Non-Domestic Alternative Fuel Payment Application Scheme Pass-through Requirement Regulations 2023
(1 year, 7 months ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Amanda Solloway)
I beg to move,
That the Committee has considered the Non-Domestic Alternative Fuel Payment Application Scheme Pass-through Requirement Regulations 2023 (S.I. 2023, No. 428).
It is a great pleasure to be here under your chairmanship, Mr Gray. The regulations were laid before the House on 17 April 2023. Their purpose is to ensure that benefits from applications to the non-domestic alternative fuel payment are passed through to end consumers.
The Government delivered critical support to households, businesses and other non-domestic consumers in response to the unprecedented rise in energy prices. We brought forward emergency legislation and moved at pace to deliver a range of schemes to disburse financial support appropriately. Those schemes include the energy bill relief scheme, which provided a discount on non-domestic consumers’ gas and electricity bills.
The non-domestic alternative fuel payment scheme serves a crucial purpose in ensuring that businesses and organisations that are not on the gas grid, but instead rely on alternative fuels for heating, are not left behind and that they receive a comparable level of support to users who are on the gas grid and have received support for their gas usage. Eligible businesses and organisations are entitled to a payment of £150. In the vast majority of cases, consumers will have already received that £150 through the electricity supply accounts registered at qualifying properties. In addition to the basic £150 payment, we are providing a top-up payment to businesses and organisations consuming a very high volume of kerosene heating oil. The top-up payments start at £750.
An application service was opened on 20 March so that eligible non-domestic customers could claim a top-up payment. Additionally, we provided an application process for businesses and organisations to apply for the basic £150 payment in the limited circumstances where they would not have received it through electricity suppliers—for example, for alternative fuel users who do not have an electricity supplier and therefore could not receive a payment through that route.
Previously, we have introduced regulations to ensure that where the £150 payment was paid to an intermediary through its electricity supplier, the intermediary would be obligated to pass the financial benefit on to the end user. Those regulations were laid in February and were debated by this House in March.
Hilary Benn (Leeds Central) (Lab)
The explanatory memorandum states that intermediaries should pass on the payment and “must” follow the regulations in calculating the pass-through amount. The next paragraph, 7.8, states that if they do not pass through the whole amount,
“they must demonstrate to the end user that the amount they are passing on is just and reasonable”.
How much discretion is there to decide what a reasonable amount is? If it came to a civil debt, referred to in paragraph 7.11, would the court have any role in deciding whether the calculation was fair? I am trying to understand how that will work in practice.
Amanda Solloway
I believe that the right hon. Gentleman pre-empts what I am about to come on to.
The regulations extend the principle of the earlier regulations. They ensure that payments made following an application are subject to the same obligation to pass the financial benefit on to the end user. They also adopt the approach taken by the earlier regulations for this scheme, and for other energy schemes such as the energy bills support scheme and the energy bill relief scheme.
Let me explain exactly how these pass-through regulations work. They make it mandatory for inter-mediaries to pass through the financial benefit of the scheme to end users. That is needed because in some cases payments may be made to an intermediary and not to the end user of the energy. We need to ensure that payments can be passed on to the end user in a way that is fair.
An end user is an individual, business or organisation that consumes energy and pays for that energy usage through their intermediary—for example, their landlord. That includes a wide range of different arrangements. For example, a tenant may pay their landlord a service charge, or they may pay all-inclusive rent, but they are ultimately paying for the energy consumed at a non-domestic property, so it is only right that they benefit from our support schemes.
As with the other energy price support schemes, the regulations require that support be passed on in a “just and reasonable” way. The regulations were drafted in this way to account for the many kinds of relationships between an intermediary and an end user. If we took a narrow definition of “just and reasonable”, we could run the risk of inadvertently excluding intermediaries from the pass-through requirements. The regulations also accommodate scenarios where intermediaries have multiple end users to pass the support on to, and they make it clear when and how intermediaries should communicate with end users regarding the benefit being passed on.
Our approach to enforcement is consistent with the pass-through regulations for the £150 payment through electricity suppliers, and those for other energy schemes, such as the energy bills support scheme in Great Britain. If an intermediary does not pass on the benefit to a user who is entitled to it, the user will be able to pursue recovery of the benefit through civil proceedings. Should a court rule in the end user’s favour, they would be entitled to the payment plus interest, which is set at 2% above the Bank of England’s base rate.
Hilary Benn
Having given the Committee the benefit of her explanation, will the Minister give way again?
Hilary Benn
I am grateful. If it comes to a civil debt being taken to court, would the court have the ability to decide for itself whether the amount that had been passed through was “just and reasonable”? In other words, could it look at the regulations, interpret them and say, “Actually, intermediary, I don’t think you’ve calculated this correctly, and therefore we are going to award a different amount”?
Amanda Solloway
The right hon. Gentleman makes a really important point. The whole premise of the regulations is to ensure that everyone is treated fairly and that we are passing on the benefits to all the people who should be receiving them. If he would like, I am happy to write with a fuller explanation.
The regulations require intermediaries to provide information to end users. For example, intermediaries must inform end users of the amount of scheme benefit that has been received, the amount that has been passed on and the remedies available to the end user. I thank the Joint Committee on Statutory Instruments for its comments on the enforcement of this requirement. Again, our approach is consistent with that taken in the earlier pass-through regulations for this scheme and the other energy schemes.
With respect to the requirement to pass on information, it is important to reiterate our view that there would be insufficient incentive for end users to make use of an enforcement mechanism, given the time and administrative burden involved in doing so. For this reason, the regulations do not provide a specific enforcement mechanism in relation to the obligation on intermediaries to provide information to the end user. Nevertheless, we consider that there remains value in retaining the requirement in the instrument, on the basis that we expect intermediaries to comply. This is aided by the Government’s publication of guidance on the gov.uk website to ensure that requirements are clear to all parties. The guidance includes template letters to support end users such as tenants, who can use them to contact their landlords should they be concerned about the application of the pass-through requirements.
The regulations are vital to ensure that the support reaches the people it is designed to help. They are essential to the effectiveness of the non-domestic alternative fuel payment across the United Kingdom, and they will ensure that intermediaries pass on the support to the non-domestic energy customers who are most vulnerable to high energy costs. With those reasons in mind, I commend the regulations to the Committee.
Dr Alan Whitehead (Southampton, Test) (Lab)
What the Minister says about the regulations is all good stuff in terms of the need to ensure that high users of kerosene in off-grid industrial and commercial settings get the benefit of £150 and, indeed, of a top-up, as the Minister mentioned, in recognition of the high fuel costs that they are experiencing.
This is, I hope, the last in a dizzying catalogue of secondary legislation, all of which the Minister’s predecessor, the right hon. Member for Beverley and Holderness (Graham Stuart), and I sat here scrutinising over a long period to try to get right the regulations related to all the different areas under consideration for payments. In this instance, we are considering pass-through requirements. The principle that we should require pass-through in circumstances where an intermediary receives a payment and the end user of the kerosene, in this instance, may not get it because they are not the primary person or organisation to whom the payment goes, is very important as far as the overall legislation is concerned. When we last met to discuss regulations of this sort, I asked the right hon. Gentleman whether they were the last ones. Apparently that was not the case, but I hope these regulations are the last ones. After all, the scheme is pretty much over and done with, but we are still trying to legislate to ensure that we get it right.
As I say, the regulations are well and good—except, as the Minister pointed out, and indeed as the Joint Committee on Statutory Instruments pointed out in relation to another SI, they rather fall down because no one actually has to do anything about them. We have a substantial piece of legislation to try to make sure that people get their money. As my right hon. Friend the Member for Leeds Central acutely pointed out, the intermediary has to write to the end user of the kerosene, in this instance, to tell them that £150 may be coming their way and, if they are not going to get the full amount—there may be reasons for that, due to administration and other costs incurred by the intermediary—what proportion of it might come their way, and that has to be just and reasonable. However, as the Joint Committee pointed out, in law, the intermediary does not actually have to do any of that. It can simply sit on its hands and not tell the end user that they are entitled to £150 and that a portion of it, or otherwise, will come their way. The intermediary can just say nothing and the law will not come after it, because there is no strict liability in the regulations to make anyone do anything.
Yes, there is a theoretical remedy: as with pretty much anything else, if the end user does not get their £150, they can try to recover it as a civil debt through the courts. But, frankly, if someone does not even know they have £150 coming their way because they have not been told in the first place, it is rather difficult for them to take legal action to get hold of it. The intermediary has no legal liability to tell the end user that £150 should be coming their way. Indeed, there is no Government register of those intermediaries that should be passing on the money, so there is no real way of bottoming this out as far as intermediaries are concerned.
The Government have said in response to the Joint Committee on Statutory Instruments that—as the Minister outlined, if I may paraphrase—all this strict liability, for the size of the problem before us, would be an awful faff, and the scheme is coming to an end more or less anyway, so it might be disproportionate. The other odd thing they say, as the explanatory memorandum sets out, is:
“Furthermore, it is considered important to ensure consistency across the pass-through regulations relating to the energy support schemes.”
That means: “We have not done it in other pass-through regulations, so we are not going to do it now. None of them has strict legal liability involved, and they all have that very inadequate, virtually non-existent way of getting any sort of remedy for the £150, so at least we are consistent.” That is not a very good way of going about such things.
The Opposition will not oppose the regulations, because it is important for people get their pass-through money if possible. However, the judgment made by the Government is, in effect, to say that it is useful to have incomplete requirements to do various things such as notification, because most people will probably do it, and it is important that they are there as guidance for how to do it. That may well be true, but a number of people might desperately need the money, as the Minister said, but miss out for various reasons. It is not always the case that the people who are intermediaries—perhaps not in this case, but in a number of others, such as park home owners—are necessarily the most completely upright, careful and judicious operators in their organisations. I can see the temptation for some people to say, “Right, we’re not going to have anything to do with this. Nothing much will happen to us, so it’s probably worth our while not to do anything, because we will probably save more money than we might conceivably expend in one or two small legal cases.”
Overall, I do not think that this has been a glorious way to respond to the points made by the Joint Committee on Statutory Instruments. I am not sure that the decision simply to ignore what the Joint Committee said is ultimately supportable, but I hope that the regulations work well and that the people involved get their £150 and their top-up for kerosene. The regulations are well intentioned, given that they are about ensuring that that happens, and we are absolutely with the Government in that desire, but I wonder whether the Minister intends simply to leave the issue or might she possibly have a look, once things are under way, to see if there is a potential problem in the lack of strict legal liability that we think there is at the moment? She may come back to the House at some stage to say either, “Well, it turns out there wasn’t a problem,” or, alternatively, “Hmm, there was a bit of a problem, so how can we get it better next time?”
Amanda Solloway
I thank the right hon. Member for Leeds Central and the hon. Member for Southampton, Test for their remarks and contributions. I can give my assurance that the Government have been looking at all the schemes and endeavouring to ensure that they are fair and equitable for all. That is the reason for the regulations.
The regulations are necessary to provide that the support of the non-domestic alternative fuel payment scheme, following an application, reaches the businesses and organisations that need it, as we all agree. The £150 payments delivered through electricity suppliers represent the main part of the scheme, but the top-up payment for higher uses of kerosene heating oil plays a crucial role in ensuring that high users of kerosene are able to meet their energy costs at this time of inflated prices.
The top-up payments start at £750 for properties consuming 10,000 litres annually, but they are uncapped and progress upwards in line with the volume of kerosene consumed. The payments support a wide range of non-domestic customers, such as businesses, schools, hospitals and churches, that are not connected to the gas grid. The support is crucial to ensuring that they receive a comparable level of support to users that are on the gas grid. We opened the application process for the top-up payment in March. We additionally opened application routes for the small number of customers that could not receive the £150 payment from an electricity supplier. We are now processing payment as quickly as possible.
The previous pass-through regulations established a set of obligations on intermediaries receiving the basic £150 payment through an electricity supplier to ensure that that support is passed on appropriately to the end users. These regulations rightly ensure that the top-up payments are subject to the same requirements and that end users are protected appropriately. Additionally, they will ensure that the protection is extended to the small number of users that needed to apply for the basic £150 payment.
We are mindful of comments received about these regulations and previous pass-through regulations, but it is important that the non-domestic alternative fuel payment is delivered consistently as a coherent scheme. As the regulations cover only a small part of a wider scheme that is in place already, it is right that we have maintained the approach followed in the previous pass-through regulations for the scheme. We will continue to update and publicise our guidance on the gov.uk website to ensure that end users and intermediaries understand their rights and obligations. We will also continue to seek views and feedback from those impacted by the regulations, as well as key delivery partners. I commend the regulations to the Committee.
Question put and agreed to.
Russia (Sanctions) (EU Exit) (Amendment) Regulations 2023
(1 year, 7 months ago)
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The Parliamentary Under-Secretary of State for Foreign, Commonwealth and Development Affairs (Leo Docherty)
I beg to move,
That the Committee has considered the Russia (Sanctions) (EU Exit) (Amendment) Regulations 2023 (S.I. 2023, No. 440).
I am pleased to be here in place of the Minister of State, Foreign, Commonwealth and Development Office, my right hon. Friend the Member for Berwick-upon-Tweed (Anne-Marie Trevelyan), who is travelling.
The regulations amend the Russia (Sanctions) (EU Exit) Regulations 2019. The statutory instrument was laid on 20 April 2023 under powers provided by the Sanctions and Anti-Money Laundering Act 2018 and contains measures on which we have co-ordinated with our international partners to increase the pressure on Putin for waging an illegal and brutal war against Ukraine. The measures place further constraints on Putin’s war machine and Russia’s economy, thereby adding further force to the largest and most severe package of economic sanctions that Russia has ever faced.
The instrument delivers on the UK Government’s commitment to ban the export of all items that have been used by Russian forces on the battlefield to date. It builds on extensive bans in previous legislation by widening export prohibitions to include additional aircraft and vehicle parts, radio and other electronic equipment, biotechnology assets and 3D printing machinery. The second tranche of measures in the legislation prohibits the important of nearly 150 additional types of goods that generate export revenue for the Russian economy. The instrument captures products as diverse as cigars, wood, tools and machinery. The third tranche of new restrictions covers the import of iron and steel products, including metal from Russia that has been processed in third countries.
The additional sanctions underline the UK’s leadership role on Russian trade sanctions. They will inflict further economic damage and constrain Putin’s ability to equip and fund his illegal war. The measures were applied from 21 April 2023, with the exception of the prohibition on iron and steel products processes in third countries, which will enter into force on 30 September 2023—the same date as the EU’s equivalent ban.
Before I finish my opening remarks, let me take this opportunity to update the House on a separate sanctions measure that was announced in April 2022. After careful consideration, the Government have decided not to proceed with a cap on funds held by Russian nationals in UK bank accounts. Having considered that policy option, we have concluded that carefully targeted sanctions against high net worth supporters and beneficiaries of Putin’s regime is a more effective way to achieve our objective. The decision follows careful scrutiny of the policy by relevant officials across Government and in consultation with industry, and is in line with our objective of ensuring that our sanctions are targeted and effective.
As this latest package of sanctions demonstrates, we will continue to impose hard-hitting sanctions against the Russian state and its supporters. This package alone adds a further £280 million-worth of exports and around £145 million-worth of imports to our prohibited list. As with all our sanctions, the latest package has been developed in co-ordination with our international partners. We will continue to work with them to identify and address any gaps or loopholes that emerge in our sanctions regime.
Barry Gardiner (Brent North) (Lab)
The Minister talks about loopholes; will he confirm whether it is correct that the stated origin of petroleum is determined by where it is refined? Given that oil and gas products are sold on the international market, is he entirely confident that Russian oil and gas that is refined elsewhere is not finding its way into the UK and thereby avoiding the sanctions?
Leo Docherty
We are fully seized of the need for constant vigilance in that regard, because we would of course want to prevent any attempt by the Russian regime to circumnavigate sanctions.
Barry Gardiner
I am grateful to the Minister for that interim response, but it does not quite answer the question that I posed, which was about whether the declared origin of petroleum products is determined by where it is refined. We may believe, or it may be on the ticket, that petroleum has come from a perfectly legitimate source when it has not. It would be helpful if the Minister could outline the Government’s strategies to ensure that the sanctions that we are putting in place are effective.
Leo Docherty
I do not want to give an inaccurate answer on behalf of the Minister of State, so I will ask her to write to the hon. Gentleman, but I am totally seized of the importance of that question.
To conclude, these latest measures demonstrate our determination to target those who participate in or facilitate Putin’s illegal war of choice. Sanctions continue to work. Russia is increasingly isolated and cut off from western markets, services and supply chains. Key sectors of the Russian economy have fallen off a cliff and its economic outlook is very bleak indeed. The UK Government will use sanctions to ratchet up the military and economic pressure on Russia until Putin ends his brutal invasion of Ukraine. We welcome the clear and continued cross-party support for this course of action. I therefore commend the regulations to the Committee.
Catherine West (Hornsey and Wood Green) (Lab)
It is a pleasure to serve under your chairmanship, Sir Gary. I thank the Minister for setting out the details of the latest expansion in the UK’s sanctions. As the coming Ukrainian offensive nears, Russia’s illegal and barbarous actions are clearer than ever. It was very welcome to see President Zelensky in the UK today, visiting Chequers. I hope that will translate into further concrete, ongoing support from the Government. We also welcomed the UK Government’s announcement to the House of Commons last Thursday that further technical and hardware aid would allow Ukraine to prosper in its dealings and defend itself as robustly as possible.
In that vein, and before we go into details pertaining to the sanctions, I want to ask the Minister how the Government plan to use the fourth summit of Heads of State and Government of the Council of Europe. It is an opportunity to push for greater international support for Ukraine and bring about the further consensus that we must galvanise across our continent. Although we have seen committed support from many of our partners across Europe, we must always seek leadership opportunities to give voice to Ukraine’s continued plight and to ensure that the continent’s focus remains on the heinous crimes being committed against the Ukrainian people.
Labour has made clear that, should there be a change of Government, we will remain unshakeably committed to Ukraine’s sovereignty, nationhood and people, as well as to our allies, partners and NATO against the attempts of Putin, or any other demagogue, to dislocate the global rules-based order. The UK’s sanctions regime is one of the most critical weapons in our arsenal to achieve that, knowing as we do that, over the years, Russian oligarchs have had rather a picnic when they have been based in London.
There are two measures being debated tonight. I will deal with the first in detail. The Minister mentioned the second, on the question of whether individuals should be allowed to have £50,000 or more in their bank accounts when they are from the Russian Federation. Labour does not support the measure, and we will seek opportunities in Parliament to make that debate better known and to make our voice clear on that. It is weak, and it is allowing rich oligarchs to get away with putting £50,000 in their bank accounts without any questions being asked. Under the “know your client” obligations that banks are meant to adhere to, that would strengthen our—
The Chair
Order. I blame the Minister for opening up on that subject, but that is not within the scope of our debate. It is perfectly legitimate to respond to the Minister, but I would be grateful if we could move on shortly.
Leo Docherty
It was just a tangential issue that we thought it was helpful to clarify.
Catherine West
Thank you so much, Sir Gary, for that clarification. That was my initial impression: the officials were so kind as to provide a briefing to the Opposition and it was my understanding that that matter was coming forward at a later date. Therefore, we can leave the debate and the vote on that matter of principle—
Catherine West
I see the Minister nodding, which is positive, because I am sure that Members would not like to have that jumped on to them at the last minute.
To revert to the original reason for our being here this evening, I am pleased to see measures being debated about the sustained export of commodities to Russia. No sanctions regime worth its salt could countenance that, so my first question for the Minister is: why has it taken so long for this measure to be brought before the Committee? The exportation of aircraft parts, radio equipment and biotechnology, among other key items, goes against the spirit of our regime and could have been a contributing factor in sustaining Russian offensives and in their destructive impact on Ukraine. I understand that such measures take time to fine-tune and are a constant work in progress, but we are well over a year into this harrowing conflict and we were, until April, still exporting biotechnological materials and vehicle parts to the Russian Federation. My second question, therefore, is this. What is the total value of the equipment that is now covered by the new measures and has been exported to Russia since February 2022, and were the Government monitoring the rate of those exports prior to 21 April 2023, when those measures came into effect?
Labour is committed to supporting the Government in expanding the UK’s sanctions regime, but time and again we come to Committees such as this to debate measures that, frankly, should have come into effect much sooner than a year and two months into this egregious conflict. I have a great appreciation for the work of the sanctions taskforce in the Foreign, Commonwealth and Development Office and for the staff of the Office of Financial Sanctions Implementation, but has further consideration been given by the Government and Ministers to questions about staffing levels and resourcing to ensure that critical measures such as these are brought in sooner rather than later, to ensure that the Russian war machine is sapped of resources more rapidly and more totally?
It is welcome that the Government will expand the sanctions regime in respect of the acquisition, supply and delivery of these goods and related financial, technical and brokering services, and Labour will of course support them. It is also welcome to see an expansion of existing prohibitions on importing iron and steel products. Concerns have been raised time and again that sanctions in this area are too weak and open to evasion. That is why I am profoundly concerned that this specific expansion will not come into force until the end of September. A similar statutory instrument, which I was delighted to cover for the shadow Minister for Europe, my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), gave a bit too much notice to others that a sanction was coming in. Can the Minister account for why there seems to be an enduring series of delays with regulations such as these and across our regime? Oligarchs and those across Russia’s political class are not sitting idly by, waiting for their vast wealth to evaporate; they are seeking out ways to capitalise on the delays. I fear that the pace at which the Government are moving is only maximising what those people can retain in the long term.
I would now like to discuss oil and hydrocarbons. My hon. Friend the Member for Brent North made a very important point about how oil and hydrocarbons can be processed in third countries and then exported, even though they originated in the Russian Federation. Will the Minister clarify this? Does he think that we have a tight enough sanction to ensure that no profit returns to the federation to feed the war machine?
On 3 February, a general licence was issued by OFSI that
“permits the supply or delivery by ship of Russian crude oil and oil products, as well as provision of associated services, so long as the price paid for Russian oil or oil products is at or below the price cap”
of “$60 per barrel”. Under this licence, a person may also
“supply or deliver Russian oil by ship from a place in Russia to a third country or from one third country to another third country provided that the Unit Price of the Russian oil concerned is at or below the Price Cap.”
OFSI also states:
“A service provider may provide relevant services to any person provided that the unit price of the Russian oil being supplied or delivered by ship from a place in Russia to a third country or from one third country to another third country is at or below the Price Cap.”
Will the Minister outline the motivation behind that general licence, given that we should be aspiring to end the proliferation of Russian oil across the world rather than encouraging it?
Secondly, how is the Minister ensuring that OFSI rigorously and assiduously enforces the price cap, and how many infringements have been collected? What monitoring is happening of the UK’s role in the international oil market? Today, it seems there could be further cause for concern. The Minister might correct me, as the notice for this SI has been quite short, but the amendment to chapter 4I states that regulation 46Z6 will be omitted. That of course concerns the prohibition on the supply and delivery of Russian oil products. Will the Minister please clarify the purpose of that omission? At first glance, it appears that it would remove the prohibition on the supply and delivery of Russian oil, but I am sure that that is a drafting error. Perhaps the Minister could provide an assurance that the change has a purely technical or drafting purpose. I reached out to the Foreign, Commonwealth and Development Office for clarification on that point in advance of the Committee, and I am not sure whether this is up to date.
As I am sure we can all agree, oil is the bloodstream of Putin’s war machine. As long as the UK continues to make inexplicable exemptions and grant implausible licences, it will continue to flow freely. We know that countries in Russia’s geopolitical neighbourhood are purchasing tens of billions in oil products, and it seems entirely confounding and unacceptable that a drop of that oil should reach the UK, but that is what is happening because often it slips through various other sanctions arrangements. I look forward to the Minister providing much needed clarity and I urge colleagues across the FCDO to consider that the integrity of our sanctions regime really is on the line.
I would like to raise an issue that I know my hon. Friend the shadow Europe Minister has relayed to the Minister on several occasions, which is the question of cryptocurrencies. My hon. Friend brought to the attention of the Minister two entities that the US Treasury sanctioned in August last year—TornadoCash and Blender. Those cryptocurrency mixers have been used to launder billions and obfuscate the proceeds from illicit cyber activity by scrambling the origin of transactions.
The Chair
Order. I hesitate to interrupt the hon. Lady, but there is no reference to cryptocurrency at all in the regulations we are discussing. Will she be very brief on this point?
Catherine West
Thank you, Sir Gary. I will conclude by saying that this is an opportunity to remind the Minister of what is left out of the sanctions regime. It is extraordinary that there is nothing on cryptocurrency in any of our sanctions to date, even though the US, our close ally, includes it.
In conclusion, I am sure the Minister will be unsurprised that I want to cover the issue of asset seizures and sequestration for the purposes of supporting the reconstruction of Ukraine, but I know that you, Sir Gary, will be very cross with me if I continue to raise matters that are not directly relevant. However, you will also understand and remember from when you were an Opposition Member that one can use these opportunities to slip in some more references to important matters.
The reconstruction of Ukraine, if the war ended today, is predicted to cost hundreds of billions, if not more than £1 trillion. De-mining alone could take decades, so I will not continue in that vein.
Catherine West
I just want to mention that we are pushing the Government on that.
Finally, what conversations has the Minister had with his counterparts in the Ministry of Justice about proxies and how we can bring an end to the practice of others—for example, oligarchs—using different bank accounts to hide and obfuscate the location of assets? Will he comment on that, given that that is his brief, and will he give a hint as to how he thinks such measures might come forward in future months as we seek to strengthen the sanctions regime?
Putin’s atrocious and illegal assault on Ukraine’s nationhood and its people shows no sign of abating. We must use the financial tools available to us to hold the Russian Federation to account. The Labour party continues to stand with Ukraine, and ultimately the Government can rely on us to go even further, even more quickly, in the sanctions regime.
Tommy Sheppard (Edinburgh East) (SNP)
The third party supports every opportunity that we can take to apply leverage to the Russian Government to cease and desist their illegal war and occupation in Ukraine, so we are relaxed about supporting the proposals in the statutory instrument, but I have three brief observations. First, like others I wonder why, given that the invasion happened on 24 February last year and the war has escalated to its present level, it has taken nearly 15 months for us to debate these measures. Secondly, with regard to iron and steel there will be a delay of another three and a half months before the measures come into effect; why is that?
Thirdly, throughout the section on revenue-generating goods, there is repeated reference to the fact that it is a defence against breaking the law if the respondent can demonstrate that they did not know that it was in operation. Normally, ignorance of the law is no defence against committing a crime, so I wonder why it has been felt necessary to state it not once but in every relevant regulation. If there is a reason for it, that is all well and good, but I am concerned that it could be used as a loophole. As the regulations are implemented, will the Department monitor the number of instances in which that defence is cited? If it is being used egregiously, we will need to take action to tighten it up.
Barry Gardiner
Does the hon. Gentleman, like me, want to push the question slightly further and ask the Minister whether any contracts were known to be in the pipeline that might have resulted in the legislation being delayed in the way that the hon. Gentleman just outlined, or indeed whether any contracts are now in the pipeline in relation to steel products that would make it convenient to have a delay in the legislation? Does he think that it would be sensible for the Minister to write to us to give reassurance on those points?
Tommy Sheppard
I concur with those observations and ask the Minister to respond. I can give a personal example: I am currently very much engaged in supporting the refurbishment of the King’s Theatre in Edinburgh, which is a very big project. The price has escalated for a number of reasons, one of which is that the contractors are no longer using Russian steel, which was in the original proposals. That has led to a price increase. Given that that is happening in the real world, there must presumably be other contractors engaged who are not so concerned to demonstrate their action against Russian suppliers and the Russian Government. That is presumably why the regulations are necessary, but my point stands about the need to evaluate and monitor the number of times when ignorance is cited as a defence.
Leo Docherty
At the outset, I confirm that I will happily write to the hon. Members for Brent North and for Edinburgh East with regard to the specific question on steel contracts, to clarify that 100%. I thank all colleagues for their support of the statutory instrument. The Government are grateful for the cross-party support for our approach to this issue. We continue to lead on sanctions. The hon. Member for Hornsey and Wood Green referred to Zelensky’s presence at Chequers today, which was another good sign of our close and tremendous support for Ukrainians in their hour of need, and I confirm that we will continue to lead on sanctions.
The regulations before us indicate not that we are slow in prohibiting certain things, but that sanctions evolve. Often it is in response to the operational landscape that certain parts and technologies that were hitherto not considered operationally or militarily important become apparent. When they do, we evolve our sanctions regime. That is why there is an iterative approach to our sanctions.
The hon. Lady asked a good question about enforcement. Of course, as part of our continued commitment to evolving and enforcing our sanctions, we are pleased to have announced a new economic deterrence initiative as part of our integrated review refresh. That consists of up to £50 million over two years to improve our sanctions implementation and enforcement. A lot of that funding is going into personnel to ensure that we get it right. I think that offers reassurance.
The hon. Lady asked a good question about hydro-carbons circumvention. I would be very pleased to ask the Minister of State to write to her to outline our approach to the oil cap and the issue of circumvention —and, of course, also on the role of OFSI.
We should be confident that we are in the lead and that our sanctions are biting. We have sanctioned more than 1,500 individuals and entities, which puts us right at the front of the pack in comparison with the EU and the US. Our sanctions have had a massive financial impact on the Russian economy. For example, the global assets of Russian banks that we have frozen amount to £960 billion, so the impact is very significant.
I am grateful for the support of colleagues today. The regulations are the latest addition to our package of sanctions, and we are committed to keeping up the pressure for as long as it takes. As the Prime Minister laid out when he met President Zelensky this morning, we stand firm and resolute alongside the people of Ukraine until they prevail. I commend the regulations to the Committee.
Question put and agreed to.