hubs. In short, my amendment provides, first, a high-level definition of a banking hub and, secondly, a power for the FCA to require one to be established. Without these, there is a real risk of inadequate face-to-face services being provided under the label of “banking hub”, which is not yet defined, or of no services being provided at all, despite all the warm words and promises.
I have long been a supporter of community banking hubs, as high street bank branches are disappearing at an alarming rate. To put this in context, there are currently some 5,000 branches in the country. By comparison, there were some 20,000 branches 30 years ago. Indeed, since the Bill entered Parliament on 20 July 2022, there have been 390 bank branch closures. Some estimates suggest that as many as 4,000 of the branches which still exist could close in the coming years, leaving an unrecognisable banking landscape about which customers have had no choice and no voice. It has just disintegrated before their very eyes.
Looking ahead, there could be as many as 2,000 shared banking facilities, generally referred to as community banking hubs. The importance and benefits of banking hubs, based on a full-service model—which my amendment sets out—include, first, allowing people who need or wish to speak to someone or to access physical banking services to do so. This may include people who need help and advice on complicated matters, such as loans and mortgages, or on issues such as powers of attorney, probate and third-party signature, when a family member becomes incapacitated or passes away. At moments of great emotional stress—I speak from personal experience here—people need a real human being to talk to and to navigate them through unfamiliar territory. They do not want to do this over the phone, online or in a distant town.
Secondly, for many people banking hubs could be a lifeline. We know that 5 million people still rely on cash, particularly to budget week to week. There is also a big overlap between those 5 million and the millions who are digitally excluded, deprived or otherwise vulnerable. We should not restrict the ambition of the Bill just to withdrawing cash.
Thirdly, and equally importantly, many shops are suffering. It is a challenging time on the high street. Banking hubs have been shown to improve footfall and make it easier for businesses to bank locally. Early evidence suggests that they have been welcomed in the locations where they have been installed and piloted. There is also early evidence of regeneration of the high street and of the service to individual customers. For example, the Financial Times reported that in Rochford, a local hairdresser can now stay open longer because it can bank its cash in its own town rather than having to travel. Also, Cambuslang has reported increased footfall at both the banking hub and the post office. Looking to the future, as we must, we should be using a national network of shared banking hubs to work with communities to help all our citizens to prepare to use digital services.
While there is clear potential for a major new national network of banking hubs, progress to date has been, I am sorry to say, glacially slow. We currently have a grand total of four, despite LINK, the UK’s largest cash machine network, having recommended 38 locations to receive a banking hub. There are two problems standing in the way, which this amendment addresses.
First, at present the legislation has nothing in it saying what a banking hub is. My amendment provides a broad definition that includes access, which is very important, but goes wider. Why is this important? Well, what I am calling a full-service banking hub would have a dedicated banker from your bank to offer support and advice as well as the full range of basic transactional services. There have been instances where banks have said that they are providing a banking hub when, in effect, it is a chair at the back of a church hall.
One of the big four high street banks, whose blushes I will spare—though I do not know why—set up a pop-up community service after the branch had closed. In reality, the service was advertised by a chalkboard and some flyers. It was a member of staff with a desk, a laptop and nothing else, in a small room at the back of a community centre. The banking rep could not do anything with cash, there were no cheque or printing services, and the rep could help only with very basic queries, not with actual transactions. In my book, that simply is not a banking hub.
We are told that we can expect a policy statement from the Treasury, which Amendment 181 calls for, among other things, but what guarantees do we have that it will actually provide the services that communities need? Could I ask the Minister when that policy statement will be published, what it will cover and whether we will have an opportunity to scrutinise it before the legislation reaches the statute book? I have given her notice of that question.
Secondly, given the very slow progress to date on the rollout of banking hubs, it is important for the FCA to be able to require delivery from the designated body. Delivery is a problem; as I said, of the 38 banking hubs recommended, we have only four so far. Yes, the chain of those involved in delivery is complex, with many suppliers and banks involved, as well as the Post Office, but the FCA needs to set out a clear target for rollout from the designated co-ordinating body, because without this requirement there will be endless arguments about who is responsible for what will happen, time will drag on and many communities will be left without a service.
Briefly, Amendment 177, which complements Amendment 176, relates to access to other banking activities often associated with a current account that the FCA considers to be significant. I believe that the legislation is too narrow as currently framed, as it covers only cash and would allow this to be delivered through fully automated services without real-life people present. That is not in line with the industry’s findings from the successful Rochford and Cambuslang pilot schemes that I have already talked about.
I readily acknowledge that the Bill is helpful in providing a framework to protect basic access to cash services so that the high street will still have ATMs and deposit services, which millions of people and shops rely on. However, consumers withdrawing and paying in cash also need other basic services delivered face to face. I have already talked about this, why they need it, the complexity, et cetera. If you do not have digital skills, access to broadband or appropriate devices, you often cannot use online services and increasingly face being cut off from basic financial services. The FCA must be given the powers to oversee this issue.
The amendment would give the FCA the authority to take other essential face-to-face transactions into account when it supervises banks. I am sure that none of us in this Room wants people who need face-to-face support to be left behind by an unambitious Bill. Indeed, the Bill is an ideal opportunity to protect those face-to-face services as long as they are needed, supporting millions of consumers, including the elderly and vulnerable groups, such as those with mental health problems, physical disabilities or long-term health conditions. To be absolutely clear, I am not stuck in the past. I am talking not about a bank branch on every corner but rather about protecting the core services we expect from our financial services and which many people would struggle to function without.
Amendment 178 relates to the closure of cash access services and preventing gaps in services—or banking deserts as they have been called. I have already talked about shared banking facilities and the benefits they bring to individuals and small businesses but, and this is critical, when the last bank branch announces that it is going to close, a gap rapidly opens up and leaves people simply cut adrift from vital financial and banking services. Although the existing voluntary arrangements are an improvement on what came before, they are simply not allowing for replacement services to be put in place anything like quickly enough.
The truth is that delivery is not fast enough because the incentive, frankly, is not there. In my view, the current voluntary arrangements lack teeth. I know there are some valid reasons why it is quite tricky. After all, it is a new network of services and it takes time to get these things right, particularly in relation to staffing and premises, but this is simply not acceptable for those communities where a service is recommended but not delivered. We should not accept a gap in service and nor should the FCA. The solution is simple, and this amendment would achieve it. It would give the FCA the explicit power to stop branches closing until the alternatives are in place, thereby protecting consumers, businesses and the high street.
Finally, on Amendments 180 to 182 and 184, I will simply underline the critical importance of free-to-use cash access services being in the Bill. In September 2022, there were nearly 13,000 fewer free-to-use ATMs in the UK than there were in August 2018—a decrease of nearly 25%. In contrast, there has been a much smaller decline in the number of pay-to-use ATMs. People living in the most deprived areas find it hard to access cash without incurring charges; to compound this, those on lower incomes understandably often withdraw smaller amounts of money more frequently and are disproportionately affected by flat fees, which are often in the region of £1 to £2 per withdrawal.
Lord Holmes of Richmond (Con)
My Lords, it is a pleasure to take part in day seven of Committee on the Bill. I again declare my financial services interests as set out in the register. I agree with almost all of the amendments in this group. Indeed, I have put my name to Amendment 184, in the name of the noble Lord, Lord Tunnicliffe. I will not say anything more about that; I will leave him to introduce it far more eloquently than I could.
However, I will speak to Amendments 186, 187, 189 and 239 in my name. I wish to talk about the accessibility of financial services and products, as well as access to them. Sometimes those two things are the same; sometimes they are not. I hope that I can bring that point to life with these amendments. In essence, what we are talking about here is a Bill that sets out some very good principles on access to cash. Cash still matters; it matters materially to millions. However, that is only one side of the coin. Without looking at the acceptance of cash, we might as well say, “What currency has cash if there’s no place to spend it?”, hence the need to look at access to and acceptance of cash if we are really to take the opportunity that this Bill presents us with.
Moving on, my Amendment 186 is about the need for “Accessibility of financial services and financial products”. It is what anybody should be able to rely on. Probably the best way to explain the intent of this amendment is through an example. For years, card payment machines were very accessible. They had raised numbers and a dot in the middle of the “5” key so everybody could use those machines independently, inclusively and accessibly. Now, we see a worrying and extraordinary rise in the use of flat-screen card payment machines. They are impossible for me to use. They are impossible for millions to use.
A worrying principle—I hope my noble friend the Minister will agree that it is such—underpins this. Through technological update, change and rollout, things that were previously accessible are now inaccessible. I do not believe that anybody in your Lordships’ House or elsewhere in the country wants that to be the case when it comes to financial services and products—surely not when it comes to any services or products. Does my noble friend the Minister agree? What do the Government intend to do to ensure that all financial services and products are indeed accessible for all users?
I move on to Amendment 187 on access to banking services, and a number of issues that the noble Baroness, Lady Tyler, touched on. With this amendment, I want to highlight the issue of acceptance of cash. There are a number of ways in which one could have gone about trying to assure its acceptance, such as imposing an obligation on retailers or on those of a certain size or kind, or on retailers offering a particular service. One of the major issues with acceptance of cash, specifically for small businesses, is what they do with that cash once they have it. It cannot be that cash becomes burdensome and expensive, particularly for small and micro-businesses. It cannot be that they have to spend an hour at lunch or the end of the day potentially closing their premises to drive to the next town or village to deposit the cash.
In Amendment 187, I suggest that all high streets of a specific size should have banking services which include deposits—
The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)
My Lords, if the noble Lord, Lord Holmes, will forgive me for interrupting him, I am afraid that there is a Division in the Chamber. The Committee will adjourn for 10 minutes, but perhaps the noble Lord will resume his speech when the Committee resumes.
The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)
My Lords, could I just have the attention of the Committee for a second? The 10 minutes are now up but we know that there will be another vote, almost certainly immediately after the result of this one has been declared. Perhaps it would be better if the Committee did not properly resume until after that vote is completed, if that is agreeable to noble Lords.
Lord Holmes of Richmond (Con)
My Lords, my Amendment 187 seeks to draw together the need for access to cash and acceptance of cash, but in no sense places burdensome requirements on retailers or financial services providers, in terms of the provision in local communities, by virtue of what is now possible through shared banking hubs. As we heard earlier in the debate, since the Bill entered Parliament on 20 July 2022, 390 bank branches have closed. Can the Minister say how many shared banking hubs have opened in that time? If we plot a similar trajectory for this year, which seems reasonable on the data we have available to us, and suggest a similar, if not slightly higher, number of bank branches closing, how many shared banking hubs will be open by 31 December this year?
Amendment 187 would provide access to banking facilities on every high street and give the Treasury the power to determine the size and scale of that high street to enable provision across the country for individuals and micro, small and medium-sized enterprises for deposit and withdrawal for the benefit of the community, the economy and our country.
Moving to Amendment 189, if we consider not only the need for cash but the current geopolitical circumstances we find ourselves in, it would seem a very good idea to classify the cash network as critical national infrastructure. I thank my noble friend Lord Naseby who has put his name to this amendment, which simply states that the cash network should be critical national infrastructure because of economic reasons. I believe we can move positively to a digital financial future where everybody is included. It is one heck of a transition, but I believe we can get there. Even when we reach that point, for reasons of reliance, there may well still be a need for cash. The level of the cash network could be determined by the Government, but having a cash network would seem to be a thoroughly good idea for reasons of resilience, unless the Minister can suggest an alternative second or third line of resilience, which I would be delighted to hear.
Finally, my Amendment 239 asks the Government to consider an access to digital financial services review. This is critical and timely. It would build on the great work that was done with the Access to Cash Review published in 2019. It would have many of the same aims, but in no sense the same specificities. If the logic was good for an access to cash review, which I believe it was, does my noble friend agree that the logic for an access to digital financial services review is equally good? I suggest that the review should look at issues around access to digital payments, online platforms, mobile applications, skills and, crucially, connectivity.
It is probably best to look at this in terms of an example. Imagine a mobile application, the best digital payments application ever created. However, I do not own a smartphone, so that digital payment is not being made. Imagine the same application, but it is not accessible. That digital payment is not being made. Imagine I own a smartphone and I have that app, but I am in an area of low or no connectivity. I could have the best digital skills, the best smartphone and this best app, but the payment is not being made. Imagine I have the app, the smartphone and the connectivity, but I do not have the digital skills. That payment is not being made.
It is those issues and more that we urgently need to look into with an access to digital financial services review, which can come up with recommendations for the Government to put into practice for the benefit not just of individuals but of micro-businesses, small and medium-sized enterprises, local economies, communities, cities and our country. The logic was good for an Access to Cash Review; I believe it is good for an access to digital financial services review.
To conclude, we need access to cash, as well as acceptance of cash; access to banking services on every high street; cash as critical national infrastructure; and an access to digital financial services review. Will my noble friend the Minister channel a retro TSB marketing campaign and, for all these amendments, be the Minister who likes to say yes?
Baroness Noakes (Con)
My Lords, I have Amendments 179 and 190 in this group. I am not very enthusiastic at all about the provisions for cash access and distribution in the Bill. I am far from clear that a heavy-handed regulatory solution, which is what we have in the Bill, is necessary to preserve cash access and distribution, but, if we have to have it, I believe that the powers in the Bill should be time limited, which is what my Amendments 179 and 190 seek to achieve. Under these, the powers would expire in 10 years, unless the Treasury brought a statutory instrument giving a later date.
This is not a hard-nosed sunset clause, because we genuinely do not know what the future will be like. What we do know is that, before Covid, the use of cash was on a long-term downward trend and the use of debit cards had already overtaken cash. Covid then accelerated those trends so that, by 2019, debit card usage was 50% higher than the use of cash, and the latest data for 2021 shows that debit cards were used three times more often than cash. UK Finance forecasts that, by 2031, cash will account for only 6% of transactions while debit cards will account for more than half.
I do not deny that some people are more comfortable using cash than other payment options, and I accept that digital exclusion exists. It may well be a proportionate response to the current need for cash to protect its availability in the way that the Bill does, but I find it hard to see why we should set cash up on a pedestal as though it is some form of human right.
There is a large cost associated with cash provision. The Access to Cash Review found that it costs around £5 billion per annum. That is ultimately borne by all users of banking services, with the possible exception of holders of basic bank accounts, which do not cover their costs anyway and are already loading costs on to other users. As the use of cash continues to plummet, the cost will become disproportionately high because most of the costs involved are fixed.
I am certain that the future is digital, and the real need in the medium term is not to build shrines around cash points but to incentivise the financial services sector to make digital payment systems more accessible and inclusive. The best fintech brains should be put to work on this, and the banks need to see that it is in their interests to support innovation. This is where the regulators should be putting their efforts, rather than working out where cash points should be.
For this reason, I quite like the idea behind my noble friend Lord Holmes of Richmond’s Amendment 239, which calls for a review of access to digital financial services, although I am not sure that now is quite the right time. I am also not sure that a review should result in decisions made by government. We need to incentivise the providers of financial services to provide answers for this, rather than thinking that government can dictate how things will work in practice as society changes.
Some of the other amendments in this group, in particular those in the name of the noble Lord, Lord Tunnicliffe, and the noble Baroness, Lady Tyler of Enfield, seek to cling to an idea of high street banking that has already been overtaken by events. Bank branches closed because people stopped going to them; I predict that the new hubs will go the same way. The future is digital—that is what we should be trying to encourage. Making banks shoulder the costs of branches or hubs that are little used will simply increase the costs of the banking sector. This will end up harming consumers because costs will be passed on to them or, in some cases, providers may decide to withdraw from servicing particular sectors. In trying to preserve high street provision, the outcomes for consumers are not good.
I do not believe that it is responsible to legislate to preserve a version of the past unless there is clear evidence that the benefits outweigh the costs. I doubt that the cost-benefit case could, in truth, be made at the moment for maintaining branches or paying for the setting up of hubs, but I am absolutely certain that, when we look back in 10 or 20 years’ time, we will be amazed that we even thought that standing Canute-like against technological and societal change was the right thing to do in this area.
Viscount Trenchard (Con)
My Lords, I recognise the good intentions of the noble Baroness, Lady Tyler of Enfield, in introducing her Amendment 176. However, the tide is running out for cash. We are not the most advanced country in this area. It is now almost impossible to use cash in Sweden. What does my noble friend the Minister know about how the authorities in countries such as Sweden, which have largely dispensed with cash in daily life and where retailers are not prohibited from refusing to accept cash, support those who have no bank account, debit card or credit card?
I sympathise with the aim of this amendment. I regret the disappearance of the bank manager, but I doubt that this is an area where the Government should be too prescriptive. Where there really is demand to meet a bank manager, surely the market will respond and one or more banks will locate a manager where he or she is needed.
I support Amendments 179 and 190, to which my noble friend Lady Noakes has already spoken so ably. Her amendments recognise the reality of the disappearing role of cash.
I have sympathy for the aims of Amendments 180 and 181 in the name of the noble Lord, Lord Tunnicliffe, as I think it important that banks continue to provide in- person banking services where there is demand for them.
I sympathise with Amendments 238 and 239 in the name of my noble friend Lord Holmes of Richmond. The way the KYC rules are interpreted by banks and credit card providers is completely absurd and disproportionate. It really is ridiculous to have to prove one’s existence to an institution with which one has had an active business relationship for many decades. Can my noble friend the Minister tell the Committee whether she agrees that a review of the KYC rules is absolutely necessary?
Lord Naseby (Con)
My Lords, I shall be brief. I have put my name to Amendments 180, 182 and 189.
I have a couple of points to make on Amendment 180. First, proposed new subsection (2) is on essential in-person banking services. My wife and I were just in a position in which we needed a face-to-face meeting with our joint-stock bank. The nearest one is eight miles away, which is not exactly around the corner. It was extremely difficult to find the right person in that particular bank, despite the requirement being created by that bank. I am sure that others have had that experience. There is a need to have the ability to have reasonably convenient face-to-face meetings with knowledgeable people who are prepared to work on Fridays, when the rest of us are working. In our case, we work only four days a week—they are just long days—but that is by the by.
Secondly, proposed new subsection (4), to be inserted by the amendment, refers to “applicable local authority areas”. We must never forget that we now have a combination of district and single-tier authorities. The difference is that it can be many miles from one town to another in single-tier authorities.
Apart from that, I hope that my noble friend the Minister takes very seriously the points made in the amendments of my noble friend Lord Holmes. They are well worth listening to and analysing.
Lord Hunt of Kings Heath (Lab)
My Lords, I support the general thrust of the amendments on access to cash and the availability of real banks, if I can put it that way. I take the point of the noble Baroness, Lady Noakes, that the future is digital and that our effort should be to incentivise the financial sector to make it easier for those people who, at the moment, lack the confidence to use digital methods. I accept that she is right, up to a point; we probably are moving to a cashless society. So far, however, the financial sector has shown itself to be rather backward in coming forward with innovative solutions for people who lack confidence.
Secondly, there is enough evidence around to suggest that, at the moment, enough people—millions of people—use cash. They often use cash as a way of budgeting at a very difficult time. I would be loath for us to take action that disenables them from doing so. One of the concerns about access to cash is not just that the number of machines is being reduced but that the amount of free access to cash is, I understand, also reducing. Some of this is to do with the way that fees are charged by the LINK facility. I will not put the noble Lord, Lord Hunt of Wirral, on the spot, but there are issues around the way in which that policy has developed over the past few years, as it seems to be putting pressure on some of the cash providers. This, again, needs to be looked at.
I was very struck by an article in the Guardian today about a 91 year-old who
“discovered that her pension and benefits payments had been stopped and her direct debits cancelled after a Barclays agent recorded that she had died and closed her account.”
I realise that hard cases cause bad law but her experience brought home to me many of the problems that are being faced. She
“informed Barclays that her husband had died. She asked for his name to be removed from their joint account and replaced with that of her daughter … who has third-party access to her account. Instead, she was marked as deceased and the account was closed. Her pension and benefit payments were returned to the Department for Work and Pensions and her direct debits were stopped. She discovered the mistake when she returned from a family Christmas to find her phone line and energy supply had been cut off and a sheaf of letters from companies and the council demanding payment.”
The article continues, as she then
“made two trips to her nearest Barclays branch and was told on both occasions by staff that she was recorded as dead. The bank refused to discuss the case with her daughter because her third-party authority had been revoked when the account was closed.”
This recalls the experience of my wife and I, who had power of attorney for our parents. Once they have died, you lose that power of attorney; it becomes very difficult to have any interaction with the bank at all, and the bank itself is often unsympathetic when you try to discuss this.
In Mrs Roper’s case, the account was eventually reopened and the payments restored after intervention by the Guardian. However, as the article states:
“Roper’s ordeal highlights the obstacles facing vulnerable customers who do not have access to online banking. A Barclays customer for 65 years, she is unable to cope with the automated menus on the customer service phone line and, since her local branch closed, she is forced to take two buses to the next town to withdraw money and manage her account. The only available appointment to request the account change was at a branch 23 miles away where staff did not know her. She brought the required documents, but the bank refused to proceed with the requested name change because she could not recall her little-used pin number. She was told her to make another appointment when she had remembered her pin.”
I am afraid that this is all too common. When we talk about encouraging people to use online facilities, I recall my mother in her last year or so. She was very frail. Even using phones with big numbers, not smartphones, became very difficult. With banks and other financial services, we know who the policy people are; they are often the same young people who work in government developing policy. I accept that the noble Baroness, Lady Noakes, is right about where we are going as technology moves on. However, we are talking about forgotten millions of people here. So far, because I do not see the financial sector responding, we need some safeguards in the Bill. Before Report, I hope that we can coalesce around one amendment that will really enable us to ensure that there are strong responsibilities on the regulator to encourage best practice here.
Baroness Twycross (Lab)
My Lords, I want to speak to my Amendments 185 and 188 in particular, as well as on the broader points made by other amendments in relation to access to cash and basic banking services. I declare an interest as London’s Deputy Mayor for Fire and Resilience and the chair of the London Resilience Forum, not least because the London City Resilience Strategy highlights the risk of moving to a cashless society.
First, Amendment 188 concerns the importance of cash to national resilience. It is of critical importance that the Government have due regard to what might happen in some crisis situations were we to become an entirely, or almost entirely, cashless society. Comment has been made on the march towards a cashless society in Scandinavian countries, including by the noble Viscount, Lord Trenchard, but we should also note that these countries have not only greater equality and lower financial exclusion than the UK but, in formal government guidance to their populations on preparedness, they recommend that their citizens have some cash for use in an emergency.
The Norwegian Government’s English language public information leaflet on personal preparedness says:
“Most of us are completely dependent on electricity in our everyday lives: for heating, light, cooking, hot water and running electrical appliances and devices. Storms, natural disasters, sabotage, technical problems, terrorism or acts of war can result in many people’s electricity or water supply being cut off.”
The digital world in which we live, which is reliant on electricity, creates huge risks as well as opportunities. The world is in many ways less resilient to shock than it was previously as a result. You only have to look to the recent cyber incident that Royal Mail experienced, with weeks of not being able to send international post, to understand the real risks of a world in which individuals, companies, sectors and countries become overly reliant on digital finance and digital infrastructure.
On a national basis, everything from a major power outage to a rota power outage—your Lordships will know that local resilience forums were asked to plan for one this winter so this is not a hypothetical situation—whether this is through shortages, hostile cyberattacks or a major storm, could restrict the ability of individuals, businesses and government to function. I agree with the noble Lord, Lord Holmes, that access to cash should be viewed as part of the national critical infrastructure.
The scenarios in which an overreliance on digital banking, with an absence of cash as a back-up, becomes an additional complication or risk in an emergency situation are not far-fetched. This is a genuine threat to our country’s resilience and to our national security in an unstable world. I therefore ask Ministers to consider including this amendment and would suggest that, as a minimum, the ongoing work that the Government are undertaking on the national risk register considers what additional risks might emerge in relation to emergency situations in which cash was no longer available.
There is limited reference to this issue online. In my attempt to get more extensive examples or comments to back up my points, I did not find much of note to cite relating to the UK. This actually made me more concerned, not less. The reality is that it is not far-fetched to have a scenario in which we could lose access to digital finance or payments systems for a number of days—or weeks—on a national, regional or sub-regional basis. The reason cash has lasted so long is that it is, in essence, resilient. That is not the only reason for keeping cash but we need, as a country, to avoid sleepwalking into losing the resilience that it can provide. If you spoke to people working on resilience in Sweden, for example, I think they would also note that it presents additional problems. This is not about preserving history, as the noble Baroness, Lady Noakes, suggests, but about preserving our resilience.
Amendment 185 in my name, which is on the regional experience of cash provision, is intended to highlight the need for us to understand and plan, through the FCA, for cash provision—not just on average, or on the whole, but in relation to whether provision has a regional and potentially sub-regional imbalance. This would enable any regional disproportionality that exists to be addressed. I am particularly concerned that we have large areas, both rural and within cities, that no longer have banks. I know, for example, that the entire constituency of Bradford South no longer has a bank. Like others, I am particularly concerned about the risks of there being a lack of cash and basic banking services for the most vulnerable in society. Others have already spoken on this point and given detailed statistics illustrating it, so I will not dwell on it.
In conclusion, I commend those noble Lords who have tabled specific amendments covering free access to cash and access to basic banking services. It is not a coincidence that Amendment 182 has cross-party sponsors and I commend my noble friend Lord Tunnicliffe, the noble Lord, Lord Naseby, and the noble Baronesses, Lady Tyler and Lady Altmann, for their work on it. I also commend those in the other place, particularly the honourable Member for Mitcham and Morden, who have pushed for this matter to be addressed. Quite simply, free access to cash and basic banking services must be guaranteed. At the heart of British personal banking lies free access to your own money. It is outrageous that if you are poor, you are more likely to have to rely on charged-for cash machines. This legislation provides an opportunity to address the issue, as well as ensuring that we safeguard our country’s resilience.
The Lord Bishop of St Albans
My Lords, I will not detain the Committee for very long but perhaps I could say one or two things. Briefly, I come at this by thinking about rural sustainability and rural business. I declare my interest as president of the Rural Coalition.
Before I say anything on that, a month ago I had my wallet stolen on my way into Parliament and I learned a lesson: do not keep all your cards in your wallet but have some different ones. I was, to use a theological term, absolutely stuffed that morning. Fortunately, I had a member of staff at home. I went back and cancelled the cards then phoned up my bank, which said, “Yes, come up—we can give you some cash”. When I got up there, I was told, “No, the system’s got it wrong and we aren’t able to give you cash here”. I then had to get someone to take me six miles to get some cash. When I eventually got into London for some meetings, I went to four places before I could find somewhere to buy lunch because I had only cash. This is actually quite a complex thing.
Actually, I agree with the noble Baroness, Lady Noakes: there is a huge change going on—of course there is. But how are we to work with that, not least if we are going to think about levelling up? In my diocese, for example, if I go into Citizens Advice in poor areas in Stevenage, they tell me that people sometimes positively get rid of their credit and debit cards because they do not know how to control money. There are some real issues here about financial literacy and discipline to help people with saving and so on.
Going back to the rural issue, much of this stuff depends on rural businesses having broadband. Large rural areas of our country are not-spots, where there is no access. Some places do not even have good access on a direct phone line, certainly to do some forms of banking. I therefore think that we are in a transition period. We certainly need protections in place for the foreseeable future as we try to work out how this goes and how we take it forward.
I was recently in the small rural town of Ampthill in my diocese in Bedfordshire. A whole group of people talked to me afterwards; they got on to this subject and said how it really affects small start-up businesses at the moment. I hear that we have to think about how we should take this forward but, over the coming years, we need some sort of provision to guarantee some basic levels of service so that we can help rural sustainability, rural businesses and individuals who live in those areas.
Baroness Bennett of Manor Castle (GP)
My Lords, I rise briefly to offer the Green group’s support for the general sense of direction here on both the provision of cash and the review of resilience. It is not an accident or a convenience that those two things have been brought together, as the noble Baroness, Lady Twycross, just made clear.
We come back to a fundamental question: what is the financial sector for? If it is there to serve the real economy and real lives, it must meet people’s needs in both good and bad times. That applies at the individual level and the national one. The system must be able to stand up to not just financial shocks but the kinds of shocks that we know about in this age of the climate emergency, the nature crises and the threat of pandemics.
As the noble Baroness, Lady Twycross, was speaking, I was reflecting on being in Lancaster in 2016 about a week after Storm Desmond. I saw a city in shock. I saw what happened when they lost electricity for a day and a half or so. Digitisation and the disappearance of cash have come a long way since 2016 but people were absolutely desperate. They were not able to meet their basic needs, which surely must be part of the financial sector’s responsibility.
I broadly agree with the general tenor of everything that has been said but I want to make one strong point of disagreement with what most people have said. There is an idea that this is a transitional phase and that, once we have gone past the generation where people have not had digital in the prime of their life, the phase will end and everybody will then be able to use digital. I was going to tell exactly the same story as the noble Lord, Lord Hunt of Kings Heath, did. I will not repeat it but I will draw a further lesson from it. It is a story about a 91 year-old lady. She may have been able to cope with the telephone system and the buttons at 70 or even 80. I know someone in this situation; he is an older gentleman who finds it harder and harder each year to navigate the complications of digital.
None of us in this Room knows what our capabilities will be in 10, 20 or 30 years’ time. Just because you can do something now, you cannot guarantee that you will be able to do it in 20 years’ time. In terms of national resilience and meeting everybody’s needs, we genuinely have to make sure that, long into the future—potentially for ever if we look at that kind of scale—there will always be somewhere where you can walk up to a person and say, “This is my problem. I need you to help me sort it out”. That person needs to have the resources, knowledge, skills and power to sort out that situation for you because, ultimately, only having a person who looks you in the eye, sees the problem and deals with it will really meet everybody’s needs.
I have one final thought. There is sometimes a feeling that we have to have maximum efficiency and meet the needs of the majority, and tough luck for the rest. If we have a system that meets the needs of the most vulnerable people in our society—this is often said about public transport systems but it applies far more broadly—we have a system that is good for everybody in our society.
Lord Blackwell (Con)
My Lords, since I have not spoken in Committee so far, I should remind noble Lords of my interest as a former chairman of a bank and a current shareholder. However, I am not going to defend the service levels of banks, which I recognise need improvement.
On these amendments, I point out that, while I understand the rationale behind the desire to maintain access to cash, everything has a cost. We need to consider the cost of what is proposed as well as the benefit. My noble friend Lady Noakes is right that the shift towards digital and away from cash has snowballed over the past few years. It is not just customers who prefer not having to carry cash around. Many small businesses, clubs, associations and societies find it much easier now to have a low-cost terminal with which they can process membership dues, fees or even small transactions. It makes the accounting so much easier and avoids having to deal with collecting and disbursing large amounts of cash.
The move towards digital is happening across the whole economy. People talk about keeping branches open but there are many branches where only a handful of people come in during the week. When you think about the cost of maintaining the building infrastructure, as well as the staffing, security and systems, the cost per transaction becomes astronomical. Those costs have to be borne by somebody; they are borne by the other bank customers in higher fees, charges and interest rates. Nothing comes without a cost so we have to consider what the appropriate cost-benefit answer is.
As many noble Lords have said, clearly there are people who find it difficult to use digital technology and need access to cash, but there are other ways of—
The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)
My Lords, I apologise for interrupting the noble Lord but I am afraid that there is another Division in the Chamber. The Committee will adjourn for 10 minutes and we will resume with the noble Lord, Lord Blackwell, when the moment comes.
Lord Blackwell (Con)
I was making the point that maintaining open bank branches as a solution to this problem is potentially a very expensive way of solving the problem and that the cost would be borne by other bank customers. We need to accept that there may be better ways of serving the genuine needs of those who cannot cope well with the digital economy and may need access to cash. Clearly there are potential solutions using other shops or post offices in localities to provide access to cash where that can be done, but another solution that many banks are adopting is the development of mobile banking branches. A mobile branch that visits a village once week may not be as good as a permanently open branch but at least it gives access to cash and the costs become much more affordable and socially acceptable.
We need to be cautious about assuming that maintaining the structure of the past is the right way to meet the genuine needs of those who have difficulties. We need to avoid fossilising a structure that is no longer fit for purpose. If this debate had been happening 20 years ago about telecoms, we might have wanted a law that said there had to be a telephone box in every high street. If we had had this debate 100 years ago, we would be requiring there to be a horse trough in every high street. There have to be other ways in which we can meet the genuine needs of those who have special needs without the blanket approach of insisting that highly costly and inappropriate branches remain open in places where there is no demand for them.
Baroness Fox of Buckley (Non-Afl)
My Lords, I enthusiastically support Amendment 186. I thought that the noble Baroness, Lady Tyler of Enfield, spelled out extremely articulately the importance of banking hubs and how that name could often be prosecuted for mis-selling. Even banks themselves, in terms of the service that they offer when you go into the few that are still open, can be accused of having only the minimum service required.
The noble Lord, Lord Hunt of Kings Heath, told a heartbreaking story about a 91 year-old but you do not have to be 91 and have a heartbreaking story. Things can just go wrong; your card can stop working or whatever. When you try to solve it on your phone and it does not work, you then go into the bank and, to be honest, you are treated as though you are wasting the bank’s time and as though you have done something wrong. The staff often cannot solve the problem and ask, “Why don’t you solve it online or on your phone?” The answer is that I would have done so if I could have done. In other words, I do not think that it is necessarily a special needs problem, as the noble Lord just said. I think it can happen to anyone. Sometimes, you need human intervention to sort out your banking.
I am also interested in supporting those amendments that would allow access to cash, including Amendments 180 and 181 in the name of the noble Lord, Lord Tunnicliffe. I especially like Amendment 189 from the noble Lord, Lord Holmes of Richmond, and its attempt to make cash critical national infrastructure in the UK; I also support Amendment 189A, which is headed “Access to physical banking services”.
I suppose I am concerned about noting that the importance of cash relates not just to those who struggle with their phones or other technology. This discussion sometimes implies that some of us are just Luddites who cannot cope or do not want to embrace the full excitement of new technology and digital futures. I want to emphasise that I can see the advantages of a cashless society. Mainstream cashless transactions carry certain information about payment participants, what was purchased and when, which can be a huge barrier to money laundering and tax avoidance. That is genuinely important but, for individuals as consumers, it can also mean—this may be slightly different to what others have emphasised—that it helps people with budgeting because they have electronic receipts and can see both what is going in and what is going out. I am rather enthusiastic about those technological steps forward; I do not in any way want to hold back the march of progress, in the way that some have implied.
However, precisely because cashless transactions mean that information about payment participants is available to financial institutions and banks in a different kind of way, they can also give those organisations huge surveillance capability and invasive powers in ways that we did not see so much in the past. It is then not about you taking cash out but about everything having to be recorded. This means that people are not able to do the things you could with discretion. It should be noted—this is not entirely being paranoid—that, in China, financial surveillance is used to censor and restrict people’s freedom to express opinions against the state.
Noble Lords might think that that would never happen in a democracy but, in a later amendment in my name—when I say later, I mean if it ever arrives; it is Amendment 241B, should anyone like to note that, because I do not suppose that anyone will be here to listen to my speech on it—I was inspired by payment processing in fintech companies, such as PayPal, and the move towards everything being cashless, with a cashless society and everything being digitised. This has meant that PayPal, for example, can close down accounts on the basis of politics; in fact, it has done so, so I am not just being paranoid.
There also tends to be a casual assumption that those who want to keep their financial transactions private—that is, by using cash from time to time—might be up to something dodgy, as though the only reason someone might want to be free to choose to use cash is if they are involved in embezzlement or tax fraud. Today, it has been much friendlier than that; people just assume that you are technologically incompetent and old-fashioned, so cannot keep up. We just have to be a bit careful about this. I have also noticed a trend where financial services are judging how individuals are making their purchasing decisions—judging their use of money in a way that they may not have done if were not quite so detailed.
Recently, I was interested that HSBC—my bank—was involved in a report that condemned people’s decisions about how much they spent on gambling and was backing affordability checks. I know that I disagree with some noble Lords in the Room on gambling—I can already see them—as I think that is a legal leisure activity and that you should be able to do what you want. The idea that the bank is saying that it has customers who spend too much on gambling, a perfectly legal leisure activity, and then gives a breakdown of them, indicates that rather than being a dispassionate financial service it is getting involved in things in a way that it perhaps should not. I have never gambled, but my bank could well send me a note about how much I am spending in TK Maxx, saying that has all gone a bit mad.
When we had cash, we took the money out, we spent it on what we wanted and nobody could see. A cashless society creates a slightly different situation. Amendment 186 on accessibility and Amendment 184 on levels of cash acceptance, along with the whole issue of digital exclusion and financial inclusion, are very important but do not quite capture some of the broader political trends associated with this issue.
I am also very sympathetic to the notion of the noble Baroness, Lady Noakes. On the one hand, cash is not a human right—I do not want to get stuck on that, as I am never keen on regulations lasting for ever; a time-limited sunset clause is a good idea—but I am anxious that we do not forget the political trends surrounding this by simply treating it as a technical issue.
Baroness Lawlor (Con)
My Lords, if I may come in briefly, I am very sympathetic to the aims of noble Lords who wish to see cash access and banking services available to those who need them and do not use or rely on digital. However, I agree with the aims of the Bill: international competitiveness and growth. I do not think that this Bill’s powers regarding the financial markets and services sector should be used in a blanket way to impose an obligation on service providers to provide a service whose use, by all accounts and evidence, is on the decline.
Not only do I support the two amendments from my noble friend Lady Noakes, but I think we should pay attention to the overall aims for the regulators in this Bill, which are international competitiveness and growth. I urge the Minister to focus on the real problem of access to cash and banking services for many people, and, where there is a problem or gap, to focus the efforts and use the powers of government on trying to deal with the declining number of users in our society—albeit a real group—rather than use the law to impose obligations in a blanket way on the sector, contrary to the aims of competitiveness and growth. As noble Lords have explained, such a move could undermine the competitiveness of the banking sector.
Baroness Bennett of Manor Castle (GP)
The noble Baroness appeared to be suggesting that the provision of services, including the cost, should be done by the Government and that the private sector should collect the profits. Could she clarify whether she was saying that?
Baroness Lawlor (Con)
I thank the noble Baroness for her intervention. No, I was saying that, when we use the law, we should be very careful not to impose the costs on providers if the aim of the law is to encourage competition. There are reasonable aims which are agreed to by the whole of society. It is a reasonable aim for society to require and want cash access. My heart agreed with the noble Baroness, Lady Tyler, as she powerfully moved her amendment, but we should draw a line between a blanket restriction on providers of these services and finding how government can help and encourage other providers of services to do it. I was just talking to other noble Lords in the Lobby about this. I know of voluntary groups, market groups and social providers which are out there helping such groups and finding ingenious solutions to meet the gap, where there is one.
Lord Hunt of Kings Heath (Lab)
My Lords, surely we have a situation in which the market is failing. In essence, the banks are not interested because they take the same view as that of the noble Baroness, Lady Noakes: that this part of the market is dying. They do not want to be involved because they want to be in a dynamic, new market. Faced with that and the 7 million people who use cash each year—in the current cost of living crisis that many people face, cash is used as a budgetary tool—what can we do if the market is clearly not providing? From our point of view, legislation is the only lever we have because none of the regulators seems that interested. Government departments are not; they are engaged in removing cash as much as possible. What is the alternative?
Baroness Lawlor (Con)
I thank the noble Lord for his intervention. I do not have an answer—I am sorry to disappoint the noble Lord—but this Bill is not the place for that. Its aims and purposes are to make the UK sector more nimble and competitive internationally so that it can move ahead in a post-Brexit world and we can all benefit from a successful financial sector. Putting caveats, restrictions and obligations on a sector can add costs to customers, consumers and all who use these services. However, I think that that is a good aim and is good to do. We should have a special committee to see how we can encourage use, short of using the law as a big stick on one sector of providers. There are many ways that have opened up in the market that are already providing use, which I can discuss later.
Lord Tunnicliffe (Lab)
My Lords, this is a key group for the Labour Party politically; it contains four of our amendments. Amendment 180 would require His Majesty’s Treasury and the FCA to publish a review of the need for
“access to essential in-person banking services”
and to ensure
“a minimum level of access”
to them.
Amendment 181 would require HMT to
“publish a policy statement setting out its policies in relation to the provision of essential in-person banking services, including … support for online banking, and maximum distances people can expect to travel to access services.”
I would be interested to know the Minister’s view on the reasonable distance for an elderly or disabled customer to have to travel to speak to someone from their bank.
Amendment 182 is perhaps the most important. It would compel HMT to
“guarantee a minimum level of access to free of charge cash access”.
Amendment 184 would require the FCA to
“monitor and report on levels of cash acceptance across the UK.”
I set out the crucial importance of free access to cash at Second Reading so I will not do so at length a second time; well, that is what it says here. Nobody has more interest in being speedy than me, or perhaps the Minister, because we have to be here for every minute of this Committee. We are almost in our 27th hour but this group is different from anything else that we have discussed. The rest of it—I cannot think of a polite way of putting it—is about activity that takes place for people like us. Quite a number of people work in the finance industry; we are looking at the nuances of it and how politicians should be involved.
However, the issue of cash is about our society. It is about the poorest and least competent people in our society. Technology has been a substantial disruptor. It is a disruptor that particularly applies to finance. It has allowed financial transactions to become extraordinarily efficient and has created a whole new customer base of people who are comfortable with technology. They have access to a whole new marketplace. We know that the dynamics of that have probably been benign for society.
However, the other problem is that it has created a divide in our society. I ran an organisation that used to have a lot of cash; I am all too familiar with the tremendous impact of approaching a cashless society. In all the knowledge in the world, the last bits are the most expensive bits. Yes, the cost of transactions goes up and so on and so forth, but we cannot afford to create the divide in our society that is emerging. We must support all parts of our society seriously. We must recognise that, in their lives, people sometimes need all banking services. We must recognise that some people simply cannot envisage how to budget without physically seeing it in separate pots. It is clearly a natural reaction if you are running out of money. You can see it there and have confidence because you know that, if you go into the grey world of accounts, banks, overdrafts, loans and things like that, all sorts of horrible things happen. For that group in society—it is probably 10% of our society so it is a substantial number of people—we must find a way of maintaining the public service. We must achieve a minimum service.
The noble Lord, Lord Blackwell, said what all providers of service say: if you are not ultra-efficient, you load the inefficiency costs on to other customers. It so happens that being ultra-efficient does not do much harm to your profit line either. Big businesses such as banks pursue the maximisation of shareholder value. It is in the law. They are supposed to do it, for Christ’s sake. We should not be surprised when they do but I rarely see them turning into charities. We have got to find ways. We do not have to keep all the branches open; even I can work that out. We have to be much more inventive in how we service this need, which is still large, but the way we must do that is by creating duties on the purveyors of financial services as well as rights and constraints.
It is proper for the law to create duties to look after the poorer members of our society. That is why so many people have said that it is important for a variety of needs—resilience and so on—that we maintain it. The banks must play their part. They have enjoyed massive exploitation—I do not use that in a pejorative sense—of information technology, probably more so than any other section of our society. They must recognise that there has to be a cross-subsidy in this situation because we must restore financial equity to all our society.
Baroness Penn (Con)
My Lords, as we have heard in this debate, the nature of banking is changing. In 2021, 72% of people banked online, and 57% on their mobile phones. Meanwhile, 85% of payments were made without cash, up from 45% a decade earlier, and 86% of UK adults used contactless payments.
Lord Tunnicliffe (Lab)
Were 85% of the number of payments made without cash, or was it 85% of the value of payments?
Baroness Penn (Con)
I will check for the noble Lord because I do not have that level of detail in my notes. They say that “85% of payments” were made without cash, not “the value of payments”, but I should double-check to clarify for him.
In the light of these innovations in the way that we bank, the Government recognise that it is incredibly important that people are not left behind—we have heard that in today’s debate. Many people still rely on physical services: in particular, millions of people still rely on cash and need access to withdrawal and deposit services.
Working with industry, the Government are already undertaking positive action to support cash access in this context. For example, existing initiatives subsidise free-to-use ATMs in remote and deprived areas. Following changes in the Financial Services Act 2021, there is a new ability to have cashback without purchase services, enabling withdrawals to the penny that people request. Communities can ask LINK to assess whether additional cash services are needed, with several major banks and building societies funding new shared services. As a result of that initiative, over 70 communities are due to get new cash deposit facilities.
In that context, it is important not to underestimate the significance of the provisions contained in the Bill. It is the first time, in UK law, that we are protecting people’s ability to access cash. The Bill provides the FCA, as the independent regulator, with the responsibility and necessary powers to ensure reasonable provision of withdrawal and deposit services.
In evidence to Parliament, the regulator said that it anticipates taking account of reasonable access to free cash services for personal customers—subject to due process, which includes a requirement to consult on its rules. In using its powers, the FCA will utilise the wealth of data that it has collected, including on access at the regional level, and it must have regard to local deficiencies in cash access services and the Government’s policy statement.
The noble Baroness, Lady Tyler, asked about the policy statement. It is currently being developed, and we expect it to be published after the Bill completes its passage. It is important that it takes into account the latest available data and evidence ahead of its publication.
I have clarification for the noble Lord, Lord Tunnicliffe, on the statistic that I used, so I shall not need to write. I can confirm that 85% of the number, not the value, of payments were made without cash.
Lord Holmes of Richmond (Con)
While we are getting clarifications in flight, may I ask my noble friend the Minister about the 86% of people using contactless? Are 86% of people using contactless all the time or are they making one payment a year? If someone from the Box is able to answer that in flight, that would be helpful.
Baroness Penn (Con)
That request has been noted. Reading the statistic in my notes, I would say that 86% of adults have used contactless payments, rather than it being a comment on how much they use them as part of their payment mix. If I am wrong, I hope that the people supporting me will tell me.
I talked about the policy statement and the significance of the measure that we are taking in the Bill. We have heard from the Committee that not everyone agrees with that approach. In legislating to protect access to cash, the Government have sought to provide that reassurance for those who rely on cash for a number of different reasons.
We have heard why it can be important for accessibility and for people to manage their finances. We have also heard about privacy concerns. However, we have not sought for the legislation to be prescriptive on the cost, type of facility or range of services offered at facilities. We are seeking to ensure that this primary legislation allows for innovation and flexibility, as the needs of people and our communities evolve over time. I think those advocating for greater access to services also recognised the need for that flexibility and change in needs over time. It is for those reasons that the Government do not support Amendments 176, 178, 182 and 185 from the noble Baronesses, Lady Tyler and Lady Twycross, and the noble Lord, Lord Tunnicliffe.
The Deputy Chairman of Committees (Baroness Kennedy of Cradley) (Non-Afl)
There is a Division in the Chamber. We will resume with the noble Baroness, Lady Penn, in 10 minutes’ time.
Baroness Penn (Con)
My Lords, we were addressing the question of when alternative service provision is put in place and the accessibility of that service provision.
I have addressed the point made by the right reverend Prelate the Bishop of St Albans about connectivity. He also made a point about customers needing, for example, a smartphone to make payments or access online banking. The FCA has stated that it expects payment service providers to offer solutions that work for all groups of people. It encourages all firms to consider the impact of their solutions for customers. The regulators’ guidance recognises that not all customers will have mobile phones or a reliable signal and that viable alternatives should be provided in these situations.
All service providers, including banks and building societies, are bound under the Equality Act to make reasonable adjustments where necessary. Many of them support access to digital services through initiatives to distribute devices, teach skills, or facilitate support networks.
As my noble friend Lord Holmes highlighted, moving towards digital can create opportunities for accessibility but it can also create barriers. It is important that we embrace these technological changes in ways that reduce those barriers, so his point about ensuring that interfaces, including ATMs and point-of-sale terminals, are accessible is really important.
Lord Eatwell (Lab)
Would the Minister indulge me for a moment? I have been intrigued by her discussion of the role of digitisation. I refer to Amendment 184, tabled by my noble friend Lord Tunnicliffe, on the duty to collect data on cash acceptance.
When teaching monetary economics, the first thing that you ask students to understand is, “What is money?” Money is something that is generally accepted in discharge of a debt. That is the definition of money. The issue of cash acceptance is therefore vital as society develops in the way that the noble Baroness, Lady Noakes, outlined so clearly. What will happen is that, for the section of society who rely on cash—several million people—their cash will no longer be money. It will no longer be generally acceptable in payment of a debt. In those circumstances, the digital instrument will be crucial. However, if the digital instrument is issued only by companies, namely banks, to those who are customers of the banks, who have some basic criterion, it is surely the responsibility of the state to issue a digital instrument that is available to all citizens.
That being the case, to get to that stage, we need to know how cash is generally accepted. Therefore, the amendment, which contains a duty to collect data on cash acceptance, is vital for the development of future policy with respect to cash and digital instruments. The Minister rejected the amendment by saying that it is not the FCA’s responsibility. Can she tell me which department of government has this responsibility to collect data on cash acceptance?
Baroness Penn (Con)
My Lords, there are a number of ways to tackle the issues that the noble Lord referred to. There are various statistics around payment methods used by consumers in the UK; I quoted some at the start of my speech. The Government have not mandated service providers to accept certain forms of payment; that is not the approach we intend to take to ensure that people continue to have access to cash or money. I have said that, in supporting businesses’ access to deposit services, that will support people’s ability to use their cash as a form of payment.
The noble Lord also raised the question of a digital form of money. That is a question that the Government have looked at very carefully. We launched what I think was a joint consultation between the Government and the regulators, looking in more detail at the question of a central government digital currency and how to take forward that work, as well as considering questions such as those from the noble Baroness, Lady Fox, about privacy issues in a world of having a digital form of money versus having cash as a form of money.
I understand the importance of having a picture and the data that allows us to understand what is going on. I do not think that the data is necessarily the gap here; it is about how you provide for the ongoing use of cash in a society where rapid changes are being made. Our approach to that has been through legislating in this Bill on access to cash withdrawal and deposit facilities.
I was just talking about the importance of the accessibility of payment interfaces, including ATMs and point-of-sale terminals. I am pleased that UK Finance and the RNIB have developed accessibility guidelines for touch screen chip and PIN devices, as well as an approved list of accessible card terminals. The Government’s disability and access ambassador for banking, Kathryn Townsend, also encourages a consistent consumer experience and engagement with deaf advocacy groups.
Lord Hunt of Kings Heath (Lab)
My Lords, I do not want to delay the Committee or the Minister but, on ATMs, I referred rather incoherently to the interchange fee paid by LINK. Will the Minister take back the issue that this is having a big impact on the viability of providing free cash by the companies that do so? This partly seems to be down to the ownership of LINK and the influence of banks in relation to it, but does she accept that there can be very profound effects when you lose free access to cash and have to pay for it? I was told this morning at a meeting with NoteMachine —one of the companies that provide cash—that six out of 10 withdrawals are for £10 because people are using it to budget. The problem is, if you no longer have access to free cash, you then have to pay £1.50 for it. That is a huge rate. These are some of the practical issues that I hope the Minister will be prepared to take away between now and Report.
Even accepting that the Minister may not be prepared to accept any of these amendments, it seems that at the moment we do not, despite FCA guidance, have a guarantee that the financial sector as a whole is going to change the way it operates. This is the problem that we face. If anything, its policies are driving cash out without recognising the impact on some very vulnerable people.
Baroness Penn (Con)
On interchange fees, decisions regarding the operation and funding arrangements for an ATM network are taken by the parties involved. The noble Lord will know that LINK has commitments to protect the broad geographic spread of free-to-use ATMs and is held to account against those obligations and commitments by the Payment Systems Regulator. It has specifically committed to protect free-to-use ATMs more than one kilometre away from the next nearest free ATM or Post Office and free access to cash on high streets, and it supports free-to-use ATMs in deprived areas through its financial inclusion programme.
I recognise the point that the noble Lord has made. Coming back to the provision in the Bill, while I understand that different amendments have been tabled to look at how it could be enhanced or altered, it is important to acknowledge that legislating to protect access to cash is the Government recognising the point that the Committee made and taking action to address it. We want to have flexibility in how that is delivered, but we are providing for it in primary legislation and I hope that principle is welcomed, even though there are different opinions about how it could best be delivered.
Drawing towards the end of my remarks, I was going to note specifically on accessibility that that question was considered by the most recent Financial Inclusion Policy Forum. As I was saying to the noble Lord, Lord Hunt, while the Government do not support these amendments, I hope that noble Lords recognise the action that is being taken through the Bill and elsewhere, because the Government take these issues seriously. It is right to consider the outcome that we are all trying to deliver in a changing world: accessible financial services. That can mean a range of things, such as for people on low incomes being able to budget their money or for accessibility when it comes to disability, age or other factors. The way we have tried to approach access to cash in the Bill is by looking at delivering those outcomes in a flexible way, so I hope that at the moment the noble Baroness, Lady Tyler, is able to withdraw her amendment and that other noble Lords do not press their amendments.
Baroness Tyler of Enfield (LD)
My Lords, it feels some time now since we started this group of amendments. I thank the Minister for her measured response in which she tried hard to reflect quite a wide range of views on the issues we have been talking about. I also thank all other noble Lords who have contributed. This has been a fascinating debate. There has been a reasonable degree on consensus in places, but by no means full consensus, and I certainly understand that.
I want to refer to a very important comment made by the noble Lord, Lord Tunnicliffe. He said that this group is different and is about whether we want a divided society. Another noble Lord said—I am sorry but I cannot remember who it was—that banks are not charities. I think we all understand that but it is for us as legislators, a point I made in my opening speech, to decide on the sort of society that we want. That is actually what this group of amendments is about.
I listened to the noble Baroness, Lady Noakes, and others, and I assure your Lordships that I am not stuck in the past. I make most of my payments by holding out my phone. However, a very helpful point was made by the noble Baroness, Lady Fox, which was that there are times when I do not want to pay like that. I still want to use cash sometimes, even though I can hold my phone out, and it is rather important that I have that choice.
Baroness Penn
Member’s explanatory statement
This amendment would enable the Bank to direct a central counterparty’s parent company to establish a separate holding company as a parent of the subsidiary, rather than requiring that holding company to be a separate financial holding company.
Member’s explanatory statement
This amendment is consequential on the amendment at page 213, line 3 and omits the definition of “financial holding company” as it is no longer required.
“(ia) paragraph 34(6)(d),”Member’s explanatory statement
This amendment would ensure that paragraph 34(6)(d) of Schedule 11 is read as including onward bridge central counterparties for the purpose of being able to convert liabilities owed by a central counterparty into securities issued by an onward bridge central counterparty.
Member’s explanatory statement
This amendment would correct the definition of “initial margin requirements” so that it refers to the counterparty exposure that would arise if the clearing member lodging the initial margin defaulted.
Member’s explanatory statement
This amendment would ensure that paragraph 127 of Schedule 11, regarding the admissibility of statements made to investigators, applies to statements made to investigators appointed under paragraph 121 of Schedule 11 as well as to those appointed under paragraph 122.
House of Lords
Green Investment
(1 year, 9 months ago)
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Lord Teverson
To ask His Majesty’s Government what assessment they have made of (1) the environmental provisions of the Inflation Reduction Act 2022 in the United States of America, and (2) the Green Deal Industrial Plan announced by the European Union in January; and what plans they have to prevent any resulting leakage of future green investment from the United Kingdom.
Lord Teverson (LD)
My Lords, I ask to give leave to ask my Question standing on the Order Paper to the Minister.
The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)
I think that the noble Lord wants to ask the Question standing in his name on the Order Paper; I hope so, anyway. The Government welcome international action on climate change, and work closely with allies and partners to ensure that we can collectively drive global decarbonisation. We continue to assess the impact of international policies on UK investment to ensure that we meet our net-zero and economic growth ambitions. The UK has made significant progress in decarbonising and growing our economy, and we will continue to back our ambitious targets with impactful domestic policy and targeted funding.
Lord Teverson (LD)
My Lords, I will try to be a little more fluent in my follow-up question. This is very serious. Industry and many people see the Inflation Reduction Act and the EU response as a real threat to us—piggy in the middle—as an economy and on where we need to go on green investment. I do not get the impression that the Government have a plan here. It looks like we are a rabbit frozen in the headlamps of trucks coming in both directions. Is there really a plan coming for how we will survive this onslaught from our economic neighbours?
Lord Callanan (Con)
The short answer to the noble Lord’s question is yes, in essence. He is right to point to both these actions as potential threats, significantly so in the case of the US. The protectionist measures are the problem; we have no problem with it finally coming to the decarbonisation table. We are still waiting to see the details from the EU and will know more next week, but it does not look as though there will be much protectionism there: certainly, from the outline that I saw, none of the items listed is a particular threat. We are looking at this very closely across the Government and will be responding in due course.
Lord Howell of Guildford (Con)
My Lords, is this so-called Inflation Reduction Act not in fact an outright protectionist measure, very much pointing the wrong way for those of us who want freer trade worldwide? The Secretary of State says that she has been talking with like-minded countries about what to deal with and how to face the problems that the noble Lord, Lord Teverson, has raised. Can the Minister assure us that, in the United States, we are talking to a like-minded country—we thought that it was—and explaining to it the collateral damage, which could be considerable, from this ill-considered measure?
Lord Callanan (Con)
I assure my noble friend that we are talking to the US about the provisions, but the legislation is the legislation. We all know the history of why it ended up as it did in the US Congress. Nevertheless, we will continue to engage the US, make our points and argue for open, free and fair competition.
Baroness Whitaker (Lab)
My Lords, yesterday, Platform and Friends of the Earth Scotland published a report which showed how oil and gas workers could lead a just energy transition, with a training scheme that was standardised between offshore oil and gas and the new offshore industries, including wind, tidal and wave, to allow workers to take their skills to the new sectors. Will the Government act on those recommendations?
Lord Callanan (Con)
The noble Baroness has an advantage on me as I have not seen that report, but we have the North Sea transition plan, which does many of the same things that she talked about. As I have said before, we still have a need for oil and gas in the medium term during the transition, but the essential skills that many of those workers bring will be very useful in the new economy.
The Earl of Devon (CB)
My Lords, the Government have adopted a state-level strategy, signing memoranda of understanding with various states: Indiana, South Carolina and North Carolina. Their focus is on clean tech and green trade. What other states are the Government currently in negotiations with, what are the expected benefits, and why should we be negotiating with individual states rather than the United States on this front?
Lord Callanan (Con)
The noble Earl raises important points with regard to trade negotiations. I am not familiar with the details so I will have to write to him.
Lord Hannan of Kingsclere (Con)
My Lords, there is a grotesque misnomer here. The Inflation Reduction Act will in fact raise trade barriers, push up prices and thus increase inflation. Worst of all, like the Smoot-Hawley Tariff Act, it is likely to set off a series of beggar-my-neighbour retaliatory measures, not least from the European Union. Will my noble friend the Minister confirm that this country remains wedded to the principles of free trade and that, if others put rocks in their harbours, we will not retaliate by putting rocks in our harbours?
Lord Callanan (Con)
My noble friend makes an important point. I know how committed he is to and how hard he works for the principle of international free trade, which we totally support. We want to engage with the US on these matters but we need to convince it and, of course, the EU that free, fair and open trade benefits everyone. That is the key point that we need to put across to them.
Baroness Blake of Leeds (Lab)
My Lords, the scale of potential investment in both the US Inflation Reduction Act and the EU green deal shows a key recognition of just how much opportunity there is in investing in net-zero projects. The European Commission cites 35% to 40% of all jobs as potentially affected by the green transition, while analysis by Princeton University’s REPEAT project suggests that the policies in the US Act will create hundreds of thousands of jobs. Any leakage of investment away from the UK will also leak jobs, as the Question from the noble Lord, Lord Teverson, suggests. I ask the Minister to be specific about what steps the Government have taken to protect these opportunities for our communities to level up. For example, can we expect to see reference to this in next week’s Budget?
Lord Callanan (Con)
The noble Baroness would not expect me to go into detail but we will set out our plans shortly. However, it is important to recognise that the UK has made excellent progress in attracting private investment into low-carbon sectors. PwC’s 2023 annual global CEO survey found that the UK is now in the top three in the global investment market, second only to the US and China. Bloomberg New Energy Finance estimated that, in 2021 and 2022, the UK saw £48 billion of net-zero investment coming into the UK.
Baroness Hayman (CB)
My Lords, while I recognise the concerns about the anti-competitiveness issues with the Inflation Reduction Act, I wonder whether the Minister has looked at the specific provisions in it in relation to onshore wind. There is support for investment and production, whereas in this country we make the infrastructure of onshore wind subject to far more difficult provisions than any other sort of infrastructure and we have kept it out of investment incentives. When are we going to change those policies?
Lord Callanan (Con)
The noble Baroness is dogged in her support for onshore wind and makes an important point. She will know that it is now eligible for CfDs and we are looking at how we can ensure more onshore wind investment with the support of local communities.
Lord Purvis of Tweed (LD)
My Lords, given the Minister’s positive reply to his noble friend Lord Hannan, do the Government retain an open mind with regard to Tata, or other organisations not based in the UK, seeking up to half a trillion pounds of taxpayers’ subsidy money?
Lord Callanan (Con)
The noble Lord would not expect me to comment on detailed negotiations with particular companies. We have long had a policy of open and free trade, but we have some relatively limited and targeted investments, including in the automotive sector, which have proved very successful. We are not going to follow the lead of the US and close our borders to foreign competition.
Baroness McIntosh of Pickering (Con)
I congratulate the Government on the investment in National Savings bonds. Will my noble friend tell us what the level of investment has been and what type of projects have benefited from them?
Lord Callanan (Con)
I am afraid I do not have that information to hand. I will need to write to my noble friend.
Lord Watts (Lab)
My Lords, is it not the case that the American policy is being driven by the fact that living standards in America—and in Europe and here—have been dropping? The gap between rich and poor is getting wider, and Governments have so far failed to address that problem.
Lord Callanan (Con)
I do not agree with the noble Lord. There are reasons why the US adopted its policy —investment, which we welcome, into green renewable energy, et cetera. Of course, the US is starting from an awfully long way behind the UK. One of the reasons it has to put in such large subsidies is that it has not provided the long-term legislative certainty that we have.
Lord West of Spithead (Lab)
My Lords, mention of rocks dropping into harbours by the noble Lord, Lord Hannan, brings to mind ships. On protectionism, what is our view of the latest legislation being passed by the EU, which seems to indicate that defence procurement will be from countries remaining in the EU and not go more widely?
Lord Callanan (Con)
The noble Lord is always ingenious at getting defence and ships into every Question. I would need to speak to my Ministry of Defence colleagues for their response to that.
Creative and Cultural Sector: Social Mobility
(1 year, 9 months ago)
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Baroness Bonham-Carter of Yarnbury
To ask His Majesty’s Government what assessment they have made of social mobility in the creative and cultural sector, and what steps they are taking to improve it.
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)
My Lords, culture and creativity are for everyone and are enriched when everyone is able to play their full part in them. As part of our work to promote social mobility in the creative and cultural sectors, we commissioned research from the Creative Industries Policy and Evidence Centre to inform our approach. We have launched the new Discover Creative Careers programme to improve access to creative careers and will set out our approach further in the forthcoming cultural education plan and creative industries sector vision.
Baroness Bonham-Carter of Yarnbury (LD)
I thank the Minister for his reply. A recent report looking into social mobility in the creative sector since the 1970s found that there has been shockingly little progress. Last week, in her first speech in the role, the DCMS Secretary of State said about the creative industries that
“we need to work together to give people the right skills and awareness from a young age”.
Does the Minister agree? Does he agree with Minister Julia Lopez that the problem is a disconnect between education provision and the jobs being created? We need no more labelling of creative courses as “low value” and more emphasis and support for creative subjects and career information. Will the Minister get his own Government, and most importantly the Department for Education, to listen to fellow Ministers and act on this as a key part of encouraging social mobility in this sector?
Lord Parkinson of Whitley Bay (Con)
The noble Baroness is right to point to recent research, which shows that this is a long-standing problem afflicting more than just our nation. That is why DCMS commissioned the report I mentioned from the policy and evidence centre in 2021. It pointed to a number of levers, particularly ensuring fair and equal access to cultural activities in early life and using education as a leveller. We are taking those forward through our work on the cultural education plan with the Department for Education. I am seeing the Schools Minister, Nick Gibb, about it tomorrow, and am delighted that the noble Baroness, Lady Bull, has agreed to chair the panel informing it. We are also supporting the take-up and provision of a broad range of post-16 vocational routes, such as T-levels and boot camps, and support the free schools led by industry, such as the BRIT School and the London Screen Academy, which are doing excellent work in this area.
Viscount Colville of Culross (CB)
My Lords, I declare an interest as a freelance television producer. One of the biggest problems facing freelancers, who make up a third of the creative industries, is late payment. The Communications Committee, in its inquiry into the future of journalism, called for the Small Business Commissioner to be given powers to sort out unfair payment practices for freelancers. Unfortunately, at the moment she cannot deal with complaints to companies that employ fewer than 50 people, which includes the vast majority of creative industry companies. Can the Minister tell the House whether the Government intend to extend her powers in this area?
Lord Parkinson of Whitley Bay (Con)
I shall take that issue up with colleagues at the Department for Business and Trade, but the noble Viscount is right to point to the large number of freelancers and small and medium-sized enterprises that make up our creative industries and cultural sector, and to the need to ensure that they are paid in a timely way for the important work they do.
Baroness McIntosh of Hudnall (Lab)
My Lords, does the Minister agree that, if we were to look at who is performing on our stage and screen at the moment, we might think there was not a problem? There is an enormous and very encouraging degree of diversity across the whole range of performing arts, but there is no such equal diversity in the necessary supporting skills and trades. Does he further agree that this is partly because schools themselves—he touched on this in his earlier reply—are insufficiently encouraged to understand the range of options open to people with all kinds of skills to work in the creative industries, including technical, digital and craft skills?
Lord Parkinson of Whitley Bay (Con)
The noble Baroness is absolutely right: many exciting job opportunities are open to people in the creative industries and the cultural sector, backstage and off-screen. Because film and television were supported to open up more quickly than live performing arts, a lot of people have switched between those parts of the sector. I mentioned the Discover Creative Careers programme, which Julia Lopez launched last month. That will provide £1 million over three years to give young people in 77 targeted areas across England better career provision, letting them know about the exciting job opportunities on offer so that we can fill those skills gaps and get people into the sector.
Baroness Berridge (Con)
My Lords, my noble friend’s department gives many grants to the sector. Can he outline what conditions are put on those grants, particularly for work experience and internships, so that those who maybe do not live in London or near a major city, or who do not have parents who can support them, can access work experience and internships?
Lord Parkinson of Whitley Bay (Con)
As my noble friend knows, we have ensured that the Arts Council, which distributes a lot of taxpayer subsidy to arts and culture, does so more fairly across the whole country, bringing opportunities and high-quality cultural provision close to people’s doorsteps. Since 2018, the Arts Council has asked national portfolio organisations, as it calls them, to provide data on the socioeconomic background of their permanent staff. We have asked them to take the socioeconomic background of the people involved into account so that we can make sure that everybody is able to enjoy the opportunities that that affords.
Lord Bassam of Brighton (Lab)
My Lords, returning to the point made by the noble Baroness, Lady Bonham-Carter of Yarnbury, there is a crisis here. According to ONS data from researchers at the universities of Manchester, Edinburgh and Sheffield, the number of creative workers from working-class backgrounds has halved since the 1970s—my generation, if you like—and the chances of children from middle-class backgrounds getting a job in the cultural sector are four times greater than for those from working-class backgrounds. Does the Minister share my concern that this affects not only who portrays the characters but the stories and narratives seen by the wider public? What work is the department doing with the Social Mobility Commission in this area, and what additional resources can it give the commission to help it change the class basis of our arts?
Lord Parkinson of Whitley Bay (Con)
The noble Lord is right: culture and creativity are enriched when as broad a range of people as possible are part of telling stories and sharing perspectives. That is why we commissioned the Creative Industries Policy and Evidence Centre to do the report that I mentioned. We have also commissioned an external evidence review to identify interventions that can help. I have mentioned the work we are taking forward through the cultural education plan and the creative industries sector vision, so there is work for us to do. The point he makes about the Social Mobility Commission is a good one, and I will follow it up with colleagues.
The Earl of Clancarty (CB)
My Lords, opportunities begin with education but as headteachers and educationalists point out, the reality is that arts subjects are now woefully underfunded, certainly compared to private schools, as well as being actively discouraged by the EBacc. What plans do the Government have to address this? Otherwise, the arts and creative industries will become accessible only to the privileged few—and yes, this is something that DCMS and the DfE need to bang their heads together about.
Lord Parkinson of Whitley Bay (Con)
Absolutely, and I am very happy to bang those heads. One of the key aims of the cultural education plan is to tackle disparities in opportunity and outcome, and to identify schools across the state and private sectors that are doing good work, while ensuring that everybody, wherever they live, has the life-changing opportunity to take part in arts and culture.
Lord Boateng (Lab)
My Lords, while the Minister is banging heads and meeting his right honourable friend the Schools Minister tomorrow, will he please raise the issue of musical education in schools? It is harder now for schoolchildren in inner-city schools and state schools to access musical instruments than it was 50 years ago when I was at a grammar school on a council estate in Hertfordshire. That really is a scandal.
Lord Parkinson of Whitley Bay (Con)
I will, but my right honourable friend the Schools Minister and I would both point to the £25 million of capital investment that accompanied the national plan for music education, informed by my noble friend Lady Fleet and others, and that ensured greater provision of musical instruments, particularly adaptable instruments for pupils with special educational needs. We wanted to make sure that every barrier to participation in arts, music and culture was removed.
Lord Storey (LD)
My Lords, it must warm the Minister’s heart to hear his Secretary of State say that we should use the creative industries to drive growth in every corner of the UK. However, we have seen a 30% decline in the last 10 years in revenue funding coming from local authorities. How can we make up this shortfall? Furthermore, does he not think that the dreadful EBacc is stifling advancement in the creative industries?
Lord Parkinson of Whitley Bay (Con)
I am indeed keen to see growth in every part of the country. The creative industries have been growing more than twice as quickly as the rest of the economy in terms of GVA, and since 2011 employment in the sector has increased more than five times faster than the rest of the economy. There are therefore huge opportunities for people in every part of the country, and we want to see more of these jobs, which are enriching in every sense. The noble Lord is right to point to the important role played by local government. We work closely with the Local Government Association, which recently produced an excellent report on cultural provision, highlighting the important role it plays. Of course, the Government, through things like the levelling up fund, the towns fund and the UK shared prosperity fund, are ensuring that investment is there to encourage it.
Myanmar: Health Workers
(1 year, 9 months ago)
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Lord Crisp
To ask His Majesty’s Government what support they are providing for health workers in Myanmar who are caring for patients outside the areas controlled by the military government of that country.
Lord Crisp (CB)
I beg leave to ask the Question standing in my name on the Order Paper and, in doing so, I declare an interest as patron of THET, the Tropical Health and Education Trust.
The Minister of State, Foreign, Commonwealth and Development Office (Lord Goldsmith of Richmond Park) (Con)
My Lords, Myanmar’s public healthcare system has been in crisis since the coup. We are concerned about Myanmar’s level of basic healthcare services and childhood immunisation rates. The UK is a leading donor on supporting healthcare needs in that country. This financial year, the UK has provided £13.95 million for healthcare in Myanmar, which is being delivered by the UN, by civil society and by ethnic healthcare organisations. This support is saving the lives of vulnerable women and children.
Lord Crisp (CB)
I thank the Minister for that response. I agree that the situation in Myanmar two years after the coup is truly appalling. I pay tribute to the UK Government’s efforts, including their efforts at the Security Council to keep up pressure on the country. There are many courageous health workers in the parts of the country that are not controlled by the military who are providing health services where and how they can from makeshift facilities, and they are being targeted by the military as a result. They are being excellently supported by UK and UK-based Burmese clinicians with education, training, advice, some supplies and more, largely over the internet. However, this is problematic because it is very largely controlled by the Government.
I have two immediate questions. I understand that Professor Zaw Wai Soe, the Health Minister of the National Unity Government, has asked the noble Lord, Lord Ahmad, if the UK can help by providing access to satellites. Can the Minister tell the House what progress is being made with this and when a response can be expected? Would he be willing to meet representatives of the UK and the UK-based Burmese clinicians in this country to discuss the situation, and what further practical action can be taken?
Lord Goldsmith of Richmond Park (Con)
My Lords, for obvious reasons, humanitarian access is extremely challenging, with many areas cut off completely to the UN and international NGOs. That is why our approach has been targeted at using and working with domestic organisations of the sort that the noble Lord has cited. The problem with that, as he knows, is that healthcare workers affiliated in any way with the civil disobedience movement are targeted. According to the World Health Organization, at least 51 healthcare workers have been killed and 352 attacked since the coup, and the Tropical Health and Education Trust, which the noble Lord is part of, reports that 624 healthcare workers remain in arbitrary detention. I am afraid I do not know the answer about progress on satellites, but I will ask my noble friend Lord Ahmad, in whose portfolio this sits, and if he is not able to meet representatives then I will certainly happily do so.
Lord Collins of Highbury (Lab)
My Lords, since Security Council Resolution 2669, we have seen 2 million children in need of a targeted immunisation catch-up programme and 3,000 people having died at the hands of the military coup. Does the Minister agree with the UN High Commissioner for Human Rights, Volker Türk, that the crisis will not end until those responsible are held to account? Will the Minister ensure that we pursue that strongly at the United Nations?
Lord Goldsmith of Richmond Park (Con)
I absolutely agree with the noble Lord and with the UN. He will know that in December last year the UN Security Council passed the first ever resolution on the situation in Myanmar, and that was led by the UK. The resolution demands an end to violence and urges immediate action by the military regime to fully implement the ASEAN five-point consensus and release everyone who has been arbitrarily detained. However, we are not going to see change until we see change at the very top. The noble Lord is right to make that point, and it is of course a priority for the UK.
Lord Alton of Liverpool (CB)
My Lords, I declare my interests as vice-chair of the all-party parliamentary groups on Burma and the Rohingya. I want to take the Minister back to what he has just said about levels of access and the request from my noble friend Lord Crisp about meeting some of those who are involved in these issues, specifically in this case Burma Campaign UK, in order to address their concerns about the level of reporting that is required for the receipt of international humanitarian aid, which they say is wholly unrealistic and simply not feasible in a conflict zone. They say that people are dying because of the red tape. Can we look again at how to utilise local civil society organisations, as referred to by the Minister a moment ago, which are indeed best placed to get aid to those who need it? They say that, among Burma’s ethnic minorities and the 2 million displaced since the military coup, a humanitarian catastrophe is unfolding.
Lord Goldsmith of Richmond Park (Con)
My Lords, it is without doubt a humanitarian catastrophe. Myanmar is the Indo-Pacific’s most desperate humanitarian crisis. Some 17.6 million people are in need of humanitarian assistance and over 1.6 million have been displaced, including over 500,000 children. Some 15 million people are considered moderately or severely food insecure, and 7.8 million children remain out of school. So the noble Lord is right. The difficulty, as I mentioned earlier, is access. When dealing with a regime of the sort that runs that country, access to the grass roots is very difficult. So we have a twin approach: first, we work through channels such as the UN and ASEAN to push for greater humanitarian access and, secondly, we increasingly support local civil society networks with access to vulnerable communities to be the first responders to the crisis. That has ensured that UK aid is reaching the most remote and hard-to-reach areas, but it is difficult.
The Lord Bishop of London
My Lords, the Burmese diaspora are working closely with NHS colleagues in delivering clinical education and training. Their time and expertise are gifted free of charge and supported by modest FCDO funds, which allow organisations such as the Tropical Health and Education Trust to organise and structure this support in a professional way. Could the Minister comment on whether he sees any scope for increasing those funds for UK health communities in their response to Myanmar?
Lord Goldsmith of Richmond Park (Con)
I will reiterate the point I made. We applaud the Myanmar health professionals who are risking their lives to continue treating patients. We commend the NHS volunteers who are sharing their skills and knowledge with colleagues and friends in Myanmar, taking huge risks in doing so. I absolutely pay tribute to them. Since the coup, we have provided around £100 million to support those in need of humanitarian assistance, to deliver healthcare and education for the most vulnerable and to protect civic space. In 2021-22, we provided nearly £50 million in aid to Myanmar, including £24 million of life-saving assistance for 600,000 people. I am not in a position to comment on future expenditure, but I think it is very clear from our recent track record that this remains a priority focus for the FCDO.
Lord Purvis of Tweed (LD)
My Lords, as I started to say earlier, the attack on health workers and health support workers is deeply reprehensible and I support the Government’s actions, including the sanctions. The operation of a parallel health system by health workers to provide much-needed support for children could be a model in other countries, such as Syria and Afghanistan, where we do not recognise the regimes. When the Minister is considering the right reverend Prelate’s question regarding UK government support, can that support include those seeking to offer vital health support in Syria and Afghanistan, where we do not recognise the regime?
Lord Goldsmith of Richmond Park (Con)
The noble Lord makes an important point, and I will make sure that that suggestion is conveyed to relevant Ministers and officials. I will add that, according to the World Health Organization, one-third of all attacks on health workers around the world have occurred in Myanmar. This is a real problem. I think the approach adopted in that country by the international community has worked and, like the noble Lord, I do not see any reason why it would not in other areas where we do not recognise the regime.
Baroness Williams of Trafford (Con)
My Lords, it is the turn of the Labour Benches.
Baroness Nye (Lab)
My Lords, I declare an interest as a trustee of Burma Campaign UK. The Minister will know that, since the coup in 2021, the military has brutally suppressed its critics and unlawfully attacked civilians on the ground and from the air, including many health workers working in the ethnic areas. While the UK and EU-imposed sanctions on aviation fuel are welcome, will the Minister give assurances that he will keep those sanctions under urgent review as companies change names to avoid sanctions, and look into whether British companies are involved in the provision of third-party services to vessels involved in the shipment of aviation fuel to Myanmar, such as insurance, shipping or financial services? Stopping the military’s relentless bombing campaign on innocent civilians will help those providing humanitarian aid.
Lord Goldsmith of Richmond Park (Con)
The Government always keep their sanctions policy under review. We are considering a range of further targets and other measures to hold the suppressive, brutal regime to account. It is vital that any sanctions imposed have the desired effect of denying the regime credibility and reducing its access to finance, arms and equipment. Part of that is to tackle the problem identified by the noble Baroness—the use of aviation fuel to facilitate bombing campaigns. That is a focus of the FCDO when it comes to looking at the appropriate sanctions.
Windsor Framework
(1 year, 9 months ago)
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Lord Dodds of Duncairn
To ask His Majesty’s Government which EU laws will be disapplied as a result of the Windsor Framework.
The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Caine) (Con)
My Lords, the Windsor Framework disapplies swathes of EU law in Northern Ireland—too much to list here in full. We have published a full range of legal texts that underpin this new agreement. It completely carves out whole areas of EU law on issues such as VAT, medicines and food, in a way that the EU has never done before. It means that it is UK laws and standards that apply, and the UK Parliament that decides what those rules should be.
Lord Dodds of Duncairn (DUP)
My Lords, I am grateful to my noble friend the Minister for that reply, I think, although he has not answered the Question. I would be grateful if he could commit to writing to me with, or putting in the Library, a list of the actual laws and regulations that have been disapplied, and not generalities. If they know that it is 1,700 pages, and swathes, they must have the list of laws and regulations. In not publishing them, I fear that they are running into the danger of allowing people to think that the reason that they are not publishing the list is that the vast bulk of the laws in annexe 2 of the protocol, which apply the single market and customs union rules of the EU to Northern Ireland without consent, will remain, and that the Stormont brake—such as it is, with all of its defects—does not apply to them.
Lord Caine (Con)
I am very grateful to my noble friend for his supplementary. I do apologise that I cannot give him a definitive number at this stage. He will appreciate that I am not an expert in EU law, and I have no intention of becoming one, but my understanding is that the situation is somewhat more complex than just adding together a list. There will of course be some directives that are in part still applied, in respect, for example, of the red channel, and disapplied in respect of the green channel. But I can assure him that, for example, with annexe 1 of the EU regulations covering SPS rules to accommodate Northern Ireland—I have it here—67 EU rules are now disapplied. I will take back what he said about trying to publish a definitive list, but, as I say, the situation is slightly more complicated than just adding together one list.
Baroness Williams of Trafford (Con)
My Lords, shall we hear from the noble Baroness, Lady Ritchie, and then from my noble friend Lord Hailsham?
Baroness Ritchie of Downpatrick (Lab)
My Lords, how much of the legislation attached to the Windsor Framework has been written? What is the process for its drafting. Will the Irish Government and the Northern Ireland parties be consulted? Have any of them already been consulted regarding the drafting?
Lord Caine (Con)
I thank the noble Baroness for her question. She will be aware that the legislation is still being drafted. My right honourable friend the Secretary of State spoke to Northern Ireland parties over the weekend, officials engaged with Northern Ireland parties yesterday and there will be more such engagement from my right honourable friend and officials later this week. That process is ongoing and we do wish to bring forward the required legislation as soon as necessary. The noble Baroness mentioned the role of the Irish Government; of course, we keep in close contact with the Irish Government, but I think it is very important that we observe the constitutional proprieties on this matter, given that these are strand 1 issues and internal to the United Kingdom Parliament.
Viscount Hailsham (Con)
My Lords, in welcoming the framework agreement, may I say to my noble friend that this shows what can be achieved when the principal negotiators are masters of detail, are willing to compromise and have a reputation for honesty and straight dealing—and that is a lesson that should be learned by previous negotiators?
Lord Caine (Con)
I am grateful to my noble friend; I cannot imagine what possible point he is trying to make with his question, but I can assure him that the attributes he set out are all ones that my right honourable friend the Prime Minister has in spades.
Baroness Suttie (LD)
My Lords, does the Minister agree that what businesses in Northern Ireland need now is stability and the ability to plan? Does he further agree that, while it is reasonable to allow all parties, including the DUP, time to examine the Windsor deal in detail, it is not reasonable to allow one party to continue to block progress indefinitely?
Lord Caine (Con)
I am very grateful to the noble Baroness. She is absolutely right that Northern Ireland needs stability and certainty. As I said in response to a Question last week, for those of us who passionately believe in the union of Great Britain and Northern Ireland, and Northern Ireland’s position within the United Kingdom, restoring the institutions and having political stability in Northern Ireland, and building a Northern Ireland that works for all parts of the community, is the surest foundation for strengthening the United Kingdom.
Baroness Smith of Basildon (Lab)
My Lords, I welcome the fact that the DUP has set up a panel to look at the issues around the framework. I hope it will be looking at what it can deliver for Northern Ireland. I hope the Minister can confirm that the Government will fully co-operate with that process, working with the panel. I also say to your Lordships—this is a point that the Minister himself just made—that there is not really a perfect solution to the position we are in. What we want to do is get the best outcomes for Northern Ireland and for the UK. I have to say that I hope that the DUP will conclude that it can go back into the Assembly and Executive, because the only way to truly address the democratic deficit in Northern Ireland is to have a fully functioning Executive and Assembly. So I look forward to the outcome of the panel’s responses and I hope it will recognise the effort that has gone into achieving this agreement.
Lord Caine (Con)
Well, I appreciate very much the comments of the noble Baroness and the tone with which she expressed them. Of course, we all hugely desire the restoration of the political institutions at the earliest opportunity, not least as we approach the 25th anniversary of the Belfast agreement, which the party opposite negotiated in government. On the panel, that is of course a matter for the Democratic Unionist Party. The Government are committed to working with all parties to take this process forward. Where there is a need for official technical briefings, we are quite prepared to provide those and, as I say, we will work with all parties to take this forward.
Baroness Hoey (Non-Afl)
My Lords, last week Maroš Šefčovič told his MEPs that the European Court still reigns supreme over Northern Ireland, despite what the British Prime Minister said. He also said that the framework was designed in a way to avoid hostile headlines in the British press, and that the Stormont brake is very much limited in scope and under very strict conditions. Does the Minister accept that the truth about the framework agreement is now out, and it shows that the Prime Minister has hugely oversold it as a triumph, when in fact it is a small tinkering with the methods of delivering the very same protocol that has done so much damage to Northern Ireland?
Lord Caine (Con)
I thank the noble Baroness. I am afraid that I have to disagree rather fundamentally with her characterisation of the agreement negotiated by my right honourable friend the Prime Minister and others, which I regard as a very considerable improvement in all respects on the existing protocol. In respect of a number of issues that she raised, the Windsor Framework will allow for the free flow of trade between Great Britain and Northern Ireland, it will underpin Northern Ireland’s position within our United Kingdom, and the Stormont brake will give the United Kingdom Government a sovereign veto over new legislation within the scope of the protocol.
Lord Cormack (Con)
My Lords, it is quite clear that this brilliant achievement by the Prime Minister deserves widespread support. Would my noble friend not agree that those who wish to serve the people of Northern Ireland would do far better to recognise that this is the best that they will ever get and to make it work?
Lord Caine (Con)
I could hardly agree more with my noble friend.
Lord Moylan (Con)
My Lords, does the Minister agree that the Windsor Framework is not merely about Northern Ireland? It has potentially profound implications for the rest of the United Kingdom as well. Paragraph 52 of the Command Paper reads that
“the Office of the Internal Market (OIM) will specifically monitor any impacts for Northern Ireland arising from relevant future regulatory changes”.
Could my noble friend say what the purpose of that is, and what weight the Government are going to give to the results of such monitoring?
Lord Caine (Con)
The purpose, as I understand it, is to ensure that any proposals for divergence can be managed in a way that is consistent with the integrity of the United Kingdom internal market, which is incredibly important for Northern Ireland and for the rest of the United Kingdom. My noble friend refers to Great Britain, and of course the deal is not just good for Northern Ireland; it is good for businesses in Great Britain that have had trouble supplying the Northern Ireland market, including friends of mine and Members of this House, such as my noble friend Lord Taylor, who I think is not in his place. There have been a number of problems with trade from GB to NI, which this agreement, a brilliant achievement by the Prime Minister, will help to remedy.
Social Security (Additional Payments) (No. 2) Bill
Tuesday 7th March 2023
(1 year, 9 months ago)
Lords ChamberRead Full debate Social Security (Additional Payments) Act 2023 View all Social Security (Additional Payments) Act 2023 Debates Read Hansard Text Amendment Paper: Committee of the whole House Amendments as at 6 March 2023 - (6 Mar 2023)
Horticultural Sector Committee
The Senior Deputy Speaker
Moved by
Horticultural Sector Committee
That Lord Watson of Wyre Forest be appointed a member of the Select Committee.
Liaison Committee
That Lord Bach be appointed a member of the Select Committee.
Statutory Instruments Committee
That Baroness Sater be appointed a member of the Select Committee.
Motions agreed.
Civil Service Impartiality
(1 year, 9 months ago)
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Baroness Smith of Basildon (Lab)
My Lords, we have heard a lot of nonsense on this over the past few days. Over many years, Sue Gray has been praised by Ministers from all parties for her abilities and her impartiality. She is not unique in being offered a political role on leaving the Civil Service. For example, noble Lords will recall that the noble Lord, Lord Frost, left the diplomatic service to be a political advisor to the then Foreign Secretary before becoming a Minister in your Lordship’s House.
Baroness Smith of Basildon (Lab)
We have had a lot of heckling—I think we are getting a bit bad-tempered in the Chamber these days. I am happy to repeat what I said, in case anyone missed it.
It is not without precedent that a senior civil servant is offered a political role on leaving the Civil Service, but Sue Gray is certainly the first to be attacked in this way. She has had such a distinguished career, and I am appalled that some now impugn her integrity for the time that she served successive Governments. Surely we should welcome that the leader of His Majesty’s Official Opposition, in preparing for government, wants to employ someone with such impeccable credentials and integrity—or perhaps those kicking up a fuss just fear the appointment.
The Minister of State, Cabinet Office (Baroness Neville- Rolfe) (Con)
I will set out the facts from a slightly different perspective. Sue Gray, formerly Second Permanent Secretary at DLUHC and at the Cabinet Office, resigned from the Civil Service on Thursday. This resignation was accepted with immediate effect. Because it was unique—and I would say unprecedented—for a serving Permanent Secretary to resign to seek to take up a very senior position, that of Chief of Staff working for the leader of the Opposition, we are looking into the circumstances leading up to her resignation. However, it is incumbent on the office of the leader of the Opposition to be much more forthcoming about the details of what discussions were involved and the timing of those discussions so that we are able to complete our fact-finding exercise.
Ministers must be able to speak to their officials from a position of absolute trust. It is the responsibility of everyone in this House to preserve and support the impartiality of the Civil Service, and this step does the opposite.
Lord Butler of Brockwell (CB)
My Lords, the Minister sometimes refers to the fact that at one time she used to work for me when she was a professional civil servant in the Cabinet Office. Does she agree that the appointment of Sue Gray to give professional assistance to the Opposition in preparing for the possibility of government throws no more doubt on the impartiality of the Civil Service than the noble Baroness’s very welcome presence on the Conservative Front Bench?
Baroness Neville-Rolfe (Con)
I do not like to comment on individual cases.
Baroness Neville-Rolfe (Con)
But, in my own case, I left to go to Tesco, where I served for 15 years. I then took a different path. I served as a civil servant with due impartiality and indeed confidentiality of everything that I did and learned there, and that will be a requirement for Ms Gray.
Lord Wallace of Saltaire (LD)
My Lords, I declare an interest as the husband of a former civil servant and the father of a civil servant. To repeat what William Wragg, the chairman of PACAC, said in the debate yesterday in the Commons:
“It is important to ask”
the Minister
“whether he shares my concern that it is wrong to impugn an entire civil service for political bias, and that it is important that he asserts that from the Dispatch Box”.—[Official Report, Commons, 2/3/23; col. 26]
Is that not the most important thing for a Minister to do? As for the current concern, this was a leak by Sky News. I would have thought that we were all interested in ensuring that, if there is a change of Government after the next election, it is competently prepared and served. After the relative chaos we have had over the past five years, of too many Ministers moving too quickly, with some members of the Government deeply suspicious of the Civil Service all the way through, should we not welcome this achievement?
Baroness Neville-Rolfe (Con)
It is for the Civil Service of the day to prepare for Governments, as I remember doing in 1997, with three lots of policies. It is very important that ACOBA looks at this appointment. The business appointment rules govern the process by which civil servants take up new employment—it is part of their contract. As my right honourable friend the Paymaster-General said in the other place, there are various sets of rules and guidance designed to make sure that impartiality is observed in the Civil Service, particularly with the movement of senior Ministers or civil servants into other jobs.
Lord Greenhalgh (Con)
My Lords, it important to see impartiality in our Civil Service, which is judged throughout the world as the finest—arguably until Thursday—but precedents are just as important. The noble Baroness opposite said that one precedent was my noble friend Lord Frost. He was a special adviser—a political post—for five years and was also in the House of Lords before he took up a post as a Minister, so that is not a precedent. Last Thursday, a Second Permanent Secretary who was at the heart of this Government and of policy, and who advised government officials, turned over and took a political post without any break in contract. For me, that is completely different. Does my noble friend, who has Civil Service experience, agree that this move is simply without precedent?
Baroness Neville-Rolfe (Con)
I agree that it is both unusual and without precedent, and I agree that Ministers must be able to speak to their officials from a position of trust. As the Cabinet Office Minister, I have worked closely with Ms Gray two or three times a week. My noble friend is right and asks a legitimate question.
Baroness Armstrong of Hill Top (Lab)
Does the Minister accept that people like me worked with Sue Gray in government, and that she knew a lot about our Government, but that did not stop her acting impartially when the election brought in a different Government? The Minister cannot continue to imply that, because people are prepared to work for the leader of the Opposition, they suddenly lose their integrity and are unable to act impartially. Will she now admit to the number of people who have left the Civil Service because their impartiality has been impugned, and particularly how a past Prime Minister behaved towards them and the House of Commons in particular?
Baroness Neville-Rolfe (Con)
That is a completely different scenario. Ms Gray will work for the leader of the Opposition, which is a political post that she is moving straight into from the very top of Whitehall. That is why we have rules and guidance. I am surprised by the response from the party opposite: I would have thought that it would want to get on and explain what she talked about with the leader of the Opposition and what else she was doing at the same time. This seems to me to be quite different from some of the other cases that have been mentioned.
Lord Macpherson of Earl’s Court (CB)
My Lords, like my noble friend Lord Butler, I remember a number of examples of people moving from the Civil Service to political positions, in particular my old friend, the noble Lord, Lord Sassoon. He was a very successful director-general at the Treasury, who moved to become Gordon Brown’s ambassador to the City; he then resigned and turned up the next day as an adviser to George Osborne. Surely the issue is about the ACOBA rules, which are all too often not observed by members of the Government. Does the Minister agree that, so long as Ms Gray follows the recommendations for an adequate cooling-off period, which I would assume would be somewhere between three and six months, she is pursuing the right and honourable course?
Baroness Neville-Rolfe (Con)
Ms Gray does indeed need to apply to ACOBA, which she has not yet done. Her post is a very senior post of a political kind, and I am sure that ACOBA will look extremely carefully at the move and lay down appropriate rules and guidance for her departure from the Civil Service.
National Security Bill
Tuesday 7th March 2023
(1 year, 9 months ago)
Lords ChamberRead Full debate National Security Act 2023 View all National Security Act 2023 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 88-II(a) Amendment for Report (Supplementary to the Second Marshalled List) - (6 Mar 2023)
17:20 - Division on Amendment 185 - Ayes: 93 / Noes: 197 - Amendment 185 disagreed.
17:33 - Division on Amendment 188A - Ayes: 146 / Noes: 211 - Amendment 188A disagreed.
18:21 - Division on Amendment 193 - Ayes: 210 / Noes: 184 - Amendment 193 agreed.
19:06 - Division on Amendment 195 - Ayes: 132 / Noes: 180 - Amendment 195 disagreed.
Lord Sharpe of Epsom
Member’s explanatory statement
This amendment, together with Lord Sharpe’s other amendments to Clause 64 relating to relevant activities, allow the Secretary of State to make regulations specifying which activities of a specified person are subject to the provisions about foreign activity arrangements.
The Parliamentary Under-Secretary of State, Home Office (Lord Sharpe of Epsom) (Con)
My Lords, the amendments in this group clarify the intent of the enhanced tier of the foreign influence registration scheme —FIRS. They ensure the tier remains proportionate, while achieving its national security objectives. FIRS was recommended by the ISC in its 2020 Russia report, and the Government committed in their response to bring forward such a scheme.
The enhanced tier of FIRS is a targeted regime, allowing the Secretary of State to require the registration of arrangements with specified foreign Governments or entities subject to foreign power control where she believes it is necessary to protect the safety or interests of the United Kingdom. The scheme will play a significant role in the deterrence and disruption of state threats activities by those countries, and entities linked to them, which are of greatest concern.
We know that these states will make use of a whole-of-state approach to covert activities, not just relying on traditional routes of intelligence organisations and undeclared agents. FIRS will be essential to gaining a greater understanding of the scale and nature of activity being undertaken for countries and their proxies that pose the greatest risks to UK interests and national security. The penalties for non-compliance will increase the risk to those who seek to engage in covert activities for specified foreign powers, either directly or through specified entities. It forces them to choose between registering openly or facing prosecution should their activities be known to the intelligence community. Finally, it offers potential for earlier disruption of state threats activity, where there is evidence of a covert arrangement between a person and specified foreign power or entity, but it is not yet feasible to bring charges for a more serious state threats offence.
Government Amendments 89 and 100 make clearer that the Secretary of State can narrow the activities requiring registration under this tier. This will allow us to tailor the registration requirements to the threat posed by the country or entity being specified.
I turn now to government Amendments 95, 104, 125 and 133 and supporting amendments. These amendments make changes to ensure that a proper provision is made for offences committed by those in unregistered arrangements, and employees and subcontractors who are carrying out activities under those arrangements, in both tiers of the scheme. The Government do not wish to unfairly criminalise those who reasonably believe an arrangement is registered and have taken all reasonably practicable steps to check that it is. This is particularly the case with employees of an entity which has made an arrangement with a foreign power or specified person, or for subcontractors carrying out activities under arrangements.
These amendments seek to address this issue by enabling a person—for example, an employee—to avoid committing an offence where they can demonstrate that they took all steps reasonably practicable to determine whether the activities were registered, and they reasonably believed that the activities were registered. We consider that in practice this will mean checking the public register or receiving evidence of registration from their employer in the form of confirmation from the registration portal.
Finally, government Amendments 147 and 151 also modify the individuals to whom an information notice may be issued under both tiers of FIRS. There are circumstances where a person may be arranging for another individual to carry out the activity. In these circumstances, it is important for the Secretary of State to be able to issue an information notice to an individual whom they reasonably believe is carrying out an activity pursuant to a registerable arrangement, even if they are not the person who has made the arrangement.
I have considerable sympathy with the aims of Amendment 91, tabled by the noble Lord, Lord Wallace of Saltaire. Wherever possible, Governments should strive to share what they know to reduce the regulatory burden on ordinary people and businesses. However, I believe that the schemes he has listed have different purposes and requirements, with relatively little overlap. Where there is a risk of unnecessary duplication, registration requirements can be targeted to avoid this.
Amendment 106, also tabled by the noble Lord, Lord Wallace of Saltaire, seeks to require the Secretary of State to produce an annual report on the impacts of the enhanced tier, including on international research collaborations. Again, I seek to reassure the noble Lord on this point, as the Government will keep the impacts of the scheme under review.
Amendments 166B and 203A, tabled by the noble Lords, Lord Purvis of Tweed and Lord Wallace of Saltaire, seek to require the Secretary of State to produce guidance within six months of the Act passing, and to prevent regulations made under the scheme being brought into force until three months after the publication of the guidance. Again, I agree with the spirit in which this amendment has been made but, as I will seek to reassure noble Lords, the Government have already committed to producing guidance during the implementation period, prior to bringing the scheme into force.
I come to Amendment 154A in the names of the noble Lords, Lord Anderson and Lord Carlile. This contains reasonable points which would bring certainty to the provisions and the Government support it.
I hope noble Lords will support these amendments.
Lord Wallace of Saltaire (LD)
My Lords, I speak to Amendments 91 and 106, which the Minister has mentioned. In this case, I speak very much on behalf of the academic and policy research communities, with which I was professionally engaged for some 40 or more years.
We are concerned not to impose too great a burden on those who are engaged in international research. The Minister will be very well aware of the commitments that have already been made for researchers engaged in international co-operation to provide information to the Government, and the concerns that there have already been, particularly about collaboration with countries such as China and Russia. That information is provided to government, and I remind the Minister that, as a member of a Government who are strongly against adding to bureaucracy and red tape, it should be possible for government departments to share information, rather than require it to be given twice to different departments.
I am conscious that the Home Office has a poor record in this regard; indeed, the entire Windrush affair happened because the Home Office refused to ask other departments for information on whether or not the people concerned had been in this country. This was clearly available at the DVLA, the Department of Health, the national insurance scheme, et cetera. There is a real problem in government about asking for the same information twice. The information asked for indeed overlaps, and I ask the Minister to assure us that the Government will look at this matter again and do their best to make sure that it does not add to the burdens to which those of us who are concerned with international co-operation have to relate.
The Minister will be well aware that the Government are also negotiating to rejoin the Horizon European international collaboration scheme for science, probably the most impressive and important network for international co-operation in the world. All the members of the European Union and the various other countries associated with it are listed as foreign powers, with the exception of Ireland, so this is a live question. I declare an interest: my son, a scientist at the University of Edinburgh, is currently engaged in international co-operation with universities and research institutes—one or two of them government-sponsored and financed—in France, Germany, the Netherlands and the United States. That is a small snapshot of the extent of that collaboration, if one were to go merely to the biology faculty at the University of Edinburgh. I suspect that there are some 30 or 40 other countries with which 100 scientists at the university are involved in various collaborative activities.
The purpose of Amendment 106 is to gain the strongest assurances from the Government that they will look at whether additional burdens are being imposed by the legislation on those who are unavoidably and actively—and desirably—engaged in international collaboration with institutes, universities and other bodies that are part of, or dependent on, foreign Governments in one way or another. We need active assurance on that. If the Minister is able to give that, we will not press these amendments further but I emphasise that it is important that this legislation does not over-add to the requirements to report normal activities. I remind the Minister that we are talking about a country that is determined to become a science international superpower, and that needs to be sure that it does not put obstacles in its own way that deter those in other counties from collaborating as it ensures its security.
Lord Purvis of Tweed (LD)
My Lords, I am grateful for the Minister’s response to the amendments I tabled, supported by my noble friend, on the need for the publication of timely guidance on how the schemes will operate. He has been true to his word from the first day of Report and taken away many of the issues raised in Committee and come back with a number of amendments to address them. They relate mainly to the next group and the political tier but, given that my amendments fall within this group, I wish to put on record how grateful I am to him for the way in which he has engaged and responded.
The government amendments have addressed many of the significant concerns of those seeking legitimate activity—I see that the noble Baroness, Lady Noakes, who raised the issue of economic activity, is in her place—and those concerned about human rights. The areas where some questions remain include those we raised on the first day of Report, such as the German Stiftungen and other organisations that will not fall within the scope of the FIR schemes but are nevertheless concerned that they may do so. Much of that will be resolved in the guidance provided to them and therefore, the timeliness of that is of utmost importance.
In Committee I quoted at length from the Government’s impact assessment of the Bill, which suggested that the initial scheme could cost up to £48 million and many thousands of people would have to be informed about the scheme’s operation. Given that it is to be welcomed that the Government have reduced the scope of that, I am not sure what status the impact assessment now has. I should therefore be grateful if the Minister told us whether the guidance to be provided will also be informed by some revision of the impact assessment.
There will be businesses wanting to carry out legitimate activity that have to operate under a set of rules in the current regulations on countries at risk of money laundering or financing terrorism—we have a list of over 30 such countries—and there may now be an enhanced tier under FIRS. There will also be others, making it quite a complex environment for businesses operating in the political sphere.
Lord Ponsonby of Shulbrede (Lab)
My Lords, the enhanced tier of FIRS requires the registration of arrangements to carry out any activity in the UK, or for future activities to be carried out in the UK, at the direction of a specified foreign power or entity. It also requires activities carried out by specified entities to be registered. I too am grateful for how the Government have responded, following concerns that this tier could deter legitimate activities. The Minister has introduced a series of concessions, as he mentioned in opening, which we welcome. There are outstanding issues, which I would be grateful if he could amplify in his answers.
On his Amendment 106, the noble Lord, Lord Wallace, spoke about the need for regular reviews, which may highlight barriers to international collaboration. He gave examples from his family—particularly his son, who is no doubt doing important research work up at Edinburgh University. The purpose of this is to ensure that the enhanced scheme does not make the same mistakes as other schemes around the world. I draw the Australian scheme to the Minister’s attention, which I understand is currently being reviewed, given some high-profile concerns about how it is working. I look forward to his answer.
Lord Sharpe of Epsom (Con)
I thank noble Lords for their contributions to this short but constructive discussion. I will turn straight to the amendments tabled by the noble Lord, Lord Wallace of Saltaire.
Amendment 91 seeks to ensure that registration under FIRS is not required when the arrangement is registered under other legislative requirements. However, somewhat contrary to the noble Lord’s assertion, I think there is a clear difference between FIRS and the National Security and Investment Act, the academic technology approval scheme and the export control regime. The Government are clear that FIRS fills a gap in our toolkit. It is worth highlighting that the focus of this enhanced tier is to provide scrutiny to UK activities directed by specified foreign powers—it is worth emphasising this; we are talking about the enhanced tier—and foreign power-controlled entities.
We consider that there will be limited circumstances where there is a risk of duplication, but we will work closely across government departments and potential registrants to keep the burden of registration to a minimum and inform our approach to using this tier of the scheme. The Government do not want to impose unnecessary burdens. We have committed to a consultation on the guidance ahead of bringing the scheme into force. If that process identifies risks of duplication, the power to target what arrangements and activities will need to be registered can be used to reduce unnecessary duplication. This will be considered on a case-by-case basis when specifying foreign powers and entities.
Lord Wallace of Saltaire (LD)
Can the Minister give us an assurance that he will consult with the academies, the Royal Society and Universities UK to make sure that the element of duplication is reduced to the absolute minimum? When I was in government, we talked about trying to introduce the principle of “Tell us once” when people were in touch with government. In some other areas, that has now been introduced. The principle is a very good one; we do not want universities having to fill in forms unnecessarily widely. If he can assure us that there will be active consultation with those affected, I will not pursue this further.
Lord Sharpe of Epsom (Con)
My Lords, I am happy with the reassurance that we are committed to consulting, but I cannot say at this precise moment who we consult with. As I say, if that process identifies a risk of duplication, the power to target what arrangements and activities need to be registered can be used to reduce unnecessary duplication. Again, I stress that we are talking about the enhanced tier of the FIR scheme in the National Security Bill so, if there is a little bit of duplication, I am sure he will understand that in the context of the overall Bill.
Amendment 106 tabled by the noble Lord, Lord Wallace, would require the Secretary of State to produce an annual report on the impacts of the enhanced tier; the noble Lord, Lord Ponsonby, also questioned me on this. I reassure both noble Lords that the Government recognise the importance of keeping the impacts of the scheme under consideration. Clause 82 already requires the Secretary of State to produce and lay before Parliament an annual report every 12 months after the scheme goes live. The legislation will also be subject to the usual post-legislative scrutiny process, which will consider how the scheme has worked in practice and how far its objectives have been met. I therefore ask that the noble Lord does not press this amendment.
Amendments 166B and 203A tabled by the noble Lords, Lord Purvis of Tweed and Lord Wallace of Saltaire, seek to require the Secretary of State to produce guidance within six months of the Bill passing, and to prevent regulations made under the scheme from being brought into force until three months after the publication of guidance. In answer to the noble Lord, Lord Purvis, I say that the Government recognise the importance of ensuring guidance for the public to support the implementation of the scheme. However, it is important that there are not undue restrictions placed on the development of this guidance, to ensure that the guidance produced is clear and targeted to those complying. I can say to him that a revised impact assessment is required before Royal Assent, so that will be forthcoming. He also raised the point about the German Stiftungen. If he bears with me, we will address this directly in the next group. I will also go further: the Government have committed to establishing expert panels to produce sector-specific guidance on compliance with FIRS. With that, I think I have answered all the questions.
Lord Sharpe of Epsom
Member's explanatory statement
This amendment, together with Lord Sharpe’s other amendments to Clause 64 relating to relevant activities, allow the Secretary of State to make regulations specifying which activities of a specified person are subject to the provisions about foreign activity arrangements.
“(1A) In this section “relevant activities”—(a) if regulations under subsection (1B) apply in relation to the specified person, has the meaning given by the regulations, and(b) otherwise, means all activities.(1B) The Secretary of State may by regulations make provision about activities which are relevant activities for the purposes of this section, either in relation to all specified persons or in relation to such specified persons as the regulations may provide.”Member's explanatory statement
This amendment, together with Lord Sharpe’s other amendments to Clause 64 relating to relevant activities, allow the Secretary of State to make regulations specifying which activities of a specified person are subject to the provisions about foreign activity arrangements.
(a) fails to comply with subsection (2), and(b) knows, or having regard to other matters known to them” Member's explanatory statement
This amendment is to ensure consistency with subsections (1) and (2) of Clause 64, which refer to the person who makes the arrangement as “P”. It also clarifies the meaning of “ought reasonably to know”.
Lord Sharpe of Epsom
“(A1) This section applies where a person (“P”) makes a foreign activity arrangement required to be registered under section 64(2).(1) P commits an offence if—(a) P carries out a relevant activity, or arranges for a relevant activity to be carried out, in the United Kingdom pursuant to the arrangement,”Member's explanatory statement
This amendment confines the offence in Clause 66(1) to the person who makes a foreign activity arrangement with a specified person.
Member's explanatory statement
This amendment is consequential on Lord Sharpe’s amendment to Clause 66, page 46, line 13, and clarifies the meaning of “ought reasonably to know”.
Member's explanatory statement
This amendment clarifies the mens rea where P acts pursuant to a foreign activity arrangement.
“(2) A person other than P commits an offence if—(a) the person carries out a relevant activity, or arranges for a relevant activity to be carried out, in the United Kingdom pursuant to the arrangement,(b) the arrangement is not registered, and(c) the person knows, or having regard to other matters known to them ought reasonably to know, that they are acting pursuant to a foreign activity arrangement.(3) In proceedings for an offence under subsection (2) it is a defence to show that the person—(a) took all steps reasonably practicable to determine whether the arrangement was registered, and(b) reasonably believed that the arrangement was registered.(4) A person is taken to have shown a matter mentioned in subsection (3) if—(a) sufficient evidence of the matter is adduced to raise an issue with respect to it, and(b) the contrary is not proved beyond reasonable doubt.(5) In this section “relevant activity” has the same meaning as in section 64.”Member's explanatory statement
This amendment clarifies the applicable mens rea where a person other than P carries out the activities in question, or arranges for them to be carried out.
Lord Sharpe of Epsom
Member's explanatory statement
This amendment, together with Lord Sharpe’s other amendments to clause 67 relating to relevant activities, allow the Secretary of State to make regulations specifying which activities of a specified person are subject to clause 67.
Member's explanatory statement
This amendment, together with Lord Sharpe’s other amendments to Clause 67 relating to relevant activities, allow the Secretary of State to make regulations specifying which activities of a specified person are subject to Clause 67.
Member's explanatory statement
This amendment, together with Lord Sharpe’s other amendments to Clause 67 relating to relevant activities, allow the Secretary of State to make regulations specifying which activities of a specified person are subject to Clause 67.
“(3A) In this section “relevant activities”—(a) if regulations under subsection (3B) apply in relation to the specified person, has the meaning given by the regulations, and(b) otherwise, means all activities.(3B) The Secretary of State may by regulations make provision about activities which are relevant activities for the purposes of this section, either in relation to all specified persons or in relation to such specified persons as the regulations may provide.”Member's explanatory statement
This amendment, together with Lord Sharpe’s other amendments to Clause 67 relating to relevant activities, allow the Secretary of State to make regulations specifying which activities of a specified person are subject to Clause 67.
Member's explanatory statement
This amendment removes the requirement for knowledge that an activity is not registered from the offence in Clause 67(7). Knowledge of registration is now dealt with in the defence inserted by Lord Sharpe’s amendment to Clause 67, page 47, line 10.
Member's explanatory statement
This amendment clarifies the meaning of “ought reasonably to know”.
Member's explanatory statement
This amendment adjusts the test for committing an offence under Clause 67.
“(9) In proceedings for an offence under subsection (7) or (8) it is a defence to show that the person—(a) took all steps reasonably practicable to determine whether the activities were registered, and(b) reasonably believed that the activities were registered. (10) A person is taken to have shown a matter mentioned in subsection (9) if—(a) sufficient evidence of the matter is adduced to raise an issue with respect to it, and(b) the contrary is not proved beyond reasonable doubt.”Member's explanatory statement
This amendment provides a defence to an offence under Clause 67(7) and (8).
Lord Sharpe of Epsom
Member's explanatory statement
This amendment and Lord Sharpe’s other amendment to Clause 68(1) restrict the definition of foreign influence arrangements to arrangements with foreign powers.
Lord Sharpe of Epsom (Con)
My Lords, I have listened carefully to the debate about the political tier of the foreign influence registration scheme. I am immensely grateful to the House and others for their expertise and the constructive nature of the debate.
In response to the strength of feeling, this group of amendments refocuses the political tier back on its original intention: the influence of foreign powers over UK democracy. In its revised form, this tier would require registration only where a person is carrying out political influence at the direction of a foreign Government. That bears repeating—only where a person is carrying out political influence at the direction of a foreign Government. To be clear, this will take those being directed by foreign companies, foreign charities or other foreign entities entirely out of scope of the scheme.
I know that there has also been some debate about what it means to be directed by a foreign power. That is a high bar. Its natural meaning is an order or instruction to act. It could be delivered in the language of a request, but only where there is a power relationship between the person and the foreign power which adds an element of control or expectation to the request—for example, through a contract, payment, coercion, or the promise of a future compensation or favourable treatment. It is not enough for a foreign power to fund an activity. Generic requests, joint collaboration, or simply an alignment of views, absent this power relationship, will not meet the test for direction.
As part of this package of amendments, we have made some other changes, which I hope will be welcomed by noble Lords. A person will now have up to 28 days to register an arrangement under the political tier and does not need to register the arrangement before the activity takes place. This will give greater flexibility and ensure that we do not impede spontaneous activity.
We have narrowed the definition of “political influence activity” so that attempts to influence a Member of Parliament or equivalents in the devolved Administrations will require registration only when it is intended to influence them in their capacity as a Member of Parliament. Activity which seeks to influence these individuals in their personal capacity will not be registerable. Amendment 120 makes this clear.
As outlined on the previous group, we have made some minor changes to the offences to ensure that they work properly for subcontractors and that a person will not fall foul of the offence where they have taken all reasonably practicable steps to determine that an arrangement is registered.
I am pleased to say that we have accepted the recommendation by the Delegated Powers and Regulatory Reform Committee that regulations detailing the information to be published on the FIRS public register made under Clause 79 should be subject to the affirmative procedure. The public register is a vital element of the scheme. However, we recognise that there will be sensitivities in publishing some information and understand the call for an opportunity to debate this important matter.
I know that your Lordships have been anxious to scrutinise draft regulations under this part of the Bill. Last week, I published two sets of draft regulations setting out what information will be required from registrants and what information will be published. Importantly, these regulations confirm that we will not publish information where there is a risk that doing so would prejudice national security, put an individual’s safety at risk or involve the disclosure of commercially sensitive information. I have placed copies of these indicative regulations in the House Library.
This is accompanied by a government policy statement setting out how we envisage the other delegated powers being used. This includes an example registration form, which I hope noble Lords have found useful in thinking about how the scheme will work.
We are keen for the implementation of this scheme to be as collaborative as possible, which is why we will hold a further public consultation on the guidance required for the scheme prior to commencement. We will also continue to review the scheme and consider any further exemptions necessary to ensure that there is no negative impact on potential inward investment into the UK.
It is important to understand the wider context for FIRS. We are in an era of increased state-based competition. Foreign powers are seeking to influence British democracy to further their own interests, sometimes openly and sometimes covertly.
Foreign influence is not unwelcome. We recognise that Governments around the world seek to influence policies in the UK in a way that benefits their interests. Of course, the UK does the same. This type of influence, when conducted in an open and transparent way, contributes positively, and we recognise the critical role that this expertise plays in enhancing policy-making, employment and wealth creation. However, when foreign powers seek to influence in a way that is not transparent, this can have serious implications for the UK, posing risk to our open system of government and risking erosion of public confidence in political and government institutions.
We need to be more vigilant about this risk. Currently, foreign Governments can use others as proxies to attempt to influence British Ministers, MPs, officials, or indeed shape British public opinion, with only a limited requirement to disclose the hidden hand behind this influence, and no sanction if discovered. It is not unreasonable to aspire to a greater understanding of foreign influence; for the Government, parliamentarians and wider public to know where this influence is being brought to bear. FIRS seeks to address this gap, providing us all with more information about the scale and nature of foreign political influence in the UK. I look forward to the debate on the amended provisions and addressing the amendments that have been tabled.
Finally, I make noble Lords aware that we have identified an inconsistency in the treatment of ministerial decisions taken across the devolved Administrations that fall within the scope of this tier. I commit to tabling an amendment at Third Reading that will resolve that issue. For now, I beg to move.
Baroness Hayter of Kentish Town (Lab)
My Lords, I have my name on a number of amendments in this group. I will start by saying, which I had not prepared to say, that when the Minister looks at the speech he has just made, I think he will find that there were some drafting errors—I hope there were—at the beginning. He said that FIRS would apply now only to a foreign Government. I think he said that twice and afterwards went on to talk about a foreign power. He knows very well why I pick up on the difference because one of my ongoing concerns is about the definition of a foreign power, which includes political parties. I hope that was just an oversight because I think that this captures political parties as well as foreign Governments.
There are two or three points I want to make very briefly but before I go on, I want to add my thanks for what the Minister has done, not only in the incredible change. The Minister has sent me the Keeling schedule that shows that we have ended up with a FIRS that is very different from what we started with. I should declare my interest, as I sit on the board of the ABI and it is very content with where we have got to. It did however make the point that this is no way to make a sausage—I have to say that they were not its words; it was far more polite. The way it started was not the best way to make legislation. The ABI and others are very content with where we have got to, and it is right to record that we have ended up with something very different, so I thank the Minister.
My name is on three amendments. I will not press Amendments 114 and 121 in my name and that of the noble Lord, Lord Carlile. But on Amendment 115 I am second to the noble Lord, Lord Sharpe, and I think it is an indication of the approval of what he has done that one of the delete clause amendments is in his name—only because he got there first because I was about to do that. I think it is a symbol that we do it.
I have that one remaining query about a foreign political power that happens to be in government engaging with any of us or councillors or parliamentary candidates, even on internal, party-to-party issues, using an intermediary such as the conference arrangement. I have looked at the draft regulations again as the Minister helpfully said. There is no de minimis there, even if they pay £1,000 to a conference organiser to book the stall at a Labour Party conference or a Tory Party conference—I am sure they have stalls; I have been to their conference and they do in the same way as we do. There is no de minimis for a political party abroad seeking to engage with a political party or anyone else here using an intermediary which is simply a facilitator. Therefore, I wonder whether there is a possibility of looking at the guidelines or the forms. There will be a contract. It may be only for £1,000 but there are the implications of having all that to be declared. I am not saying that simply because we have stalls at our conference, it could happen to the Government as well. It captures things that I know the Minister never intended. I know that at the moment he will not give me an answer and a promise written in blood, but some acknowledgement that there is a small ongoing problem would be very helpful. For the moment, I think we have ended up in a much better place than we started.
Lord Wallace of Saltaire (LD)
My Lords, I will speak to Amendment 166A in my name. I also thank the Minister for the way in which the Bill has been discussed and amended between Second Reading, Committee and Report. It is a model of the way in which the Lords should operate, and we all appreciate the way in which the Minister and his team have responded to reasoned criticisms as we have moved forward.
Amendment 166A merely draws attention to some of the definition problems we have all struggled with, wanting to catch all the problems but not to overload the necessary and highly desirable international co-operation with other Governments and other countries, many of which are governed in ways we do not entirely approve of. As somebody who used to work for an international think tank, I am particularly concerned with the opacity of the funding of some of our political think tanks, which as charities do not have to declare their revenue.
In the United States there is much concern with the extent to which some foreign Governments, in particular the Gulf states, put enormous amounts of money into institutes operating as political think tanks, intending to influence and therefore reshape the American political debate. Although that is outside the scope of the current Bill, I and others are much concerned to insist that there should be much greater transparency about the funding of think tanks that set out to deliberately influence the way in which our politics take place.
That is an example, but we all know that there will be a substantial grey area between direction and influence, which we and the Minister have all grappled with. We are not entirely sure that we can draw the line clearly as we go. This amendment asks the Government actively to keep under review and to consult on where that line needs to be adjusted as we move forward in implementation. I hope the Minister will respond in that way.
Baroness Noakes (Con)
My Lords, I got involved in Committee—my only appearance on the Bill—because of concerns brought to my attention about the impact of the registration scheme on huge swathes of ordinary, everyday business and commercial activity. I was much encouraged that at that stage my noble friend the Minister said that this was under review. I am more than pleased with the actual outcome. I know that once a Bill has been published it is very hard for the Government to do a radical overhaul, so we have to pay tribute to my noble friend the Minister and the Security Minister in the other place for having the courage to say that what we started with would not work well enough and to come back with such a significant set of revisions on Report. I thank him again for all he has done to achieve this.
Lord Beith (LD)
My Lords, I think I failed to hear something the Minister said earlier relating to Amendment 110A. I raise it because the noble Lords, Lord Anderson of Ipswich and Lord Carlile of Berriew, are both unable to be in the House this afternoon for various compelling reasons. The amendment helpfully tidies up part of the provision by ensuring that the reference to arrangements entered into before the clause comes into force does not apply to arrangements that have ceased to have effect. I think the Minister indicated that he was going to accept it and therefore, I presume, move it at the appropriate stage.
Lord Purvis of Tweed (LD)
My Lords, the noble Baroness, Lady Hayter, raised valid areas with regard to the sometimes complex relationships between political parties and the Governments of states, which I hope the Minister, who referred to foreign Governments, can go a little further and point to. It is absolutely right that that is one of a number of criteria set down earlier in the Bill, in Clause 32, and that the meaning of a foreign power includes
“a political party which is a governing political party”.
There will still be issues when it comes to relationships such as demand and supply and other kinds of relations, but I hope that the Minister will provide clarity and proper consultations so that, when we come to the finalised guidance and regulations, those issues will be very clear. The Minister will not be surprised to hear that, as in the earlier group, we are still hoping for that bit of clarification on the German Stiftungen and others represented by the kinds of organisations that the Stiftungen are—those that operate within a public policy and political sphere but are not directly linked to the Government or governing political parties although they are, by definition, political in their nature. I am sure that the Minister will respond to that when he winds up.
Like the noble Baroness, Lady Noakes, we have a number of scars on our back from legislation where we have tried to do heavy lifting in this Chamber to improve Bills. I tabled a number of amendments in Committee highlighting the concern that what had been brought forward was an unworkable scheme; I think we are now looking at a workable scheme. That is important for the security of our country.
I particularly welcome the draft registration forms, about which I had raised concerns in Committee. I am very pleased that the Minister will be having an active consultation. I am delighted that there will be an updated impact assessment. While the Minister said that that is required of the Government, in previous Bills some excuses have been made for impact assessments not to be updated, so I am very pleased about that. And on the draft regulations, as I said, I am delighted.
As I said on the earlier group, the Minister has been true to his word. I have just one final favour to ask of him. Given that I have been rather successful with colleagues in securing some concessions on this Bill, could he have a word with other Ministers, just to say that “Purvis is not always wrong”? Sometimes, we can do our job in this place; we can make the Government’s job a bit better and make unworkable schemes workable. I commend the Minister for how he has approached this so far.
Lord Ponsonby of Shulbrede (Lab)
My Lords, there seems to be a new approach to Ministers by buttering them up. I noticed my noble friend buttering up the noble and learned Lord, Lord Bellamy, the other day, which seemed to cause amusement in the House. Nevertheless, I too thank the Minister for his response to the earlier concerns raised. The primary tier of FIRS requires the registration of
“arrangements to carry out political influence activities within the UK”,
or to arrange for such activities to be carried out in the UK,
“at the direction of a foreign principal”.
Registration of political influence activity is also required
“where the activity is being carried out by the foreign principal itself. The foreign principal will be responsible for registering political influence activities”.
As I said, concerns were raised that this could impair international co-operation through political parties and similar organisations. It was previously reported that the Government might withdraw the primary tier entirely, but, instead, the Minister has removed the most controversial features of this and accepted Amendment 110A in the names of the noble Lords, Lord Anderson and Lord Carlile—and the name of the Minister himself is also on that amendment.
I also mention the contacts from the German embassy in relation to the same points raised by the noble Lords, Lord Purvis and Lord Balfe, at an earlier stage of Report: the concerns of political foundations such as the centre-left Friedrich-Ebert-Stiftung and the centre-right Konrad-Adenauer-Stiftung and whether they would have a duty to register. If the Minister could repeat what he said earlier, I hope that the minds of the representatives of those organisations will be put at rest.
I welcome what has been said. I hope that this is indeed a workable scheme. I think it was the noble Baroness, Lady Noakes, who described a “radical overhaul”, which it is not usual to get on such an important Bill as this. I think that everybody accepts that this is a very important Bill and I hope that it will emerge from your Lordships’ House a better Bill than when it arrived.
Lord Sharpe of Epsom (Con)
My Lords, I thank all noble Lords who participated in this debate. I am feeling a little overwhelmed. The Government have moved a long way, as has been noted, on the FIRS scheme, which now tackles what it was originally intended to address. I thank all noble Lords for their probing amendments. I would particularly like to thank the noble Baroness, Lady Hayter, for paying special attention and noticing my deliberate error. I should have said—and I will repeat this because I repeated it the first time around—“foreign powers, including foreign Governments”.
With the leave of the House, and in answer to the noble Lord, Lord Beith, I will speak to Amendment 110A, standing in the name of the noble Lord, Lord Carlile, and signed by the noble Lord, Lord Anderson. The Government do not intend to require the registration of defunct foreign influence arrangements, so we urge the House to support the amendment.
Amendments 114 and 121, tabled by the noble Lord, Lord Carlile, and the noble Baroness, Lady Hayter, would remove the requirement to register foreign influence arrangements at Clause 68, and the meaning of “political influence activity” at Clause 70, from the scheme. These clauses are essential to the functioning of the revised political influence tier of the scheme, and for this reason I ask that the amendments be withdrawn. I will, however, go into a little more detail on the impact on the proceedings of a UK-registered party in Clause 70. It is not intended to cover every activity undertaken by a UK political party. The focus is on where foreign powers are seeking to influence formal matters of a UK political party, such as candidates’ selections and adoption of policy through third parties; but it will not, for example, cover decisions around venue changes for joint conferences. In this way, we believe that this scheme is appropriately targeted to focus on the arrangements and activities where transparency is most needed, while avoiding unnecessary bureaucracy. However, I have heard the noble Baroness on a number of occasions now and I will certainly be taking her points into account when we are developing the guidance.
I thank the noble Lord, Lord Wallace of Saltaire, for his Amendment 166A. This would require the Government to consult, and lay a report in Parliament, on the merits of expanding the foreign influence registration scheme to those controlled by a foreign power seeking to influence public policy. Again, we have sympathy with this amendment and, indeed, one of the reasons why the Government originally sought a broader scheme was to fully capture the proxies of foreign powers. I share the noble Lord’s interest in ensuring we remain responsive to the risks posed by covert influence, but I reassure him that the Government will keep the impacts of the scheme, and any need to expand it, under careful review. The timings for this are important and I cannot accept an amendment that may tie the Government to evaluating the scheme before it has come into force and had a chance to bed in. So I ask him not to press this amendment but reassure him that the Government will be able to use the annual review requirements to assess areas where the scheme could be strengthened.
In addressing the point raised in both this group and the last by the noble Lord, Lord Purvis, around the impact of the scheme on foreign political foundations, we did meet with representatives of the German embassy after the debate last week to discuss this scheme, and recognise the importance of the work carried out by political foundations such as the Konrad-Adenauer-Stiftung to promote political co-operation and the values of democracy and the rule of law. So I reassure the noble Lord that institutions such as these that operate independently of foreign powers will not have to register their activities. Receiving funding from a foreign power does not trigger a requirement to register under the scheme. Only where organisations are being directed by a foreign power through a power relationship to carry out political influence activities will that need to be registered. With that, I think that I have answered all the questions.
Lord Sharpe of Epsom
Member’s explanatory statement
This amendment and Lord Sharpe’s other amendment to Clause 68(1) restrict the definition of foreign influence arrangements to arrangements with foreign powers.
“(1A) Where the foreign power is a specified person, the arrangement is not a foreign influence arrangement to the extent that it relates to political influence activities that are relevant activities for the purposes of section 64.”Member’s explanatory statement
This amendment prevents overlap between foreign activity arrangements required to be registered under Clause 64 and foreign influence arrangements required to be registered under Clause 68.
Member’s explanatory statement
This amendment increases the time limit for registering a foreign influence agreement after it has been made.
Member’s explanatory statement
This amendment clarifies that the requirement to register foreign influence arrangements entered into before Clause 68 comes into force does not apply to arrangements which have ceased to have effect when the Clause comes into force.
Lord Sharpe of Epsom
Member’s explanatory statement
This amendment is consequential on Lord Sharpe’s amendment to Clause 68, page 47, line 19.
(a) fails to comply with subsection (2), and”Member’s explanatory statement
This amendment is to ensure consistency with subsections (1) and (2) of Clause 68, which refer to the person who makes an arrangement as “P”.
Lord Sharpe of Epsom
Member’s explanatory statement
This amendment is consequential on Lord Sharpe’s amendments to Clause 68(1).
Lord Sharpe of Epsom
Member’s explanatory statement
This amendment is consequential on Lord Sharpe’s amendments to Clause 68(1).
Member’s explanatory statement
This amendment adjusts the matters within subsection (3)(a), for consistency with Clause 14(3).
Member’s explanatory statement
This amendment clarifies that the matters within Clause 70(3) include a decision of a Minister of the Crown or a government department.
Member’s explanatory statement
This amendment removes reference to the proceedings of Parliament, the Northern Ireland Assembly, the Scottish Parliament and Senedd Cymru. Persons in these assemblies are caught by other paragraphs in subsection (3).
Member’s explanatory statement
This amendment clarifies that the conduct of Members of Parliament etc is relevant only where those persons are acting in that capacity.
Lord Sharpe of Epsom
Member's explanatory statement
This amendment is consequential on Lord Sharpe’s amendment to Clause 71, page 49, line 13.
“(c) P knows, or having regard to other matters known to them ought reasonably to know, that they are acting pursuant to a foreign influence arrangement.”Member's explanatory statement
This amendment adjusts the test in Clause 71(1)(c).
“(2) A person other than P commits an offence if—(a) after the end of the registration period the person carries out a political influence activity, or arranges for a political influence activity to be carried out, in the United Kingdom pursuant to the arrangement,(b) the arrangement is not registered, and(c) the person knows, or having regard to other matters known to them ought reasonably to know, that they are acting pursuant to a foreign influence arrangement.(3) In this section the “registration period” means the period before the end of which P must register the arrangement (see section 68(2) and (3)).(4) In proceedings for an offence under subsection (2) it is a defence to show that the person—(a) took all steps reasonably practicable to determine whether the arrangement was registered, and(b) reasonably believed that the arrangement was registered.(5) A person is taken to have shown a matter mentioned in subsection (4) if—(a) sufficient evidence of the matter is adduced to raise an issue with respect to it, and(b) the contrary is not proved beyond reasonable doubt.”Member's explanatory statement
This amendment clarifies the applicable mens rea where a person other than P carries out the political influence activities in question.
Lord Sharpe of Epsom
Member's explanatory statement
This amendment is consequential on Lord Sharpe’s amendments to Clause 68(1).
Member's explanatory statement
This amendment is consequential on Lord Sharpe’s amendments to Clause 68(1).
Member's explanatory statement
This amendment is consequential on Lord Sharpe’s amendments to Clause 68(1).
“(3A) Where the foreign power is a specified person, the prohibition in subsection (3) does not apply to the extent that the political influence activities are relevant activities for the purposes of section 67.” Member's explanatory statement
This amendment prevents overlap between the offence in Clause 67 and the offence in Clause 72.
Member's explanatory statement
This amendment is consequential on Lord Sharpe’s amendment to leave out Clause 72(1) and (2).
Member's explanatory statement
This amendment clarifies the meaning of “ought reasonably to know”.
Member's explanatory statement
This amendment adjusts the test in subsection (8).
“(9) In proceedings for an offence under subsection (8) it is a defence to show that the person—(a) took all steps reasonably practicable to determine whether the activities were registered, and(b) reasonably believed that the activities were registered.(10) A person is taken to have shown a matter mentioned in subsection (9) if—(a) sufficient evidence of the matter is adduced to raise an issue with respect to it, and(b) the contrary is not proved beyond reasonable doubt.”Member's explanatory statement
This amendment provides a defence to an offence under Clause 72(8).
Lord Sharpe of Epsom
Member's explanatory statement
This amendment is consequential on Lord Sharpe’s amendments to omit Clause 72(1) and (2).
Member's explanatory statement
This amendment is consequential on Lord Sharpe’s amendment to clause 66, page 46, line 20.
Member’s explanatory statement
This amendment is consequential on Lord Sharpe’s amendment to Clause 71, page 49, line 20.
Member’s explanatory statement
This amendment is consequential on Lord Sharpe’s amendment to Clause 71, page 49, line 20.
Member’s explanatory statement
This amendment is consequential on Lord Sharpe’s amendments to omit Clause 72(1) and (2).
Member's explanatory statement
This amendment is consequential on Lord Sharpe’s amendments to omit Clause 72(1) and (2).
Member's explanatory statement
This amendment is consequential on Lord Sharpe’s amendment to Clause 71, page 49, line 20.
Member's explanatory statement
The amendment is consequential on Lord Sharpe’s amendments to Clause 68(1).
““news-related material” , “publish” , and “recognised news publisher” have the meaning given by paragraph 4A.”Member's explanatory statement
This amendment and Lord Sharpe’s proposed new paragraph 4A of Schedule 15 incorporate the definitions of “news-related material”, “publish” and “recognised news publisher” in Schedule 15 rather than by cross-referring to the definitions in the Online Safety Bill.
“(1) In paragraph 4, “recognised news publisher” means any of the following entities—(a) the British Broadcasting Corporation,(b) Sianel Pedwar Cymru,(c) the holder of a licence under the Broadcasting Act 1990 or 1996 who publishes news-related material in connection with the broadcasting activities authorised under the licence, and(d) any other entity which—(i) meets all of the conditions in sub-paragraph (2),(ii) is not an excluded entity (see sub-paragraph (3)), and(iii) is not a sanctioned entity (see sub-paragraph (4)).(2) The conditions referred to in sub-paragraph (1)(d)(i) are that the entity—(a) has as its principal purpose the publication of news-related material, and such material—(i) is created by different persons, and(ii) is subject to editorial control,(b) publishes such material in the course of a business (whether or not carried on with a view to profit),(c) is subject to a standards code,(d) has policies and procedures for handling and resolving complaints,(e) has a registered office or other business address,(f) is the person with legal responsibility for material published by it in the United Kingdom, and(g) publishes—(i) the entity’s name, the address mentioned in paragraph (e) and the entity’s registered number (if any), and(ii) the name and address of any person who controls the entity (including, where such a person is an entity, the address of that person’s registered or principal office and that person’s registered number (if any)).(3) An “excluded entity” is an entity—(a) which is a proscribed organisation under the Terrorism Act 2000 (see section 3 of that Act), or(b) the purpose of which is to support a proscribed organisation under that Act.(4) A “sanctioned entity” is an entity which—(a) is designated by name under a power contained in regulations under section 1 of the Sanctions and Anti-Money Laundering Act 2018 that authorises the Secretary of State or the Treasury to designate persons for the purposes of the regulations or of any provisions of the regulations, or (b) is a designated person under any provision included in such regulations by virtue of section 13 of that Act (persons named by or under UN Security Council Resolutions).(5) For the purposes of sub-paragraph (2)—(a) news-related material is “subject to editorial control” if there is a person (whether or not the publisher of the material) who has editorial or equivalent responsibility for the material, including responsibility for how it is presented and the decision to publish it;(b) “control” has the same meaning as it has in the Broadcasting Act 1990 by virtue of section 202 of that Act.(6) In this paragraph—“news-related material” means material consisting of—(a) news or information about current affairs,(b) opinion about matters relating to the news or current affairs, or(c) gossip about celebrities, other public figures or other persons in the news;“publish” means publish by any means (including by broadcasting), and references to a publisher and publication are to be construed accordingly;“standards code” means—(a) a code of standards that regulates the conduct of publishers, that is published by an independent regulator, or(b) a code of standards that regulates the conduct of the entity in question, that is published by the entity itself.”Member's explanatory statement
This amendment and Lord Sharpe’s amendment to paragraph 4 of Schedule 15 incorporate the definitions of “news-related material”, “publish” and “recognised news publisher” in Schedule 15 rather than by cross-referring to the definitions in the Online Safety Bill.
Member's explanatory statement
This amendment is consequential on Lord Sharpe’s amendment leaving out Clause 72(1) and (2).
Member's explanatory statement
This amendment is consequential on changes to the definition of foreign activity arrangement in Clause 64.
“(2A) Regulations under subsection (1)(c) may, in particular, require the person to provide information about any political influence activities carried out, or arranged to be carried out, during the registration period by any person pursuant to the arrangement which is required to be registered.(2B) In subsection (2A) “registration period” has the same meaning as in section 71.”Member's explanatory statement
This amendment clarifies the breadth of the regulation-making power in Clause 74(1), and is consequential on Lord Sharpe’s amendment to Clause 71 allowing for political influence activities to be carried out during the registration period.
Lord Sharpe of Epsom
“(ba) a person the Secretary of State reasonably believes to be carrying out relevant activities, or arranging for relevant activities to be carried out, in the United Kingdom pursuant to a foreign activity arrangement within paragraph (a) or (b);”Member's explanatory statement
This amendment allows the Secretary of State to give an information notice to persons carrying out relevant activities pursuant to a foreign activity arrangement who are not themselves a party to the arrangement.
Member's explanatory statement
This amendment is consequential on changes to the definition of foreign activity arrangement in Clause 64.
Member's explanatory statement
This amendment is consequential on changes to the definition of foreign activity arrangement in Clause 64.
Member's explanatory statement
This amendment is consequential on changes to the definition of foreign activity arrangement in Clause 64.
“(ba) a person the Secretary of State reasonably believes to be carrying out political influence activities, or arranging for political influence activities to be carried out, in the United Kingdom pursuant to a foreign influence arrangement within paragraph (a) or (b);”Member's explanatory statement
This amendment allows the Secretary of State to give an information notice to persons carrying out political influence activities pursuant to a foreign influence arrangement who are not themselves a party to the arrangement.
Member's explanatory statement
This amendment is for consistency with subsection (2)(e).
Member's explanatory statement
This amendment is for consistency with subsection (3)(e).
Lord Sharpe of Epsom
“(3A) An information notice may only specify information which the Secretary of State considers may be relevant to an arrangement or activity within subsection (1) or (2).”Member's explanatory statement
This amendment clarifies the information which may be specified in an information notice.
Lord Sharpe of Epsom
Member's explanatory statement
This amendment is consequential on changes to the definition of foreign activity arrangement in Clause 64.
Member's explanatory statement
This amendment clarifies the meaning of “ought reasonably to know”.
Member's explanatory statement
This amendment clarifies the meaning of “ought reasonably to know”.
Lord Sharpe of Epsom
Member's explanatory statement
This amendment is consequential on changes to the definition of foreign activity arrangement in Clause 64.
Member's explanatory statement
This amendment is consequential on changes to the definition of foreign activity arrangement in Clause 64.
Member's explanatory statement
This amendment clarifies the meaning of “ought reasonably to know”.
Member's explanatory statement
This amendment clarifies the meaning of “ought reasonably to know”.
Lord Sharpe of Epsom
Member's explanatory statement
This amendment clarifies that Clause 79(2) only relates to the power in Clause 79(1)(a).
Lord Sharpe of Epsom
Member's explanatory statement
This amendment is consequential on changes to the definition of foreign activity arrangement in Clause 64.
Member's explanatory statement
This amendment is consequential on Lord Sharpe’s amendment omitting Clause 72(7).
Lord Sharpe of Epsom
Member's explanatory statement
This amendment is consequential on Lord Sharpe’s amendments to Clause 68(1).
Member's explanatory statement
This amendment is consequential on Lord Sharpe’s amendments to Clause 68(1).
Lord Sharpe of Epsom
Member's explanatory statement
This amendment omits the definition of “foreign principal” and is consequential on Lord Sharpe’s amendments to Clause 68(1).
Lord Marks of Henley-on-Thames (LD)
My Lords, at the risk of being accused of buttering up the noble and learned Lord, Lord Bellamy, I should say at the outset that we are very grateful to him, his officials and the noble Lord, Lord Sharpe, for their positive engagement with us on the Ministry of Justice aspects of the Bill. There has been significant movement by the Government on the MoJ provisions, and on this group in particular.
While that is the reality, there remain significant differences between us on these provisions. Our position on the damages reduction clauses in the Bill is that the power to reduce or extinguish damages in a case against the Crown on the basis that the claimant has been involved in some terrorist wrongdoing in the past should never have been in the Bill. After all, the clause does not require the conviction of a terrorist offence. Ground 1 in Clause 85(3)(a)(i) is the commission of such an offence, but the alternative ground in sub-paragraph (ii) is nebulously described as
“other involvement in terrorism-related activity”.
That could be serious or it could be limited. After all, even wearing clothing that might suggest support for a proscribed organisation is a terrorist offence. I therefore invite the Government to give the House an assurance that the provisions on reducing damages will not be invoked on unproven allegations emanating from a foreign state that a claimant has been involved in some terrorism-related activity under the alternative ground in Clause 85(3)(a)(ii).
We have serious concerns about Clauses 84 to 88 being part of the Bill. Those concerns are that they are restrictive of civil rights, effectively denying or restricting legitimate claimants’ access to the courts and their right to a remedy; that they could enable the Government to avoid liability for damages in the face of justified claims; and that they would reduce accountability and limit the publicity for genuine claims of government wrongdoing.
These clauses risk undermining two important democratic principles: first, that everyone is entitled to enforce their rights in court and, secondly, that, where a legal right is breached, there is a remedy. Our central question is, why should the Government be excused from paying damages in a case where their liability to a claimant is proved? I invite the noble and learned Lord to explain how the Government answer that central question. Why, also, have the Government not confined this power to cases within Clause 88, where there is a risk of damages being themselves used for the purposes of terrorism?
In Committee, I drew attention to the cases of Jagtar Singh Johal, Abdul Hakim Belhaj and Fatima Boudchar, arising from the British Government’s complicity in torture and, in the latter case, detention in Thailand and rendition to Libya. Their cases and other cases of government wrongdoing might risk being threatened by this new power. However, since Committee, and in response to one of the main criticisms I and others levelled at this clause, the Government have laid Amendment 169. My reading of that amendment, which agrees with the Ministers explanatory statement, is that the court may consider reducing damages
“only if there was a connection between the terrorist wrongdoing and the conduct of the Crown complained of in the proceedings.”
Because it is complex, I invited the noble and learned Lord to write. Today, the noble Lord, Lord Pannick, and I have received a letter from the Minister containing that assurance. I hope he will forgive me if I read from it the relevant paragraph. He says, “On damages I am pleased to confirm your understanding of the intention and effect of the Government’s amendments to the scope of the Bill. The Government consider that they will mean that applications by the UK security services to reduce damages in national security cases will be possible only where there is a connection between the Crown’s conduct and the terrorist conduct of the claimant.”
That assurance, embodied in Amendment 169 and its consequential amendments, is a significant concession and answers an important criticism. Although the central criticisms of principle that I have outlined remain, we will not be pressing the stand part objections we have laid. Important among our concerns, as pointed out in Committee, is that the clause fails to set out criteria as to when and on what basis the court should exercise powers to reduce or extinguish damages. This was a matter extensively canvassed in Committee, but the Minister could really only say that the provisions were intended “to convey a message” that Britain should not be seen as a “soft touch” for terrorism. There was no guidance as to how and on what basis judges should exercise this new power. With the benefit of several weeks to consider the way in which the power is to be exercised, can the Minister please give us such guidance now?
I turn to Amendments 174 and 175 in my name and that of my noble friend Lady Ludford. At present, Clause 85(4) requires the court to take into account whether
“there was a limitation on the ability of the Crown to prevent”
the wrongful conduct complained of, including on the basis that it occurred overseas or was carried out in conjunction with a third party. That formulation suggests that His Majesty’s Government are just too weak to control their own conduct, if wrongful, overseas, or in collaboration with a third party. That permitted excuse is inadequate. Our amendments would restrict permitting any such limitation on the Crown’s ability to prevent its own wrongful conduct to places where it was both carried out overseas and—not or—instigated by a third party.
In the noble Lord’s letter, to which I referred, he has indicated that the Government are not prepared to concede these amendments. I would nevertheless appreciate the Government’s further consideration of the present provisions as they stand, and of the effect of the amendments we propose. I look forward to his further consideration and his response, in the hope that we might get a little further if he comes back with something at Third Reading. I beg to move.
Lord Pannick (CB)
My Lords, I added my name to some of the amendments tabled by the noble Lord, Lord Marks. I echo his thanks to the noble and learned Lord, Lord Bellamy, and the noble Lord, Lord Sharpe, for their constructive engagement with us on the damages clauses. I too am satisfied that Amendment 169, in particular, and the assurance that the noble and learned Lord gave in writing—which I hope he will repeat on the Floor of the House—address the main concern. I am impressed also by the eloquent point he made in Committee, that these clauses simply confer a power, or discretion, on the court, and I am confident that the courts will exercise those powers fairly and sensibly.
The Parliamentary Under-Secretary of State, Ministry of Justice (Lord Bellamy) (Con)
My Lords, I am extremely grateful to the noble Lord, Lord Marks, for his amendments, and to the noble Lord, Lord Pannick, for his comments. I hope the House will agree that the Government have been in listening mode throughout this Bill, and that we have in this particular instance moved quite considerably to deal with what the Government consider to be justified observations by your Lordships.
On the general point, the reforms are designed to protect the public, to deter those who seek to exploit our security services for compensation and to reduce the risk that court awards or damages may be used to fund terrorism—perhaps the most serious harm that can be perpetrated against society, going to its very fabric. The noble Lord, Lord Marks, asked me to restate the purpose of the clause and I think I have endeavoured to do so in those words.
On whether the Government can give any assurance that these provisions will not be invoked on the basis of
“unproven allegations … from a foreign state”,
I draw your Lordships’ attention to the fact that this is a power in the court; it is entirely in its discretion. No court is going to act on anything other than proper evidence, so in the Government’s view there is no risk of the danger to which the noble Lord, Lord Marks, referred, because this is a court process with rules of evidence and proper and fair procedures.
With those two preliminary observations, I come to the central point that was at issue when we discussed this clause in Committee. We have listened to the concerns expressed by noble Lords that the legislation needed to ensure that no national security case fell into scope where there was no connection between the Crown’s conduct and the terrorist conduct of the claimant. I can repeat before this House the assurance in the letter I sent noble Lords today, to which we have already been referred, saying that there needs to be a causal connection between the conduct of the terrorist and the reduction in damages.
As to what criteria the courts should apply when considering these issues, I know that noble Members felt the courts would require further guidance. In the Government’s view, the courts do not require further guidance; they are well able to interpret and apply this legislation, especially in light of the amendments we have proposed. The Government have every confidence in the court being able to discharge its functions under these provisions.
Our courts are well versed in taking a wide range of relevant factors into account in determining liability and assessing the level of damages. There are a number of common-law considerations to which noble Lords referred in Committee which may indeed provide some guidance. We do not seek to exonerate the Crown in respect of its own culpability; we aim simply to ensure that the terrorist conduct is properly taken into account when calculating quantum.
I turn to what I think are the only live amendments on this part, Amendments 174 and 175. Those amendments would apply to the Bill’s provisions whereby a court would consider the context in which the Crown had acted to reduce a risk of terrorism, but their underlying intention seems to the Government to be to markedly restrict those provisions. As I understand it, the amendments seek to limit the consideration of the court to where the Crown’s actions had been commenced —the provisions use the word “instigated”—and the conduct was required to have taken place overseas at the instigation of a foreign state.
While the Government accept that there are difficulties in preventing terrorism when the action concerned needs to be taken overseas, there are so many different facts and circumstances flowing from the claimant’s own actions that the proposed amendments would significantly limit the effect of these clauses. In the Government’s view, the courts ought to have complete discretion to apply the clauses as they stand; a very tight restriction both as to instigation and to the requirement that the instigated conduct took place overseas would limit them inappropriately and improperly restrict the discretion courts should have under the provisions.
The Government further feel that there is scope in these amendments for some confusion. The two aspects, an overseas element and instigation, seem to be couched in language reminiscent of an exclusive list, quite apart from the difficulty of deciding exactly what one means by “instigation”. In practice, the Government feel that the courts should be left to exercise their discretion, as they surely will, without the limitation proposed by these amendments. That is the Government’s position on the amendments proposed by the noble Lord, Lord Marks, and I hope that in the light of what I have said, he will consider not pressing them.
There is one amendment by the Government—Amendment 181—which is proposed to ensure family proceedings in Scotland and Northern Ireland are excluded from the freezing and forfeiture provisions that are also part of this part, as with those in England and Wales. That simply corrects an oversight in the original drafting.
Having set out the Government’s amendments and why we are unable to accept the amendments proposed by the noble Lord, I commend Government’s amendments and ask the noble Lord to withdraw his.
Lord Marks of Henley-on-Thames (LD)
My Lords, I have heard the Minister’s explanation. It is right that the amendments that were between us were Amendments 174 and 175. Having considered his point on the court’s discretion, I am not sure that the difference between us is so wide as to justify my testing the opinion of the House on this occasion. I shall not move those two amendments and beg leave to withdraw the stand part amendment.
Lord Bellamy
(i) involves the commission of a terrorism offence or other involvement in terrorism-related activity, and (ii) has a connection with the conduct of the Crown complained of in the proceedings,”Member's explanatory statement
This amendment, together with the other Government amendments to this Clause, would mean that the court may consider the matters in Clause 85(3)(b) only if there was a connection between the terrorist wrongdoing and the conduct of the Crown complained of in the proceedings.
Member's explanatory statement
This amendment is consequential on the Government amendment to Clause 85(3)(a) removing the defined term “terrorist wrongdoing”.
Member's explanatory statement
This amendment is consequential on the Government amendment to Clause 85(3)(a) requiring consideration of whether there was a connection between the wrongdoing and the conduct of the Crown before considering its extent.
Member's explanatory statement
This amendment is consequential on the matters referred to in this paragraph being referred to in Clause 85(3) as a result of the Government amendments to that subsection.
Member's explanatory statement
This amendment is consequential on the Government amendment leaving out Clause 85(4)(a).
Lord Bellamy
Member's explanatory statement
This amendment is consequential on the Government amendments to Clause 85.
Lord Marks of Henley-on-Thames (LD)
My Lords, we now move on to group four on legal aid. Again, I express our gratitude to the Minister, and to the noble Lord, Lord Sharpe, for his engagement with us on these provisions. Nevertheless, in spite of one welcome concession, to which I will turn, we oppose in principle the Bill’s proposals to exclude access to legal aid for those previously convicted of terrorist offences, however minor, subject only to the time and age conditions set out in the Bill. Legal aid, restricted as it might already be, is a right that we enjoy as citizens, and it is wrong simply to exclude that right for anyone convicted of a terrorist offence, however minor, whether or not the legal aid sought has any connection with the previous conviction. At least in relation to damages in the last group, the Government made the concession in Amendment 169, as we have heard, that, for the power to reduce damages to be exercised, there would have to be some connection between the past terrorist activity and the Crown’s wrongful conduct complained of in the proceedings. Here, no such connection is necessary before the exclusion of legal aid kicks in.
All we have from the Government in this group is an exception in Amendment 186 and its associated amendments for cases where an applicant for legal aid is the victim of domestic abuse. That is, of course, important, and it is welcome, but it is based on no discernible principle at all. If the victims of domestic violence should be entitled to legal aid, why not the victims of human trafficking, which, we observe, may well have led them into terrorist activity in the first place? Why not the victims of sexual offences? These two examples are the genesis of Amendments 186A and 186B in my name and the name of my noble friend Lady Ludford.
There are many examples of other cases where legal aid ought to be available, regardless of past convictions: family cases involving children, housing cases, Equality Act cases, and eligible cases of applications for judicial review. It is simply no answer for the Government to say that exceptional case funding remains available. The criteria for exceptional case funding are very restrictive. Broadly, they apply where convention rights are said to be infringed—principally in family, housing or benefits cases. There are very difficult hurdles to surmount before exceptional case funding is given, and there is no promise by the Ministry of Justice to make that funding more widely available.
In any case, the Government are trying to make legal aid more difficult to obtain for past terrorist offenders. It is a nonsense for them now to claim, and then rely on that claim, that it is not all that bad because exceptional case funding will make it easier for the very people they are trying to exclude from the availability of legal aid. So we put down Amendments 185 and 187 based on principle, and it is exactly the principle the Government conceded in the last group in relation to damages reduction: that legal aid would not be excluded in cases where there was no link—which we have called “no relevant factual connection”—between the past terrorist offence of which the applicant had been convicted and the current application for legal aid. I have invited the Minister and the Government to accept that principle. Were it accepted, we would not press these amendments to a vote because, although these clauses would still be unacceptable, much of the sting would be removed from them. In the letter from the noble Lord to which I alluded earlier, those amendments have not yet been accepted. I invite the noble Lord to reconsider that.
We also support Amendment 188 in the names of the noble Lords, Lord Pannick and Lord Carlile of Berriew, and my noble friend Lady Ludford, restricting the exclusion of legal aid to cases where an offender has been sentenced to more than seven years for the relevant terrorist offence. At least those are serious terrorist offences—that is not a limitation in the Bill as currently drafted.
I regret that we cannot see the benefit of Amendment 188A, put down yesterday by the noble Lord, Lord Ponsonby, on behalf of the Labour Party, after what must have been weeks of thought. It seeks a review of the impact of Clause 89 on offenders sentenced to a non-custodial sentence. The review sought is very limited and does not address the flawed principle of the proposal or its application. We will stick to our principled amendments, and I beg to move.
Lord Pannick (CB)
My Lords, I have added my name to amendments in this group. I declare my interest as a practising barrister, sometimes representing clients on legal aid. The harmony that has broken out in this afternoon’s debates does not apply to this group, although I do thank the Minister, the noble and learned Lord, Lord Bellamy, for engaging with me and others on this subject and for tabling an amendment that mitigates, to a limited extent, the mischief of Clause 89.
I will first cite some history. At the legal aid Bill’s Second Reading on 15 December 1948, the Attorney-General, Sir Hartley Shawcross, told the House of Commons that civil legal aid was so important because it would
“open the doors of His Majesty’s courts and make British justice more readily accessible to the great mass of the population who hitherto have too frequently, I am afraid, had to regard these elementary rights—as they ought to be—as luxuries which were beyond their reach”.—[Official Report, Commons, 15/12/1948; col. 1223.]
Sadly, the scope of legal aid has been much reduced in recent years by Labour Governments, Conservative Governments and by the coalition Government. But, where civil legal aid is still available, it remains a vital legal protection for individuals and their families. It is a noble scheme that goes some way, although not far enough, towards ensuring that a lack of financial resources is not a bar to access to justice. So it is objectionable in principle for the Bill to propose to remove eligibility, even subject to exceptions, for a category of people who are defined simply by the nature of the criminal offence of which they have been convicted.
Clause 89 is simply indefensible for three main reasons. First, it will apply irrespective of the seriousness of the criminal offence of terrorism of which the individual is convicted, so long as that offence is capable of being punished by up to two years’ imprisonment. The noble Lord, Lord Anderson of Ipswich, who cannot be in his place, pointed out in Committee that terrorism offences include such matters as
“inviting … support for a proscribed organisation”
and
“‘failure to disclose professional belief or suspicion about’ the commission of terrorist offences by others”.—[Official Report, 18/1/23; col. 1868.]
Now such criminal conduct is wrongful, but it may, and often does, lead to a short custodial sentence or even a community sentence. But, under Clause 89, any such conviction excludes a person from civil legal aid, subject to narrow exceptions, for 30 years, whatever sentence the court thinks is appropriate in the circumstances of the individual case. This is indefensible, and it is particularly so when, as the noble Lord, Lord Anderson of Ipswich, also pointed out, the recidivism rates for terrorist offenders are very low indeed: he gave the figure of 3%.
The second reason that Clause 89 is simply indefensible is that there is no exclusion from civil legal aid for those convicted of murder and rape, people who may receive life sentences and who normally receive very serious sentences for their offence. To single out terrorist offences, and to do so irrespective of the gravity of the individual offence, suggests to me, and I may not be the only one in this House, that the Government are more interested in political gestures than they are in pursuing any coherent principle.
The third reason that Clause 89 is simply indefensible is the one given by the noble Lord, Lord Marks: it will exclude persons from civil legal aid in cases which have no connection to the offence of terrorism of which they were convicted. A woman may be convicted of giving support to a proscribed organisation and receive a short custodial sentence or a community sentence, but 10 or 20 years later, she may be evicted, or face eviction, from her flat and face homelessness. The idea that she should be denied civil legal aid—and denied eligibility for civil legal aid—because of the terrorist conviction frustrates the very purpose of civil legal aid in a civilised society. Let us suppose the terrorist offender is beaten up in prison by prison officers—it does happen. Should he be excluded from eligibility for civil legal aid if he otherwise satisfies the relevant criteria? The idea that this proposal is brought forward by a Ministry of Justice defies credulity.
The only question in my mind is how best to remove or dilute the stain of Clause 89, and the Marshalled List contains a number of possible amendments, to some of which I have added my name: that Clause 89 should not stand part of the Bill, that it should be confined to those who are sentenced to seven years’ imprisonment or more, or that it should be confined to legal aid for a matter connected to the terrorism offence, which is the amendment preferred by the noble Lord, Lord Marks.
I am very sorry indeed that the Labour Front Bench is unwilling—as I understand it; I would welcome correction from the noble Lord, Lord Ponsonby—to support any of these amendments, and has itself tabled what can only be described as a weak amendment, Amendment 188A, which would require a review within 60 days of Clause 89 coming into force. The noble Lord, Lord Ponsonby spoke eloquently about Clause 89 in Committee; he is far too sensible and fair-minded to think personally that Clause 89 makes any sense. I assume, although I welcome correction, that the Opposition in the other place fear that they will be accused of being soft on terrorism if they support any of the substantive amendments. I think we all know what Sir Hartley Shawcross or the great Labour Home Secretary, Roy Jenkins, would have said about that.
If, as I hope, the noble Lord, Lord Marks decides to test the opinion of the House on one of these amendments, he will certainly have my support.
Baroness Ludford (LD)
My Lords, I can speak briefly because my noble friend Lord Marks and the noble Lord, Lord Pannick, have spoken forcefully on this matter. The amendments to remove Clauses 89 and 90 are in my name and signed by the noble Lord, Lord Pannick. I spoke at some length on this in Committee, and I believe it is a matter of principle—a very flawed principle, as the noble Lord, Lord Pannick, said—to bar anybody with a terrorism offence, however minor, from being granted civil legal aid.
The noble and learned Lord, Lord Bellamy, admitted in Committee that this proposal was “symbolic”— I think he said it more than once. In other words, it is gesture politics. The hope must be, as the noble Lord, Lord Pannick, just said, to paint those of us opposing it as somehow soft on terrorism, but I put it to the Government that they could be regarded as soft on murder, rape and sexual offences. They are apparently content that major offenders against women, of the likes of Wayne Couzens and David Carrick, variously guilty of abduction, rape and murder, could one day be eligible for civil legal aid, but not someone who is a minor offender under terrorism laws. If they try to throw at us in the Daily Mail that we are soft on terrorists, the Government ought to be prepared for a counter charge that they are soft on murderers and rapists. Given the huge public concern in recent weeks, months and years about the volume and the type of offences against women, I do not think that the Government are going to come out of this well.
Lord Ponsonby of Shulbrede (Lab)
My Lords, these clauses restrict access to civil legal aid for convicted terrorists, although there are exemptions to this, such as when the convicted terrorist is under 18. I welcome government Amendments 184 and 186, where the Minister has made a further concession regarding people who have been victims of domestic violence and domestic abuse.
While we support the principle that terrorists should not receive legal aid, we are concerned that application of these clauses could permanently impact those with minor offences such as vandalism. We have therefore tabled Amendment 188A in my name to create a practical mechanism to address these concerns. This would establish a statutory review of the impact on those who receive non-custodial sentences. We will not support Amendment 180 in the name of the noble Lord, Lord Marks, which would allow terrorists to receive legal aid if their applications relate to a non-terrorism offence. We believe that these most serious offenders who commit attacks on the UK should not receive support, regardless of the nature of their later civil proceedings.
There is a point of principle here, which is that terrorism is a uniquely targeted offence against the British state, and we think that that needs to be recognised. However, there are the points of the low-level offences, which I brought to the attention of the Committee, and there is also the point that was acknowledged by the Minister about people who are victims of domestic abuse. So, there are principles here, but there is a clash of principles.
Baroness Ludford (LD)
Will the noble Lord explain on behalf of the Official Opposition why, if terrorism is a unique crime against the state, he does not have a similar view of unique crimes against the integrity of the person, the integrity of women, that we have seen in the appalling crimes that have, thankfully and at last, led to convictions of the likes of Wayne Couzens and David Carrick? Those are offences against the integrity of the person, the integrity of women and the integrity of society. Why would they not be considered on a similar level to some terrorist offences, without giving any quarter to terrorism whatever, but on the lesser scale of terrorism? I think his “uniqueness” argument really demands justification.
Lord Ponsonby of Shulbrede (Lab)
I agree that it demands justification, which is that when terrorists carry out their activities, they are attacking in a random way the state itself. The attacks against women to which the noble Baroness referred are of course totally reprehensible, but do not attack the state in any way. They attack women for what they are and those offences are, of course, taken extremely seriously.
I accept that the Government’s amendments regarding civil legal aid on these offences send a message. I and the Labour Party accept and support that point. However, that needs to be ameliorated at the lower level and reviewed. That is why I will be testing the opinion of the House when we reach Amendment 188A.
Baroness Butler-Sloss (CB)
That does not clear a path in the Bill at all. I am rather shocked by Clause 89. I should like to ask the noble Lord whether he accepts the position regarding someone who was convicted of terrorism some years before and brings a civil claim, particularly, for instance, for eviction from housing. Is he or she entitled to a lawyer in order to be able to come before the court and put his or her case? If so, there is an absence of fairness if that person cannot afford the lawyer that he or she would need, and would have to represent himself or herself. That seems to be contrary to access to justice.
Lord Ponsonby of Shulbrede (Lab)
My Lords, we in the Opposition are accepting the principle that terrorism is uniquely terrible and needs to be dealt with in that way. However, my amendment calls for a review of the impact of this on certain lower-level cases.
Lord Pannick (CB)
The noble Lord is being patient, but what is there to review? Why has he not put down an amendment that simply excludes from this objectionable clause those who are convicted only in circumstances that lead to a non-custodial sentence? That surely is the logic of what he is saying. Why do we need a review?
Lord Ponsonby of Shulbrede (Lab)
We need a review because we do not know what the impact is unless we have looked at the data. It seems to be as simple as that.
Lord Purvis of Tweed (LD)
I am grateful and the noble Lord is being patient on these points. He referred to only the most serious cases and said that there was a separate issue with regard to cases that are less serious. In Committee, he used as an example a personal one: someone being convicted of the offence of graffiti. That woman—if indeed it was a woman—would no longer be able to get any legal aid support if she had been a victim of human trafficking or sexual attack. That cannot be right. Does the noble Lord agree that that is what he is supporting today?
Lord Ponsonby of Shulbrede (Lab)
As the noble Lord knows, the amendment is calling for a review to look at the practical impact of the proposed legislation. We have yet to hear from the Minister on whether the Government accept that a review is necessary.
Lord Davies of Gower (Con)
My Lords, I remind noble Lords that this is Report and not an opportunity to further debate the matter.
Lord Purvis of Tweed (LD)
It is perfectly within the rules of the Companion for noble Lords to seek points of clarification or elucidation from those who are speaking.
Lord Bellamy (Con)
I am again extremely grateful to noble Lords for their interventions and, in particular, for the support for the principle behind Clause 89 expressed by the Official Opposition, subject to the point about minor offences, which I will come to in a moment.
As a quick reminder, Clause 89 narrows the range of circumstances in which individuals convicted of specific terrorism offences can automatically receive civil legal aid services. This includes individuals convicted of terrorism offences punishable with imprisonment for two years or more as well as other offences where a judge has found a terrorism connection. It is important to note that this clause modifies but does not exclude legal aid, because there is still the route of exceptional case funding, particularly if convention rights are in issue. One of the fundamental convention rights— I think this at least partially answers the point raised by the noble and learned Baroness, Lady Butler-Sloss—is the necessity for a fair trial, in Article 6. The exceptional case funding route is still available in that regard. Phrases such as “excludes”, “denies”, “debars” and “no legal aid support” are not an accurate summary of what this clause achieves.
Lord Marks of Henley-on-Thames (LD)
I am grateful to the noble and learned Lord for giving way, but is it not the case that no one gets exceptional case funding simply because they otherwise would not get legal aid? The point made by the noble and learned Baroness was that it is unfair, so you will not get a fair trial. However, that does not ground exceptional case funding —unless the noble and learned Lord has a different view of exceptional case funding from the rest of us.
Lord Bellamy (Con)
My Lords, there might well be found applications for exceptional case funding; approximately 75% of such applications are successful each year. In any event, exceptional case funding is still available.
Viscount Hailsham (Con)
On the question of numbers and definition, what is the essential definition of exceptional case funding and how many cases have given rise to such a relief?
Lord Bellamy (Con)
I do not have the exact definition in front of me. It is a matter for the director of the Legal Aid Agency to decide. There is guidance on this, which applies in particular to cases of inquest and other areas where convention rights are at issue. I can supply my noble friend with further details in due course.
Lord Bellamy (Con)
I do not have that information with me, but about three-quarters of applications succeed.
At the risk of disturbing the atmosphere of good will that has, to an extent, prevailed this afternoon, your Lordships would have expected me to explore with the Government whether there can be any further movement on this clause and I am sorry to say that, subject to the important exception for victims of domestic abuse in relation to family and housing matters, they adhere to the clause and respectfully present it to the House.
The amendments tabled by the noble Baroness, Lady Ludford, seek to remove these clauses from the Bill altogether. The Government’s position is that the measures are necessary to ensure that our limited resources for legal aid funding are not directed towards individuals who attack society and democracy and, through their actions, commit acts of terrorism that seek to threaten and undermine the very democratic institutions which provide the benefit of legal aid. It is right that access to legal aid should therefore be subject to the provisions of this clause. Again, I understand that the Labour Party, in principle, accepts that approach.
It is certainly possible to argue, as the noble Baroness did, that if this applies to terrorism, why does it not apply to murder, the abuse of women, drug trafficking and other offences? Certainly, one can always advance an argument about where you draw the line. The line is drawn here at terrorism because of its particular threat to our society and democracy; that is the Government’s reasoning. As I have just said, it is not a blanket ban on civil legal aid because the exceptional case funding route ensures—in compliance with our obligations under the convention—that legal aid remains available when it is most needed to ensure access to justice.
Amendment 188, tabled by the noble Lord, Lord Pannick, would limit the restriction to where an offender has been sentenced to a term of imprisonment of seven years or more. I acknowledge of course the noble Lord’s concerns, but the Government oppose this amendment on the following grounds. The Counter-Terrorism and Sentencing Act 2021, introduced following the Fishmongers’ Hall and Streatham Hill terrorist attacks, expanded the sentencing powers of courts in relation to terrorist offenders and created more restrictive provisions for terrorist offenders whose offences carry a maximum sentence of more than two years. So, the two-year benchmark is already baked into legislation, and the Government feel that it is the appropriate benchmark in this instance.
The noble Lord’s seven-year sentence proposal would mean that a number of quite serious terrorism offences would escape: for example, the breach of a TPIM notice. It would also—by reference to sentencing, as distinct from the statutory definition of an offence—create quite a subjective difference between offenders when one has got more than the other: one is a bit above and one is a bit below, perhaps because one has had more previous convictions than the other, or for whatever reason. So, the Government think that the two-year benchmark in existing legislation is logical, defendable and clear and that it should remain. So, with regret, the Government are unable to accept Amendment 188 in the name of the noble Lord, Lord Pannick.
Amendment 187, tabled by the noble Lord, Lord Marks, would make the restriction not apply if the terrorism offence of which the individual had been convicted had no relevant factual connection with their application for legal aid. We quite understand the noble Lord’s intention behind that amendment, but, again, the Government cannot accept it. As the noble Lord, Lord Ponsonby, said, this is a point of principle. The Government have considered with great care the proposal put forward and consider that the fact of a conviction for a terrorist offence carrying a sentence of more than two years is a ground for restricting the route by which legal aid is granted, so we are unable to accept this amendment.
However, we have tabled government Amendments 182, 183, 184 and 186 to create an exception so that the restriction will not apply where a terrorist offender is a victim of domestic abuse and is applying for legal aid related to family and housing matters within a relevant time period. That would include such matters as pursuing protective injunctions in child custody cases, as well as the loss of a home or homelessness. Again, the question arises: if you have extended it there, why do you not extend it somewhere else? The answer, I think, is that one has to draw a line somewhere. Those are particularly serious issues in society as it stands, and that seems to the Government to be a sound basis for making an exception. It is not our position that it is relevant or wise to create any further exceptions.
Lord Purvis of Tweed (LD)
I would be grateful if the Minister could clarify a point from his earlier comments on exceptional case funding. The guidance on this on GOV.UK says:
“You could get legal aid for cases that would not usually be eligible if your human rights are at risk. This is known as exceptional case funding”.
Can the Minister clarify: under the Bill, will anybody who receives any sentence for any terrorism offence now automatically be eligible for exceptional case funding?
Lord Bellamy (Con)
No, that is not the Government’s position. There is a mechanism by way of exceptional case funding to ensure access to justice in an appropriate case.
Lord Purvis of Tweed (LD)
Then the point that the Minister referred to about the Bill is irrelevant, because the eligibility for exceptional case funding is regardless of whether the Bill is in place.
Lord Bellamy (Con)
It is not entirely irrelevant that exceptional case funding is always available for access to justice. That fact changes some of the comments that have been made about the restrictive nature of the Bill.
Lord Marks of Henley-on-Thames (LD)
My Lords, there is a sharp division of opinion on the general principles here. I share the disappointment of the noble Lord, Lord Pannick, at the position taken by the noble Lord, Lord Ponsonby, on behalf of the Labour Front Bench, particularly in view of the way the Labour Front Bench spoke in favour of the principles we enunciated in Committee. I do not propose to press Amendment 180, but when the time comes, I will seek to test the opinion of the House on Amendment 185.
Lord Bellamy
“(a) in relation to England and Wales, has the meaning given by section 75(3) of the Courts Act 2003; (b) in relation to Northern Ireland, has the meaning given by Article 12(5) of the Family Law (Northern Ireland) Order 1993 (S.I. 1993/1576 (N.I. 6));(c) in relation to Scotland, has the meaning given by section 135 of the Courts Reform (Scotland) Act 2014 and includes proceedings under the Children (Scotland) Act 1995 and the Children’s Hearings (Scotland) Act 2011 (asp 1).”Member's explanatory statement
This amendment provides a definition of “family proceedings” in relation to Scotland and Northern Ireland, as well as England and Wales.
Lord Bellamy
Member's explanatory statement
This amendment would remove the limitation on the availability of civil legal aid to an offender where the services are provided to them as victims of domestic violence in relation to a matter arising out of a family relationship in which there has been, or is a risk of, domestic violence.
Member's explanatory statement
This amendment would clarify that the Director has to determine that one or more of the additional conditions is met in order for civil legal services to be available to offenders.
Member's explanatory statement
This amendment is consequential on the amendment to this Clause inserting a new Condition G.
Member's explanatory statement
This amendment is consequential on Lord Marks’ other amendment to this clause inserting a new Condition G1. Condition G1 will become Condition H if the amendment to be moved by Lord Sharpe of Epsom inserting a new Condition G is accepted.
Lord Marks of Henley-on-Thames (LD)
My Lords, I wish to test the opinion of the House on Amendment 185.
Lord Sharpe of Epsom
“(7A) Condition G is met where—(a) the general case services are those described in paragraph 11, 33, 34 or 35 of Schedule 1 (services in relation to domestic violence and housing), and(b) the offender—(i) was or is a victim of domestic violence occurring after the relevant date, or(ii) is at risk of being a victim of domestic violence.(7B) In subsection (7A)—“domestic violence” has the meaning given in paragraph 12(9) of Schedule 1;“relevant date” means the date five years before the application date.”Member's explanatory statement
This amendment would allow offenders to access civil legal aid in relation to services relating to domestic violence and housing where they were at any time in the five years preceding their application, or at any time after their application, victims of domestic violence, or are at risk of being victims of domestic violence.
“(10A) Within 60 days of this section coming into force, a Minister of the Crown must publish a review in to the impact of this section on offenders who have been sentenced to a non-custodial sentence.”Member's explanatory statement
This amendment means that a Minister must review the impact of restrictions on legal aid on those who receive non-custodial sentences.
Lord Sharpe of Epsom
“Amendments of Terrorism Act 2000Schedule (Amendments of Terrorism Act 2000) contains amendments to the Terrorism Act 2000.”Member's explanatory statement
This amendment introduces the new Schedule inserted by Lord Sharpe before Schedule 17.
Lord Sharpe of Epsom
My Lords, Section 41 of the Terrorism Act 2000—hereafter referred to as TACT —confers a power on a police officer to arrest a person whom they reasonably suspect to be a terrorist. Under Section 41, officers are able to detain someone before charging or releasing them. The Section 41 detention clock allows them to do so for a maximum period of up to 14 days. It is possible for a person to be arrested under Section 24 of PACE then subsequently rearrested under Section 41 of TACT. This might happen, for example, when information comes to light during the investigation indicating that the offence of which the individual is accused has a terrorist connection. Under the current position, the time spent in detention under Section 24 would, in theory, not be counted towards the initial 48-hour permissible period of detention under Section 41. Though counting this time is, in fact, current operational practice, the Government are clear of the need to codify this practice and ensure that the safeguard continues to apply in all future cases. This is what this amendment does, while aligning the power relating to foreign power threat activity contained in Part 1 of this Bill.
Schedule 5 to TACT contains a power under which an officer of at least the rank of superintendent may, by a written order, give to any constable the authority which may be given by a premises search warrant issued by the court for the purposes of a terrorist investigation. The authorising officer must have reasonable grounds for believing that the case is one of great national emergency and that immediate action is necessary. We are seeking to amend Schedule 5 to TACT to create an ex post factum judicial authorisation safeguard. This will require the police to apply to the court for a warrant in relation to any relevant confidential journalistic material seized during the search that they need to retain for the purposes of a terrorist investigation. In the interests of national security, it is right that confidential material should be accessible in cases where the police can show that the action is necessary, proportionate and satisfies the legal tests in these provisions, while pursuing a terrorist investigation.
However, the Government also recognise that press freedoms are extremely important. Therefore, when such material is seized during a search that has been authorised under this urgent procedure, it is right that a warrant must be sought from a judge for its continued retention, and that an application for retention can be ex post factum, after the search itself has taken place. This approach reflects recent case law and ensures that the provisions provide appropriate protection for journalists. This amendment will also align this aspect of Schedule 5 to TACT with the equivalent urgent premises search power found in Schedule 2 to this Bill.
I turn to Amendment 192, tabled by the noble Lord, Lord Coaker. This amendment seeks to impose on the Secretary of State a duty to implement the recommendations of the Intelligence and Security Committee’s report on Russia. As noble Lords will be aware, the Government published their response to the Russia report on the day the report itself was published, 21 July 2020. Although the report did not itself enumerate specific recommendations, all the recommendations that could be identified in the report were addressed in the government response. A majority of the ISC’s recommendations had already been implemented by the Government before the report was published—for example, those covering co-ordination of HMG’s Russia work, close working with international partners and continued exposition and attribution of malign Russian activity. The then Home Secretary reiterated this in a Statement made to the House on 17 January 2022.
The Government’s response made our approach to tackling the recommendations in the report clear. By introducing effective new tools and powers for the police and security and intelligence agencies, this Bill can rightly be seen as delivering on commitments that the Government made in their response. Noble Lords will also be aware that the Government implement the vast majority of all ISC recommendations. However, there may be occasions when, for reasons including national security, we may not be able to take forward specific recommendations. We do not consider further reporting nor this amendment necessary, given the actions that the Government have already taken in response to the report.
Amendment 193, also tabled by the noble Lord, Lord Coaker, seeks to impose a duty on the Prime Minister to update the memorandum of understanding between the Government and the Intelligence and Security Committee to reflect the changes to the Government’s intelligence and security activities as a result of the Bill. Section 3(2) of the Justice and Security Act 2013 already provides for the ISC to make reports
“as it considers appropriate concerning any aspect of its functions”.
That already gives the ISC the ability to report on matters that fall within its remit so far as is consistent with the MoU—for example, to seek to avoid duplicating the work of other committees. Amending the Bill as proposed might be taken to imply that the ISC required explicit legislative nomination to propose changes to the MoU in relation to changes in intelligence and security arrangements brought in by Bills, which is not the case.
I turn to the amendment tabled by the noble Lord, Lord Wallace of Saltaire. I am aware that there are concerns about how the now closed tier 1 investor route operated—in particular, concerns that the route was used by those relying on funds that had been illegitimately acquired and those who may have posed a wider risk to the UK’s national security. It was because of those concerns that we committed to a review of visas issued under the route between 2008 and 2015. The Home Secretary made a Written Ministerial Statement on 12 January setting out the findings of that review, including that the review had identified a minority of individuals connected to the tier 1 investor visa route who were potentially at high risk of having obtained wealth through corruption or other illicit financial activity, or being engaged in serious and organised crime.
The Statement of 12 January represents the Government’s substantive response to the commitment to undertake a review and publish our findings. I am aware that some noble Lords would have preferred that the published review had included more information about specific individuals. However, we have had to act responsibly with regard to the UK’s national security. We have sought to strike the right balance between setting out the broad findings of the review and the constraints on disclosing sensitive details, which must be withheld at the request of our operational partners to protect our border, and the vital work of our law enforcement agencies.
I stress that this Government have already acted decisively regarding the risks posed by the tier 1 investor route to the UK’s national security when we closed the route on 17 February 2022. The Government have also been clear that any future visa programme in the investment space must operate on a fundamentally different premise from the previous one, with a far greater focus on skills and impacts, rather than just cash in the bank. I beg to move.
Lord Coaker (Lab)
My Lords, this is the first opportunity I have had to join other noble Lords in thanking the Minister for the various significant changes the Government have made to the National Security Bill and the improvement they have brought.
I shall speak to my Amendments 192 and 193. Again, I thank the Minister for his various amendments in this group, which are also an important step forward. I will leave the noble Lord, Lord Wallace, who has signed my Amendment 192, to speak to his Amendment 194.
Amendment 192 deals with the recommendations of the July 2020 ISC Russia report. The Minister has addressed some of those but I have one or two questions to ask him before I turn to Amendment 193, which is the real priority for me in this group. The report highlighted the fragmentation of the various bodies. The Minister has spoken about how the Government seek to address that, but we would all like to know how the supposed co-ordination of the government response to the Russia report is being monitored to ensure that it is taken forward, and that what the Government say about the need for co-ordination to tackle fragmentation is made a reality.
The report highlighted again the prominence of dodgy Russian money in London. The Government will say, quite rightly, that they have at last taken action on that. How is that progress being monitored, so that we know how effective it has been, particularly in light of Ukraine? Similarly, can the Government reassure us that the various threats to democratic processes that the report highlighted are being addressed? I do not intend to press Amendment 192 to a vote—I am really just asking about the progress made since the report was published. As the Minister said, the Government’s response was published on the same day, but the question is how we maintain the progress that we all want to see on the various issues raised.
I will try to be as brief as possible on Amendment 193. The ISC’s annual report, published on 13 December 2022, clearly laid out the need to update the memorandum of understanding. That is what my Amendment 193, on which I will test the opinion of the House, seeks to do: to update the MoU the ISC operates under to reflect the changes made by the Bill and those made over the last few years. The Minister himself referenced the various government departments that now have responsibility for different aspects of security and intelligence, a point I will come to in a moment.
Let us remember that the ISC was set up in 1994 to allow for greater parliamentary oversight of these important matters, while respecting the obvious need for national security—an issue brought into sharp focus by the excellent Saunders report on the horrific Manchester Arena attack. The current MoU is out of date. The commitment made by the Security Minister in 2013 during the passage of the Justice and Security Act—that the MoU is a live document that is easily changed—needs to be honoured.
Who oversees the increasing devolution to policy departments of intelligence and security activities? How can parliamentarians scrutinise those when only ISC members with the necessary security clearance can access classified information? The Select Committees supposedly tasked with these various oversight roles are not suitable for that reason, rather than for any reason of capability. They simply do not have the security clearance to look at classified information.
The following departments and bodies are mentioned in the Saunders recommendations: the Department for Education, the Crown Prosecution Service, the Law Commission, the Home Office and the Ministry of Justice—and that is the open part of the report; for obvious reasons, we will not know what is in the closed part. If the ISC oversees all this, as it is perhaps expected to do in light of the recommendations, how will that work with regard to the Department for Education and the various other departments?
Our committee says that the outdated MoU is a real problem, but the Government say it is not. The ISC says it is a problem, but the Government simply dismiss it and say it is not. Can the Minister explain how members of a Select Committee—let us use BEIS as an example—can oversee classified information that informs the work of a body they are responsible for if they cannot see that information? Pages 42 and 43 of the Intelligence and Security Committee annual report lists numerous departments that have various security and intelligence functions they are supposed to oversee, but they will not be able to see the classified information because they do not have the security clearance. The ISC itself cannot oversee this because that is not part of the memorandum of understanding under which it works.
The committee was told, as I said, that the Government do not feel bound by statements made by the Security Minister to Parliament in 2013. So what weight should we give to any Ministerial Statements the Minister makes if, in a few years’ time, the Government can simply say, “We don’t give any weight to what was said in 2013”? Parliamentary Statements by Ministers of the Crown are supposed to be justifications of policy. We all rely on them. Courts rely on them. Many amendments to this Bill were withdrawn earlier because of what the Minister said at the Dispatch Box and the reassurances he gave, yet the Government are saying that they no longer agree with the 2013 assurances given by then Security Minister, so they will ignore them. We are talking not about policy—I understand how policy works—but about process and the need to update it. As I say, that is very disappointing, to say the least.
Lord Wallace of Saltaire (LD)
My Lords, my name is on Amendments 192 and 194. I also support Amendment 193. I remind the Minister that the Conservative 2019 manifesto states:
“We will protect the integrity of our democracy, by introducing … measures to prevent any foreign interference in elections.”
This Bill partly does that—not in my opinion sufficiently, but it takes us some way in this direction. There are questions of transparency and of accountability, about which the noble Lord, Lord Coaker, has just been speaking, and broader questions about public information and public education into the nature of the threat and the experience which we have so far had of that threat.
I remind the Minister, that paragraph 47 of the Russia report has as its heading, “Lack of retrospective assessment”. It says:
“We have not been provided with any post-referendum assessment of Russian attempts at interference … This situation is in stark contrast to the US handling of allegations of Russian interference in the 2016 presidential election, where an intelligence community assessment was produced within two months of the vote, with an unclassified summary being made public.”
It goes on to say that it is
“the Committee’s view that the UK Intelligence Community should produce an analogous assessment of potential Russian interference in the EU referendum and that an unclassified summary of it be published.”
The following chapter talks about the high level of integration for Russian oligarchs within London society and, in particular, political parties—including mentioning penetration of the House of Lords. In effect, it recommends that some of that should be published. Very little has been, which leads to Daily Mail allegations of all sorts of things about the House of Lords, which I suspect are exaggerated, and to a lack of understanding of the nature of the threat. I understand that many of these issues might embarrass the Conservative Party because the penetration, influence and money has most evidently gone to the Conservative Party. However, I can easily imagine what a Conservative Party in opposition would be saying if it were a Labour Government who were refusing to accept the recommendations of the ISC in this respect. Accountability and public education are important. In this respect, they have failed.
On Amendment 194, I take the same view in terms of accountability and public education on the golden visa scheme, and some of that review should be published. We have heard very little about the problem of Chinese rich people in Britain. I remind the Minister that by far the largest nationality of origin of people who have come in under the golden visa scheme was Chinese. The second largest was Russian, and then there were various other nationalities, including a lot of central Asian nationalities. We need to understand a little better what the experience has been, what the sensitivities have been, and what we should learn from that. The Government, in keeping it all under wraps, are failing not only to account to Parliament about what is going on but to tell the public what sort of world we now live in and where there are sensitivities about which we should be concerned. This Bill, as a whole, is trying to sensitise some of the public to the delicacies of our international relations.
Part of our problem in Britain is that we live in a highly internationalised world, with a very large number of rich people in London living among us. My wife and I have just begun to face up to the dreaded problem of downsizing. As we go around parts of London, we see estate agents who tell us that 20% to 40% of the people to whom they have sold houses in recent years have been from overseas—from the Middle East, eastern Europe, Russia and Asia. Again, many of these are highly desirable people buying second homes in London. However, we need to know where there are problems, what we should have been thinking about, what the government have now learned and what they would like the public to understand.
Lord West of Spithead (Lab)
My Lords, I support on behalf of the ISC Amendment 193 in the name of my noble friend Lord Coaker. This amendment would update the ISC’s remit to ensure it has the power effectively to scrutinise intelligence and security activity that will be taking place across government under the new national security regime.
The ISC already has the power to oversee much of the intelligence and security activity that will take place. However, as my noble friend Lord Coaker outlined very persuasively, the ISC’s oversight has generally been eroded due to intelligence and security activities often now being undertaken by policy departments which do not generally carry out national security-related activity. He mentioned a list of them and there are many. They were not included in the ISC’s remit and they can—I have to say, they have often—excluded the ISC from looking at the material that we think we should look at. If the Government establish new teams as part of this Bill which sit outside our remit, this amendment will make sure that the memorandum of understanding is updated, and we will be able to have access to do our job for Parliament scrutinising this highly classified material.
Updating the ISC’s MoU is vital, as effective oversight of intelligence and security can be undertaken effectively only by the Intelligence and Security Committee. Unlike Select Committees, the ISC’s purpose is to oversee these highly classified matters which relate to national security on behalf of Parliament. It is therefore the only parliamentary body with the necessary security infrastructure to scrutinise the material that often underpins national security decisions. This issue of having the right material affects the staff. For example, civil servants, who are working with regular access to “top secret” have to have DV. If one looks across government at the moment, I am not sure that that is the case in some departments. They also, including Ministers, have to be read into the STRAP material, and then there is the extra physical security to store “top secret” and STRAP material. It is considerable, and I am not convinced that this is the case across government.
As my noble friend Lord Coaker mentioned, the Government understandably provided a very clear commitment to Parliament, during the passage of the Justice and Security Act 2013, that the ISC’s MoU would be kept updated. Unfortunately—we noted this in our last annual report—this has not been done. They have not stood by this commitment. I cannot understand what difficulty the Government have with this, because I would have thought it was in the interests of the Government to ensure that Parliament has an ability to do this.
I can only repeat the words of the noble Lord, Lord Coaker:
“Each piece of new legislation devolving national security matters away from bodies already overseen by the ISC should come with commensurate expansion of the ISC’s MoU”.
This has been promised by the Government and it should be done. This amendment will seek to do that if, as a result of this Bill, the Government do indeed establish new teams outside the ISC’s current remit. However, as this amendment is linked to this Bill only, it understandably has limited scope; it will not fix the lack of effective oversight in other national security legislation, such as the Telecommunications (Security) Act, where, again pretty much across this House, people argued that the ISC should have the ability to scrutinise that. But it will be a very useful start to help embed the oversight provisions, and for that reason I support this amendment.
Lord Butler of Brockwell (CB)
My Lords, I want to support Amendment 193, moved by the noble Lord, Lord Coaker. He said that he felt the memorandum of understanding had not been renewed and brought up to date for no good reason. I believe it is worse than that. I think it has not been revised for a bad reason: because the Government have taken a dislike to the Intelligence and Security Committee. They have tried to restrict its activities, I believe for two reasons. First, the Government were piqued when there was pressure to publish the Russia report before the 2019 election and they did not want that. I suspect the reason they did not want it was that they did not want the discussion which the report introduced about the involvement of Russian apparatchiks in London politics. Secondly, I believe the Government were piqued because the committee did not elect as its chairman the person whom the Government wanted. It seems extraordinary that one could say of a responsible Government that these were their motives; they are childish motives. But the consequence is that in recent times the Intelligence and Security Committee of Parliament has not been used for the purpose for which it was set up.
If the Government are not going to use the Intelligence and Security Committee properly, they should save money and abolish it. But, of course, they will not do that because Parliament set it up, Parliament thinks it is important that this House and the House of Commons should have some insight into intelligence operations, and it would be unacceptable for the Government to abolish it. But they must choose either to abolish it or to use it properly. If they are to use it properly, they must update the memorandum of understanding and, as the noble Lord, Lord West, said, use it for the purpose for which Parliament intended: to give oversight by people who are fully screened within the ring of secrecy to report to Parliament. I think this is a much more important amendment than the face of it suggests.
Lord Sharpe of Epsom (Con)
My Lords, again I thank all those who have spoken on this group of amendments, and in particular I thank the noble Lord, Lord Coaker, for his generous remarks.
In terms of the Russia report, it is simply not true that we have not implemented the report’s recommendations. As I said in my opening remarks, the Government published a full and comprehensive response to the ISC report in July 2020, which is available online and which addressed all the committee’s key themes and recommendations point by point. The Government have responded to all the recommendations that could be identified within the report. The majority of the committee’s recommendations were already being implemented by the Government before the report was published: for example, those covering co-ordination of HMG Russia’s work, close working with international partners, and continued exposition and attribution of malign Russian activity.
I would say also that, as noted in HMG’s response to the Russia report, an assessment was produced and is available at a higher classification. Noble Lords will appreciate the difficulties of producing intelligence assessments for the wider public, given the risks of putting sensitive material, including information about our capabilities and methods, into the public domain.
Lord Coaker (Lab)
Before the noble Lord moves on to a different amendment, can he answer my question? How can Select Committee members, who do not have the necessary security clearance, possibly look at and scrutinise classified material on Parliament’s behalf?
Lord Sharpe of Epsom (Con)
If they do not have the necessary security clearances, they obviously cannot, but, as I said earlier, that is part of the full consideration of the MoU and the various changes to the machinery of government that is currently under way.
Lord Beith (LD)
Has the noble Lord quite grasped the significant value of the ISC? I speak as someone who used to be on it. One aspect is its value to the Prime Minister, who gets a detailed assessment of aspects of security in circumstances where nobody else can, and he alone can do something about it. It is also an important guarantee to parliamentary colleagues in both Houses that things that cannot be disclosed are being examined by people whom colleagues trust, and that is very important in order to have some confidence that there is oversight going on.
Lord Sharpe of Epsom (Con)
I completely agree with the noble Lord. I certainly get it, and I hold the ISC in great respect, including the noble Lords in this House who are members. As I have said, the Justice and Security Act requires the Prime Minister to read the report before it is published. He gets an unredacted version, so he sees the full picture, and I have committed to take back the House’s concerns about attending the committee, via my noble friend Lord True.
If I may, I will turn to the tier 1 investor visa route, and I am afraid that I will have to repeat a number of things that I said in my opening remarks. The review of visas issued under the route took place relatively recently. A Written Ministerial Statement on 12 January set out the findings of that review, which reviewed visas issued between 2008 and 2015. That included that it had identified a minority of individuals connected to the tier 1 investor visa route that were potentially at high risk of having obtained wealth through corruption or other illicit financial activity. The Statement represented the Government’s substantive response to the commitment to undertake that review and publish its findings.
I am aware that the noble Lord, Lord Wallace, would have preferred that the published review included more information about specific individuals. I agree with his remarks about protecting our democracy and transparency. However, we have had to act responsibly in regard to the UK’s national security. We have sought to strike the right balance between setting out the broad findings of the review and the constraints on disclosing sensitive details, which must be withheld at the request of our operational partners to protect our border and the vital work of our law enforcement agencies. I think that those are perfectly reasonable points to have made in regard to the tier 1 investor visa.
I appreciate that I have not given as fulsome answers as all noble Lords would like, but in light of the answers that I have given, I request that noble Lords do not press their amendments.
Lord Coaker
“Duty to update the Intelligence and Security Committee of Parliament's memorandum of understanding(1) The Prime Minister must ensure that the memorandum of understanding between the Prime Minister and the Intelligence and Security Committee of Parliament (the “ISC”) under section 2 of the Justice and Security Act 2013 (the “MoU”) is revised to reflect any changes to the intelligence or security activities of His Majesty’s Government as a result of this Act.(2) Any revisions to the MoU under subsection (1) must be agreed between the Prime Minister and the ISC in accordance with the process set out in section 2 of the Justice and Security Act 2013.(3) Any engagement between the Prime Minister and the ISC relating to revisions to the MoU under subsection (1) must commence within the 6-month period beginning with the day on which this Act is passed.”Member's explanatory statement
This amendment ensures that the ISC’s Memorandum of Understanding is updated to reflect this Act.
Lord Coaker (Lab)
As I indicated, I would like to test the opinion of the House.
Lord Coaker
“Proscription of organisations: hostile activity on behalf of another State(1) Within six months of this Act receiving Royal Assent, the Secretary of State must publish draft legislation establishing a process for the proscription of actors engaged in hostile activity within the meaning of paragraph 1(5) of Schedule 3 to the Counter-Terrorism and Border Security Act 2019.(2) Such legislation must have reference to the existing proscription process as governed by section 3 of the Terrorism Act 2000 (proscription).”Member’s explanatory statement
This amendment requires the Secretary of State to propose a new proscription process for actors engaged in hostile activity on behalf of other states.
Lord Coaker (Lab)
My Lords, in moving Amendment 195, I will not speak at great length. The amendment requires the Secretary of State to propose a new proscription process for actors engaged in hostile state activity on behalf of other states, or indeed non- state organisations acting for a state or those who may act on their behalf.
I am moving this amendment to enable the Government to deal with any legislative problem in proscribing, among others, the Islamic Revolutionary Guard Corps, known as the IRGC. The Government will tell the Chamber and me that existing legislation can deal with it, so it is not a problem. So why is there a delay in proscribing the IRGC? If there is no problem with existing legislation, why are Foreign Office officials questioning, as reported in the Times and many other media outlets, how the IRGC can be defined as a terrorist organisation under existing legislation, given that it is a government agency, unlike most of the other groups on the list? Foreign Office officials are being reported in the media as saying that there is a problem with the legislation. The Home Office is saying—I presume this is what the Minister will say—that there is not. Where has that come from? Why is the Foreign Office briefing the media that the reason it is resisting the proscription of the IRGC is that it is not sure that existing legislation will be adequate to define the IRGC as a terrorist organisation because it is a government agency.
There is a problem here at the heart of government. My Amendment 195 seeks to say to the Government, “Here is a legislative vehicle by which you can plug a gap so that the concerns raised by the Foreign Office can be alleviated”. The Home Office and the Foreign Office cannot both be right. So we should pass the legislation as I have laid it out here. I have read—I was advised that this was the way to give the Government a vehicle to deal with any legislative problem in the proscription of the IRGC, as laid out by the Foreign Office—the various parts of the 2000 Act and the 2019 Schedule in front of me and, as much as I can read and understand them, I will have to take the Foreign Office’s word that it is because it is a government agency that there is a problem.
As I said, something is the matter here. It is the will of Parliament, as expressed time and again in this place and in the other place, that the IRGC should be proscribed, but the Government are unable to do it. Therefore, all of us should pass this amendment to get rid of the legislative barrier that the Foreign Office says stays in the way. I am not a legislative expert, but, if the Foreign Office says there is a problem, if I were in the Home Office, I would pass this amendment and call out the Foreign Office if I wanted to proscribe the IRGC. Perhaps the Minister can tell us whether the Government wish to proscribe the IRGC and whether there is a problem with the Foreign Office. Clearly there is; the Minister will not say there is, but there is.
We have seen an Iranian TV station in the UK forced to shut down because of activity from Iran. Numerous plots have been foiled, thanks to our security services. The noble Lord, Lord Evans, is here, and the noble Baroness, both former heads of MI5, so we thank them. But the Government are prevaricating on the proscription of the IRGC. My amendment, as I said, seeks to help the Home Office in its disagreement with the Foreign Office by allowing the creation of an improved and clearer process for proscribing hostile state actors.
The Government are divided in the face of this worrying issue. The Government will say they are not, so I was looking for evidence to show that they were. What did I find? In Hansard, Bob Blackman MP—not me trying to create trouble in the Lords but a Conservative MP—said:
“Clearly, the threat from the IRGC to people in this country—be they opposition journalists reporting on what is going on in Iran at the moment or UK citizens—is paramount. Foreign Office Ministers have responded to all the urgent questions the Speaker has granted and the debates we have had, but will my right hon. Friend now take the obvious step, which is supported by all political parties in the Chamber, and proscribe the IRGC in its entirety?”
Tom Tugendhat, Minister, Home Office, responds with this direct quote:
“My hon. Friend will know that it is not me”—
I am quoting this—
“he has to persuade in this matter and that there are many areas where I would like to go. I can assure him that the Government are absolutely listening to exactly what he is saying. The Home Secretary and I are as one on this”.—[Official Report, Commons, 6/2/23; col. 639.]
I am not a genius at working out what that means, but I think anybody who has been in the other Chamber or in this Chamber and has listened to the debate knows that the National Security Minister is telling Bob Blackman MP that the Home Secretary and he agree that the IRGC should be proscribed, but they have a problem with other parts of government, and those other parts of government are the Foreign Office, which believes that it should keep open communication with Iran and that proscribing the IRGC will cause all sorts of other problems, presumably around the nuclear treaty and so on and so forth.
All I am saying to the Minister is that the Foreign Office is clearly blocking the proscription of the IRGC, which is what the majority of people in this Chamber and the other think should happen, and my amendment seeks to take away from it the excuse it is using: namely, that there is a legislative problem, because the IRGC is a government agency and it would therefore be difficult under existing legislation to define it as a terrorist organisation.
Amendment 195 is extremely important, because it will allow the proscription of the IRGC and will take away from the Foreign Office the excuse that it is using to block that proscription. It is in the national security interests of this country for the IRGC to be proscribed as soon as possible. From what I just quoted, it is obvious that the Government, defined as the Home Office, agree, but the Foreign Office is stopping it. This Chamber has the opportunity, in the vote on my Amendment 195, to take away the excuse that the Foreign Office is using to stop that proscription. I hope that noble Lords will take it.
Lord Purvis of Tweed (LD)
My Lords, I am grateful to the noble Lord, Lord Coaker, for bringing this issue to the Chamber on Report. He asked very pertinent questions. If he seeks to test the opinion of the House, we shall abstain on this point, but that is not because we do not wish to hear the Minister’s answer—it is because, if we are reforming the Terrorism Act 2000 and the means by which we proscribe organisations, there are perhaps better places for a full and more fundamental review.
I have been on record as supporting the proscription of the IRGC, and I have said that this should not be done without considering the knock-on effects within Iraq and Lebanon. The Terrorism Act 2000 states that it is the Home Secretary who has the specific power to proscribe, so the questions that the noble Lord, Lord Coaker, asked are valid. If this is a Home Office Minister stating that to the House of Commons and it is the Home Secretary’s decision, what is the process by which government will now make decisions on this? I have also repeatedly called for the proscription of the Wagner Group, which is a non-government organisation but clearly has direct links with the Russian Government.
There are, of course, some grey areas. Before we reached this group, I reviewed the whole list of those proscribed organisations, and we have recently proscribed some that are clearly not linked with a Government but are organisations designed to destabilise that country’s Government. However, over the years, there have been other organisations where the lines are more blurred as to whether they are within the framework of aliases or associated organisations, which can be proscribed under the Terrorism Act 2000, even if they are not directly part of the Government of that nation. It is obviously a large step if we proscribe part of a Government, but, in the past, we have seen that, in many areas, it has not been clear who the Government of a country are. Therefore, the statutory tests that are used, and that need to be satisfied, need to be robust.
I have raised the issue of the Wagner Group since 25 April last year, and I have seen it operating with my own eyes in Sudan—some noble Lords have heard me make this case before—and it is palpably the case that its operations are terrorist in purpose and in nature and that they are directly against the national security interests of the United Kingdom and pose a threat to British nationals and our allies. I called for its proscription last year on 25 April, 23 May, 9 June, 7 July, 15 November and 21 December, and on 26 January this year.
Lord Leigh of Hurley (Con)
My Lords, I have not spoken on the Bill before, and I appreciate that we are very near the end of it, but I am moved to stand by the amendment of the noble Lord, Lord Coaker, which, as it is written, I support.
I have only voted against the Government once and, in retrospect, I think that was a mistake, in that I got confused about what the legislation said. But in this particular instance there is an opportunity for us to stand up and say that the IRGC is an organisation that should be proscribed. It is clear that large parts of government and MPs, including the Tory MPs referenced, believe that, and it is clear that a group of people in the Foreign Office take a different view. That is not a new position. I appreciate that my noble friend is a Home Office Minister and does not have a Foreign Office Minister with him but, none the less, an inflection moment is in front of us. I hope that my noble friend the Minister might find a way of supporting this amendment or explaining how he will satisfy the questions raised tonight.
Lord Polak (Con)
My Lords, my noble friend Lord Leigh led the way, and I shall follow. Along with the noble Lord, Lord Alton, I am one of the two Members of this House who have been proscribed by the Iranian regime and the IRGC, and I have consistently called for it to be proscribed by the Government.
I listened carefully to what the noble Lord, Lord Coaker, said and, if there is an issue with the organisation being part of the Government, how were we able, when Sajid Javid was Home Secretary, to proscribe Hezbollah, which had Members of Parliament in Lebanon? This was always the argument against it, but it was done because it was the right thing to do. I remind noble Lords that Hezbollah and Hamas, which we all proscribed, are in fact the unruly children of the parent body—the IRGC, which needs to be proscribed.
Lord Alton of Liverpool (CB)
My Lords, it is a pleasure to follow the noble Lords, Lord Polak and Lord Leigh, as well as my friend, the noble Lord, Lord Purvis. He is indeed a friend, but I disagree with the conclusion he reached today. I want to support the noble Lord, Lord Coaker, if he puts the amendment to a vote in the House. I salute the noble Lord, Lord Purvis, for the work he has done on both the IRGC and the Wagner Group; like him, I have seen the consequences of their actions in many parts of the world. I think that proscription is the right thing to do in some circumstances, and I believe that it is right in these circumstances.
Just before the debate on this amendment, I was at a committee meeting upstairs in Committee Room 9, where a young Iranian woman was speaking, during this special week celebrating the rights of women, about the slogan which has been used so often in the protests: “Freedom, Life and Women”. This young woman described atrocities that had occurred to her friends and her own personal experiences. She asked what we were doing about the IRGC and why the television broadcaster Iran International has had to leave this country and go to the United States because it is not safe to operate in west London. How can that be? How can it be that BBC Persian service personnel are constantly harassed as a result of doing their job, even though Article 19 of the Universal Declaration of Human Rights guarantees the freedom to transmit ideas and opinions? That freedom is not permitted by the theocracy in Iran.
As the noble Lord, Lord Polak, said, he and I have been sanctioned, along with Tom Tugendhat MP, to whom the noble Lord, Lord Coaker, referred. This is trivial in comparison to the things that happen to Iranian people and to what we have seen happening to people in the protests in Iran, which are truly shocking. It is trivial when you think about the export of drones from Iran to Russia that are now pouring down on the people of Ukraine. If we fail to take this kind of action—indeed the noble Lord, Lord Polak, and I asked this question in your Lordships’ House back on 18 January, after Alireza Akbari, a British citizen, was executed—what has to happen before they are proscribed? We asked it again on 23 February, in the Moses Room during a Question for Short Debate I tabled about relations between Iran and the United Kingdom. We specifically asked about the division between the Foreign Office and the Home Office and about what was impeding a decision being taken on this matter.
I know the Minister quite well now, and I admire and respect him. I do not expect him to give us a lot of cant from the Dispatch Box, but I hope that he will take back to the Government the feelings of so many of us in this House today who want to support the noble Lord, Lord Coaker, for the reasons he expressed so well.
Lord Evans of Weardale (CB)
My Lords, it is an honour to follow the noble Lord, Lord Alton. I have considerable sympathy for what he says in view of the appalling behaviour of the IRGC. However, this amendment, as I understand it, would open the door to the proscription of state organisations, with proscription having originally been envisaged as a mechanism principally to bear down on non-state organisations.
I wonder therefore whether the Minister, when he responds, could clarify whether the proscription of state organisations brings with it unintended consequences that would be potentially quite difficult. For instance, will we say that anybody who is a member of a hostile intelligence service—which might be proscribed—is, by definition, committing an offence? What will that do, for instance, to intelligence liaison with people who are hostile to us, which sometimes happens? Does it create problems which would not be created for a non-state organisation, because these organs will be part of a very considerably bigger state entity with which we may have to engage at some level?
I am neither in favour with nor against the amendment. I am not quite sure exactly how it would work, and I would be very grateful if the Minister could clarify those aspects.
Lord Sharpe of Epsom (Con)
My Lords, I thank all noble Lords who have participated in this very brief debate.
I think it would be helpful to give a brief overview of the concept of proscription as outlined in Part 2 of the Terrorism Act 2000. Put simply, proscription can play an important role in degrading the ability of terrorist organisations to operate effectively, and it sends a strong message that the UK is a hostile operating environment for such groups. The Terrorism Act 2000 gives the Home Secretary the power to proscribe a group if she has a reasonable belief that it is currently concerned in terrorism and it is proportionate to do so. The amendment seeks to replicate this within an explicit state threats context and requires that the Government develop and publish appropriate draft legislation.
The Home Secretary’s decisions on proscription can be legally challenged. As such, those decisions are supported by a comprehensive, evidence-led process which involves close consultation with other government departments and partners. This House will fully appreciate that developing a state threats proscription power will need to be considered fully.
Before I go on, I will refer to the IRGC, as it has come up in all contributions. I remind the House that the United Kingdom already sanctions the IRGC in its entirety. The separate list of proscribed terrorist organisations is kept under very careful review, but we do not routinely comment on whether an organisation is or is not under consideration for proscription.
In response to the illustrative points from the noble Lord, Lord Coaker, on whether there is a legislative gap in this area, I say that the National Security Bill creates a wide range of offences, tools and powers to counter state threats activity. In many respects, they cover very similar ground to a proscription-like power. For example, any person materially assisting a foreign intelligence service in their UK-related activities would commit an offence under Clause 3. Under the enhanced tier of the foreign influence registration scheme in Part 3, the Government could require the registration of all activities being conducted with those specified under the scheme. The Government will, with the agreement of Parliament, be able to specify a foreign power, part of a foreign power or an entity controlled by a foreign power. That means that those who are in arrangements with such organisations must register their activities or risk prosecution. The noble Lord, Lord Coaker, referred to my right honourable friend in the other place, the Security Minister, and I know that he is reassured by this.
However, as the Government have previously set out, we see the Bill as forming a new baseline for state threats legislation from which the statute will inevitably build over time as the threat evolves and diversifies. I am therefore grateful to the noble Lord for raising the issue and giving us the opportunity to debate it. I reassure him that I understand the reasons behind the amendment and the concern about the activities of state groups such as the IRGC. The Government of course share the noble Lord’s concerns, as was made clear in the Government’s statements on Iran International —to which the noble Lord, Lord Alton, also referred—which highlighted the potentially lethal operations of the IRGC taking place in the UK.
The amendment raises an important question of whether more needs to be done in this space, and I can reassure all noble Lords that this is a question that the Government are already considering carefully. The Government are committed to tackling all forms of state threats and to ensuring that our police and security services have the right powers to keep the UK safe.
Given, as I have said, that the measures in the Bill already have a similar effect in the state threats context to that achieved through the proscription for terrorism, we need to fully consider, alongside our operational partners, whether and how additional tools such as a state threats proscription power would add to the offences and measures in the Bill. We are committed to ensuring that any future legislation we pursue in this area has maximum effect.
Returning to the amendment itself, while it does not seek to set the ultimate scope of any legislative provision, I am afraid I am unable to accept an amendment that too tightly constrains our thinking in this important area. Linking proscription to hostile activity as defined in Schedule 3 to the Counter-Terrorism and Border Security Act 2019 would need careful consideration. I very much take on board the points of the noble Lord, Lord Evans, on this and on the scope. While that definition was considered suitable for that legislation, a different approach was taken in the National Security Bill, reflecting the differing nature of the tools and powers it contains. I would not want to pre-empt what might work best in the context of a potential proscription-like power. Furthermore, it is possible that to deliver an operational benefit, the tool may need to be created in a different way, and as such proposing a link to existing proscription processes may be unhelpful.
For these reasons, the Government cannot accept this amendment as drafted. I am also going to have disappoint the noble Lord, Lord Purvis: I am unable to comment on the Wagner Group; I am not qualified to do so. I hope the noble Lord is reassured that the Government are already looking carefully at this area and will therefore consider withdrawing his amendment.
Lord Coaker (Lab)
I thank the noble Lord for his response. Of course the Government are carefully considering this. I do not for one moment believe that they are not thinking about or carefully considering it—that would be an insult to the British Government. Of course they are concerned about national security and worried about various issues, including the one before us. That is a given. I have never accused the Government of not being concerned about it, of not considering it, of not deliberating on it, of not thinking about what they should do.
My amendment is saying that there is a real problem at the heart of government because the Foreign Office is blocking what the Home Office wants to do. There was not a word about that from the Minister; not a word about the fact that the Foreign Office is saying, “You cannot use existing legislation because it means that the IRGC”, to use that as an example, “is a government agency and not within the definition of a terrorist organisation under the legislation as drafted”. That is the core of it.
The noble Lords, Lord Leigh, Lord Polak, Lord Alton, and others who have spoken are saying that if there is a legislative problem, which the Foreign Office thinks there is, sort it out or come before this Chamber and say, “We do not want to proscribe the IRGC. We do not want to take that sort of action”. It is a perfectly reasonable thing to argue. “We do not want to proscribe the IRGC because we think the better way of sorting this problem out is to maintain open communications with the Iranian regime, to talk to them, to embrace them. We are not going to take any hard action against them because we think that undermines the policy objectives of the British Government.” It is a perfectly reasonable policy position, but I do not think that that is what is going on. I think the Government are having a row. I think there is a clash between the Foreign Office and the Home Office, and I am on the side of the Home Office. The IRGC should be proscribed, and I think that is what the majority of people in this Chamber, and in the other place, think. If so, it is the Government—or part of the Government—who are the problem, and my Amendment 195 gives them a legislative vehicle to sort it out.
What sort of a response is it, on something as serious as this, to say it is a drafting problem and “I did my best with it”? If there is a drafting problem, the Government can accept it and sort it out. They can change it, bringing in their battalions of lawyers, barristers even—I apologise to the noble Lord, Lord Pannick—to sort it out. I was a teacher; I played football; I was a politician; I am not a lawyer, but that was the best I could do, because I know how important this is. The IRGC is operating within this country, to the extent that MI5 and others are having to foil terrorist plots. It forced a TV station to shut down, and the Government’s reaction to my amendment is to say, “There is a drafting problem with it”. It really is not acceptable.
The noble Lord, Lord Evans, is right in saying that there is a balance to be struck. Well, strike a balance by accepting Amendment 195, sorting the legislation out and allowing the will of this Parliament to be expressed through its directly and properly elected Government. It is saying to the Government that the IRGC is simply and utterly unacceptable. I do not care if the legislation says there is a problem with defining it. It is a terrorist organisation. “No, it is not”, because Schedule 58 to some Act somewhere says it is not. That is ridiculous. It is the tail wagging the dog. The IRGC is causing damage in our society and the Foreign Office is blocking this, according to the Times and other media outlets, because its officials are saying there is a definition problem because it is a government agency.
The noble Lord, Lord Evans, is right that this takes us into new territory. It does, and there are problems, but all I am saying is that it cannot be an excuse for the British Government to say, “We are not going to proscribe the IRGC because the Foreign Office says there is a problem with it being defined as a terrorist organisation when it is a government agency”. What do we say to people? Bring it down from these heady clouds of the House of Lords Chamber. Bring it down to the fact that terrorist plots are having to be foiled by our security services because of its actions. An international Iranian TV station has been forced out of our country: the United Kingdom cannot guarantee the safety of people who work for a TV station, in the face of actions by the IRGC and the people who support it, and the British Government prevaricate on whether to proscribe it. It is unbelievable.
The Government are whipping their Members to vote against that proscription and the Liberal Democrats, for their own reasons, are going to abstain. So, we are going to have people voting against and abstaining on the proscription of a body that poses a very real threat to our country. Good luck with explaining that. Good luck with explaining to people why that is something Parliament should accept and why my amendment should fail. “A drafting error”. “Not properly written”. Goodness me, is that the best we can do? I wish to test the opinion of the House.
Lord Sharpe of Epsom
“ScheduleAmendments of Terrorism Act 20001 (1) Section 41 to the Terrorism Act 2000 (arrest without warrant) is amended as follows.(2) In subsection (3)(b)—(a) for the words from “Schedule 7” to “2019,” substitute “a provision listed in subsection (3A)”;(b) for “examination under that Schedule” substitute “detention under that provision”.(3) After subsection (3) insert—“(3A) Those provisions are—(a) section 24 of the Police and Criminal Evidence Act 1984;(b) Article 26 of the Police and Criminal Evidence (Northern Ireland) Order 1989 (S.I. 1989/1341 (N.I. 12));(c) Schedule 7;(d) section 1 of the Criminal Justice (Scotland) Act 2016 (asp 1);(e) Part 1 of Schedule 3 to the Counter-Terrorism and Border Security Act 2019;(f) section 27 of the National Security Act 2022.”(4) After subsection (8) insert—“(8ZA) Subsection (8A) applies where— (a) a person is detained under this section in hospital, or(b) a person detained under this section is removed to hospital because the person needs medical treatment.”(5) In subsection (8A)—(a) for the words before paragraph (a) substitute “Where this subsection applies”;(b) in paragraph (a) after “hospital or” insert “(where this subsection applies by virtue of subsection (8ZA)(b))”;(c) in paragraph (b) after “hospital or” insert “(where this subsection applies by virtue of subsection (8ZA)(b))”.2 (1) Schedule 5 to the Terrorism Act 2000 (terrorist investigations) is amended as follows.(2) In paragraph 3 (power to search premises within cordoned area)—(a) in sub-paragraph (1) for the words from “Subject” to “superintendent” substitute “A constable”;(b) in sub-paragraph (2) for the words from “who” to “paragraph” substitute “may exercise the power in sub-paragraph (1) only”.(3) In paragraph 15 (search and seizure in urgent cases: England, Wales and Northern Ireland)—(a) at the end of sub-paragraph (1) insert “(subject to sub-paragraph (1A))”;(b) after sub-paragraph (1) insert—“(1A) An order under this paragraph giving the authority which may be given by a search warrant under paragraph 11 does not authorise a constable to retain confidential journalistic material.(1B) “Confidential journalistic material” means material which is excluded material by virtue of section 11(1)(c) of the Police and Criminal Evidence Act 1984.”(4) After paragraph 15 insert—“15A “(1) This paragraph applies where confidential journalistic material is seized by virtue of an order under paragraph 15 giving the authority which may be given by a search warrant under paragraph 11.(2) A constable may apply to a Circuit judge for the issue of a warrant under this paragraph.(3) An application under sub-paragraph (2) must be made as soon as reasonably practicable after the material is seized.(4) The judge may grant an application under sub-paragraph (2) if satisfied that conditions 1 to 3 are met.(5) Condition 1 is that the warrant is sought for the purposes of a terrorist investigation.(6) Condition 2 is that there are reasonable grounds for believing that the material is likely to be of substantial value, whether by itself or with other material, to a terrorist investigation.(7) Condition 3 is that there are reasonable grounds for believing that it is in the public interest that the material should be retained having regard to the benefit likely to accrue to the terrorist investigation if the material is retained.(8) A warrant under this paragraph is a warrant authorising the retention of confidential journalistic material.(9) A warrant under this paragraph may impose conditions on the retention and use of the material.(10) If the judge does not grant an application for the issue of a warrant under this paragraph in relation to any of the material to which the application relates, the judge may direct that the material is—(a) returned to the person from whom it was seized, or (b) destroyed.(11) “Confidential journalistic material” has the same meaning as in paragraph 15.”(5) In paragraph 18 (application to Northern Ireland) before paragraph (f) insert—“(ea) the reference in paragraph 15(1B) to section 11(1)(c) of the Police and Criminal Evidence Act 1984 is to be taken as a reference to Article 13(1)(c) of the Police and Criminal Evidence (Northern Ireland) Order 1989 (S.I. 1989/1341 (N.I. 12)),”(6) In paragraph 31 (search and seizure in urgent cases: Scotland)—(a) at the end of sub-paragraph (1) insert “(subject to sub-paragraph (1A)).”;(b) after sub-paragraph (1) insert—“(1A) An order under this paragraph does not authorise a constable to retain confidential journalistic material.(1B) “Confidential journalistic material” has the same meaning as in the Investigatory Powers Act 2016 (see section 264(6) and (7) of that Act).”(7) After paragraph 31 insert—“31A “(1) This paragraph applies where confidential journalistic material is seized by virtue of an order under paragraph 31.(2) The procurator fiscal may apply to a sheriff for the issue of a warrant under this paragraph.(3) An application under sub-paragraph (2) must be made as soon as reasonably practicable.(4) The sheriff may grant an application under sub-paragraph (2) if satisfied that conditions 1 to 3 are met.(5) Condition 1 is that the warrant is sought for the purposes of a terrorist investigation.(6) Condition 2 is that there are reasonable grounds for believing that the material is likely to be of substantial value, whether by itself or with other material, to a terrorist investigation.(7) Condition 3 is that there are reasonable grounds for believing that it is in the public interest that the material should be retained having regard to the benefit likely to accrue to the terrorist investigation if the material is retained.(8) A warrant under this paragraph is a warrant authorising the retention of confidential journalistic material.(9) A warrant under this paragraph may impose conditions on the retention and use of the material.(10) If the sheriff does not grant an application for the issue of a warrant under this paragraph in relation to any of the material to which the application relates, the sheriff may direct that the material is—(a) returned to the person from whom it was seized, or(b) destroyed.(11) “Confidential journalistic material” has the same meaning as in paragraph 31.””Member's explanatory statement
The amendments to section 41 of the Terrorism Act reflect provision in Clause 27 of the Bill. The amendments to paragraph 3 of Schedule 5 amend powers to authorise searches. The remaining amendments to Schedule 5 restrict powers to retain confidential journalistic material to reflect provision in Schedule 2 to the Bill.
Lord Sharpe of Epsom
“Investigatory Powers Act 2016 (c. 25)
10 (1) Schedule 3 to the Investigatory Powers Act 2016 (exceptions to the exclusion of certain matters from legal proceedings) is amended as follows.(2) After paragraph 8 insert—“Proceedings under Part 2 of the National Security Act 20238A (1) Section 56(1) does not apply in relation to—(a) any proceedings which are relevant proceedings within the meaning of Part 2 of the National Security Act 2023 (see section 63(1) of that Act), or(b) any proceedings arising out of any proceedings within paragraph (a).(2) But sub-paragraph (1) does not permit the disclosure of anything to—(a) any person, other than the Secretary of State, who is or was a party to the proceedings, or(b) any person who—(i) represents such a person for the purposes of the proceedings, and(ii) does so otherwise than by virtue of an appointment as a special advocate under Schedule 10 to the National Security Act 2023.”(3) In paragraph 20(2) (proceedings for certain offences)—(a) after paragraph (h) insert—“(ha) an offence under section 1 or 3 of the National Security Act 2023 relating to any information, document or other article which, or an offence under section 12 of that Act relating to any asset which—(i) incorporates, or relates to, the content of any intercepted communication or any secondary data obtained from a communication, or(ii) tends to suggest that any interception-related conduct has or may have occurred or may be going to occur;(hb) an offence under section 18 of the National Security Act 2023 in relation to an offence falling within paragraph (ha);”(b) in paragraph (i), for “(h)” substitute “(ha)”.”Member's explanatory statement
This amendment makes consequential amendments to the Investigatory Powers Act 2016.
“Counter-Terrorism and Border Security Act 2019 (c. 3)
10 In paragraph 62 of Schedule 3 to the Counter-Terrorism and Border Security Act 2019 (review of Schedule 3 by Investigatory Powers Commissioner) omit—(a) sub-paragraphs (1) to (5);(b) sub-paragraphs (7) and (8).”Member's explanatory statement
This amendment omits provision for the review of Schedule 3 to the Counter-Terrorism and Border Security Act 2019 by the Investigatory Powers Commissioner. It is superseded by new Clause (Reviews: general), which provides for reviews of Schedule 3 by the independent reviewer appointed to review Parts 1 and 2 of the Bill.
Lord Sharpe of Epsom
“(za) regulations under section 64(1B);”Member's explanatory statement
This amendment provides for the affirmative procedure to apply to regulations under Clause 64(1B), which is inserted by Lord Sharpe’s amendment to Clause 64, page 45, line 19.
“(aa) regulations under section 67(3B);”Member's explanatory statement
This amendment provides for the affirmative procedure to apply to regulations under Clause 67(3B), which is inserted by Lord Sharpe’s amendment to Clause 67, page 46, line 36.
“(ab) regulations under section 79(1)(a);”Member's explanatory statement
This amendment provides for the affirmative procedure to apply to regulations under Clause 79(1)(a) (provision about the publication of information provided to the Secretary of State under Clause 74 or 75).
Member's explanatory statement
This amendment is consequential on the additional regulation making powers in relation to specified persons conferred by Lord Sharpe’s amendments to Clause 64, page 45, line 19 and Clause 67, page 46, line 36.
Lord Sharpe of Epsom
Member's explanatory statement
This amendment is consequential on the new Schedule inserted by Lord Sharpe before Schedule 17.
Arrangement of Business
The Earl of Courtown (Con)
My Lords, as this Question for Short Debate is now the last business, it will stretch to 90 minutes. Apart from the opening speech and the speech from my noble friend the Minister, all noble Lords now have four minutes.
Israel and Palestine
(1 year, 9 months ago)
Lords ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Lord Harries of Pentregarth
To ask His Majesty’s Government what steps they are taking, with international partners, to calm the violence and build a lasting peace between the government of Israel and the Palestinian people.
Lord Harries of Pentregarth (CB)
My Lords, in 1962 I had the great privilege of spending a term studying in Jerusalem. Signs of conflict were everywhere; there was barbed wire across the streets and pockmarks in the walls made by bullets from recent fighting. The time was tense and difficult. But now, more than 60 years later, the situation is even worse—the tension greater, the violence more bitter. Some of us will remember that the two great political issues in 1962 were the Cold War and apartheid. We could see no end to the Cold War, but in 1989 the Berlin Wall was torn down. We did not expect apartheid to come to an end without massive bloodshed, but in 1994 Nelson Mandela was elected peacefully president of South Africa. Is it not a terrible indictment of leadership on all sides and the whole international community that still nothing very much has happened, and that the situation is in fact much worse now than it was in 1962? The hopes of Oslo in 1993 and the hopes of so many since then have come to absolutely nothing.
It is understandable that the eyes of the world have been elsewhere this year—on Ukraine, the women of Afghanistan and Iran, and the earthquakes in Syria and Turkey—but during this time tension in Israel has risen and violence has increased. In January, a Palestinian boy throwing stones in the West Bank was killed. Then in a raid by security forces, nine Palestinians were killed in Jenin. On the same day, a 13 year-old boy shot seven Israelis outside a synagogue in east Jerusalem. The following day, rockets were fired by Hamas from the Gaza Strip and there was a further exchange of fire. A few days later, there was a major raid in Nablus, in which 10 Palestinians were killed and more than 100 injured. A few days after that, a Palestinian killed two Israeli settlers. This was followed by settlers running amok, torching homes and cars, with the IDF apparently unwilling or unable to stop it. Once again, families are left bereaved, young Palestinians are left even more desperate, and more Israeli peace-lovers are left in despair at the present Government.
After that outbreak of violence, Israeli and Palestinian delegates made a joint commitment to take immediate steps to end it. This followed talks in Aqaba between the parties, alongside the United States and Egyptian officials. The announcement said that Palestinian and Israeli sides
“affirmed their commitment to all previous agreements between them, and to work towards just and lasting peace”.
Both sides also committed to immediately working to end unilateral measures for a period of three to six months, which included an Israeli commitment to stop discussion of any new settlement units for four months and to stop the authorisation of any outposts for six months. The parties agreed to reconvene in Egypt in March this year—this month—to determine progress made towards these goals. However, this statement was immediately called into question by some members of the Israeli Government, including Mr Netanyahu himself, who denied that there would be a settlement freeze or any kind of pause.
My first question for the Minister is: what role are our own Government playing in this process? Is he in a position to clarify what has been agreed and what progress, if any, has been made with a view to the reconvened meeting later this month?
The reason I asked for this debate is not just the recent level of violence, severe though it has been, but because there will continue to be violence unless there is hope. At the moment, there is no hope. Where is the hope in the situation? What sign of hope can be given to young Palestinians, or to those Israelis who have lost their family or friends and who have sincerely wanted and worked for a solution? Studies of those who survived harsh imprisonment during World War Two showed that the people most likely to survive were those who had something to live for—for example, a hope of seeing a loved one again. Without hope, people become desperate. Since Oslo in 1993, the hope has been held out of a two-state solution. Recently, our Government have once again committed themselves to that solution, as have various other international bodies, the UN and the EU. However, at the same time, I have read—as I am sure your Lordships have—commentators saying that the two-state solution is dead and that nothing will now revive the peace process. Is it really dead? If it is, what hope can be given?
The idea of a single state, once dismissed by most people, has surfaced again. Is this a serious idea—a single state with equality for all its citizens? In a recent article, Jonathan Freedland, while not arguing for this, nevertheless pointed out that overall turnout in the November election topped 70% but among Israeli Arabs it was just 53.2%. He argued that if Arabs had voted in the same numbers as Jews, Netanyahu would not be Prime Minister. He suggested that to remedy this will require,
“first, a wholesale change in mindset on the part of the mainstream Israeli left, one that at last listens to Palestinian demands for equality inside the green line and an end to occupation beyond it. That could, in turn, prompt a sea change among Palestinian-Israelis, a recognition that a de facto boycott of Israel’s political institutions might have made sense when a separate Palestinian state seemed on the horizon, but makes no sense now. It only strengthens those bent on making their lives worse.”
I am, of course, aware of the arguments on this issue, but I will not enter into them now. My point is about the total lack of hope in anything at the moment. I believe it would be quite wrong simply for the international community to shrug its shoulders and assume that nothing can be done. While the recent meeting in Jordan to see what might be done in the immediate term to reduce the level of violence is to be welcomed, it is not enough.
I recently asked a friend living in Jerusalem if he could find any hope in the present situation. He wrote that he looked to the individuals committed to peace and reconciliation, “the mother of an Israeli soldier killed at a checkpoint in the Second Intifada joining a group of bereaved from both sides of conflict and becoming best friends with a Palestinian man whose daughter was killed at a checkpoint by an Israeli soldier, or the man at the Tent of Nations who is in the longest-running legal dispute to keep the family olive farm despite beatings, intimidation and Kafkaesque legal dealings”. His mantra was: “We refuse to be enemies”. These are people who belong to the Parents Circle-Families Forum—PCFF—a body that I have long admired. This group is made up of parents, Jewish and Palestinian, who have all lost family members in the conflict. However, apparently even the PCFF is being threatened with tough new restrictions on its activities by Israel’s recently elected coalition Government. They are planning to curtail the organisation’s access to high schools where, for years, bereaved Israeli and Palestinian families have been allowed to meet groups of teenagers before they are called up for any service. If this is the case, I hope that our own Government will vigorously protest.
So, in the name of those Israeli and Palestinian parents, we cannot allow the present situation to continue fluctuating between simmering violence and its inevitable explosion forever. Meanwhile, as we are all aware, we have to face the fact that, as settlements continue to grow in number and size, the viability of a Palestinian state gets more and more called into question; the Palestinian position, already weak, becomes even weaker; and young people on both sides become even more desperate.
Let us have some honesty in the international community. Is the two-state solution dead? If not, let us have some real initiatives for reviving it. In 1978, that good man President Carter, who is now in his last days in a hospice, called together Prime Minister Begin and President Sadat to agree a framework for peace in the Middle East. Where is the Jimmy Carter for our time? We cannot simply shrug and resign ourselves to the fact that this will go on forever. A new initiative is needed. I beg to move.
Lord Leigh of Hurley (Con)
My Lords, let me be the first to congratulate the noble and right reverend Lord, Lord Harries of Pentregarth, on the well-worded title of this debate and on his opening remarks. He is a most distinguished cleric, and it is very fitting that a cleric should choose to put a plea for peace in the title. He will be aware that one of the core prayers we recite in the Jewish religion, which some people recite three times a day, has the words:
“He who makes peace in his high places, may he make peace upon us and upon all Israel”.
Peace is the most sought after of all man’s objectives in our prayers. So I am grateful to him for moving this debate.
I am also grateful to the authorities for moving it from yesterday, when I believe it was originally scheduled to take place, because yesterday was the Jewish festival of Purim, where, incidentally, and most unusually, a requirement is to drink a lot of alcohol. So it would not have been a great day for me to be standing up in your Lordships’ House. As with many Jewish festivals, we celebrated the fact that evil people did not overthrow and kill the local Jewish population, as they sought to do. We were saved by a clever bit of manoeuvring by Esther, a Jewess who achieved favour in high places. It is a longer story, but we will leave it at that.
None the less, Jewish people have always been on the defensive and, not surprisingly, concerned for their own survival. When I was in Manchester city centre recently with my youngest daughter, we passed a demonstration with a red, green, black and white flag. They were chanting, “From the river to the sea, Palestine will be free”. My daughter asked me, “What does that mean?” I had to explain to her that this was a group of people on UK soil seeking to wipe out the Jewish state of Israel. Israel faces similar threats now, some organised and promoted by Hamas and PFLP, and some random, such as the killing last month of the brothers, Hillel and Yagael Yaniv.
I move the point of the debate. What can be done? I know Jerusalem best, because I am chairman of the Jerusalem Foundation in the UK. I will be there next week, running a 10k around the city, with citizens from every background—Jewish, Muslim, Christian and no faith—all running together. It is a most uplifting experience. We are working hard to make Jerusalem a better place. I am not convinced that the UK Government, or any Government, can do as much as we would like in the cause of peace. It is the people, the individuals, who can do so much.
We are working hard to calm tensions there. For example, with British donors’ money, we are building two large community sports centres and swimming pools in East Jerusalem. British donors are paying for a project with the municipality to train new Arabic-speaking social workers, who will help thousands of Arab families.
We continue to abhor the fact that at least 31 Palestinian schools are named after terrorists and, likewise, that an Israeli Minister seems to call for the wipeout of a Palestinian village. This was rightly condemned by the head of the IDF and others in Israel.
Initiatives such as those taken by British donors, as I have described, can make a difference. In a recent poll conducted by the Washington Institute in East Jerusalem, half of the Palestinians asked said that, if they had to make a choice, they would prefer to become citizens of Israel than of the Palestinian state. Their recent experience of access to Israel’s healthcare, social welfare, benefits and jobs is making a difference. We need to ensure that this direction of travel is continued.
Lord Turnberg (Lab)
My Lords, I too thank the noble and right reverend Lord, Lord Harries, for introducing this important debate in such a fair, if somewhat sobering, way. It is a sobering topic.
Once again, the vicious cycle of violence has rapidly spun out of control: there have been 550 terrorist attacks, and too many Israeli and Palestinian deaths, in the last 12 months alone. It is easy to get involved in the blame game. Heaven knows there is enough blame to go around—we might hear some tonight. Tit for tat has taken over. Reconciliation has been replaced by retribution and revenge after generations of mistrust and antipathy. So is there anything at all that we in the international community can do that will influence those on the ground?
As we have heard, Israel agreed to stop all West Bank settlement activity for six months at the recent meeting of security officials in Aqaba. Of course, that was immediately derided by Hamas and right-wingers in the Israeli Government. But that should not detract from what was a remarkable step for the first time in many years.
Sadly, I fear that brave speeches by the US and UK ambassadors at the UN have had little effect on the ground. Of course, we should not give up, despite the limited response. So where can any external influence have any effect? The USA has historically had some influence on Israel. Clearly, we should be supporting that, and our friends in the Middle East—Jordan, Egypt, Saudi Arabia and the UAE—who may have been, and one hopes should be, able to influence the Palestinians. We should influence both sides.
However, we seem to have ignored one resource, which should be called upon now: the Arab citizens of Israel, who make up over 20% of the population. We have heard a little about them. They overwhelmingly want to see a two-state solution, according to all of the polls, but they live uncomfortably between the two sides. They could form an invaluable link as go-betweens between the warring parties. Have our Government had any discussions with the Israeli authorities about encouraging them to engage fully with their Israeli Arab friends, many of whom occupy high office in Israeli society?
Baroness Janke (LD)
My Lords, having read the extensive coverage in the newspapers over the weekend, I feel that it is important to point out that Israel today has the most extreme Government in its history. Haaretz calls it a “Government of darkness”, as right-wing politicians from parties that are overtly Jewish supremacist, anti-Arab, anti-women and homophobic dominate it. I was impressed by the accounts given in the Guardian on Friday by Simon Schama and Margaret Hodge, documenting some of the things happening under the new Israeli Government. These extremist Ministers now have major powers over the Occupied Territories, as authority has been transferred from military to civilian rule, contravening international law on occupation. I hope that the Minister will enlighten us with the Government’s view on that.
A Haaretz editorial also states:
“In light of the fact that there is no intention of granting civil rights to the millions of Palestinians living in the West Bank, the result of the agreement is a formal, full-fledged apartheid regime.”
Some of us from Parliament went on a recent visit—not so recent now, it was actually in November. I have to say that I was impressed by those on both sides who were working together for solutions and peace. For example, there were the heroic doctors working in the underresourced Palestinian hospital in Jerusalem. There was the courage of relief and grass-roots support agencies, many of which are now banned organisations—and many of them actually Israeli—which were also working for peace. I pay tribute to all of them for the work that they do and the risks they take with their own well-being and that of their families. There was the determination of a family in the Hebron hills living in a cave, their previous homes having been demolished so many times that they believed that that was the only way they could remain living in their current home.
But in spite of this, a massive expansion of settlements is planned, even though there is increased settler violence, which we were told has certainly been ignored by the authorities. In the Observer on Sunday there was an article about an olive farmer. It was headlined:
“They ransack our village for sport.”
That is one farmer’s story of settler violence. Palestinian homes have been demolished and when we were there a primary school funded by foreign aid was demolished to accommodate the settlers’ demands for more land. There is a huge sense of injustice as families have who lived there for generations are evicted to give more land to incoming settlers who rampage their villages.
I agree with the noble and right reverend Lord, Lord Harries, that hope is very much lacking at present, certainly in the Occupied Territories. I hope that we here can promote action by our own Government that can work to support change. Humanitarian support and medical supplies are urgently needed. Funding for the relief agencies and grass-roots organisations which deliver the aid and support is also needed. I hope that the example of Simon Schama and Margaret Hodge will mean that supporters of Israel who want to see it prosper will see that what is being done at the moment is counter to that. The noble Lord, Lord Leigh of Hurley, talked earlier about the work that goes on in Jerusalem. I know much good work of this kind that goes on, but it is ruined when we get the provocative statements and the ambitions, particularly of the Ministers, Gvir and Smotrich.
As I said, I hope that the Government will lead diplomatic pressure where violations of human rights and international law are taking place on both sides and that we can, as the noble and right reverend Lord, Lord Harries, said, find some leader to reinitiate the peace process and work for a just and lasting peace.
Lord Hannay of Chiswick (CB)
My Lords, it would be quite wrong if this House simply overlooked the worsening security situation in Israel and the Occupied Territories, so my noble and right reverend friend Lord Harries is to be congratulated on obtaining this debate.
To those like me who have spent a substantial part of their professional life working for a two-state solution to the Israel-Palestine dispute and working to give effect to UN Security Council Resolution 242, which was, of course, drafted and sponsored by Britain, and its successor resolutions, these are dispiriting days. There is an Israeli Government who have turned their back on that solution, a Palestinian Authority which has no new contribution to make, activists in Gaza whose sole response to any rise in tension is to fire rockets into Israel, and a slide, once again, towards violence right across the region in both Israel and the Occupied Territories.
It is easy to despair, but the hard fact is that there will be no stability and security in that region on the present basis—no number of Abraham accords, no amount of crackdowns by Israeli forces in the Occupied Territories, no expansion of illegal settlements will bring that security and stability about.
What should Britain with its historic responsibilities for the state of the region be doing in these unpromising circumstances? Faced with Israeli intransigence to even talking about a two-state solution, we should make it clear that we will legitimise nothing less than that. We should do so by recognising a Palestinian state. Plenty of others have already done so.
Our policy of endless prevarication over recognition is a bankrupt one. It was defensible while negotiations were under way—and I myself defended it for many long years—but no longer even faintly credible. Will that bring about a solution? Of course not. But it would show that we will not be a party to any abdication of responsibility for the present drift toward tit-for-tat violence and a rejection of international law.
In addition, I hope we really will sustain our humanitarian support for UNRWA and for the suffering people in the Occupied Territories and Gaza. Allowing cuts in our aid programme to fall on them would be both shameful and counterproductive, and I hope the Minister can give us the latest FCDO commitments on those programmes which have been so important over the years.
We should engage at every level with the Government of Israel and with its people to demonstrate that we continue to value their state and their democracy, however much we may disagree with some of their present policies. That is no easy path to tread, but it is still worth while in my view.
Lord Stone of Blackheath (Non-Afl)
My Lords, all these problems in the Middle East are my fault. In 1967, I was a volunteer in the Six Day War, so I started all this mess. However, in the following decades, I have been trying to help make peace. At Marks & Spencer, we encouraged Israeli manufacturers to work with Egyptian, Jordanian and Lebanese companies and become partners with one another. With the help of Tony Blair, I got Marks & Spencer, Sainsbury’s and Tesco to buy homegrown foods and textiles from the West Bank and Gaza to help them to grow. But those and many other projects did not create peace either, so I am still to blame.
I have three questions for the Minister. First, will the UK Government recognise the state of Palestine? This would then mean that rather than a recognised state—Israel—trying to negotiate with a disparate people, the Palestinians of the West Bank and Gaza, you would have two states negotiating about their borders and citizenship et cetera, and it would make it more fair and viable. It could change everything if our country, that issued the Balfour Declaration and was a mandate authority, would agree to extend recognition to a Palestinian state.
Secondly, will the UK make good on its commitment as the first country on earth to endorse the concept of creating an international fund for Israeli-Palestinian peace, which can engage a new generation, at scale, in the project of peacebuilding rather than allowing them to fall into their current despair and enmity, as the noble and right reverend Lord, Lord Harries, described?
Thirdly, will the UK signal its strong opposition to any legislation that taxes, chills or delegitimises the work of Israeli-Palestinian civil society, which this Israeli Government are threatening to do? Also, in May at the G7 leaders’ communique in Japan, let us please push for language that clearly shows to the governing authorities in the region that civil society is a “red line” for the international community.
Finally, I suggest that the Minister meets John Lyndon of the Alliance for Middle East Peace—ALLMEP—who is doing great work in the field; Gershon Baskin, who has been talking with both sides for decades, and Tony Klug, who has written many wise briefs on how to resolve these issues.
I close by mentioning the late Rabbi David Geffen, who died this weekend and was the founder of Loving Classroom, a project that is teaching children in Arabic, Hebrew and English in schools across the world to love, respect and befriend children on all sides. Can we support this project by adopting Loving Classroom in all schools in the UK, where it is already making a difference in several schools?
Lord Polak (Con)
My Lords, I refer the House to my non-financial registered interest as president of Conservative Friends of Israel. I also pay tribute to the noble and right reverend Lord, Lord Harries, for obtaining this debate. I recall the wonderful work he did as chairman of the Council of Christians and Jews.
I am concerned about comments in a recent letter from the Foreign Secretary effectively boycotting an Israeli Minister. It is not about whether one agrees with Minister Ben-Gvir. We work with all elected Israeli politicians, and we must be very careful not to go down a route of suggesting that our support for Israel is somehow conditional on any individual politician.
Could we be holding Israel to a different standard from other countries? It seems that we are fine working with Prime Minister Meloni’s extreme right-wing Italian Government and with some kleptocracies and dictatorships, but working with elected officials who could be tried and found guilty in democratic Israel is somehow not fine.
No one wants an escalation of the recent troubles. The discussions in Aqaba that have been mentioned were important, and the comments by the Israeli Finance Minister have been universally condemned, led by Prime Minister Netanyahu and President Herzog, who stated that the idea of Israeli citizens taking the law into their own hands, rioting and committing violence against innocent people, is wrong. It will always be wrong.
The question posed by the noble and right reverend Lord, Lord Harries, is about building a lasting peace between the Palestinian people and the Israeli people. He spoke eloquently, looking for hope. There is a peace train that has left the station and is making its way across the region. The Abraham Accords train has visited Manama in Bahrain. It has travelled through Dubai and Abu Dhabi in the UAE and meandered through the hills of Jerusalem in Israel. It has reached Rabat in Morocco, and the journey has continued to Khartoum in Sudan. It is possible that the train is making its way to Riyadh in Saudi Arabia.
I urge my noble friend the Minister to ensure that His Majesty’s Government will join the Negev Forum for regional co-operation, as has been suggested by my friend the Foreign Minister of Bahrain, who I met only last Friday. Can my noble friend tell me what we are doing to get that train to visit Ramallah? What are the Government doing to ensure that the Palestinians purchase a ticket to join this remarkable and exciting initiative? For the sake of all peoples in the region, and especially for their own children, the Palestinians must not miss the train and should be urged to get on board.
Baroness Ramsay of Cartvale (Lab)
My Lords, like others I thank the noble and right reverend Lord, Lord Harries, for procuring this debate and for the way he phrased the topic.
Does the Minister agree that the recent upsurge in violence in Israel and the Palestinian territories is a tragic reminder to us all of the need for a political process leading to a two-state solution? A further complicating factor now is the election in the only real democracy in the region, Israel, of the most right-wing and nationalist Government in its history.
Does he agree that there are barriers to peace outside the control of Israel or the Palestinians? First and foremost is Iran, a state sponsor, supplier and facilitator of terrorism, from Hezbollah in Lebanon to Hamas and Palestinian Islamic Jihad in the Gaza Strip and cells in the West Bank. I know that my next question was discussed at the end of the Report debate on the Bill earlier this evening, but I will ask it again because it is far too important not to repeat it and repeat it again: when will the IRGC, the armed wing of Iran’s terrorism, be proscribed in the United Kingdom?
Given the UK’s deep and historic ties in the Middle East, it is disappointing that it was not even at the table in 2020 in negotiations on the normalisation of relations between Israel and four Arab states. What plans do the Government have, if any, to support further normalisation between Israel and the Arab world? Lastly, when will the UK contribute to the international fund for Israeli-Palestinian peace and follow up its very warm words of support for the fund with a concrete contribution?
Baroness Ludford (LD)
My Lords, I also thank the noble and right reverend Lord, Lord Harries, for this timely debate. For 45 years I have been a friend of Israel as a homeland for the Jewish people—an expression I much prefer to “Jewish state”. It is a long story as to why I first connected with the country. Suffice it to say that it started by chance, as I am not Jewish and have no family connection to Israel. I found myself celebrating Purim in a kibbutz in March 1978. I have just looked it up on Wikipedia; it was 22 and 23 March 1978.
What attracted me and kept me engaged were the values of the State of Israel and its right, which I very strongly support, not only to exist but to exist in security, without its neighbours and others wishing and trying to wipe it off the map—so I have ended up as a vice-president of Liberal Democrat Friends of Israel. There is certainly inequality and discrimination within Israel against the Arab minority, but it is emphatically not an apartheid state. Israel is entitled to take military action by the IDF to defend itself and its citizens from attack and, although there have been excesses and wrongdoing by the IDF, the motivation for its action is qualitatively different from the terrorist attacks on civilians by Palestinian militants and the glorification of terror, including by the Palestinian Authority.
I am a friend of Israel but I am no friend of the present Prime Minister, Mr Netanyahu. I never have been, because I am a liberal and he is increasingly like Trump, as shown by the attempts to ram through highly controversial and self-serving changes to the courts. With an undemocratic and corrupt Palestinian Authority, both Israelis and Palestinians are very badly served at present. The present coalition Government Mr Netanyahu leads go way beyond even the tolerable, containing far-right extremists and racists, and they are perpetrating or being apologists for some utterly disgraceful actions and rhetoric about Palestinians and Arab Israelis. The Liberal Democrat Friends of Israel are appalled at the violent attacks by settlers on Palestinians in Hawara, and indeed any settler violence.
Israelis opposed to this far-right Government give me hope about rescuing the soul of their country, with thousands of protesters on the street every week. Prominent among them are members of the Liberal Democrats’ sister party, Yesh Atid, but people from all sections of Israeli society are taking part.
I first said almost 20 years ago that I believed that illegal settlements and being an occupying power were poisoning and politically corrupting Israel, as well as oppressing Palestinians. My visits to Israel and the West Bank last autumn confirmed my view, but even recognition of a Palestinian state does not obviate the need for negotiations. The route to peace and any hope of two states has to lie partly through economic and cultural co-operation and engagement, which is why I fervently oppose any boycott of Israel.
I support the Abraham Accords and was glad to join the call, which others have mentioned this evening, for the UK Government to work with partners to create an international fund for peace for Israelis and Palestinians. The national question between Jews and Palestinians is still just about solvable. I hope the Minister can give us hope of a solution.
The Earl of Sandwich (CB)
My Lords, my noble and right reverend friend and I shared experience of the Middle East when we were both board members of Christian Aid. I am delighted to join him again in this debate and congratulate him on bringing up once again a very difficult subject.
I have previously spoken about humanitarian aid in the West Bank and Gaza, but this time I have chosen music. My wife chairs a charity that helps young Palestinian musicians, called PalMusic. Music provides a vital part in keeping hope and joy alive, even during these adverse conditions—first, by ensuring that the unique culture of Palestine continues to thrive; secondly, by giving young people the satisfaction of learning and acquiring other skills, such as working in teams and showing leadership; and thirdly, and not least, by bringing happiness to the community, not only to the young musicians but to others through their music. I have heard wonderful examples of this music.
This is the 10th anniversary of PalMusic, which was set up to support the Edward Said National Conservatory of Music in Ramallah. The conservatory was built around the vision of having a creative musical culture in every Palestinian home. Highlights have included a six-week UK tour by the Palestine Youth Orchestra; a long-distance learning programme for teachers and students; online concerts throughout the pandemic; and bursaries for musicians to attend degree courses in the UK. However, the difficulties of running a music school in an occupied territory are ever present and growing. For example, Israel has now made it nearly impossible for Palestinian institutions to secure visas for visiting teaching staff. The Israeli Government will have to think again.
We in the UK have a historic responsibility to find a political solution—and it is not the “peace train” that we have heard about this evening. We all need to work much harder to support Palestinian life and to end the oppression of the Palestinian people.
Lord Shinkwin (Con)
My Lords, it is a pleasure to follow the noble Earl, and I too thank the noble and right reverend Lord, Lord Harries of Pentregarth, for securing this important debate. Regardless of one’s perspective on the causes of this seemingly endless conflict, I find it impossible not to agree with the noble and right reverend Lord and the noble Lord, Lord Hannay, that the current spiral of destruction is enough to make anyone who longs for peace in that region despair. For those who value every human life and, like the noble Baroness, Lady Ludford, are also committed to defending the integrity and security of Israel, the tragedy is compounded by growing anxiety—as others have said—that the extremism of a disproportionately powerful element in the new Government is both destabilising and potentially self-destructive of the Israeli dream.
Earlier today, I googled one word: “Israel”. What came up filled me with dismay: “Israel’s elite fighter pilots escalate judicial reform protest”; “Huwara attacked by settlers during Purim”; “Israeli attack wounds citizens as settlers and soldiers dance”. I am commenting not on the individual stories but on the direction of travel. It is the wrong direction—wrong for Israel and wrong for the world. At a time when Iran poses an existential threat to its very existence and, indeed, to world peace, we need Israel as never before to be united and strong, not weakened by extremism, whether on settlements or so-called “reforms” to the judiciary. I hope that my noble friend the Minister can help Israel to understand that it is too important a partner to be consumed by internal strife when its strategic leadership is so needed.
Lord Watson of Wyre Forest (Lab)
My Lords, it is a pleasure to follow the noble Lord, Lord Shinkwin, once again and I congratulate the noble and right reverend Lord, Lord Harries, on securing this debate at a very important time. When I heard his reflections on 1962, I thought, “Is it really 30 years since I was not just at university with the noble Lord, Lord Shinkwin, attending lectures by the noble Lord, Lord Norton, but since I took my first trip to Israel?”
You could say that I travelled there when the state was at the apex of hope. We visited just as the Oslo Accords were becoming public, and I saw as a very young student what leadership and statecraft could do. They nearly found peace with a two-state solution. Thirty years later, when we see escalating violence, 14 fatal attacks, increasing violent rhetoric, and both sides escalating the threat of more violence, perhaps we are now, as the noble and right reverend Lord, Lord Harries, suggested, at the nadir of hope for Israel.
Almost every attack is obviously a personal tragedy for the families who have lost loved ones or have seen loved ones injured. They also represent a national tragedy for the State of Israel. I think it was the noble Lord, Lord Polak, who alluded to this. It is a tragedy because, amidst the violence, Israel is potentially entering the most exciting stage in its history. Perhaps that is where we can try to find hope. As a new generation of Arab leaders no longer regards Israel as an enemy, and as those Arab leaders seek partnership and co-operation and mutual support in the economic growth of the region, surely it is the role of leadership and statecraft to nurture that kind of behaviour.
The Abraham Accords, as noble Lords have said, are in their infancy. They are fragile and delicate. That is why the escalating violence is such a threat. Of course Israel is right to stand up to domestic terrorism; every state has to protect its people. Ultimately, however, as a friend of Israel, when I look around and see friends demonstrating for peace—not just in Israel but around the world—we know that statecraft and leadership are the only way we are going to find peace. Does the Minister still believe in a two-state solution? What statecraft and leadership will he show to try to encourage our friends in Israel and Palestine to de-escalate the violence?
Lord Palmer of Childs Hill (LD)
My Lords, I too thank the noble and right reverend Lord, Lord Harries, for getting this debate on to the Order Paper and, in particular, for listing the horrific incidents, on both sides, which set the whole debate in context. I must declare my interest as President of the Liberal Democrat Friends of Israel. I do not need to say that it is unpaid, because obviously it is.
Yesterday, as has been said, was the Jewish festival of Purim, just out by an hour or so today. This is the story of a Hebrew woman in Persia—Esther—who thwarts the genocide of her people. It is stories like this and, more recently, the 800,000 Jews who fled Arab lands, and the horrors of the Holocaust, which are part of the Israel psyche today of “never again”.
Having said that, I want to make it clear that I am, like many Israelis, appalled at the violent attacks by settlers on Palestinians in Hawara. These actions go against Jewish values—and I speak as a Jew—teachings and the founding principles of the State of Israel. It is not all one-sided. There have been significant Israeli casualties of Palestinian terrorism in 2022 and 2023, including the two young Israeli men, referred to by earlier speakers, murdered just before the Hawara riots. Sadly, violence begets violence. The violence has to cease.
The UK Government must make it clear to the Palestinian Authority and the current Israeli Government that we expect an urgent de-escalation, which requires the PA and the Israeli Government to take strong action against any perpetrators of violence. The UK, through the Minister, should offer itself as an unbiased interlocutor for the peace talks. We are still the unbiased interlocutor, which the US is no longer. We should support the establishment of an international fund for peace, as outlined by the Alliance for Middle East Peace, mentioned by the noble Lord, Lord Stone.
We must not lose sight of the fact that Israel is a democratic state, for Jew and non- Jew, where there is a free media and plenty—plenty—of internal critics who are against the current Government. Democracy does not always present a desirable outcome, but it does mean that the Government can and should take account of internal criticism, unlike the situation in the West Bank. The President of the Palestinian Authority has not faced an election for many, many years. My feeling, and the feeling in Israel and in the territories, is that President Abbas does not have support on the Palestinian street. If he does not, I have a question for the Minister and the Government. I personally am in favour of the creation of a Palestinian state, but will the Minister say how, in practical terms, the Government could see that happening when one side does not have the support of its people?
My noble friend Lady Janke gave the example of Haaretz, an Israeli newspaper. The important thing to me is that, in Israel, you can have a paper criticising the Government.
The noble and right reverend Lord, Lord Harries, called for hope and for a two-state solution. I join him in that wish.
Lord McInnes of Kilwinning (Con)
My Lords, I thank the noble and right reverend Lord, Lord Harries, for bringing this important debate before your Lordships’ House. I refer to my entry in the register of interests as I recently joined a field trip with Medical Aid for Palestinians in the West Bank during the February Recess, and to previous entries where I joined similar trips with Conservative Friends of Israel.
In the two minutes that I was originally allowed, I wanted to focus very much on our responsibility as an honest, and sometimes critical, friend to Israel. That is not in any way to distance myself from the remarks that the noble Lord, Lord Palmer of Childs Hill, has just made about the failures of the Palestinian Authority, which I endorse. I am a friend of Israel who wants the UK to continue its strong relations with that country, and who absolutely supports its right to exist and its continuing security. As we have already heard, we must never forget the memory within Israel of the obsession of some with removing it from the map.
I have often spoken in those terms in this House before, and my shared Scottish kinship with Lord Balfour makes me reflect very much on the creation of the Israeli state. However, as a friendly nation and ally, it is incumbent upon us, not least because of our historical responsibility, to use our influence to ensure that the Israel that we support is upholding its international obligations, and it is those on which I wish to dwell today.
We must support any talks and communication that try to stop the spiralling acts of violence that we have already seen this year and the rising tension within Israel and the Occupied Territories. However, I ask the Minister that we continue to raise in our discussions with Israel—as part of our commitment to international law, to Articles 55, 56 and 59 of the Geneva convention and to the Oslo accords—our opposition to the building of illegal settlements; our commitment to ensuring that the Palestinian people in areas B and C of the Occupied Territories have full access to education and health services; importantly, that we follow international law; and, as we witnessed did not happen in Huwara, that the IDF is fully empowered, and has the responsibility, to protect all civilians from violent attack or disruption.
It is important as well that we question and seek legal advice as a Government on the recent transfer of responsibilities for settlers from military jurisdiction to Israeli civilian responsibility. How does that square with our own opposition to the annexation of the West Bank in terms of responsibility for those settlements?
To be secure as well as to carry international support, Israel requires critical friends. Can the Minister confirm that we will continue to be one such friend?
Lord Austin of Dudley (Non-Afl)
My Lords, I draw attention to my entry in the register of interests. I congratulate the noble and right reverend Lord, Lord Harries, on securing this important debate. While I agree with much of what he said—as he said, the situation is bleak and terrible—I am not sure I agree that it is completely hopeless. As we have heard from the noble Lords, Lord Turnberg, Lord Polak and Lord Watson, and others, the Abraham accords are a remarkable achievement and a stunning breakthrough that would have been impossible to imagine just before they were announced. They show us that, even in the Middle East, positive change can happen very quickly and we must never give up hope. However bleak things are, the UK’s role must be to encourage negotiation, because that is the only route to a two-state solution and a peaceful and viable end to this terrible conflict.
The protests in Israel, now in their third month with hundreds of thousands taking part, remind us that Israel is the only country in the Middle East where not just protests like these but even the basic traditions of liberal democracy—pluralism, elections, equality and the rule of law—are even conceivable, let alone the very foundations and values of the state itself.
We have seen a terrible rise in violence over the last year, with civilians killed on both sides, starting with four Israeli civilians killed in Beersheba by a Palestinian supporter of ISIS. There have now been 13 fatal attacks by Palestinian terrorists, including seven people killed in a synagogue on Holocaust Memorial Day, one of them just a child. These attacks are not a reaction to the election of this new Government; they began under the previous left/right unity Government, which included for the first time an Israeli Arab party, and, sadly, as we have seen, they have continued under today’s very different Government.
We must be clear that there is never any justification for terrorism. Those responsible are the terrorists themselves. We should be clear that the deaths of any innocent Palestinian civilians in Israel’s counterterror operations are terrible and must be investigated. We must also recognise that there is no equivalence between indiscriminate terror attacks against civilians and attempts to arrest the terrorists responsible.
Ultimately, inflammatory rhetoric and appeals to extremes do nothing to help Palestinians or Israelis; they only entrench divisions and increase the violence. Instead, we need to see a resumption of the political process, however difficult that is, because two states remains the only solution and opinion polls still show that majorities on both sides support that objective. However, I do not agree that a Palestinian state can just be recognised or imposed unilaterally from outside—and it is counterproductive to suggest that it can be, because it suggests to Palestinians that there is a route to statehood which does not involve the hard work of negotiation, compromise and concessions.
The truth is that a Palestinian state will be achieved only through dialogue, negotiation and compromise by Israelis and Palestinians working together. The UK must do all it can to support that, with closer ties to Israel and Palestine, economic development, jobs and prosperity for the Palestinians and support for projects that bring people together on both sides to build trust and create the conditions for negotiations.
Lord Moynihan (Con)
My Lords, I wish I could echo the optimism of the noble Lord, Lord Austin, but sadly I cannot. As we have heard this evening, instead of a more benign security environment in the Middle East, the opposite is true. Today’s environment might more accurately be termed a “new regional disorder”, underwritten by an “arc of instability” in the Middle East with the growing influence of Iran.
The landscape against which the Arab-Israeli conflict is viewed appears increasingly volatile and turbulent, contoured by myriad examples of violence and escalating conflicts which, over the past year, are no longer headline news here. No matter their origin, these conflicts can engulf us all, thanks to the pace of a rapidly globalising world. This is dangerous because it takes our eye off the escalation of tension and violence in the region at a time when it should be a top international priority, not one in the foreign policy shadows of the Ukraine conflict.
The multiplicity of new and continuing threats at times appears overwhelming: terrorism, conflict, insurgency. In this bleak and dystopian world, the liberal order, backed by strong, independent legal institutions, which are under question in Israel, and the democratic free-market prescriptions of the Washington consensus, are being challenged as never before—not least where a right-wing coalition with ultranationalists is seated in government against a background of increasing violence and a threat of a further Palestinian intifada.
While the eyes of the world are elsewhere, it is welcome that Israel has altered its settlement programme with a temporary cessation. At the same time, regrettably, more extremists are moving into Gaza and the West Bank, stoking tensions and trouble for the future. As the noble and right reverend Lord, Lord Harries, has indicated—if I can put his sentiments into my words—the running sore is festering badly and 2023 is likely to see the contagion erupt again. Against that backcloth, now is the time to step up our involvement, as many noble Lords have said, and seek to clear the political debris from the pathways to the two-state solution which, in my view, is in no way dead. It cannot die; it is the lifeline to peace.
I have only one question to put to the Minister, which is in the context of children. What more can the government do to support the UN’s efforts to help children, who pay the highest price as the violence escalates? Will he agree to increase our support both financially and in terms of qualified personnel to help the impacted children with psychosocial services, starting with the humanitarian family centres across the Gaza Strip, but encompassing all children in the region who have been victims of the horrors of violence?
Lord Purvis of Tweed (LD)
My Lords, I join others to thank the noble and right reverend Lord, Lord Harries, for bringing this debate and for starting in such a measured way. It has been an extremely sombre debate but, as he indicated, we should not see conflict as inevitable. Therefore, we should not lose hope, even though it seems quite a long time ago—it was just a number of months—that I watched all of the address to the UN General Assembly by Yair Lapid, the former Israeli Prime Minister. There was a degree of hope that the Prime Minister then would put on the table again a two-state solution and reopen some of the discussions that this House has called for. However, as my noble friend Lord Palmer indicated, Israel is a democracy and democracies do not always yield the results that you want. As the noble Lord, Lord Leigh of Hurley, indicated, some of the members of that new Administration have extreme views.
Equally, over 60 years ago is a very long time for those who have been within Palestine, and I noted that less than 3% of the population of the occupied territory are over 65 years old. There is no living memory of the period to which the noble Lord referred. The median age in that area is 19. None of the population has experienced a democratic election process, so it means that it is quite hard to see the areas where we can start to see practical ways forward.
Five years ago, this Chamber debated the recognition of the occupied Palestinian territories as a state. Since then, the illegal settlements—“a block to peace”, to quote the noble Lord, Lord Ahmad—have become worse. Indeed, contrary to commitments from the Israeli Government to pause and slow down settlements, there is the recent decision of nearly 7,000 settlement units and 35 settlement areas to be approved imminently. So that pause is not a pause at all.
If we see this as a block to peace, I would be grateful if the Minister could say what practical steps the UK Government are taking to seek the arrest and removal of such blocks, and the development of road and route infrastructure in the affected zones. I have seen areas which could make the situation worse. I would be grateful if the Minister could indicate whether support for that infrastructure will be part of the trade discussions that the Secretary of State is currently engaged in during a visit to Israel at the moment. Is the Secretary of State going to meet Bezalel Smotrich, the Finance Minister, and is it the case that the Government will continue not to engage with the National Security Minister, as has been referred to?
We have to recognise, as did the thread in the speech by the noble and right reverend Lord, Lord Harries, that a viable state of Palestine is in many ways harder to see. But it is not impossible, and a decision may have to be made that we, in effect, recognise a quasi-failed state at its inception. This is not new; we have done this with many other countries. But it does mean that the UK now needs to stop its dramatic cuts for the support of the people of that area. In 2020, funding was £102 million; in 2023-2024, this has been reduced to £6 million. The Business Department funding for economic regeneration in the area has been cut from £25 million to zero. So can the Minister, in his winding up, explain where UK financial support, which could make the prospects of a statehood more viable, will be in place? If the UK plays a role, it must be to make a two-state solution viable in a practical way, and I hope the Minister will be able to give some positive responses today.
Lord Collins of Highbury (Lab)
My Lords, I, too, would like to thank the noble Lord, Lord Harries, for initiating this debate and for setting the scene, and highlighting the real difficulties that are being faced. I thought it was really important that he stressed the need for hope, because it is not just hope in Palestine and Israel but hope within this House, which will motivate us to pursue the efforts for peace. I support the Government’s efforts and those of the noble Lord, Lord Ahmad, the Minister responsible, who has been working with our international partners, particularly the US, to promote peace in the region and de-escalate tensions. I know that the noble Lord has reinforced that message in his meetings with Israeli Government officials and the Palestinian Authority. Last month’s joint statement by the UK, the US, France, Germany and Italy, in reaction to Israeli plans to expand settlements in the occupied Palestinian territories, was a really important move to reflect that sort of strategy.
Of course, that statement strongly opposed these unilateral actions, which will serve only to exacerbate tensions between Israelis and Palestinians, and undermine efforts to achieve a negotiated two-state solution, which I think the whole House is united behind.
Our efforts should not just be limited to international government actions or negotiations between states. Peace between the Israelis and the Palestinians will be achieved only through direct negotiations between those parties. I echo my noble friend Lord Turnberg and other noble Lords; as the Prime Minister acknowledged, the expansion of the Arab-Israeli peace in the region also provides a valuable route to Israeli-Palestinian peace. It is an incredibly important achievement.
Building peace also means improving lives. I do not think we should underestimate the importance of civil society and intercommunity activity. Through most of my working life, I developed very strong relationships with Histadrut, the Israeli trade union movement. That has been very important in how you can build a social movement. Building that sort of peace means backing economic development and supporting people-to-people coexisting projects, which we have heard noble Lords refer to—bringing everyday Israelis and Palestinians together.
I was particularly pleased that, at the end of last year, the Prime Minister committed to explore the US joining the international fund for Israeli-Palestinian peace, an effort that actually has cross-party support—support from the leader of the Labour Party, as well as the Prime Minister. Like my noble friend Lady Ramsay, I hope the Minister can tell us what progress has been made in backing that fund, particularly with the US. It is five years since the UK officially supported and endorsed the concept; I think it is about time we heard some positive news on it.
The Minister of State, Foreign, Commonwealth and Development Office (Lord Goldsmith of Richmond Park) (Con)
My Lords, I start by thanking my noble and right reverend friend Lord Harries for tabling this debate and highlighting these important issues. My noble friend Lord Ahmad of Wimbledon, the Minister for the Middle East, is currently travelling, so I am standing in for him. I thank all noble Lords for their insightful contributions and will try to respond to all the points raised, although so many have been raised that I think that is a long shot.
Too many lives have been lost to violence in Israel and the Occupied Palestinian Territories and we need to accelerate progress towards peace. In answer to the noble Lord, Lord Watson, the UK’s position on the Middle East process is clear: we support a negotiated settlement leading to a safe and secure Israel living alongside a sovereign and viable Palestinian state, based on the 1967 borders, with Jerusalem as a shared capital.
To respond to questions by a number of speakers, particularly the noble Lords, Lord Stone and Lord Palmer, we will recognise a Palestinian state when it best serves the prospects of peace. I want to indicate my agreement very strongly with the point of the noble Lord, Lord Austin, that the journey towards those circumstances is a long and complicated one, and requires hard work on the part of Palestinians.
The security situation remains fragile. Last year, large numbers of Palestinians and Israelis were killed by acts of violence, and this year has started the same way, with further violence and instability. The UK is working intensely with all parties and international partners to end this deadly cycle. As the noble Lord, Lord Collins, noted, my noble friend Lord Ahmad visited Israel and the Occupied Palestinian Territories in January to take this work forward, meeting Israeli and Palestinian counterparts.
We were all appalled by the recent terror attacks near Jerusalem that have been mentioned by almost everyone who has spoken today, not least the noble Lords, Lord Austin and Lord Watson, but others as well. We condemn these attacks in the strongest terms possible and stand with Israel in the face of terrorism and violence. Our thoughts remain with the victims and their families. Similarly, we condemn recent indiscriminate rocket fire from Gaza towards civilian populations. Any attacks targeted against civilians are unlawful, unjustifiable and utterly repugnant.
We are also concerned by the high number of Palestinian civilians who have been killed and injured. It should go without saying that Israel has a legitimate right to defend itself. However, it is also important that Israeli forces exercise maximum restraint, especially in the use of live fire, when protecting its legitimate security interest. We have watched with concern the numbers of people killed during incursions by Israeli security forces into places such as Jenin, Jericho and Nablus. When there are accusations of excessive use of force, we advocate swift and transparent investigations. We also strongly condemn indiscriminate violence by Israeli settlers against Palestinian civilians—a point made by the noble Baroness, Lady Janke—including the destruction of homes and properties. I strongly share the view of the noble Lord, Lord Palmer, that those responsible must face full accountability and legal prosecution.
As we approach the religious festivals of Ramadan, Easter and Passover next month, it is important to underline our support for the historic status quo at the holy sites in the Old City of Jerusalem. Sadly, there is a high risk of violence breaking out during this period. During his visit to Israel and the Occupied Palestinian Territories at the beginning of the year, my noble friend Lord Ahmad visited Haram al-Sharif, the Temple Mount site. He emphasised the UK’s unwavering commitment to freedom of religion and belief and to ensuring the safety of all who visit and worship there. We value the Jordanian Hashemite royal family’s important role as custodian of the holy sites in Jerusalem.
The UK Government are asking all parties to take urgent measures to reduce tensions and de-escalate the situation. In answer to the noble Lord, Lord Turnberg, over the weekend the UK joined France, Germany, Italy, Poland and Spain to express our grave concern in the face of continuing, growing violence in the Occupied Palestinian Territories.
Speaking for the Jerusalem Foundation UK, my noble friend Lord Leigh emphasised his abhorrence both at Palestinian schools being named after terrorists and that an Israeli Minister called for the wipe-out of the Palestinian village of Huwara. My noble friend pointed out, and it is worth reiterating, that the remarks were rightly condemned by the head of the IDF and others in Israel. The UK has always firmly opposed any incitement to violence. We are engaging closely with international partners to end the deadly cycle of violence. We will carry on talking with the Israeli and Palestinian leaderships to support co-operation, stability and economic development for the benefit of both parties.
My noble friend Lord Polak asked about the FCDO’s engagement with the Abraham Accords. The UK fully supports the Abraham Accords. We see the treaty as a unique opportunity to enhance the peace process and raise the prospects of peace right across the Middle East. I think my noble friend described it as “the only game in town”. It certainly is enormously important. I reassure him that, since its inception, the Israel bilateral team in the Foreign Office has been fully engaged in supporting the process. As we mentioned before the debate began, the lead official in charge had changed in January, but the seat that he had occupied was never left empty.
My noble friend Lord Polak also makes a point about the importance of not applying different standards to Israel, as compared with other countries. That is something that happens frequently, and we need to guard against it. But I reassure him and the noble Lord, Lord Purvis, who asked a similar question, that there is no boycott of any Ministers. That is not something that is being pursued by the UK. As my noble friend Lord Polak said, we will speak to Ministers from Administrations across the world, and agreeing with everything a Minister says or believes is not a prerequisite or a condition that we apply.
Since the beginning of the year, the Foreign Secretary and my noble friend Lord Ahmad have spoken to many influential international partners who, like us, have a stake in calming the situation. That includes US Secretary of State Blinken, Egyptian Foreign Minister Shoukry and Jordanian Foreign Minister Safadi. We are bringing together countries across the world to help co-ordinate our efforts and maximise success.
The UK’s direct efforts take many forms: we help to improve Palestinian security through the work of the British support team in Ramallah, and our diplomatic teams in Tel Aviv and Jerusalem are active on the ground, speaking to and working with their hosts. In response to the noble Lord, Lord Turnberg, the Government absolutely recognise the value of Israel’s Arab population in the peace process, and I note the opinion poll of Israeli Arabs that my noble friend Lord Leigh mentioned.
As the noble Lord, Lord Stone, highlighted, civil society organisations play an important role. I assure him and other noble Lords that the UK Government are firmly of the view that these organisations must be able to operate freely in the OPTs. We are also a strong supporter of UNRWA, which provides vital services to those in need.
The noble Lord, Lord Stone, also mentioned the US Middle East Partnership for Peace Act. UK officials remain in close contact with the US Government about how existing peacebuilding projects and funding can better support the goals of the Act, and we stand ready to collaborate and co-ordinate further, including regarding the Act’s advisory board, as additional information about its plans and priorities becomes available.
But of course the UK cannot solve this problem by itself. The noble Lord, Lord Hannay, and the noble Baroness, Lady Janke, mentioned UNRWA, which I have commented on. The UK voted to renew its mandate last year and remains a proud supporter of the agency, which provides essential humanitarian support to Palestinian refugees across the region. Although the seismic impact of the pandemic on the UK economy forced us to take tough decisions in relations to ODA, the UK remains a long-standing supporter of UNRWA and values its importance as a vital humanitarian and stabilising force in the region.
I cannot provide an answer to the noble Lord, Lord Purvis, so I am afraid I will give the same answer that I have given so many times in so many debates: future allocations will be set out on the FCDO development tracker very soon, I hope.
The noble Baroness, Lady Ramsay, asked about the IRGC and whether—
Lord Purvis of Tweed (LD)
It would be useful to put on the record that UK support for UNRWA went from £70 million in 2018 to £28 million in 2021.
Lord Goldsmith of Richmond Park (Con)
As I said, I am afraid I cannot give information about ongoing or future funding.
The noble Baroness asked whether we would proscribe the IRGC. The list of proscribed terrorist organisations is always under review. We do not routinely comment on whether an organisation is or is not under consideration for proscription. However, we have taken clear action in response to the malign behaviour of the Islamic Revolutionary Guard Corps, including sanctioning the organisation in its entirety.
A number of speakers have made the point that a spark of hope has come from the recent meeting in Aqaba, where both Israelis and Palestinians affirmed reciprocal commitments. The meeting is the first in many years and an expression of intent on both sides to engage constructively to de-escalate tensions. We urge all parties to refrain from jeopardising this fragile process, as some have attempted to do, and we call on all parties to make good on the commitments made in Aqaba.
In answer to the noble and right reverend Lord, Lord Harries, the Foreign Secretary spoke to his counterparts today and asked Israel to live up to its commitments in Aqaba. We look to the Palestinian Authority to resume full security co-operation with Israel as a matter of urgency and to renounce and confront terror. We urge the Government of Israel to cease and to rethink its policies on settlements, evictions and demolitions with immediate effect, a point made by almost everyone speaking today. As we said on 14 February and, most recently, on 4 March, we strongly oppose these unilateral steps; not only are they contrary to international law but, as the noble Lord, Lord Palmer said, they undermine the prospects for peace.
The Prime Minister has made it clear that the UK will continue to oppose all actions that make peace harder to achieve, whether taken by the Palestinian or the Israeli side. The Government of Israel and the Palestinian Authority must demonstrate through both word and deed a genuine commitment to peace and security and agree a two-state solution. That is the only way to end the conflict, preserve Israel’s Jewish and democratic identity, eliminate the existential threat that Israel has faced at all times, and to realise Palestinian national aspirations.
My noble friend Lord Shinkwin is right to point to the almost unique importance of a strong and balanced Israel, and the noble Lord, Lord Austin, is right to point to the protest in Israel as evidence, if evidence were needed, that Israel is the only country in the region where it is possible to disagree with the state of the day. The noble Lord, Lord Purvis, made the point that so many Palestinians have never experienced an election.
To conclude, a just and lasting resolution, one that ends the occupation and delivers peace for both Israelis and Palestinians, is long overdue. It is possible to restore stability and to secure peace, but that requires efforts from all sides. The UK stands ready to support them. I thank the noble and right reverend Lord, Lord Harries, once again, for tabling the debate and all noble Lords for their contributions.