Grand Committee
Arrangement of Business
The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)
My Lords, welcome. Noble Lords know the drill by now, but if there is a vote in the Chamber we will suspend proceedings and allow noble Lords to vote. Let us kick off.
Money Laundering and Terrorist Financing (High-Risk Countries) (Amendment) Regulations 2023
(1 year, 4 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Penn
That the Grand Committee do consider the Money Laundering and Terrorist Financing (High-Risk Countries) (Amendment) Regulations 2023.
The Parliamentary Secretary, HM Treasury (Baroness Penn) (Con)
My Lords, this Government recognise the threat that economic crime poses to the UK and our international partners, and are committed to combating money laundering and terrorist financing. To help respond to these threats, and building on the recently enacted Economic Crime (Transparency and Enforcement) Act, the Government are currently taking through a second Bill, the Economic Crime and Corporate Transparency Bill, which will bear down on kleptocrats, criminals and terrorists who abuse the UK’s financial and services sectors.
The money laundering regulations provide the legislative framework for tackling money laundering and terrorist financing, and set out various measures that businesses must take to protect the UK from illicit financial flows. Under these regulations, businesses are required to conduct enhanced checks on business relationships and transactions with high-risk third countries. These are countries identified as having strategic deficiencies in their anti-money laundering and counterterrorist financing regimes that could pose a significant threat to the UK’s financial system.
This statutory instrument amends the money laundering regulations to update the UK’s list of high-risk third countries. It removes Cambodia and Morocco from the list to reflect changes agreed by the Financial Action Task Force, the global standard setter for anti-money laundering and counterterrorist financing. The FATF found that both Cambodia and Morocco have made the necessary domestic reforms to improve their compliance with FATF standards, which have been confirmed through on-site visits to both countries.
The Government will pass further changes in due course to add to the UK’s list of high-risk third countries those that the FATF added to its own list in February and June 2023. The reason for passing these changes separately is to give time to complete a full impact assessment for these additions.
This is the seventh SI amending the UK’s list of high-risk third countries to respond to the evolving risks from third countries. This update ensures that the UK remains at the forefront of global standards on anti-money laundering and counterterrorist financing. In 2018, the Financial Action Task Force assessed that the UK has one of the toughest anti-money laundering regimes in the world. The UK was a founding member of this international body, and we continue to work closely and align with international partners, such as the G7, to drive improvements in anti-money laundering and counterterrorist financing systems globally.
Lastly, this list of high-risk third countries is one of many mechanisms that the Government have to clamp down on illicit financial flows from overseas threats. We will continue to use other available mechanisms to respond to wider threats from other jurisdictions, including applying financial sanctions as necessary. This amendment will enable the money laundering regulations to continue to work as effectively as possible to protect the integrity of the UK financial system. It is crucial for protecting UK businesses and the financial system from money launderers and terrorist financiers. I therefore beg to move.
Lord Vaux of Harrowden (CB)
My Lords, I thank the Minister for introducing and explaining the regulations. I realise that all they do is follow the recommendations of the Financial Action Task Force, FATF, to change the list of countries designated as high risk and therefore subject to enhanced due diligence requirements in relation to anti-money laundering, counterterrorism financing and counterproliferation financing. In that respect, so far so uncontroversial.
It has to be said, however, that the list is somewhat surprising—both for those on it and, in particular, those not on it. The changes made by these regulations are also somewhat surprising: they remove Morocco and Cambodia from the high-risk list. It seems rather odd that Cambodia, which is generally regarded as among the most corrupt countries in Asia, is no longer treated as high risk. I am very fond of Cambodia and have spent a lot of time in that country, but that does not change the fact that it is extremely corrupt.
According to Transparency International’s Corruption Perceptions Index, Cambodia is ranked 150 out of 180 countries on the index. This is a slight improvement on previous years, but still considerably lower than many countries that remain on the high-risk list, such as Albania at 101, Panama at 101, the Philippines at 116, Barbados at 65, Burkina Faso at 77, Iran—which is on the blacklist—at 147, Jamaica at 69, Jordan at 61 and Mali at 137. I could go on. In fact, Cambodia has a worse corruption score than all but seven of the 27 countries that remain on the FATF high-risk list. It is not only Transparency International that ranks Cambodia badly. With perhaps more relevance to this regulation, the Basel AML Index ranks Cambodia as having globally the seventh worst money laundering and terrorism financing score. Despite that, we are reducing the level of due diligence that the regulated sector will have to apply to it. Seriously, is there anybody in this Room who believes that Cambodia should be treated better than, say, Gibraltar, Barbados or even the Philippines? I should like the Minister to look me in the eye and state that she really believes Cambodia is not a high-risk country for corruption.
This starts to beg the question about the value and legitimacy of the FATF high-risk assessment process, known as the mutual evaluation assessment. That value is called into even greater question when we look at the countries not included in the high-risk designation. I will give a high-profile example: until February of this year, Russia was a member of the FATF. In February, the FATF suspended its membership because of the war against Ukraine—somewhat belatedly, one could say. I emphasise “suspended”; Russia has not been expelled. It is evidently a paragon of virtue when it comes to money laundering and terrorism financing because, unlike the British territory of Gibraltar, Russia is not designated as high risk and therefore not subject to enhanced due diligence. It is odd, then, that we have spent so much time passing Bills in this House specifically to deal with the stolen laundered money coming from Russia. Almost unbelievably, in its last review of Russia in 2019, the FATF praised Russia’s efforts to prosecute terrorist financiers and suggested that AML/CFT is afforded the highest priority by the Russian Government. This is a country that finances and supports organisations such as the Wagner Group, while Putin’s Government is generally regarded as a kleptocracy. Other countries not on the list, and therefore not subject to enhanced due diligence, include such famously uncorrupt ones such as Somalia, Venezuela, Libya, Turkmenistan, Nicaragua and Zimbabwe, to name but a few. All score worse than Cambodia in the corruption index; all are apparently low risk, according to the FATF. The Explanatory Memorandum refers to the FATF’s “robust assessment processes”; frankly, those do not stand up terribly well to scrutiny, if this list is anything to go by.
It is worth quoting the recently departed FATF CEO, David Lewis, who was very highly regarded. He said the agency structure of “mid-level bureaucrats” means that it does not have the scale to take on the big global financial crime issues. He said that they are
“very comfortable dealing with the finest minutiae of technical detail, but aren’t comfortable or able to have big picture discussions and are often only in their jobs for one of two years”.
He stated that genuine reform of the FATF is difficult to achieve, with typically two to four countries blocking consensus, meaning it is rare that you can get any meaningful change, which probably explains the list we are looking at.
Concerns are often raised about the FATF’s lack of transparency. The minutes of plenary sessions that make these risk designations are not published and it is clear that political horse-trading plays a significant role in the decision-making process. To be fair, there is no doubt that the FATF has had a positive impact on global financial crime since its inception in 1989, but there are growing doubts about its ability to cope with the challenging global situation we currently face. In an article for RUSI, Tom Keatinge of the Centre for Financial Crime and Security Studies makes some helpful suggestions about how the FATF could be improved. He suggests, first, greater transparency: it should provide greater assurance of independence and oversight. Its activities should be overseen by an independent board and its evaluation should be independently reviewed, not subject to the evidently politicised horse-trading that occurs currently. The minutes of the plenaries should be published, or the plenaries themselves could be livestreamed. Secondly, it needs to create a dedicated technical-assistance capability to ensure that unintended negative consequences, such as financial exclusion and the use of the FATF recommendations by autocratic regimes against civil society organisations, are addressed.
Thirdly, he suggests that the FATF needs to show greater ambition. Ultimately, the question is whether it is addressing financial crime effectively. It currently evaluates how effectively its recommendations are implemented, but not the extent to which financial crime is addressed as a result. He suggests an independent review of the FATF’s effectiveness, which seems a simple and sensible suggestion 45 years after it was founded.
Fatima Alsancak, also of the Centre for Financial Crime and Security Studies, suggests that Russia is a good
“case study in the deficiencies of the … FATF mutual evaluation process, which allows countries with high levels of institutionalised corruption to complete their evaluations despite the lack of integrity in their AML systems”.
She goes on to say:
“It is essential for the watchdog to revisit its standards”,
and again highlights the need for greater transparency in the decision-making and listing process.
I was going to ask why South Africa, Nigeria, Croatia, Cameroon and Vietnam are not the list, but the Minister answered that in her opening statement. I mentioned earlier that Gibraltar, a British Overseas Territory, is on the high-risk list. Will she please comment on that, too?
There are important questions to answer about the value of the FATF evaluation process. We should not rely passively on what are, frankly, flawed recommendations. Do the Government agree that FATF’s procedures and the high-risk list itself appear to have important deficiencies and, if so, what are they doing about it? Do they agree with the recommendations that I referred to earlier?
Lord Purvis of Tweed (LD)
My Lords, it is a pleasure to follow the noble Lord, Lord Vaux, who made a probing and persuasive argument about the deficiencies in some of the process. I have two questions for the Minister.
In a debate on a previous instrument, in which I spoke, the Government made the case that, with the new freedom as a result of Brexit, they would immediately make the decision to remove British sovereignty by having an automatic updated list of the Financial Action Task Force. I thought that rather inconsistent with the argument that we had left the European Union to gain freedom: the very first act was to give that freedom away.
The noble Lord highlighted the inconsistencies, and I will add another. The Minister has heard me talk about the Wagner Group and its lack of proscription, and the fact that it operates almost with impunity in many countries. One of the countries in which it has been operating, which is not on the list, is Sudan. It is beyond me that the UK, having done excellent work through our diplomats, development and security operations in that conflict-afflicted country, would not want the ability to act immediately in putting Sudan on the list, whose two warring parties, the Sudanese Armed Forces and the Rapid Support Forces, are operating across organised crime, including conflict. Why would that not be a high-risk third country? If the Minister is saying that we have made the decision simply to adopt an external organisation for making determinations of what would be high-risk third countries, what was the point of seeking the sovereignty to make decisions ourselves?
My second question relates to the United Arab Emirates, which maintains its position on the list. I have asked for the text of the UK-UAE investment agreement, but it has not been forthcoming. Why not? If there is an investment agreement that binds the UK into certain preferential market treatment for financial vehicles within the UAE, and the UAE is on a UK list of high-risk third countries, we should, as a matter of good governance, be able to see the text of the UK-UAE investment agreement and to consider what elements in it ensure that we comply with all the elements that would be required of our financial relationship with the UAE. This is even more important given that, in Grand Committee debates on the sanctions regime for Russia, we have raised the joint ventures that operate between the UAE, Russia, the Wagner Group and countries such as Sudan. I hope the Minister will be able to respond by saying that new regulations will be brought forward at pace to ensure that these loopholes are now closed.
Lord Wallace of Saltaire (LD)
My Lords, we come to this with several of us having been involved in the economic crime Bill and the National Security Bill, in which we touched on a number of related issues. Some of us, indeed, complained when the economic crime Bill was before us that there was a tendency in that Bill to treat economic crime as if it was entirely domestic, when anyone who knows a small amount about the subject knows that all serious economic crime is transnational and that one has to co-operate actively with other countries to combat it.
There was no reference to the FATF in the discussions on the economic crime Bill, but I thank the Treasury very much for the extensive briefing that my noble friend Lord Fox and I were given the other week on the FATF. It was extremely helpful and detailed, and showed how actively some parts of the Treasury are engaged in—one has to say this in the light of the comment by the noble Lord, Lord Vaux—trying to make the FATF work, or work better.
The FATF is a large, multinational organisation. I used to teach a course in international relations when I was an academic at the London School of Economics. I had to explain that it is a miracle that any international organisation works, because the difficulties are so intense. One has to recognise that there are limits to how far you can get agreement when you have as many member states as the FATF has, many of which are autocracies and systemically corrupt themselves. This creates considerable difficulties.
I was struck, as was my colleague and noble friend Lord Purvis, by the oddity that we have of course regained our sovereignty by leaving the dreadful European Union, which produced regulations that we had to adopt, only to align ourselves entirely with a much larger, looser and more opaque organisation, the FATF, in which we apparently follow what the noble Lord, Lord Vaux, described as its idiosyncratic listings. As I understand it, this is the grey list rather than the blacklist. I will talk a little about who is on the list.
There are two UK overseas territories on the list, which are listed as third countries. I point out to start with that the idea that an overseas territory is a third country is incompatible with the definition of a British Overseas Territory. That corresponds to the deep ambiguity with which the relationship between His Majesty’s Government and the overseas territories is carried on in so many different areas. It is, one would have thought, a scandal of British governance that there are overseas territories on the grey list. When I mentioned some issues to do with Gibraltar on the economic crime Bill, I rapidly received a communication from the Gibraltar Government. I am sure that the noble Lord, Lord Vaux, will shortly receive one in his turn. I understand that the fact that Gibraltar is still on the list relates more to delays in carrying a number of things through the Gibraltar Government than to the depths of the problem. The Cayman Islands, I suspect, is a more serious problem.
The Gibraltar Government said to me, “You have to understand that it is very much part of our position that we are entirely independent in how we carry through our adoption of these various new proposals”. As far as international illicit finance is concerned, the Treasury should be concerned that several British Overseas Territories—not just these two—have some things to answer on this area. They benefit from UK sovereignty and the UK system of law. In turn, that puts obligations on them to follow much more closely than some do, some of the time, British standards in this respect.
I hope that the Treasury has an active dialogue with the FCDO, which is responsible for the overseas territories, and that it pushes the Foreign Office to ensure that the overseas territories do not, as they have in a number of other areas, say that they will meet British standards— I am talking about transparency in beneficial ownership —then spend much longer than we had anticipated bringing their domestic practices in line with what the UK Government recommend.
I follow my noble friend Lord Purvis in asking some questions about the UAE, which is a major financial centre and has close links with the UK. There are 100,000 British citizens living there, some of them wealthy expats. The fact that the UAE is also on the grey list is a matter of real concern. I am sure that the Minister is aware that the largest donation given to the Conservative Party in the first three months of this year came from someone whose financial interests are centred in Dubai; I understand that the donor is also the treasurer of the Conservative Party and a former Minister in an Egyptian Government. This is just one illustration of how we perhaps ought to pay more attention to the delicacy of our financial and political relations with the UAE. On the importance of Dubai and Abu Dhabi as financial centres, as well as the worries and proper concerns that one has about them, I, alongside my noble friend Lord Purvis, note that the Wagner Group has managed its various transactions and financial arrangements through Dubai; this is not something that we should be happy about at all.
There are a number of questions to answer here. I am grateful for the briefing on the FATF that the Treasury provided for us, but Parliament deserves to be told more about this murky area of finance in which not just the overseas territories but, dare one say it, sometimes our Crown dependencies are caught up and which we ought to be more actively engaged in cleaning up as far as we can.
Baroness Chapman of Darlington (Lab)
My Lords, I am aware that we always follow the FATF’s recommendations but, given what we have just heard, it is just as well that we have this procedure as an opportunity to ask the Minister about some issues of concern that arise from the recommendations we are considering. I will not repeat everything that has already been said, because immediately following this we have another SI that took three and a half hours to consider in the Commons and, looking around the Room, I anticipate that it may take a little while this afternoon as well.
This instrument is perhaps relatively straightforward, but I will highlight a couple of the points that have been made in which we are especially interested. On the issue of reputation and our overseas territories, the fact is that Gibraltar and the Cayman Islands are on this list. Do the Government think that this has any reputational impact on the UK? What is the Government’s assessment of that? When this issue was considered in the Commons, providing some kind of support or input from the UK to Gibraltar to move things along was discussed. I do not think that the Minister there gave a particularly expansive response at that point so it might be helpful, if there is an opportunity, to hear from the Minister here today whether a request has been made by Gibraltar and whether any input has been forthcoming from the UK.
I will leave it there for today, given the next SI that we will consider and the fulsome contributions that have already been made by others, which I know the Minister will answer fully.
Baroness Penn (Con)
My Lords, I thank noble Lords for their contributions to this debate. I know that we have also touched on this issue in other Bills progressing through the House.
I will start with the FATF process. As I think I said in my opening speech, the UK is an active member of the FATF. We participate in mutual country evaluations, looking at its processes and rules, which we are fully supportive of. Indeed, we were a founding member of the FATF. The processes are agreed internationally and based on rigorous, detailed and robust technical assessment. The FATF also regularly co-ordinates with other major international organisations.
It is worth saying two further things on the FATF. First, as a member of the FATF, we will always look to improve its work and processes and we will always reflect on those. Secondly, it is an important piece of the picture on setting standards for international action on anti-money laundering and counterterrorist financing, but it is only one piece of the picture when it comes to the UK’s overall approach towards tackling economic crime more broadly and some of the issues raised in today’s debate.
Cambodia being delisted is within the scope of the SI. Cambodia has addressed key deficiencies relating to the legal framework for international co-operation and preventive measures, risk-based supervision, financial intelligence, investigation and prosecution of money laundering, asset confiscation and targeted financial sanctions for proliferation financing. By addressing those deficiencies, Cambodia met the criteria to be removed from the list.
The noble Lord, Lord Vaux, also raised Russia’s membership of the FATF. As he noted, in February 2023 the FATF suspended Russia from the organisation. It continues to call on all jurisdictions to remain vigilant to threats to integrity, safety and security of the international financial system arising from the Russian Federation’s aggression in Ukraine. We are absolutely clear that Russia’s actions run counter to the principles on which the FATF is based and we fully support the ongoing suspension of Russia’s membership of the FATF. We have taken a wide range of measures against Russia, including the most extensive sanctions regime that we have ever put in place. We will continue to bear down on the Russian state in that way.
The noble Lord, Lord Wallace, and the noble Baroness, Lady Chapman, asked about the overseas territories and Crown dependencies. The UK has engaged with both on this issue to share best practice, improve understanding of risks and increase compliance with the FATF standards. I went to the ministerial meeting of MONEYVAL, which is a regional organisation that feeds into the FATF process. Some of the Crown dependencies are members and I met the Ministers responsible for FATF compliance as part of that forum. We will continue doing that, as several of the Crown dependencies have assessments that are either ongoing or upcoming this year.
Gibraltar and the Cayman Islands were mentioned. Gibraltar continues to make good progress against its action plan with only one action remaining—for it to show that it can pursue more final asset confiscation judgments commensurate with its high-risk profile. When it comes to that action, judgments coming through can take time and that timing is not all within Gibraltar’s control.
I met representatives from the Cayman Islands this year and we touched on this area. They have made significant progress in addressing deficiencies since the Cayman Islands were listed in February 2021. In June 2023—just last month—the FATF made the initial determination that the Cayman Islands have substantially completed their action plan. On this basis, it plans to conduct an on-site visit in September to verify this, which is the final stage before delisting. We have a positive story to tell in both those areas.
Lord Purvis of Tweed (LD)
I look forward to the Minister writing to me, because I was a little alarmed to hear her say—if I heard her correctly—that the UK would work with Sudan on this. There is no one to work with in Sudan at the moment and, if a case cannot be made for the UK not to act on Sudan, which has a civil war, with two warring partners and with considerable financial interests on each side—SAF and RSF—then I cannot see a case that would be stronger.
Baroness Penn (Con)
I will write on Sudan to the noble Lord, Lord Purvis, as I committed to do, and I will copy in the Members in this debate.
The UAE is making swift progress on its FATF action plan. It has several actions still to complete, focused on money laundering investigations, transparency of beneficial ownership and the investigation of money laundering cases. We hope to see further progress on those areas, as it looks to deliver on its action plan.
I have not managed to cover in detail all the points raised by noble Lords. They have gone slightly wider than the countries in question on the listing today, but I understand noble Lords’ interest in the process that we use to update these lists, adhering to international standards. I will read Hansard and ensure that I write to noble Lords if I have not addressed any questions.
Postal Packets (Miscellaneous Amendments) Regulations 2023
(1 year, 4 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Penn
That the Grand Committee do consider the Postal Packets (Miscellaneous Amendments) Regulations 2023.
Relevant document: 46th Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument)
The Parliamentary Secretary, HM Treasury (Baroness Penn) (Con)
My Lords, this statutory instrument will provide United Kingdom authorities with powers in relation to postal packets—parcels—moving from Great Britain to Northern Ireland. It does nothing more or less than that. It does not itself put in place the wider Windsor Framework arrangements.
These powers are part of delivering what we promised for consumers and businesses in Northern Ireland. They are necessary to ensure that we can implement the Windsor Framework and remove the burdensome regime that the old Northern Ireland protocol would ultimately have required. I am aware of some misunderstanding about what the Windsor Framework requires in respect of parcel movements, so I will attempt to address that also in my opening remarks.
Had it been fully implemented, the Northern Ireland protocol would have required international customs processes for all parcel movements from Great Britain to Northern Ireland. On the new arrangements, it is worth dealing up front with some of the issues where there has perhaps been a misunderstanding about what will be required in future under the Windsor Framework. In short, I would like to provide some reassurances to noble Lords in that regard.
First, someone in Great Britain sending a parcel to their friends and family in Northern Ireland will not need to engage with any customs processes under the Windsor Framework. Nothing will change for those movements, compared with today. Similarly, Northern Ireland recipients of parcels sent by their friends and family in Great Britain will not need to engage with any customs processes. For example, a grandson in Liverpool sending a package to his grandmother in Belfast will not need to do anything new to send the package and his grandmother will not need to do anything new to receive it.
British businesses in Great Britain selling to Northern Ireland consumers will not need to complete customs declarations, international or otherwise, and Northern Ireland consumers buying from sellers in Great Britain, including via online shopping, will not need to engage with any customs processes. They will buy from the seller in Great Britain and receive their goods without doing anything new.
I emphasise that this means the Windsor Framework explicitly removes one of the most onerous requirements on goods being sold to Northern Ireland consumers and, of course, on goods being sent to friends and families. There will be no routine checks or controls applied to parcels, with interventions only on the basis of a risk-based, intelligence-led approach. This means that the overwhelming majority of parcels will not be subject to checks.
I turn to parcels sent from a business in Great Britain to a Northern Ireland business. These will be treated the same as equivalent freight movements: they can be moved through the new green lane where eligible when it is introduced from October 2024. As with freight movements, the green lane will ensure that eligible goods will no longer require international customs processes. They will instead require only the provision of routine commercial information. Movements via the red lane, including goods destined for the EU, will be subject to the customs processes required by the EU, as noble Lords would expect.
The Prime Minister negotiated the Windsor Framework to ensure that consumers and businesses in Northern Ireland—and, indeed, British businesses selling into Northern Ireland—could benefit by protecting internal trade within the UK. The Government need to ensure that the powers of HMRC and Border Force are sufficient to allow them to monitor the rules for movements of parcels and that, where certain requirements are in place, they can be enforced.
The Secondary Legislation Scrutiny Committee’s report suggested that we clarify the rationale for bringing the instrument into force on 31 August. There is a limited range of prohibited or restricted goods that the UK Government accept are required to comply with EU customs rules today—for example, certain drug precursor chemicals or products derived from or associated with endangered species covered by CITES. HMRC and Border Force cannot currently enforce these requirements, which is why this statutory instrument is needed now rather than in a year. The same powers will be used in respect of the new parcels arrangements that will come into force through the Windsor Framework arrangements for parcels from 30 September 2024. This is so that we are able to determine that parcels destined for the EU can be detected and ensure that they follow the requirements of the red lane.
The committee’s report also noted that arguments had been submitted to it that these regulations would contravene the principle of unfettered access within the UK by introducing a customs border. A submission by the Democratic Unionist Party argues that they would be contrary to the Good Friday agreement.
The Government recognise that there are a range of views on the Windsor Framework. Our view as the Government—as the Prime Minister and the Secretary of State for Northern Ireland have made clear—is that the arrangements support and protect the Good Friday or Belfast agreement in all its parts. They protect the integrity of the European Union’s single market and Northern Ireland’s place in the United Kingdom’s internal market. These regulations are discrete and relate solely to powers available to HMRC and Border Force. That said, I hope I have provided some reassurance about what the Windsor Framework does and does not require, and therefore what the powers granted by the regulations will be used to monitor and enforce.
The report also notes the absence of a public consultation. It is the Government’s view that a public consultation on an SI of such limited scope is unnecessary. The instrument implements requirements under the Windsor Framework that have been discussed extensively. The Treasury and HMRC continue to engage with a wide range of businesses and sectors, and indeed with fast parcel operators, on both this SI and the wider Windsor Framework.
In summary, the parcel arrangements set out under the Windsor Framework are a significant improvement when compared with the requirements under the old Northern Ireland protocol. But as well as comparing them with what the protocol would have required, it is vital to understand how little will change compared with the status quo for the vast majority of Northern Ireland parcel recipients and those in Great Britain sending goods to them. This statutory instrument is not a barrier but an enabler to the agreement that we have negotiated. I therefore beg to move.
Lord Dodds of Duncairn (DUP)
My Lords, I thank the Minister for outlining the purposes of the regulations before us. As noble Lords probably know, just the other day this was a matter of some heated debate in a Delegated Legislation Committee in the other place, and was subject to a vote in that House yesterday evening. Some consternation was expressed in the other place about the manner in which the Government had removed Members from that committee and replaced them with those who would vote these regulations through, but that is a matter for another day and it can be followed by reading Hansard on those committee proceedings.
The Minister said probably the most significant thing at the very end of her speech: these regulations facilitate the Windsor Framework. A lot of the debate is about the benefits of the Windsor Framework compared with the protocol as originally agreed, but the regulations before us are not about implementing the Windsor Framework; they are purely about creating the border for parcels between Great Britain and Northern Ireland. After that, we come on to the Windsor Framework, which is all about the EU law in which it decided, after discussions, to reduce the requirements that would normally be in place to move parcels into the EU for Northern Ireland.
But that is not what is before this Committee. Before this Committee is purely the creation of the parcels border. Whatever the EU then decides to do, whether by agreement or unilaterally, is facilitated by that border. It is our job as parliamentarians to examine the actual regulations before us, not necessarily today, although we can comment on them. The Windsor Framework proposals, which are in EU legislation, are separate, but I will reference them and no doubt they will be referenced by other speakers in this Committee.
The regulations treat Northern Ireland as if it is a foreign country for the purposes of moving parcels. They put in place another piece of the jigsaw of the Irish Sea border. They do not ameliorate or remove it; this is a new creation that is not here at present. Their effect is to separate Northern Ireland from the rest of the United Kingdom in the sense of placing it outside the same single market as Great Britain for postal purposes.
They amend the Postal Services Act 2000 and the Postal Packets (Revenue and Customs) Regulations 2011, so that movements from Great Britain to Northern Ireland cease to be unfettered within the same single market and become fettered by a customs barrier that effectively divides them into two single markets. As a consequence of the legislation before the Committee, postal packages destined for Northern Ireland from Great Britain have to be placed in the same group as packages destined for foreign countries. The definition of “export” is changed to include movements from Great Britain to Northern Ireland. Reference to the United Kingdom has to be removed so that the only references in play are Great Britain and Northern Ireland, with the UK single postal market terminated.
Baroness Ritchie of Downpatrick (Lab)
My Lords, I declare my interest as a member of the Secondary Legislation Scrutiny Committee, which has looked at this statutory instrument in some detail. As the Minister said, we had several questions and we are still seeking clarification. I am also a member of the Protocol on Ireland/Northern Ireland Sub-Committee.
I support the Windsor Framework and appreciate that this statutory instrument addresses business-to-business customs checks. For the wholeness of this debate, it is important that we in Northern Ireland can avail ourselves of our unique opportunities, being a member of the UK internal market and able to access the EU single market. There are major economic opportunities there, and the people of Northern Ireland should see them fully utilised and realised in order to underpin our economy.
Recently, I saw some interesting figures about economies within the UK. Northern Ireland was quite far down the scale, but it came up to about number 2 earlier this year. A contributory factor was us in Northern Ireland being able to avail ourselves of both markets.
Although I support this statutory instrument, I have several questions. The noble Lord, Lord Dodds, referred to the burdens being placed on business. We members of your Lordships’ committee on the protocol and the Windsor Framework have just completed our report, which will be published next week. We looked at labelling. Will the parcels have to indicate that they are not for the EU and therefore not going through a certain lane? There are potential burdens and expenses there for businesses in Britain, and that has to be explored. What discussions have taken place with potential businesses? What information is available to them about requirements and practical arrangements?
My queries about the statutory instrument relate to the process of compiling it—the very issues raised by our standing committee on statutory instruments. I have several questions concerning three points. The measures that allow powers in relation to existing requirements, as opposed to those deriving from the Windsor Framework, have not been well explained. Why is this the case? Will a better explanation be provided for businesses? The noble Baroness referred to existing requirements in her concluding remarks about the dates for this to come into force, but what are those existing arrangements? The noble Lord, Lord Dodds, referred to this.
Why do the powers to enforce those arrangements not currently exist? Why are they needed, and what do the “appropriate powers”, which are now being taken, mean in practice? As a consequence of representations made by our committee, a revised Explanatory Memorandum was laid on 6 July and referred to “restricted goods” and better managing “any risks of smuggling”. Can the Minister provide further clarification and elucidation of this?
On the details of this coming into force, which the Minister referred to at the end, I note that the statutory instrument says that it will come into force on 31 August 2023. But others suggest that the arrangements will not come into force until September 2024, so why the urgency in scrutiny before parliamentary recess? What powers are being introduced that have effect before 30 September 2024 and why are they needed now? Do these relate to the existing arrangements and requirements?
Why was there no consultation with businesses, either in Britain or Northern Ireland? Why not consult on how the changes will be implemented? If it will affect only a small sector, would it not have been prudent to have a consultation? Why the lack of an impact assessment? Some who made comments to our committee raised the lack of an impact assessment. From memory, I believe that the Road Haulage Association, which will be directly involved in a lot of this, indicated that.
Lord Weir of Ballyholme (DUP)
The approach taken to this statutory instrument, both in this House and when it was introduced earlier this week in another place, has very much been one of, “No worries, there’s nothing to see here”. As with a car crash at the side of the road, we have been directed that there is nothing really to worry us. Indeed, in another place, the Minister tried to give an assurance that this is
“a very, very small SI”.—[Official Report, Commons, Second Delegated Legislation Committee, 17/7/23; col. 16.]
When this instrument was introduced in the other place, reference was made on four occasions to the fact that no change is being made, or words to that effect. That phrase has been echoed today by the Minister here, yet I suggest that significant changes are being made. For example, as has been mentioned, for the first time ever, parcels moving from Great Britain to Northern Ireland will be put in a separate category and categorised alongside parcels from a foreign third country. For the first time ever, the UK market is being divided between the rest of the United Kingdom and Northern Ireland, but we are told that there is no change. For the first time ever, parcels going from Great Britain to Northern Ireland will be categorised and defined in the same way as exports and imports but, again, we are told that no change is being made. These are not simply changes in processes that could be dropped at the whim of any Minister. These are being put in place directly in the law of the land via legislation.
Similarly, let us look at the wording of the regulations. The Explanatory Note makes reference to the fact that part of the purpose of the regulations is
“to make provision to apply such enactments relating to customs and excise as are for the time being in force to goods contained in postal packets sent from Great Britain to Northern Ireland, and to ensure that duties and other charges payable in connection with such postal packets are recoverable by the postal operator concerned”.
They will give directly a power to impose customs duties and a financial burden, albeit one that will supposedly be reimbursed, yet we are told that there is no real change here.
In their boast, the Government also tell us that this SI is an improvement on the protocol. In some ways it is, although we should always remember who brought about the protocol in the first place. The remarkable extent to which the Government are distancing themselves from the protocol that they negotiated is unusual in and of itself but the great boast of the Government—reiterated in both Houses—is that an individual sending a parcel to a friend or family member in Northern Ireland can do so without having to fill in customs declarations. They say we should be grateful that a granny in Liverpool is able to send something to her grandchild in Belfast. However, we should also remember that that is on the basis, as has been particularly referenced in EU legislation recently, of an exemption. The opportunity for the granny to do this is at the grace and favour of the European Union. There is a clear diminution of sovereignty yet we are told that, like grateful natives, we ought to be suitably delighted that this has been given to us.
Similarly, it has been indicated that if a business is sending a package to an individual consumer there will no customs declarations required, but I seek some information from the Minister. For a business to do that, will it have to be part of a trusted trader scheme? Also, because it is put on the same basis as freight, presumably any business-to-business supply could be only where that business is part of the trusted trader scheme.
Leaving aside the general concerns that we have with that, some movements—particularly if we talk about something that is to be moved in a parcel—may be very infrequent between two businesses in different parts of the United Kingdom. Many businesses will come to the conclusion that going through the bureaucracy of having to join a trusted trader scheme for an occasional movement of goods to Northern Ireland is simply not worth it. What we are likely to see, which is also part of the purpose of what has been put in place, is diversion of trade. People and businesses will simply seek to source from outside the United Kingdom.
It has also been indicated in another House that the new powers to be given to HMRC and Border Force are to stop illicit goods—a very accurate but misleading term—moving from Great Britain to Northern Ireland. Let us remember that we are talking about giving powers to Border Force for movements entirely within the United Kingdom—from one part of it to another. When one talks of illicit goods, it conjures up a mental image of drug packages or another form of something illegal. But the powers already exist to stop movements of those goods, so when we talk about illicit goods we are really talking about goods that contravene what the EU says. This is not for something entering the single market but within the internal UK market.
I note that the Secondary Legislation Scrutiny Committee has mentioned the question, which has not been answered particularly satisfactorily, of why, despite the fact that provisions are due to take place in 2024, these regulations are effectively being brought in now. When pressed on that in another place, the Minister gave two examples. One was: what if hazardous substances were being moved about? If hazardous substances were being moved by parcel, that should be a concern if it was moving from Glasgow to London, let alone coming into Northern Ireland. I am not quite sure why a provision needs to be put in place for that.
The other example given in another place was the risk of blood diamonds being moved. I have not had a recent conversation with my local postman. I am not altogether sure that they would tell me that they are burdened each day with blood diamonds moving from Sierra Leone or Liberia through Great Britain—because it would have to be there—and then on to Northern Ireland, with the risk of them moving into the EU. But supposedly, that is the excuse as to why these additional powers need to be given. Again, we are told there are no real changes.
Finally, in another place there was a subject of much controversy. This statutory instrument is so innocuous that the Government took the unprecedented step of removing five of their own MPs from the committee that was scrutinising it. One of the MPs said that whenever he indicated any level of scepticism towards it, he was first asked whether he would be happy enough to remove himself from the committee. When he said that he was not, he was then told, “Perhaps you want to take a week off—have a week’s holiday”. I think that MP missed a trick because, if they had held out with the Whips, perhaps the soon to be vacant post at the Ministry of Defence could have been lobbed in their direction as a reward for not being on the committee.
That is against the background that we should all be relaxed, as there is no real change. Rather than that argument, there is an equally strong argument that it changes everything for our sovereignty or is the first step towards that. I simply say to the Government that we are opposed to this statutory instrument, but it is high time that they, instead of doubling down and pretending with spin that everything is perfect, actually face the realities and make the changes that need to take place to restore the internal market of the United Kingdom. Once those changes are properly made and the union is restored, we can begin to see proper progress in Northern Ireland.
Baroness Hoey (Non-Afl)
My Lords, in as short a time as a few months, noble Lords will realise just how serious these regulations are. It will be the first of many statutory instruments that result from the Windsor Framework or, indirectly or directly, from the European Union’s attitude to it. As we all know if we read the Windsor Framework, and what the Government and the EU said, they are very different. Even on these postal packets regulations, it is very different.
A number of noble Lords referred to what the Secondary Legislation Scrutiny Committee said about why there is a rush—why the hurry? Why the Government want to rush this through is very straightforward. They know that, as time goes on and there is more detail, scrutiny and need to work with this in, for example, sub-post offices across the country or through customs officials, we will see that this is not right. It is not going to work. They want to get it through.
It has been mentioned, so I do not want to go into what happened in more detail. I sat through the committee on this SI in the other place, and it is absolutely shocking that our Government have so little confidence in their own Members that they had to remove five of them because they knew that they would not get their support. That was because those Members had read it. They had read it and listened, and they knew what they needed to do, because what the Government had decided was not right or good for the people of Northern Ireland and certainly not for the union.
These regulations are, without doubt, changing the status of Northern Ireland such that it is being treated as a foreign country and a foreign part of the administration of the United Kingdom. For some people, that is fine. Some people do not really care about Northern Ireland. Let us face it: there are an awful lot of Members, not necessarily in this House but in Parliament generally, who probably think, “Oh, Northern Ireland—what a nuisance. If only we could forget about it”. This is precisely what many people who do not care about Northern Ireland want to see happening—this dividing, this moving, this drip, drip, drip taking Northern Ireland further and further from the rest of the United Kingdom.
Imagine a young person coming to this country as a student, sending a parcel. The Government are saying that it will not be very different, but we know that the European Union will eventually decide whether even individual parcels from person to person will need authorisation from somewhere. That is not for the person at the moment, but someone in the sub-post office will have to get the authorisation and that is going to cost money. Who is going to pay for that? There are business-to-business costs from that. More and more costs mean more businesses in Great Britain being clear that they will not bother sending things to Northern Ireland. This is happening already and is going to happen even more.
Imagine a young student coming over here to England and deciding to send a parcel to their grandfather. They will be told that they are sending it to a foreign country. That is quite outrageous. The instrument has the same instruction for Regulations 5, 6, 9, 15, 20 and 21, namely to insert
“and all GB-NI postal packets”
after “foreign postal packets”. It is quite outrageous that people in Northern Ireland who have given so much loyalty to this country—so many people died during world wars—are now being repaid by this glibness around how they are treated.
Lord McCrea of Magherafelt and Cookstown (DUP)
My Lords, I thank the Minister for outlining these regulations as she and the Government desire to present them. As we look closer at them, and upon further investigation, we know that the reality for people living in Northern Ireland will be quite different.
What does the Minister think Northern Ireland’s constitutional position is? Is it a part of the United Kingdom or not? In reality, all the Government are doing through this statutory instrument, these regulations, is strengthening opposition to the Windsor Framework within the unionist population in Northern Ireland because people are seeing the unfolding of the reality. The reality is that the Windsor Framework was sold by the Prime Minister and the Secretary of State for Northern Ireland on spin, not reality.
These regulations directly contradict what the Prime Minister stated when introducing the Windsor Framework on 27 February, namely that it
“removes any sense of a border in the Irish Sea”.
That is a very clear statement. So, does it? In reality, the framework deepens the border in the Irish Sea rather than removing it and does so without there being any redeeming upside in the regulations, which the Government claim exist and existed in the Stormont brake SI.
The regulations have been the subject of a critical report from the Secondary Legislation Scrutiny Committee, which called attention to them on the grounds of there being no consultation or impact assessment. It also highlighted the Government’s refusal to answer key questions about the regulations, which creates the clear impression that they are hiding something.
The fact that the Government seek to hide the true implications of these regulations is reflected in the answers that they provided to the Secondary Legislation Scrutiny Committee. Specifically, they claim that the impact of the regulations is modest and that they just need to be able to give HMRC and the border agency powers to detain and seize illicit movements. In an effort to change the subject, they go on to talk about the introduction of a “green lane” for packages on 1 October. Specifically, they say that their purpose is to secure the integrity of the Windsor Framework by
“ensuring that Border Force and HMRC have powers to detain, inspect, and seize goods moved illicitly in parcels from GB to NI”.
It is interesting that, when the committee in the other place discussed this, attention was drawn to the Minister’s reply that she was concerned about “hazardous” substances, “invasive species” and other things mentioned in the Explanatory Memorandum being transferred by post from Great Britain to Northern Ireland. However, would the Minister not be concerned about them being transferred in parcels from London to Scotland or to Wales? If the regulations are all about protecting markets, why are the Government singling out Northern Ireland?
It sounds reasonable that provision should be made so that the requisite authorities can detain illicit movements, for example of drugs, in parcels but, through the deployment of “illicit”, these words conceal the fact that what is in view is not the movement of drugs and the like but, rather, any goods movements across the border created by these regulations that is in violation of them—movements that are perfectly legal today and just part of what being in the same single market means. Therefore, rather than restoring Northern Ireland’s place in the United Kingdom single market, these regulations give effect to the additional sense in which Northern Ireland is placed outside the single market, which is increasingly becoming a Great Britain single market.
The simple effect of these regulations is to build in the Irish Sea a border that currently does not exist, in relation to which full customs requirements can be made. The consequences of this include packets going from Great Britain to Northern Ireland having to be put in the same category as foreign packages. That is why I asked this question: where does the Minister see Northern Ireland? Is it a foreign country, a third country, or is it a full constituent part of the United Kingdom, equal to every other part? The definition of “exporting” is being changed to include movements from Great Britain to Northern Ireland, replacing references to “the United Kingdom” with “Great Britain”. On the question about what the Minister thinks, empty words and rhetoric will not be sufficient because this is reality. These regulations—the statutory instrument—are reality.
The Minister and the Government mentioned the Belfast agreement—I have no doubt that others will before this debate is finished—and how it is so important to protect it. It constitutes international law. At the heart of the agreement is the following statement:
“acknowledge that while a substantial section of the people in Northern Ireland share the legitimate wish of a majority of the people of the island of Ireland for a united Ireland, the present wish of a majority of the people of Northern Ireland, freely exercised and legitimate, is to maintain the Union and, accordingly, that Northern Ireland’s status as part of the United Kingdom reflects and relies upon that wish; and that it would be wrong to make any change in the status of Northern Ireland save with the consent of a majority of its people”.
I believe that the Postal Packets (Miscellaneous Amendments) Regulations 2023 plainly change the status of Northern Ireland such that it is to be treated as foreign with respect to the rest of the United Kingdom for some custom purposes. That is totally wrong and is deeply offensive to the people of Northern Ireland who, as the noble Baroness, Lady Hoey, mentioned a few moments ago, sacrificed so much——many of them gave their lives—to remain part of this great, cherished United Kingdom.
Lord Berkeley (Lab)
My Lords, I rise to speak briefly about another milestone in what I see as the postal service’s disaster this week. I listened very carefully to what noble Lords said about the parcel service, or lack of, between Britain and Northern Ireland, but the other disaster is what many people call the most widespread injustice in British legal history, which is the Horizon IT inquiry. Will we have post offices at all in the future and will they operate properly? It is a very serious issue. The chair of the inquiry, Sir Wyn Williams, published his first interim report on 17 July, which is well documented in the Guardian today. I will give a few highlights of this long-running matter, which has been going on for 20 to 30 years. There are comments that Post Office staff were grouping the suspected postmasters, most of whom have been demonstrated to be innocent, by the colour of their skin. I find it quite extraordinary that this can happen in this century—this was in 2011.
The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)
My Lords, the Division Bell is ringing, so let us suspend proceedings for eight minutes. Scamper off, rush back, and we will carry on.
Lord Berkeley (Lab)
I shall be quick, my Lords, because we have been at this for some time.
I was just saying that the Post Office has been continuing to prosecute innocent people. Suddenly, it has found 4,767 new documents, which will of course have to go into the inquiry, delaying it further. I suggest that it is not co-operating at all fully with the inquiry. Nevertheless, its chief executive got a bonus of £455,000 last year, so he must be all right. Fifty executives also got bonuses relating to the inquiry. I ask the Minister this, very gently: can the Government finally get a grip of this organisation? Most importantly, will they read the start of Wyn Williams’s report, which was published yesterday and says that the compensation schemes are running late? It also states:
“Under the legislation now in force all payments of compensation … must be made by 7 August 2024. My current view is that this will not be achieved”.
That is a terrible reflection on Ministers over the years—it is not just the present lot but many other people—but I hope that the Minister can give us some comfort that, once and for all, the Government will get a grip of this horrible project.
Lord Purvis of Tweed (LD)
My Lords, it will spare the blushes of the noble Lords, Lord Dodds and Lord Weir, for them not yet to be in their places to hear me say that I agree with everything that they said. The debate that we have had, while more respectful and with more decorum than the extraordinary scenes in the committee of the House of Commons on Monday, does not undermine the seriousness of the measures that we are being asked to approve. “Yes Minister” could probably have had an episode on how to bring forward regulations with considerable impact and long-term consequences, but with an innocuous title, by taking powers very early, before they are necessary, without consulting those who have to implement them and without giving any data on their likely impact and, as a security measure, removing members of a committee which is asked to approve the regulations because you know that they will be significantly concerned about them.
I hope that this is not a trend. As the Minister said, this is not about implementing the Windsor Framework, but I hope that it does not start a precedent for how the Windsor Framework will be implemented. We were told, notwithstanding noble Lords’ concerns in a debate that we had on the Windsor Framework and the view of the noble Baroness, Lady Ritchie, on the wider issue with the framework, that it was starting a new chapter. I hoped that that new chapter would be about transparency, openness, consultation, trying to build consensus, notwithstanding how difficult it would be, and bringing people with the Government on implementation, but this is in stark contrast to the way forward.
Stephen Farry MP intervened on the Minister on Monday calling for support for the business community in GB trading with Northern Ireland. I reiterate that call. It is necessary to carry on the support that is being provided to businesses to overcome some of the difficulties in the Government’s initial protocol so that they can overcome the difficulties that they will face with the implementation of the Windsor Framework. The Road Haulage Association said very clearly that this measure will bring new burdens on business and add to bureaucracy. That is not unfettering. The noble Lord, Lord Dodds, was absolutely correct: this is fettering internal UK trade.
The Minister in the House of Commons said that this SI was the result of “a hard compromise”. That language was not used by the Minister here. It is, to some extent, more honest to say that it results from a hard compromise but when the Government have made that compromise, they then have to own it and act honestly and openly.
Let me give one example of where there is still confusion. I commend the Secondary Legislation Scrutiny Committee’s report. I hope the Minister will have clear responses to its strong recommendations and concerns. They were not made lightly, as the noble Baroness, Lady Ritchie, indicated, but followed proper consideration from a balanced perspective. That should be taken into consideration.
The Government used the example of a granny in GB sending a birthday parcel to her granddaughter in Northern Ireland. That would not be affected by this SI, but if the granny used online purchasing from a company that then used another company to dispatch the parcel to the granddaughter, it would be covered by the SI. We do not live in the 19th century as far as how people send parcels. The Government need to be clear about the estimated number of parcels that are likely to fall under each of the lanes, the percentage that will now be opened for checks and the likely impact on the businesses that would be dispatching and receiving them. The Minister in the House of Commons said that the Government could provide only estimates at this stage, and there is no impact assessment, as there should have been.
On a previous occasion in Committee the noble Lord, Lord Dodds, raised the issue of measures. The Minister said that this is not about implementing the framework agreement but, conveniently, it is about implementing it in order to get out of having an impact assessment. The Government have said that an impact assessment is not needed because, as the Minister said, this is so limited in scope. When it affects all parcels being sent from GB to NI, it is not limited in scope; and when the definition of those will now have to be inserted after “foreign postal packets”, that is not limited in scope either. When will the Government provide the detailed information about the impact of all that is likely to be covered by these regulations?
Baroness Chapman of Darlington (Lab)
My Lords, the noble Lord, Lord Purvis, is correct to emphasise what the Secondary Legislation Scrutiny Committee observed about timing and the lack of consultation and impact assessment; of course, that is important, and I am sure that the Minister will want to respond to it fully. The reason it is so important is not just because it is our job to ask those questions, which we ask frequently; it is because, particularly in the matters before us today—as we heard, issues of Northern Ireland’s place within the union have been raised, as a consequence of the sense that this is being rushed or is not being done adequately—it is beholden on the Government to make an extra effort to make sure that this is done in a way that is beyond reproach, as far as Ministers are able.
These regulations implement part of the Windsor Framework, which we support. The Minister knows this, and we have been clear about it. We think it is a far better solution than that which was arrived at previously with the Northern Ireland protocol. It is also better than the approach that the Government sought to take with the protocol Bill, which we spent many weeks discussing earlier this year. Brexit brought us to this place. A solution needed to be found, and there was always going to be this kind of unsatisfactory compromise on Northern Ireland. This was raised before the vote took place. As we all know and have repeatedly said, Northern Ireland voted to remain and a solution needed to be found. I am afraid that this is probably the least worst option that we can land on at the moment.
Consumer-to-consumer parcels and business-to-consumer parcels will not be subject to regulations, and business-to-business goods intended to remain in the UK will use the green lane, while other goods will be subject to declarations and checks. We know that life will not be that simple and that there will be complications—in the real world, things will not always work as anticipated—and there will have to be some recognition of that as we go forward. The questions raised by the noble Lord, Lord Purvis, will have to be answered—if not today, then in the execution of this. That is life, and that is how we will have to approach this. But, having come to the point of securing an agreement, which was approved by the other place by 515 votes to 29, it is incumbent on the Government to make good on what they agreed.
My noble friend Lady Ritchie spoke of the opportunities for Northern Ireland from its unique position, and she asked important questions about the advice and support for businesses that will have to navigate these new arrangements. Is HMRC adequately prepared and resourced to make this work, and can the Minister explain how the green lane will be policed? The noble Lord, Lord Purvis, described the EU as a foreign power, which it is, but it has our consent and agreement. This is the arrangement that we have come to with our negotiating partners. There were other options: the Northern Ireland protocol was the one that was settled on by Boris Johnson and the noble Lord, Lord Frost. We all agreed that it was unsatisfactory —no one seemed particularly happy with that outcome—and here we have moved on to something that is an improvement.
I completely accept what our friends the noble Lords, Lord McCrea and Lord Dodds, had to say. I understand the challenge, but I find myself searching for an alternative viable solution. I know that one could have been that we all stayed in the customs union or the single market, but that is not the position of any of the main political parties and I believe it is not the position of the DUP. The noble Lord, Lord Dodds, may correct me if I am wrong about that—here he comes now.
Lord Dodds of Duncairn (DUP)
I thank the noble Baroness for giving way. On alternatives, I refer her to the report by our Select Committee on the protocol, on which I have the honour to serve along with the noble Baroness, Lady Ritchie. In July last year, it said—I do not have the precise reference, but I can supply it—that, in relation to parcels, the solution was to continue as with the grace period, and that there should be no fettering of parcel deliveries between Great Britain and Northern Ireland. The cross-party Select Committee did suggest a very good solution—one that, unfortunately, the Government decided not to run with.
Baroness Chapman of Darlington (Lab)
I read that report and I commend the noble Lord for bringing it to our attention, but we cannot arrive at a solution unilaterally, as the United Kingdom. Whatever solution we arrive at must be agreed with our negotiating partners. I was not part of that negotiation but, from what Ministers have indicated, it would seem they were not able, at this point, to settle on that with the European Union. We can regret that, but it is the reality of where we are. We are surely in the business of dealing with reality as we find it, not as we would wish it to be.
It really ought to be a priority for the Government to rebuild trust. I would urge far more candour and a franker approach when we discuss these issues, and not to do anything which would give the impression that we are somehow trying to steamroller these things through. Can the Minister explain exactly what a business would have to do to become part of the trusted trader scheme, so we are clear about exactly what we are asking businesses to do? We completely understand the dissatisfaction that some have with the framework but there is, at the moment, no other viable alternative solution.
I am not going to comment on the mismanagement of the Joint Committee on Statutory Instruments and the debate that took place in the other place. I read Hansard and found the way it was conducted extraordinary, but that is not for me to manage. This is clearly not business as usual; it is different and unique. There have always been differences, which were previously brought to the fore regarding animals and other things, but it is obvious that some contributors this afternoon feel there is somehow a threat to their constitutional position, and we cannot be relaxed about that. We have to recognise that and take it seriously. I disagree; I am British and if I moved to Belfast I would still be equally as British. I might have to fill in some forms if I wanted to receive goods from a business in GB to my business. I could live with that without a threat to my Britishness, but is it not for me to tell other noble Lords how they should feel about it, and they are quite right to bring those points to the attention of the Committee.
I could not agree more strongly with those who said that what we need is a frank and open discussion, and perhaps a change of tone and being a little more relaxed as a Government about all this. I know we have had some torrid debates on these issues in recent years and that the protocol was a disaster. Things have happened and things were said; promises were made, but they should not have been because they were broken knowingly and very quickly. We have damaged our international reputation as a good partner to negotiate with and I regret that very much but, with a change of attitude from the Government, and a more respectful approach to colleagues in Northern Ireland and to this House, we could move forward in a much more positive way.
Baroness Penn (Con)
My Lords, I agree with the noble Baroness, Lady Chapman, on the approach that this Government should, and want to, take to implementing the provisions in the Windsor Framework. The noble Baroness described it as the least worst option for Northern Ireland; the Government describe it as the best option. In reality, there is not a gap between them, because it does restore the smooth flow of trade and protect Northern Ireland’s place in the union. It also delivers a robust framework for solving future issues, as we know they will come up.
The framework delivers by enabling smooth trade between Great Britain and Northern Ireland, resolving the problems that were undermining Northern Ireland’s place in our union and fixing the democratic deficit which has seen Northern Ireland have no say in its laws. It is worth responding at the outset that while we may disagree on the Windsor Framework in this Committee, it is important to be clear that with regard to the approach taken by the Government in the framework and the accusation that it reflects the fact that the Government do not care about Northern Ireland, the opposite is true. The effort put into negotiating for Northern Ireland by my right honourable friend the Prime Minister, and many others across government, is because we care deeply about Northern Ireland and its place in our union.
To provide an answer and reassurance to the noble Lord, Lord McCrea, Northern Ireland is a full part of the United Kingdom in every sense, and we negotiated the Windsor Framework to protect the UK’s internal market and trade between Great Britain and Northern Ireland. We are confident that the framework does this. We reject the claim that the Windsor Framework changes Northern Ireland’s status within the UK.
Nevertheless, while I acknowledge the range of views on the framework in this debate, I encourage noble Lords to recognise the nature of what this statutory instrument provides. It is solely about the powers available to HMRC and Border Force to ensure the improvements in respect of parcels that we have secured through the Windsor Framework are delivered. Focusing on what this SI does provides, in part, some of the answers to the questions put forward to the Committee today. Noble Lords are right that the provisions relating to parcels will come into force at the end of September 2024 and that there is more work to be done in implementing those provisions. That work will be taken forward by the Government, HMRC and the Treasury, working with businesses in Great Britain and Northern Ireland and having discussions with them.
Baroness Ritchie of Downpatrick (Lab)
The Minister was describing the work and who would actually be involved in it. Can she provide the Committee with a little more detail about the type of work? Maybe she could elucidate that.
Baroness Penn (Con)
I was going to come later to ongoing co-operation with businesses in Northern Ireland and Great Britain, in terms of implementing the provisions when it comes to parcels. For example, we are working through in detail with the couriers and the people who take a lot of this traffic on how we can make it as seamless as possible. If I have anything further to add in my speech, I will do so later.
In respect of the point from the noble Lord, Lord Dodds, on this statutory instrument being about creating a border between Great Britain and Northern Ireland, as I said just now and in my opening speech, this instrument does not put in place the Windsor Framework arrangements. The noble Lord is right that that has already happened, but we disagree that the Windsor Framework or these regulations separate Northern Ireland from Great Britain in the way that he describes. The regulations do not treat movements from Great Britain to Northern Ireland as exports or movements from one country to another; they make some powers that are available in respect of international movements available in respect of movements from GB to NI. However, it is not the case that they treat them the same as parcel movements that are international or exports.
As the noble Baroness, Lady Chapman, said, these arrangements are unique. The Windsor Framework is a bespoke set of arrangements. If you move a parcel internationally, such as to your grandmother in France rather than in Northern Ireland, you and she would need to make customs declarations and possibly pay tariffs; that is not the case for the arrangements for GB to NI. Similarly, if you buy from an international retailer, the package goes through customs when it enters the UK; as I set out, that is not the case for GB to NI orders from internet sellers to individuals.
Lord Dodds of Duncairn (DUP)
Does the Minister accept, however, that the reason for what she has set out is in EU law, and that nobody in Northern Ireland is elected and nobody in the EU is accountable to anyone in Northern Ireland—indeed, in the United Kingdom—for those laws? If those laws change—for example, if the EU changes, tweaks or modifies them—that is what will apply. So the Minister cannot give any guarantee or assurance that the position she is outlining will continue to pertain and apply because no Government, nor this Parliament, will have any power in that respect.
Baroness Penn (Con)
The Windsor Framework is a bilateral agreement. To the noble Lord’s point, there are detailed governance arrangements around the Windsor Framework. Either side can raise issues through those mechanisms. It is not the case that the EU could just impose new requirements without consultation. Of course, the Stormont brake will be available to the Northern Ireland Assembly, when it is sitting.
With regards to the lack of an impact assessment, that point takes me back to what this statutory instrument itself does. It does not impose any requirements on businesses; it is solely about the powers for HMRC and Border Force. The Government are dealing with the resources available to those agencies in the normal way. I cannot remember who asked about this—it was the noble Baroness, Lady Ritchie of Downpatrick, I think—but we will of course ensure that resources are available, in particular to HMRC, to ensure that these agencies can engage with businesses in order to ensure that the process is as smooth as possible.
Lord Purvis of Tweed (LD)
I understand the Minister’s point with regards to the powers for HMRC under these regulations, but it assumes that HMRC will not then use those powers to ask businesses to carry out certain procedures. If that is the case, there will be an impact on businesses. Secondly, my reading of Regulation 3 is that, for the first time, a postal packet going from GB to Northern Ireland will now be categorised alongside a foreign postal packet. That is what the regulation says.
Baroness Penn (Con)
Again, that takes me back to what these regulations do versus the wider process around how parcels will move under the Windsor Framework. These powers do not and cannot do anything to impose anything on businesses.
I come to a few of the points made by the noble Lord, Lord Purvis, about understanding and beginning to quantify how the new process will work. It is not possible to give precise numbers on volumes of parcels and how they will fall into the different lanes, because volumes are not consistent year on year. However, based on estimates and commercial information provided by the parcel industry, we understand that about 5% of parcels are sent from business to business, with 90% moving from businesses to consumers and 5% from individuals to individuals. Based on those figures, for 95% of movements no difference will be felt in how customs operate now, under the easement that we have to the protocol. Compared to the protocol itself, they will face significantly fewer burdens.
There will be no routine checks or controls applied to consignments, with interventions made only on a risk-based, intelligence-led approach. This is decided by HMRC and Border Force. We expect a very small proportion of parcels to be checked or opened, only when there is reason to suspect circumvention of the rules.
The 5% of business-to-business goods will be treated the same, as if they were moving in freight. They can access the UK internal market scheme and the green lane, and they will benefit from radically reduced checks and data requirements compared to those under the protocol. Businesses can apply to HMRC to become a trusted trader and access the green lane. It is a simple process. Tens of thousands of traders are already in the scheme, and the Windsor Framework extends eligibility to it further. New arrangements under the framework are being phased in over nearly two and a half years. We will continue to use that time to undertake extensive engagement with stakeholders, including businesses in Northern Ireland and Great Britain, trader support services and parcel operators, to provide support and ensure that everyone is ready.
Baroness Hoey (Non-Afl)
As part of that work, will the Government look at the extra cost to business? There will definitely be an extra cost to businesses in GB that want to send to Northern Ireland, whether they go through the green or the red lane. Those costs will eventually end up with consumers in Northern Ireland. Do the Government agree?
Baroness Penn (Con)
The whole purpose of the Windsor Framework is to reduce any extra costs and burdens from moving from business to business in Northern Ireland. We need to put this in the context of the figures that I gave earlier about personal packages and business-to-consumer packages which, on some estimates, account for around 95% of parcel movements from GB to NI. The aim of our ongoing engagement with parcel operators, in both GB and NI, is to make sure that this process is as easy and seamless as possible for those that rely on existing information and data, where that is possible.
Several noble Lords also raised the question of timing. As I said, provisions under the Windsor Framework are being brought in over two and a half years and will come into effect on 30 September 2024. As I said in opening, although the majority of Northern Ireland protocol requirements on parcels were not implemented as the Government sought to renegotiate arrangements, we accepted that certain categories of goods moved in parcels, as in freight, should require customs declarations to ensure that both their entry to Northern Ireland and possible onward movement to the EU were notified to HMRC.
These requirements related only to a specific list of prohibited and restricted goods that includes, for example, certain drug precursor chemicals, endangered animals, et cetera, covered under CITES. The powers we are taking now will allow those requirements to be monitored and enforced from now, and those same powers will be used in respect of the new parcels arrangements that come into effect on 30 September 2024.
The Deputy Chairman of Committees (Baroness Scott of Needham Market) (LD)
The Question is that the Grand Committee has considered this instrument. As many as are of that opinion will say “Content”; to the contrary “Not content”.
The Deputy Chairman of Committees (Baroness Scott of Needham Market) (LD)
The Committee stands adjourned.
The Deputy Chairman of Committees (Baroness Scott of Needham Market) (LD)
My Lords, it would be very helpful if Members could stay close by. We are just seeking advice on how to proceed, as this is quite an unusual situation.
We have now considered this instrument. It has not been agreed to, and therefore will go to the Chamber as usual.
Russia (Sanctions) (EU Exit) (Amendment) (No. 3) Regulations 2023
(1 year, 4 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Ahmad of Wimbledon
That the Grand Committee do consider the Russia (Sanctions) (EU Exit) (Amendment) (No. 3) Regulations 2023.
Relevant document: 46th Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument)
The Minister of State, Foreign, Commonwealth and Development Office (Lord Ahmad of Wimbledon) (Con)
My Lords, these regulations amend the Russia (Sanctions) (EU Exit) Regulations 2019. This instrument was laid on 29 June 2023, under powers in the Sanctions and Anti-Money Laundering Act 2018. The measures in this instrument entered into force on 30 June 2023.
If I may digress from my script, once again we are debating Russia and its actions. As I came into the Room, I was catching up on some of the news on the Black Sea grain initiative. Yet again, we have seen tragedy; to say it is shocking is perhaps an understatement. According to media reports, Russia has not only scuppered the Black Sea grain initiative but attacked some of the grain ports, destroying much of the grain held in those warehouses. Again, it shows the tragic nature of this illegal war and the importance of our sanctions. I say at the outset that I appreciate the work of both Front Benches opposite and the co-ordination and unity that we have displayed in moving through sanctions at such a pace.
I turn to the SI in front of us. These measures have been co-ordinated with our international partners, while refining the approach to accommodate the particular circumstances of the UK legal sector. By restricting access to additional services from the United Kingdom, they will contribute to increasing pressure on Mr Putin for waging this illegal and brutal war against Ukraine. I know that noble Lords have been focused on this issue in previous debates too. These measures place further constraints on the Russian economy, and therefore Mr Putin’s war machine. They add force to the largest, most substantial package of economic sanctions that Russia has ever faced.
The instrument delivers on the commitment made by the UK Government to ban legal advisory services on specified commercial activities. This will further hamper the ability of Russian businesses to operate internationally. This legislation will make it illegal for any person working in the UK, as well as British nationals working abroad, to advise on or facilitate certain commercial activities that would be sanctioned by the United Kingdom Government if they involved a British national or entity or were taking place in the UK. In practice, this will make it harder for Russia to benefit from the United Kingdom’s world-class legal expertise. This goes beyond prohibitions already in place that cover a range of professional services, including accountancy, architecture and management consultancy. This latest measure demonstrates our continued determination to ratchet up the pressure on Mr Putin for continuing his illegal war.
Although this legislation will close down opportunities for Mr Putin’s associates and supporters to benefit commercially from the UK’s legal expertise, it is important that we ensure that legal services can continue to be provided where they contribute to upholding the rule of law and compliance with our sanctions framework. By protecting the fundamental right to legal representation, we, frankly and directly, distinguish ourselves from Mr Putin’s oppressive regime. By ensuring that legal advice can continue to be provided for the purposes of compliance with our sanctions framework, we enhance the effectiveness of our regulations and intensify the pressure on Mr Putin.
Legal professionals are under a strict obligation to ensure that their services support their clients to be sanctions-compliant and do not stray into enabling them to circumvent restrictions. However, it has become apparent that this legislation can be interpreted as having the unintended consequence of prohibiting persons in the UK and British nationals abroad from providing legal advice to clients seeking to comply with the sanctions regimes of our international partners. Let me assure noble Lords that it is not the intent of these regulations to prohibit this type of legal service. UK lawyers should be able to support their clients to be sanctions-compliant beyond UK law as we work closely with our allies to tighten the net on Russia’s economy.
We have looked at this issue thoroughly. As an immediate response, we are working, first, across government and, importantly, across the legal profession. We have met representatives of the legal sector. My colleagues, the Lord Chancellor and the Justice Secretary, have met members directly; indeed, the Lord Chancellor met the president of the Law Society this morning. I know that this is a concern that anyone would have but I assure noble Lords that we are working closely with the legal sector in this respect to ensure that we implement a general licence that will make it clear that this type of activity can continue. We aim to have this in place in the coming days. I put on record our thanks to the legal sector for its constructive engagement on this important issue.
We have sought here to provide a direct remedy to that possible unintended consequence; the valuable support and input that we have had from the professional legal sector is very much appreciated. Once we have issued the licence, we will consider whether further amendments to the SI to address the issue are appropriate and necessary. Of course, I will update noble Lords, particularly those representing the Front Benches, on this. We will do this in conjunction with the legal sector and, if amendments are deemed necessary, we will bring them forward at the earliest opportunity.
As with our sanctions, this latest package has been developed in co-ordination with our international partners, as I said. In doing this, we will continue to work with the legal community to monitor the effects of this legislation and ensure that it achieves the desired objectives. We will also continue to co-ordinate with our international allies to identify and address any gaps or loopholes that emerge in our respective sanctions regimes.
This latest measure demonstrates our determination to target those who participate in or facilitate Mr Putin’s illegal war of choice. Through our sanctions regime, and those of our allies, Russia is being increasingly isolated, cut off from western markets, services and supply chains. Key sectors of the Russian economy have taken a significant hit and its economic outlook is bleak. The UK Government will use sanctions to intensify the military and economic pressure on Russia until Mr Putin does the right thing and ends his brutal invasion of Ukraine. We welcome the clear and continued cross-party support for this course of action. I beg to move.
Lord Purvis of Tweed (LD)
My Lords, I am grateful to the Minister for introducing these regulations in such a clear and comprehensive way. I will refer briefly to the concerns about unintended consequences in a moment but I will start by strongly agreeing with the Minister about what are likely to be the consequences of the decision on grain in the Black Sea.
Putin will again threaten the expansion to new victims of his aggression to Ukraine across those who are least able to feed and fend for themselves, especially as malnutrition and hunger ravage the Horn of Africa. Those countries that are dependent on the grain will be looking at this with doom. In a way, it is a horrific response to the leaders of countries, when they consider that they can effectively maintain the status quo ante relations with the Putin regime, to know how little he holds in his standing their people, who need this food.
Baroness Lawlor (Con)
I am grateful to my noble friend the Minister for discussing the proposed statutory instrument so thoroughly. I want to follow the noble Lord, Lord Purvis of Tweed, in what he picked up from the Law Society’s briefing. It is certainly the case, as the statutory instrument is framed, that a lawyer who works for an international firm but may be based in New York cannot advise an international client on EU or US law in respect of, say, divesting from activities in Russia. It is really quite important to know how he can be compliant with the law. I note the intention to have general guidance but will it be such that there will be a lack of clarity and a concern that overseas clients consulting UK lawyers will not be able to get advice at the same time about where the law stands in respect of US and EU law?
Lord Collins of Highbury (Lab)
My Lords, one of the issues we need to address is that Russia is highly dependent on western countries for legal expertise. As a country, we previously exported £56 million in legal services to Russian businesses every year, so it is important that we address this issue.
I also welcome the fact that we can use this debate to reiterate our cross-party support for these measures to show our unwavering commitment to and solidarity with Ukraine, its people and its sovereignty. Following last night’s Statement repeat on NATO’s Vilnius summit, I underscored the strength of feeling across our diplomatic and military alliance that we must stand with Ukraine until the war is won. It is vital that Parliament speaks with one voice.
The Opposition fully support the steps that the Government are taking to further strengthen our sanctions regime, prevent evasion and ensure that the Kremlin’s capacity to conduct this war is undermined. I stress that we recognise that this statutory instrument is common sense and prudent. It clearly should not be permissible that, more than 500 days into this conflict, it would be potentially lawful for a UK legal services provider to support commercial activities that advanced Russian interests because said activity did not have a sufficiently tangible connection to the UK, due to the territorial application of the 2019 regulations.
I hope the Minister can tell us what assessment the Government have made of how effective the 2019 regulations were and how we discovered any potential loopholes that people could get through. This leads on to my major point about this: can the Minister account for the delay in addressing these issues from the application of the regulations in 2019? If this loophole has been exploited, why has it taken us so long to address it?
I have read the Law Society’s letter and I appreciate the Minister’s response. I welcome the fact that the law officers and other departments are meeting with the Law Society but, to echo the point from the noble Lord, Lord Purvis, I am keen to support the Government in strengthening these sanctions. I do not want to see any further escape routes for people. It is important that we hear the Minister’s view on how effective these new regulations will be at imposing the sort of sanctions that we believe are necessary to limit Russia’s ability to wage war.
I know that the Minister has heard me say before that it is one thing to adopt particular regulations on sanctions, but how we resource them and how we are satisfied that they can be implemented and monitored is another. Can he tell us how the Office of Financial Sanctions Implementation is resourced? Will it be able to police these regulations? If our sanctions regime truly is a work in progress, we must be capable of reflection and improvement. If exemptions are causing more issues, we need to know about them; the assessment must be based on that.
There is one other question I will briefly raise, which is that the regulations provide exceptions when the Act relates to diplomatic missions or consular posts. Can the Minister give me a practical example of that? I am not sure I understand the purpose of it.
I have addressed the point about the Law Society. Of course, this was also raised with the Secondary Legislation Scrutiny Committee, which expressed the view that this issue needs to be addressed. The committee was approached by an international law firm.
I conclude by saying that we once again fully support the Government’s actions. We want to see the Russian regime sanctioned. The news I have just seen on the BBC website about not only breaking the agreement but bombing the very facilities that could feed Africa is absolutely atrocious. The sooner we bring this regime to account, the better. We fully support the Government in their actions.
Lord Ahmad of Wimbledon (Con)
My Lords, I put on record my thanks to the noble Lords, Lord Purvis and Lord Collins. I am sure I speak for all three of us in saying that, when we embarked on this journey of sanctions, we hoped that our debates and discussions would be limited. However, it is a real tragedy of the consequences of the war on Ukraine that we are continuing to have these debates. As I said in my opening remarks, and as was acknowledged by the noble Lords, Lord Purvis and Lord Collins, the fact that, even as we speak, there continue to be not just acts of aggression but pure violations of international law shows the nature of this war.
One point I would raise is how we amplify these points to the sorts of countries that still sometimes challenge us directly. I was delighted to see the noble Lord, Lord Wallace—I am not tempting him into the debate, but I am sure he will have a view on how we address the issue of influence directly. Quite often on the world stage and as I have travelled, it has been said to us that our sanctions are causing problems of food insecurity. Russia’s actions today demonstrate what is causing the challenges to food security. We have always worked with the UN and other key countries to ensure that the Black Sea grain initiative is kept on the front burner. It is regrettable and tragic that it was not. Further, it is tragic that we have seen the consequences culminating in this Russian aggression on the very areas that store the grain.
That said, I thank noble Lords for their specific contributions. To clarify the point made by my noble friend Lady Lawlor, whose intervention I welcome, what we are seeking to introduce—we have identified this issue—is a general licence as an immediate first step. We are working directly with the legal profession, including the Law Society, to ensure that any other unintended consequences and any other loopholes that we can address directly can also be met first hand. As I said in my opening remarks, we will seek to bring legislation forward at the earliest opportunity. It is important that we continue to do so.
The noble Lord, Lord Collins, raised the issue of identifying, as things are, how we have been working to address particular issues and the delay. As I am sure he would acknowledge, legal services are distinct from other professional services in the constitutional role they play within our country in supporting and upholding the rule of law. Therefore, we carefully consider the implications of different policy options. This is ever evolving. In collecting an evidence base, we also work with legal services to ensure that, as far as possible, the measures we lay have the desired effect.
I am not saying that this is the last time we will have this conversation. As we are imposing these sanctions and taking further steps to restrict Russian activities, I am sure that we will identify areas, as we have on this occasion, that will further address those very issues. As a former person of the City myself, I fully understand the comprehensive scope of not just the banking services but the services industry around them. We have previously addressed consultancy and accountancy firms and today, in conjunction with legal representatives, we have worked through the implications for the legal industry.
Lord Collins of Highbury (Lab)
I am sorry to interrupt but regarding the exemptions, I was going to ask about the provision of professional business services, specifically related to auditing services. I cannot understand why there is an exemption for that.
Lord Ahmad of Wimbledon (Con)
As I understand it, the auditing element of it is a professional and legal requirement, but if I can amplify that further I will of course write to the noble Lord.
The noble Lord, Lord Purvis, and my noble friend Lady Lawlor raised the issue of the general licence and its application. Under the general licence, UK persons will be able to advise on global sanctions regimes, including but not limited to the United Kingdom, USA and EU. In response to my noble friend, the same applies to the scenario she illustrated of a UK person working in the USA. However, I will take all these elements and ensure that there is a specific response because these are understandably issues of concern.
At this juncture, I also say that our rule of law and justice system allow for the provision of representation services. I am sure that the fact that I did not get a question on that means that noble Lords have acknowledged and noted that it is right that a country such as the United Kingdom continues to protect that right of legal representation. We may have our personal views on particular people who seek to take advantage of our professional services but, at the same time, every professional, including legal professionals, will now be bound by the new regulations that we are putting forward.
On the issue raised by the noble Lord, Lord Collins, specific to the Diplomatic Service, I am sure that some areas of privileges and immunities are covered in that. Again, in the interest of completeness, I will cover that in the appropriate letter.
On auditing, as I said, audits apply to the shareholders rather than the companies, in order to ensure that audits can take place where they are a statutory requirement. I have just had that confirmation from the Box—I remember some of my private sector experience quite well. It shows that when you do things off the cuff, you remember things from years past.
In all seriousness, we have sought to address some of the key areas identified as these new regulations and sanctions regimes are applied. While we have worked to ensure that Russia cannot access our legal expertise in relation to certain commercial activities, we have not hindered work that helps to provide judicial rights and access to justice.
These measures are the latest addition to our package of sanctions, which is having a damaging effect on Mr Putin’s war machine and his regime. I know that the UK Government and all Members of your Lordships’ House are united in keeping the pressure on Mr Putin until he ends this horrific and senseless war.
Finally, if, before the House rises, there are further details I can share with noble Lords on the issuance and the date of issuance of the general licences, I will do so. I will write to noble Lords on the areas that I have said I will address, particularly on diplomats. That said, I put on record my sincere thanks to all noble Lords, including my noble friend, who participated in this brief debate. Sadly, and tragically, I am sure that we will have further debates on this.
Official Statistics Order 2023
(1 year, 4 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Neville-Rolfe
That the Grand Committee do consider the Official Statistics Order 2023.
The Minister of State, Cabinet Office (Baroness Neville-Rolfe) (Con)
My Lords, I will begin with the purpose of the order and briefly take the Committee through what we are considering.
The order updates the list of non-Crown organisations that produce official statistics, as defined in the Statistics and Registration Service Act 2007. The Government and the UK Statistics Authority want to see official statistics enabling sound policy decisions and providing a firm evidence base for decision-making both inside and outside government. The role of the authority and the need for timely and high-quality statistics were never more evident than during the Covid-19 pandemic. The code of practice for statistics plays an important role in ensuring that producers of official statistics inspire public confidence by demonstrating trustworthiness, quality and value in the statistics they produce.
The order revokes and replaces the Official Statistics Order 2018, updating the list of UK non-Crown bodies that may produce official statistics. The Statistics and Registration Service Act 2007 established the non-ministerial department, the Statistics Board—known colloquially as the UK Statistics Authority—as an independent statutory body to promote and safeguard the production and publication of official statistics that serve the public good. The Act allows the flexibility to add non-Crown bodies to, or remove them from, the authority’s remit by order. The order provides an updated list of bodies whose statistical activities will be official statistics and so will be monitored by the authority.
The authority will work with bodies designated as producers of official statistics to promote good practice for the production and publication of official statistics, including through the code of practice for statistics; to monitor and report on the production and publication of official statistics; and to assess the treatment by producers of official statistics, at the request of those producers, against the code of practice and publish the results of those assessments. If statistics comply with the code, the authority will designate them as national statistics.
These changes are applied to UK-wide and English organisations. The UK statistical system follows the principle that the devolution of statistics should mirror the devolution of policy areas. This order takes the same approach to devolution as the order it replaces. Regularly updating the orders ensures that the scope of official statistics remains accurate and relevant in light of the establishment, abolition or name changes of public bodies. Section 6 of the 2007 Act provides that Scottish Ministers, Welsh Ministers or Northern Ireland departments can determine that statistics produced by non-Crown bodies are brought into scope. There have been equivalent amending orders for Wales, Scotland and Northern Ireland.
It is important to note that, although the order covers a wide range of bodies, which are listed in the Schedule, the vast majority were already designated under the previous order, so this is a very minor adjustment. It adds five new bodies to the list in the 2018 order: the Equality and Human Rights Commission, the Joint Information Systems Committee, the Regulator of Social Housing, Skills for Care Ltd and the Trade Remedies Authority. It removes five bodies from the list in the 2018 order that are no longer legal entities: the Health and Social Care Information Centre, the Higher Education Statistics Agency, Monitor, the NHS Trust Development Authority and the Natural Environment Research Council.
The order also alters the names of two bodies that were contained in the last order. The NHS Commissioning Board is now recorded as NHS England, and Her Majesty’s Inspectorate of Constabulary is now recorded as His Majesty’s Inspectorate of Constabulary and Fire & Rescue Services—and long may he live.
The UK Statistics Authority was consulted in preparing the order, in accordance with the Act, and is content for it to be laid. My department has laid the order on behalf of other government departments in preference to each department laying an order for the bodies for which it is responsible. That is intended to make the best use of parliamentary time.
Lord Davies of Brixton (Lab)
My Lords, it is important for us to discuss this order. It may appear on the face of it to be simply a technical, procedural or managerial matter, but it does have a political import.
Lord Davies of Brixton (Lab)
My Lords, it is appropriate for us to have a debate on this instrument. It is worth noting that the Commons dispensed with it in seven minutes. Perhaps the Front Bench is hoping for a similar record here but I will delay us for a little bit. Sorry, I am wrong; it was nine minutes.
The debate on postal packages caught me unawares; I thought that we would all be finished by now. Still, this is an important issue and I wanted to have my say about statistics, as I am interested in that sort of thing. Unfortunately—I apologise to the Committee for this—I did not do as much preparation early as I had intended. I shall ask questions that, of their nature, will be fairly technical so I shall indulge the Minister if she is unable to answer everything fully. It would have been a good idea if I had asked for a meeting before this debate; a meeting after the Summer Recess may be a helpful way forward but we will see.
We have these things called official statistics. There are actually two tiers of them because there are national statistics as well. As I read the rules, it has to be an official statistic before it can be a national statistic, and whether something is a national statistic is a matter of practical importance. It is not just a technical clarification; it makes a difference. This is a completely different issue, which I am not seeking to debate today, but the fact that the RPI is not a national statistic but an official one has an impact on the way in which policy is determined.
My problem is that I am still not totally clear what the point of an official statistic is. There is a certain circularity in the definition—important statistics are official statistics and official statistics are important statistics. It is quite difficult to break out of that loop and try to identify from published material what the criteria are by which official statistics are decided, what difference they make to the operation and what impact they have. I saw a claim somewhere in the documentation that there is an overarching policy on the scope of official statistics. If it exists, I have failed to track it down. It would be good to have a clear explanation online.
All this stems from the 2007 Act. In their wisdom, the legislators at that time decided that this order required the affirmative procedure, which to me means that they thought this was an important issue that required political review. I looked at the Explanatory Notes for the Bill; although there is an explanation of Sections 5 and 7, unfortunately there is a gap for Section 6 in the background explaining this legislation. It jumps straight from Sections 1 to 5 to Sections 7 to 21. It is a bit difficult to see what was in the legislators’ minds at the time about what exactly was the point of official statistics.
However, we have them now. We have this list of 40, if I am counting right. One by one, they all look entirely reasonable, although the sorts of bodies vary widely. The difficult thing is to spot which organisations are missing. I turned to the government website and looked up government bodies. Apparently there are 604, and here we have 40. The obvious question is why these 40 were chosen and the others excluded. There may well be good reasons but we do not know what they are, because there is a singular lack of clarity over the criteria and purpose of official statistics.
The Explanatory Memorandum to this order says that there was consultation. The way it is worded implies that it was the department—the Cabinet Office—consulting the UK Statistics Authority, but in practice it was plainly the other way around. This is all generated by the UK Statistics Authority. It consulted the Cabinet Office and all the departments, pulled all the information together and drew up this list. But it does not tell us what it said to departments about why they would want to put forward these public bodies to have official statistics status and not others. We just do not know what the criteria are, as far as I can tell. Maybe I am missing it; I hope the Minister can draw my attention to it.
So I got 604 results, and I looked through them all. We can dismiss the 24 ministerial departments; they are the Government, so they are included automatically. The non-ministerial departments are included—there are 20 of them. But 425 were described as
“Agencies and other public bodies”,
of which 33 are on the list—I went through them, and they raised all sorts of questions. I could go through all 390-odd remaining bodies and ask about them one by one, but I will save your Lordships that. Still, there are some that I do not really understand.
One oddity that I will mention is that the Financial Conduct Authority is included, but it is a subsidiary or part of the Bank of England, which is not. Another one that I was surprised about was the Certification Officer, which is very important as far as trade unions and employers’ organisations are concerned. It is not on the list, but one would have thought that its statistics were of some importance. The Electoral Commission is not on the list, and neither is the Advanced Research and Invention Agency, which has had some controversy. The list does not include the Secret Intelligence Service, but I think we can let them off that one. The Rail Accident Investigation Branch seems an obvious candidate to me. Of course, it is of interest that the Office for National Statistics is not on the list, but that would have been a bit self-referential. So there are questions about why only a limited number are included and many appear to be excluded.
One particular oddity is that included in the list of 40 is the Service Complaints Ombudsman. Why is that ombudsman included in the list when the seven other ombudsmen—whatever the plural of them is; is it “ombudsmen”?—are not? We do not have the Housing Ombudsman, the Legal Ombudsman and so on—noble Lords get the point. Yet another oddity concerns public corporations; should they be included? On the government website, there is a list of public corporations, along with other lists of public bodies and so on. Only one public corporation is included in the SI: the Pension Protection Fund. Others are not. The National Employment Savings Trust Corporation, which in many ways is very similar to the PPF, is not included. The Post Office is not included, nor is the Oil and Pipelines Agency.
Once you start poking and pulling a thread in this tapestry, the whole thing, to my mind, starts to unravel. I have made my point and I hope it is clear. I suggest that the Minister does not try to respond on every single item I included in the list, but it would perhaps be helpful to have a meeting after the Recess to go through this and set my doubts at nil.
Baroness Lawlor (Con)
My Lords, can my noble friend the Minister comment on where, if not under these regulations, one can find out who decides the measures that will be included in official statistics by any of the authorised bodies?
Lord Wallace of Saltaire (LD)
My Lords, I congratulate the noble Lord, Lord Davies of Brixton, on the care and attention he has dedicated to this. I regret that I was not as thorough, although I did discover what JISC was, and one or two other things, as I looked at the list. I start with a confession: I do vaguely remember that there was a point when I understood the difference between national statistics, official statistics and other statistics, but I think I have forgotten. There were some very subtle, but nevertheless significant, distinctions between them. I was a Minister at the time, so I had to understand it.
I echo the recommendation made by the noble Lord, Lord Davies of Brixton, that we might have a fuller briefing when we return. It would be very helpful to know what the Government’s overall strategy on statistics is. I would also welcome, and I think quite a number of us would welcome, a government briefing on where we are now on the use of statistics across departments, as the Government go through the digital transformation.
I recall from my time in the Cabinet Office that there were tremendous barriers to sharing statistics across government, because the laws under which the Department for Work and Pensions operated were different from those of the Home Office. Therefore, when it came to something such as the Windrush scandal, where it was quite evident that there was material in other departments which would have showed whether or not the people concerned had been in Britain, in employment and registered with a doctor over the previous 20, 30 or 40 years, it was not carried through.
The digital strategy within government is extremely important to the future of government. It is also very much a non-party issue. It would be very helpful to have a briefing for all Peers to say where we are with that now. How far have some of those legal barriers been overcome? Is there now appropriate sharing across Whitehall? How far have some of the hesitations that so many people have about privacy and the use of their personal statistics been overcome?
I recall, at the time of the last census, a number of people, including the then Minister, Francis Maude, now the noble Lord, Lord Maude, saying that the question of whether we need future censuses ought to be moot, because one agency or other of our Government is collecting most of those statistics all the time. If one were able to put them all together, it would save us the effort and expense of a census and would provide us with a moving interpretation of what is happening in our schools, our ethnic communities, our ageing population, et cetera. So there were some very large, important questions there.
I welcome what the Minister said about providing a firm evidence base for government. We have, after all, been through a period in which a number of people, including at least one Prime Minister, were not entirely sure that evidence mattered, and one rather senior Minister decried government by experts as something we should get away from. I am very glad that the with the current Government we are getting back towards a concern with evidence-based policy-making.
I too was puzzled by the list of inclusions and exclusions. We would welcome a letter at some point to explain what that might be about, without delaying where we are now much further. From these Benches, we welcome the greater use of statistics. We welcome the wider publication of statistics, and we recognise that effective government for all British citizens precisely does depend on accurate information on what is happening, and on where there are problems which need to be identified. Good governance depends on that.
Lord Collins of Highbury (Lab)
My Lords, I suppose a lot of these questions stem from the 2007 Act and the establishment of the Statistics Board as a non-ministerial department that operates under the name of the UK Statistics Authority. The issue then was, and now is: what stats do we rely on? What has public confidence and what has public policy confidence? Of course, the authority is meant to do that job and draw from a number of sources, not least the bodies that are listed. Apart from the government departments, it can add other bodies to it, which raises the point that the noble Baroness, Lady Lawlor, mentioned. The official statistics from the five new bodies that have been added to the list must be accurate, credible and reliable.
The question for the Minister is: what sort of additional support will be given to the bodies concerned to ensure that they are able to meet the standards required? The Equality and Human Rights Commission is one of the bodies that is being added. I am certainly aware of how much its resources have been reduced recently; its ability to conduct a range of statutory work has been curtailed because of the lack of resources. Is it solely up to the UK Statistics Authority to do that monitoring and evaluation? It must have felt confident to recommend that the Equality and Human Rights Commission be added to the list. The question raised by the noble Baroness, Lady Lawlor, was important: how is that decision made and how do we maintain public confidence in official statistics by the mechanism established in the 2007 Act?
The 2007 Act was designed to have an independent stats authority that can challenge the use of statistics where necessary. If the bodies are receiving government grants or are in any way overreliant on the Government—particularly the five that are being added to the list—will that reduce their capability to challenge the Government where necessary? I suspect that there is always the temptation for Governments of whatever colour to use the principle that he who pays the piper calls the tune. We need to see just what mechanism is involved. Can the Minister assure us that the independence and credibility of these bodies will be properly maintained? That is the main focus of my concern. I would certainly welcome any briefing, but the 2007 Act is a useful starting point to look at the issues that my noble friend raised.
Baroness Neville-Rolfe (Con)
First, I thank all those who have taken part in this debate. I am delighted that it is a bit longer than the equivalent debate that my colleague, Minister Burghart, took in the Commons. He must have been very disappointed.
I thank in particular the noble Lord, Lord Davies of Brixton, for challenging us in such a delightful way. What he does not know is that I am almost as passionate about statistics as he is, so I was delighted when I discovered that statistics was in my portfolio at the Cabinet Office. I would be absolutely delighted to agree to a meeting, where we can take the conversation a little further. That will perhaps save us a little time this evening, especially if the Division Bells ring again.
I draw the Committee’s attention to the code of practice for statistics, which ensures that official statistics serve the public. I find it a very useful document that answers quite a few of the questions that have been asked this evening. It is on the GOV.UK website. Indeed, the definitions of “official” and “national statistics” are on the UK Statistics Authority website. The purpose of official statistics is made very clear in the code.
On why there are 40 bodies and how we consulted, I will explain a little about what we did in the run-up to this order. It is the product of extensive engagement between the Cabinet Office, the UK Statistics Authority, the listed bodies and responsible government departments. The scope of the engagement was to establish whether the list of bodies in the old order was up to date and what changes were required. We contacted the authority, which obviously led this work—as was explained, it is independent—and it contacted senior statisticians at all the departments involved. This involved a review of the schedule in the old order to establish changes. The authority requested input from senior statisticians regarding new bodies under its remit and the changes that might be needed. Its role as the national statistics institute gives the authority a special position in all this.
As we noted, many of the changes are proposed because of the restructuring of the bodies since 2018. It slightly took one down memory lane that some of the bodies that we all dealt with have now been replaced by others. I do not think I can match the brilliant analysis that we heard, but I look forward perhaps to having a more leisurely conversation about some of the reasoning behind the list that we put before noble Lords. On the overarching policy, I hope that noble Lords find the explanations online and in the code of practice helpful.
My noble friend Lady Lawlor asked who decides about the official statistics. All statistics produced by the bodies listed will be official. The ONS does not direct bodies as to what statistics are to be produced and, under Section 12 of the Act, producers of official statistics have the opportunity to request an assessment of their statistics against the code of practice. If the UK Statistics Authority determines compliance with the code, the statistics are designated as national statistics. That also helps with the question that the noble Lord, Lord Collins, asked about the departments’ need for help with statistics—that engagement is helpful there.
The noble Lord, Lord Wallace, talked about barriers to sharing statistics. We have discussed this before in relation to legislation, where we have sometimes taken powers in Bills before this House to make sure that there is better scope for the sharing of statistics, which is important. From having visited the authority, my impression is that it plays an important role in bringing statistics together and sharing important information and consultations on important issues. Some migration statistics recently went out for consultation, and these kinds of things are useful and important.
I very much welcome agreement on the importance of evidence-based policy-making, which is one of the reasons why we have invested in this substantial statistics authority. I do not think that the future of the census is for today, but conversations continue about the terrific material that is now emerging from the last one, which is changing our view of things. We look forward to finding the best possible ways of collecting statistics for the future, which is an important focus of the authority’s work.
The noble Lord, Lord Collins, talked about challenge. Clearly, the UK Statistics Authority contains some of the best statisticians in the world and plays a world-leading role. The noble Lord’s question was about how the organisations supplying data to the authority would challenge. I am not sure I quite understand what he was getting at but, clearly, the code and the UK Statistics Authority’s links with different departments—
Lord Collins of Highbury (Lab)
If I might assist the noble Baroness, it was a general point on statistics: he who pays the piper calls the tune. I suppose all statistics produced by government departments are official statistics. The Civil Service does that job, but we have these additional bodies—quangos and other things.
The point I was making was particularly about the Equality and Human Rights Commission, which has been added. Is that because of its restructuring? I do not think so, but it could be. It does collect important stats on the groups for which it has statutory responsibility, but its resources have been substantially cut. Its ability to do the job that it was given by statute has been undermined by government funding. What mechanism is there to ensure that, when it is asked to produce statistics or statistics are drawn from it, it has the capacity and capability to do the job? I was amplifying the question from the noble Baroness, Lady Lawlor.
Baroness Neville-Rolfe (Con)
Bodies such as the Equality and Human Rights Commission use extensive guidance on official statistics, which is available on the website and elsewhere. The Office for Statistics Regulation engages regularly with producer bodies. The impact of adding bodies to the list in the order is not huge, because various organisations are on this list because they produce interesting statistics. The commission, as we all know, produces very good research reports on a variety of topics relating to equality, race, ethnicity, disability and so on, which will be classed as statistics in the future.
I take the noble Lord’s point about resources, but I do not think the order makes a big difference. I note what he has said, and perhaps we will return to it when we discuss these issues further.
I hope I have responded to at least the spirit of this debate, which I found extremely interesting. The order updates the list of bodies subject to oversight by the UK Statistics Authority. I thank all those who have worked on this order and brought it forward. I hope colleagues will join me in supporting the order, which I now commend to the Committee.
House of Lords
Food: Two-For-One Offers
(1 year, 4 months ago)
Lords ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Baroness Walmsley
To ask His Majesty’s Government on the basis of what health evidence, if any, they have postponed the planned ban on two-for-one offers for foods high in fat, salt and sugar.
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord Markham) (Con)
The volume price promotion restrictions have been delayed for two years while we prioritise the implementation of the location restrictions. This is the most impactful policy for reducing children’s calorie consumption, and accounts for 96% of the expected health benefits of the promotions policy. Kantar data suggests that it is working. The evidence suggests that this will have the biggest impact on tackling obesity.
Baroness Walmsley (LD)
I thank the Minister for his reply, but according to the Food Foundation’s most recent Broken Plate report, the most deprived 20% of families would have to spend half of their disposable income on food to comply with the Government’s healthy diet advice. Bearing that in mind, why are the Government continuing to allow retailers to sell HFSS foods, which can make people ill, at a discount? Do the government really want to encourage people to buy cheap food that could, in the end, kill them?
Lord Markham (Con)
First, I thank the noble Baroness for her tireless work in this space. I think we have shown that our restrictions are absolutely placed to inform and educate people so that they can have a healthy diet. I mentioned what we have done on location—the so-called pester power avoidance. It is estimated that these measures will reduce calorific intake by 96%. That is the prize that we are looking at here.
Lord Rooker (Lab)
My Lords, can the Minister confirm that the Secretary of State for Health actually believes in public health policy, because his recent speech at the Centre for Policy Studies—I watched all of it—indicates he does not?
Lord Markham (Con)
He definitely does. He was very much behind these measures. Just look at what we are doing in the smoking space, through the swapping out of cigarettes for vapes—another example of where we are taking action. As I mentioned, the evidence from Kantar suggests that it is working.
Lord Naseby (Con)
My Lords, if a product is marketed legally in the United Kingdom, why should His Majesty’s Government feel they have to interfere at all with the marketing of that product? I understand the point about education and totally accept it, but is it not wrong for His Majesty’s Government to restrict what is a legally marketed product?
Lord Markham (Con)
We are trying to educate, inform and nudge. The best example of all is encouraging the industry to reformulate its foods to be healthier. At this point, I am glad to say that, since we introduced these restrictions, Mars, Galaxy, Bounty and Snickers have reformulated, and even Mr Kipling’s Deliciously Good cakes are compliant.
Lord Allan of Hallam (LD)
My Lords, next week it will be three years since the Government committed to legislate to end the promotion of high-fat, salt and sugar foods by volume. Would a reasonable person think that this commitment has been met when the legislation has been passed but not implemented, and will not be for another couple of years?
Lord Markham (Con)
As I mentioned, the key is giving industry time to adjust so that it can reformulate. We would all agree that, if you can get the same taste but it is a lot healthier, with less fat, salt and sugar, that must be a good outcome. The examples that I just gave show that, and it is working.
Baroness Boycott (CB)
The NHS Food Scanner is promoting to children a number of ultra-processed food items. Do the Government not think that this is quite perverse given the new knowledge about what exactly ultra-processed food means? It is not just about the sugars, salts and fat but about the chemical destruction and reformulation of foodstuffs into something else.
Lord Markham (Con)
As I mentioned in answer to a Question on ultra-processed food yesterday, as a definition that is not particularly helpful because wholemeal bread, baked beans and cereals are all examples of ultra-processed food. The real point is the content of the food, and that is what our regulations should look to.
Baroness Merron (Lab)
My Lords, when the anti-obesity strategy was published, this ban was said to be supporting food affordability, citing evidence that multi-buy offers such as “buy one, get one free” increase the amount that people spend on foods by around 20% but often on foods high in fat, sugar and salt. With the Government now making the opposite argument to support this postponement, do they no longer stand by the evidence? Would a ban on these deals make it easier or harder for those who are struggling to get by?
Lord Markham (Con)
As we have mentioned before, our general direction of travel is to educate, reformulate and give people the best chances through having choices, and a good start in life through the fresh fruit and vegetables that we have in schools. Those are the things that will really make the difference.
Lord Lansley (Con)
Does my noble friend the Minister recall, on that exact point about access to fresh fruit and vegetables, the very successful scheme that we pioneered about 12 years ago with the Association of Convenience Stores so that corner shops would carry fresh fruit and vegetables close to the till and make them accessible, with us carrying the risk of wastage? That led to a significant increase in corner shops selling fresh fruit and vegetables.
Lord Markham (Con)
To me, that is a great example of how working in co-operation to allow people to make the right choices is the best way. For instance, 78% of shoppers have said that they are in favour of not having unhealthy items at the till because they know that they give in to pester power. That is why this has been focus of what we have done.
Baroness Bull (CB)
My Lords, notwithstanding the interesting “legal but harmful” point made by the noble Lord, Lord Naseby, I think that most of the House would agree that reducing high-fat, sugar and salt content is a good idea. However, the Minister has at least twice mentioned reduction of calories. Does he acknowledge and recognise that while one way to address obesity is calorie reduction, it is not an appropriate message for everybody and it certainly is not the sole cause of obesity across this country?
Lord Markham (Con)
The noble Baroness is correct; this is a complicated area, and a number of measures need to be taken. The best thing is the promotion of healthy foods, and the fresh fruit and veg initiatives that we have talked about today are perfect examples of that.
Lord Dubs (Lab)
My Lords, some years ago, the British-Irish Parliamentary Assembly looked at obesity in children, during the course of which we went to Amsterdam to look at what was going on there. Two of the things that were very enlightening were educating children in schools and educating pregnant mothers. What about that?
Lord Markham (Con)
I am aware of the Amsterdam initiative. Off the back of that, the OECD said that there were four main strands to what countries should be doing: first, information and education, such as the good examples I spoke about; secondly, increasing healthy choices through the reformulation of foods, which again is something we are doing; thirdly, the modifying of costs—the sugar tax, which has reduced sugar consumption by as much as 40%, is a perfect example of that; and, fourthly, restrictions on where product placement should take place. I am absolutely familiar with the initiative in Amsterdam, and am pleased to see that we have taken action on a lot of those things.
Lord Brooke of Alverthorpe (Lab)
Is the Minister not ashamed about what has happened to children’s health while the Conservatives have been in power since 2010? We have more obese children than ever before, and a plethora of policies which would work if implemented, yet so many are delayed. Will the Minister give a commitment to go back and look at the regulations governing children’s school meals? They were changed in 2014, with permission granted to give children more sugar. The Government were reviewing this in 2019 and 2020, but that stopped because of Covid. Will the Minister give a commitment again to start a review? Even if they cannot implement it, the next Government could.
Lord Markham (Con)
The noble Lord is correct: good school meals are fundamental to all of this. My understanding is that the review is something that the Government are looking to do, but I will happily provide more details on what the plan is.
Lord Morse (CB)
My Lords, can I just test with the Minister whether there is still a commitment to the policy of banning two-for-one promotions? If there is, is there an effective deal going on with the food producers that they will change certain processes if this ban continues to be pushed backwards and effectively talked out of effect?
Lord Markham (Con)
There is absolutely the commitment for October 2025. The tactic behind that is to give industry the time to make its food healthier. That is exactly what it is doing in the examples I mentioned, including the Deliciously Good cakes. It is good to see industry respond in that way.
Independent Review: Armed Forces Homosexuality Ban
(1 year, 4 months ago)
Lords ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Lord Lexden
To ask His Majesty’s Government when they expect to publish the report of the independent review, chaired by Lord Etherton, into the impact on military veterans of the pre-2000 ban on homosexuality in the armed forces, along with their response to the report.
The Minister of State, Ministry of Defence (Baroness Goldie) (Con)
The Government have today published the report of the noble and learned Lord, Lord Etherton, and accepted in principle the vast majority of the recommendations. As the Defence Secretary set out, while we agree with the intent behind them, there are a number which we will deliver in a slightly different way from that described in the report. We will set out these differences when we publish the Government’s full response to the review after the Summer Recess. Earlier today in the other place, my right honourable friends the Prime Minister and the Secretary of State for Defence apologised. Today in this House I repeat those apologies. From this Dispatch Box, I apologise on behalf of the Government and the Armed Forces, and I am profoundly sorry for all that our LGBT personnel suffered.
Lord Lexden (Con)
My Lords, is it not an interesting coincidence that this Question should come up on the very day that the Government finally published the excellent and long-awaited report of the noble and learned Lord, Lord Etherton? Could it possibly be that my little Question, tabled a month ago, helped in some small way to end the delay in releasing this report—so meticulously prepared by the noble and learned Lord, Lord Etherton, and delivered to the Government in May, bang on time—which had distressed many LGBT veterans? I hope that the Statement delivered in the Commons by the Secretary of State for Defence earlier today will be repeated in your Lordships’ House before the Recess. Finally, does not the full apology delivered by our Prime Minister today set the scene quite admirably for the substantial reparation that must be made to LGBT veterans who served their country with devotion, only to have their lives ruined because of their sexuality?
Baroness Goldie (Con)
I much respect the views being expressed by my noble friend. An eminent theologian once said to me that anyone who believes in coincidences must lead a very boring life and I could never accuse my noble friend of that. He makes an important point. There was a desire to bring the report forward and to publish it and I absolutely accept that my noble friend’s Question has been most timely in respect of this Chamber. On the matter of further procedure within the Chamber, he will understand that that is for others—my noble friends the Leader and the Chief Whip, with their counterparts through the usual channels—to determine. However, I am confident that, as the Secretary of State indicated in the other place, this Chamber will want to debate this report and I take this opportunity to pay tribute to the noble and learned Lord, Lord Etherton, for a forensic and meticulously comprehensive report. It is a most informative, extremely disturbing and, at times, appallingly repugnant read. It has shone light where light needed to be shone—there is not a shadow of a doubt—and we are all indebted to the noble and learned Lord for his assiduous work and his contribution to this vital issue.
Lord Cashman (Lab)
My Lords, I too commend this report and congratulate the noble and learned Lord on what, as the Minister has said, is a deeply harrowing yet forensic report. I think it will put right the wrongs that have been done to LGBT service personnel across the generations. I pay tribute to Elaine Chambers and Robert Ely, who set up Rank Outsiders in the early 1990s, which campaigned to end the ban on gays serving in the military. Will the Minister consider setting up an active task force to ensure that the 49 recommendations across government departments are brought forward, not least on service records, pensions and compensation? Further delay will only cause deeper tragedy.
Baroness Goldie (Con)
I thank the noble Lord for his kind remarks, and I think there was a lot of sympathy across the Chamber with what he said. I would observe that, as the Secretary of State was explicit about today in the other place, we are going to look comprehensively at the recommendations but we need to do that in conjunction with organisations such as that to which the noble Lord referred; and I pay tribute to them. They were indeed the founders of the pressure to ensure that at some point this was all laid open, exposed and examined and they deserve credit for their persistence. My right honourable friend the Secretary of State said in the other place that we will work extensively over the summer in consultation with all those who have an interest in this. We want to get it right and ensure that the recommendations so appropriately articulated by the noble and learned Lord get due consideration and we all understand what the consequences are and what the best route for delivery may be. My right honourable friend the Secretary of State said we accept the spirit of the recommendations and I repeat that in this Chamber.
Baroness Smith of Newnham (LD)
My Lords, speaking in the other place, the Secretary of State assumed that Members would have had a chance to read the testimonials. Unless people have done a speed-reading course, I suspect that so far we have not been able to do that. The Secretary of State also said that the Government have implemented six of the 49 recommendations already, without stipulating what they were, other than the apology. Can the Minister elaborate? Can she say also whether there will be an apology to the families of those LGBT veterans who are no longer with us but whose lives were blighted by the ban and whose families were therefore affected?
Baroness Goldie (Con)
I can say to the noble Baroness that already we have taken proactive measures such as implementing various inclusive policies—that was important —including the provision of pre-exposure HIV prophylaxis. We have introduced a guide for parents of LGBT children and LGBT+ allies training. We have several thriving LGBT+ staff networks and a LGBT+ community which regularly parades in Fighting with Pride marches and does so with pride. I had the privilege of meeting them at a reception last year and my right honourable friend the Minister for Defence, People, Veterans and Service Families was with them this year. In addition, we have today launched an “LGBT veterans: support and next steps” GOV.UK page, which is now live and available for anyone who was impacted by the policy to explore the support, services and restorative measures available to veterans. The recommendations also specifically provided for apologies, which we acknowledge as being absolutely necessary. In relation to the successors and relatives of those who have died, I think the apologies of the Prime Minister and the Secretary of State for Defence were all-encompassing. The Prime Minister’s was on behalf of the British state to all affected.
Lord Carlile of Berriew (CB)
Does the Minister agree that my noble and learned friend’s report should be seen as a paradigm across other sectors in both the public sector and the private sector; for example, in banking, where there is still discrimination on the grounds of sexual orientation, often fairly covert?
Baroness Goldie (Con)
I agree with the noble Lord. I think “paradigm” is a very appropriate noun to attribute to the noble and learned Lord’s report. I am disturbed to hear that there are other areas and sectors where such behaviour is lurking. My advice to anybody in those sectors is to call it out, expose it, shine a light on it and make sure that the miscreants, transgressors and culprits are all put into public view and dealt with appropriately.
Lord Coaker (Lab)
My Lords, I congratulate the noble Lord, Lord Lexden, on his Question and the noble and learned Lord, Lord Etherton, on his report, which I have managed to look at. I am sorry that I have not yet read it. It was good to hear the Minister’s apology on behalf of the nation, as well as the apologies of the Prime Minister and the Defence Secretary. I think all of us would wish to join in that apology. It is important for us in the remarks that we make today to pay tribute to those who have had the bravery to come forward and share their testimonies with us. For those who have not read the report, it is horrific, with unscientific methods of investigation into individuals, prejudice, discrimination, bullying and harassment, and Armed Forces personnel having their medals, which were often given for gallantry, taken away. It is an appalling saga, and let us hope that the recommendations are implemented quickly and that we can move forward out of this horror and ensure that in today’s Armed Forces none of that prejudice exists.
Baroness Goldie (Con)
I associate myself with everything the noble Lord has said. I was struck by part of the narrative. At page 53 of the report, the noble and learned Lord wrote:
“In broad terms, the responses to the Call for Evidence paint a vivid picture of overt homophobia at all levels of the armed forces during the period 1967 to 2000 and of the bullying that inevitably reflected it”.
The noble Lord is correct that some of the testimonies are absolutely nauseating and reveal treatment and behaviour that are beyond belief. The noble Lord is absolutely correct that to have the courage to come forward—it is obvious from the report how many people did come forward—was an extraordinary commitment and demonstration of bravery, and I cannot congratulate, commend or thank them too much because without their evidence, despite all the best efforts of the noble and learned Lord, this report would perhaps lack the impact and the undeniable punch which it has had.
Oil and Gas Windfall Tax
(1 year, 4 months ago)
Lords ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Lord Bruce of Bennachie
To ask His Majesty’s Government what assessment they have made of the impact of the oil and gas windfall tax on investment and jobs, and the capacity of the energy sector and supply chain to deliver key components of the transition for achieving the United Kingdom’s net zero objectives.
The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)
My Lords, the Government introduced the energy profits levy to respond to exceptionally high prices that mean that oil and gas companies are benefiting from extraordinary profits. The Government have been clear that we want to see producers reinvest profits to support the economy, jobs and the UK’s energy security, which is why we have introduced generous investment allowances. Our North Sea transition deal reflects the key role of the sector in that energy transition.
Lord Bruce of Bennachie (LD)
I thank the Minister for that reply. As we increase our efforts to meet net zero, which we clearly must, does he agree that through all the projections to and through net zero, we will continue to use fossil fuel, albeit on a declining basis? Therefore, is it not essential, because Norway has said that it will produce every ounce of oil and gas that is commercial in its sector, that we do nothing to prevent the transition being led by the energy industry, which is increasing its investment in the necessary technology such as carbon capture and storage, hydrogen and green electricity, and that we need to ensure that it can continue to do that?
Lord Callanan (Con)
I am very happy to agree with the noble Lord. I am tempted to observe that he might want to talk to some of his colleagues on his Benches about that message. He is right that it makes much more sense as we go through the transition to obtain those resources from our own fields rather than import them at a much higher carbon content.
Lord Leigh of Hurley (Con)
My Lords, I refer to my interests in the register and to the previous questions I have raised on this matter in Treasury Questions. The point is that the EPL has had a dramatic effect on investment in North Sea oil. The question from the noble Lord, Lord Bruce, asks what assessment the Government have made of it. Would the Minister include in that assessment an analysis of the bids that have been made—for example, for Chevron oil in the Republic of Congo and in the Gulf of Mexico—by North Sea oil companies that are no longer investing in the North Sea?
Lord Callanan (Con)
My noble friend makes an important point. Taxation levels are obviously a matter for the Chancellor and the Treasury. However, there are a number of concerning stories from investors that they have pulled out of investments in the North Sea; in fact, one remarked that parts of Africa were a more stable tax environment.
Lord West of Spithead (Lab)
My Lords, I congratulate the Government on the £20 billion they put into the small modular reactor enterprise, and the work they have done for the STEP fission reactor. Does the Minister agree that the best net-zero way of ensuring that we have energy to provide the electrical baseload is to press ahead rapidly with Hinkley C and Sizewell because, if we do not get this nuclear power online, we are not going to make it?
Lord Callanan (Con)
I do agree with the noble Lord. Nuclear reactors, whether it be Sizewell or Hinkley, and small modular reactors will play an important part in the net-zero transition. Of course, we want a diverse supply mix; we want as much renewable energy as possible, but nuclear will play an important role.
Lord Stern of Brentford (CB)
My Lords, does the Minister recognise that the Paris Agreement implies the use of much less oil and gas in the 2030s than now? Therefore, issuing permits for exploration that usually requires at least seven years to generate flows makes little sense, particularly as the effect on prices and security would be negligible. Does he recognise that issuing such permits is essentially enabling and fostering bets on climate failure?
Lord Callanan (Con)
No, I would not agree with the noble Lord, I am afraid; he is absolutely dead wrong. Even with any new licences that might be issued in the UK, UK production will continue to decline at the rate of about 7% a year. It is estimated that global production decline needs to be about 3% to 4% in order to ensure the net-zero transition, so we will be declining at a faster rate than what is required globally.
Lord Teverson (LD)
My Lords, the windfall tax that the Minister mentions taxes profits but also gives a substantial kickback on investment. On renewables, the levy is against revenue and there is no such kickback. When will the Department for Energy Security and Net Zero stop discriminating against renewables?
Lord Callanan (Con)
My Lords, what the noble Lord refers to as a “kickback” is actually an investment allowance. If I am right, the same noble Lord was asking me about reducing flaring and about introducing electrification of fields. It is those investment allowances that pay for the very policies that he asked me to introduce.
Lord Bellingham (Con)
My Lords, in concurring with the noble Lord, Lord Bruce, in his statement that oil and gas are a vital part of transition to net zero, can I ask the Minister what the situation is with the Rosebank oil project, which is a world-class asset and one of the largest of its kind anywhere in the world?
Lord Callanan (Con)
I thank my noble friend for the kind invitation to respond to that. He will understand that I cannot comment on licensing decisions.
Baroness Blake of Leeds (Lab)
My Lords, analysis of the Office for Budget Responsibility data in May this year showed the extent to which oil and gas firms were able to reduce their energy profits levy while still making record profits. Between this loophole, the decision against a 78% rate and the decision not to backdate to catch all the surging profits, it is estimated that over £10 billion of potential tax will be missed between 2022-23 and 2023-24. I ask the Minister: have the Government given any consideration to fixing the levy to deliver the full benefits proposed since these figures came out?
Lord Callanan (Con)
I do not know where the noble Baroness gets her figures. I responded in my previous answer to the question about investment allowances—policies that the Opposition have called for. The energy profits levy is expected to raise about £26 billion and is set at a rate of 75%, which is one of the highest in the world. I realise that the Labour Party’s policy is to tax firms into extinction, but we need to leave them with some profits. Much of the profits of oil and gas companies goes towards pension funds and other shareholders which many pensioners and others rely on for their income.
Baroness Sheehan (LD)
My Lords, the IEA’s report World Energy Outlook 2022 is clear that the solution to the energy trilemma of economic, climate and security issues is to accelerate the move to greener energy. For us in the UK, among other things, that means urgently equipping our workforce with transferable skills for the energy transition. What are the Government doing to make sure that a single offshore energy skills passport that aligns training standards in all offshore energy sectors is introduced?
Lord Callanan (Con)
The noble Baroness is essentially right: of course we need to transition to renewable energy sources, and that is exactly what we are doing. The North Sea transition deal between the Government and North Sea companies is helping to move them, as far as the transition is going, to transfer their skills to many of the new industries. For example, many drilling companies operating in the North Sea also drill geothermal heat sources to use for renewable energy. The two things are not mutually incompatible.
The Lord Bishop of Bristol
My Lords, what assessment is the North Sea Transition Authority making of the alignment of company commitments, especially on net- zero targets covering scopes 1, 2 and 3, over the short, medium and long term as well as company alignment on capital expenditure towards those targets? Can the Minister assure us that, before licensing any expansion in North Sea exploration, the authority will factor this into consideration when judging projects under alignment with the UK’s net-zero legal commitment?
Lord Callanan (Con)
As I said in response to a previous question, I cannot comment on any licensing decisions—we will know about them before too long—but I can assure the right reverend Prelate that all the appropriate considerations are being taken into account by the Government and the North Sea Transition Authority on the issuing of those licences.
Lord Rooker (Lab)
I agree 100% with the Government’s nuclear policy but, bearing in mind that we want the success of renewables and the end of oil and gas, what assessment has been made of the fact that by 2050—which is not that far away—when the oil and gas is gone, we will be relying on nuclear for intermittency? That will leave the nuclear situation as a stranded asset, because it really does not work that way; it has got to be a formal baseload. Once the rest has gone and we are on renewables and left with nuclear, how can it be intermittent?
Lord Callanan (Con)
I totally understand the point the noble Lord is making. He is right that many renewables are very cheap but intermittent, and nuclear will contribute towards the baseload. He is asking for long-term energy storage; the answer is hydrogen. We can store large quantities of hydrogen—some really exciting projects are coming forward—and it can then be burned, with no emissions, in a power station to provide the supplies that we will need when the wind is not blowing and the sun is not shining.
House Of Lords: Appointments System
(1 year, 4 months ago)
Lords ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Baroness Jones of Moulsecoomb
To ask His Majesty’s Government what assessment they have made of the conclusion of the report of the Lord Speaker’s Committee on the Size of the House that recent developments “have brought the appointments system into question”.
The Lord Privy Seal (Lord True) (Con)
My Lords, of course, the Government will carefully note the report. Our view is that the life peerage system works well—
Lord True (Con)
There are certain beneficiaries of the life peerage system who seem to disagree.
We think that members of the House of Lords Appointments Commission do a good job and I have every confidence that new members coming in will do the same. To tweet this morning, as the noble Baroness did, about “ongoing corrupt patronage” from Prime Ministers does not help confidence in the appointments system.
Baroness Jones of Moulsecoomb (GP)
I am very flattered that the noble Lord knows about my tweets. That is very nice. It is obvious that the system of prime ministerial patronage is not working. Various Prime Ministers over the past couple of years have clearly put people into your Lordships’ House who have no intention of contributing to our work and probably do not have the skills to do so anyway. This is not about the House of Lords Appointments Commission, which I admire very much. The Green Party believes that that system is archaic and corrupt. Does the Leader of the House agree with me even a tiny bit?
Lord True (Con)
I very often agree with the noble Baroness, except I have never tweeted in my life, and I recommend her not to. The policy of the Green Party is to replace the system of appointment—which has given us all the excellent noble Lords here on these Benches in their parties—with a PR-democratically elected Chamber. Frankly, that would simply replace an accountable appointments system, where Prime Ministers are openly responsible for who they appoint, with an unaccountable appointments system of lists drawn up by secretive party secretariats.
Baroness Williams of Trafford (Con)
My Lords, we have lots of time. Let us hear from the noble Lord, Lord Wallace, then we very much look forward to hearing from the noble Lord, Lord Grocott.
Lord Wallace of Saltaire (LD)
My Lords, when the last reform of the House took place between 1997 and 1999, the then Government stated clearly that, ad interim, it was the Government’s policy, agreed with the Conservative Opposition and the Leader of the Conservative Opposition in the Lords, that no party should have a disproportionate number of Peers in the Lords.
Lord Wallace of Saltaire (LD)
I remind Conservative Peers that on a current poll basis the Conservatives have exactly twice the poll percentage of public support that we do, so we are not overrepresented.
Particularly under Boris Johnson, the Conservatives have broken that agreement. Do the Government not accept that we are now in a position where any change of government would have to be accompanied either by the voluntary resignation of a substantial number of Conservative Peers or the appointment of a large number of new governmental Peers, which would be bad for the size of the House?
Lord True (Con)
My Lords, I think the question of “disproportionate” was answered by Members of your Lordships’ House rather than me, so I will not add to the pain of those Benches. I think that there needs to be—and I have advocated this publicly in the House and privately—better representation of His Majesty’s Opposition in your Lordships’ House. I do not think it is generally acceptable that His Majesty’s Opposition should have fewer representatives in this House than the Cross Benches. I recognise that, and for all the criticism of the previous Prime Minister, Mr Johnson, he approved the appointment of Labour Peers. I hope that will go forward.
Lord Grocott (Lab)
My Lords, a part of this report that I particularly enjoyed was the piece saying that
“the ending of the hereditary peer by-elections … is crucial”.
There are two more of these wretched men-only by-elections pending as they stand. I appeal to the Leader, who talks about proportionality. It is his responsibility—and he knows the constitution well enough—not just to speak for his party but as Leader of the House to speak for the whole House. The whole House is absolutely clear by an overwhelming majority, repeatedly tested in votes on this issue, that hereditary Peer by-elections should end. I ask him to go to his colleagues in the Cabinet, tell them that there is no defence of this system whatever—I challenge him to provide one—and say that a simple two-clause Bill would scrap them, which would be consistent with the wishes of nearly everyone in this Chamber.
Lord True (Con)
I think the Government have other legislative priorities. The noble Lord knows how highly I esteem him. He is a bit like the elder Cato, who ended every speech in the Roman Senate by saying that Carthage must be destroyed. Unfortunately, Romans later looked back and said that when Carthage was destroyed was perhaps the beginning of the end of Rome. I am sure that, one day, the hereditary peerage will—and that has been long accepted—depart this House. Many will be sad of that. When it does, the full gaze of the public will turn on the life peerage and how that, in its turn, will stand the test of time.
Lord Shinkwin (Con)
My Lords, overall numbers obviously matter, but so does the number of Members of your Lordships’ House with a diversity of lived experience. The greater ethnic diversity of the recent intakes of Members to your Lordships’ House obviously strengthens us hugely in the eyes of the public, but will my noble friend The Lord Privy Seal to draw No. 10’s attention to the fact that, as compared with 20% of the population who are disabled, only 1% of your Lordships’ House has long-term lived experience of disability and encourage the Prime Minister to remedy that disproportionality?
Lord True (Con)
My Lords, my noble friend makes a very important point. I certainly will pass on that message, as indeed others that I have referred to. I think the whole House looks with the most enormous admiration and respect at—and gains tremendously from the presence of—those who have the kind of lived experience that my noble friend refers to.
Baroness Hayman (CB)
My Lords, the Leader said that the Government would take note of the report. Would he go rather further and look at it? It is cogent and carefully argued. If there is not time for legislation, there is time and opportunity for the Prime Minister to take action on issues that the public object to—not the work that this House does, but the size of the House and the method of appointment. The Prime Minister could limit the number of appointments and he could say that the Appointments Commission should look at the suitability and ability to contribute of Members who are nominated by the political parties, as it does for those who are nominated to the Cross Benches.
Lord True (Con)
My Lords, on the size of the House, since January 2022 it has in fact grown by four—plus seven net Conservatives and plus three net Labour. I understand that many noble Lords are agitated about the size of the House. However, I sometimes wish that the House would concentrate on extolling the great and good things that your Lordships do every day and the challenge that your Lordships give to the Government to improve legislation, and not concentrate so much on running down the House. I am not accusing the noble Baroness of that, but the reality is that we have just had in this House one of the most contested pieces of legislation, where 417 Peers voted.
Baroness Smith of Basildon (Lab)
My Lords, the noble Lord will understand that this is the fifth report of the Lord Speaker’s Committee. I am sure he senses the huge exasperation that so little has changed since the first report. Those of us who value—and I concur with him on this point—the work of this House and believe that it matters are frustrated that the two most serious and justified complaints are ones that Members of this House can do absolutely nothing about. As outlined by the noble Baroness, Lady Hayman, the size of the House and the appointments system bring us into criticism. The work of this House, whether people agree or not with our decisions, does not receive criticism; it is often praised—it is the size of the House and the appointments system. We do not have to agree with everything in the Lord Speaker’s report to know that something has to change. There needs to be grown-up, cross-party, serious discussions on these two key issues. I am ready; are the Government?
Lord True (Con)
My Lords, I wanted the noble Baroness to have time to intervene. I repeat with some humility the fact that I think we worry too much about the nominal size of the House. A House which has certain experts in it and people who come here occasionally and make a great contribution has to be larger than a full-time House. I repeat that we had 417 Peers voting on the deeply contested legislation on illegal migration on Monday. The House calls for a limit of 600 Members; we very rarely get that number voting.
As for discussions, the most important things are the role of the House, the way it conducts itself and, if I may say so, the agreements across the House within the usual channels. I am always keen to facilitate the House operating in a sensible mode. Size was not a problem in the late 1940s when the Labour Party was massively outnumbered, because there was an understanding about the way in which the House should operate. The House should concentrate on doing its role in that sort of way, and I am very happy to have those kinds of discussions. We should worry a little less about the nominal size of the House.
Bank Accounts
(1 year, 4 months ago)
Lords ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Lord Lamont of Lerwick
To ask His Majesty’s Government, in light of the recent assurances from the Economic Secretary to the Treasury, what action they intend to take to ensure that no person’s bank account should be closed for political reasons.
Lord Lamont of Lerwick (Con)
My Lords, I beg leave to ask a Question of which I have given private notice. In asking this Question, I declare that I have a bank account with NatWest.
The Parliamentary Secretary, HM Treasury (Baroness Penn) (Con)
My Lords, the Government unequivocally support the right to lawful free speech and consider it unacceptable for banks or other payment service providers to terminate contracts on these grounds. Earlier this year, the Government launched a call for evidence which included questions on the issue of payment account terminations and freedom of expression. We will soon set out plans for enhanced requirements applying to the termination of payment accounts.
Lord Lamont of Lerwick (Con)
My Lords, I am grateful to my noble friend for confirming that it is the Government’s view that no bank account should be closed for political reasons. Does she therefore agree that it is not for a bank to judge whether someone’s personal or political views accord with the so-called “values” of the bank and that that is not a reason for closing an account? Equally, does she agree that it is not for a bank to judge whether someone’s views are out of tone with wider society and then use that as the pretext for closing an account? Is this not a fundamental issue which ought to concern everyone of every party—left, right, centre or flat earth—who might all be the next person to suffer under what is happening? Will my noble friend ensure that the number of cases that have been reported recently, which, prima facie, seem to indicate that accounts may have been closed for political reasons, are referred to the regulator and investigated? Will she confirm that this a fundamental right of free speech in a free society?
Baroness Penn (Con)
I absolutely agree with my noble friend and reiterate once again that the Government unequivocally support the right to lawful free speech and consider it completely unacceptable for banks or other payment service providers to terminate contracts on these grounds. We issued a call for evidence that covered these issues and will consider all evidence as part of that. As my noble friend noted, I am sure that the regulator will also want to consider these matters.
Lord Hunt of Kings Heath (Lab)
My Lords, does the noble Baroness agree that part of the problem is that her department and the FCA were very slow to take action against the banks for the unwarranted interference in parliamentarians’ lives because they failed to operate the guidelines on PEPs appropriately and proportionately? Can we expect to see the FCA take disciplinary action against the banks that are doing this?
Baroness Penn (Con)
My Lords, it is important to distinguish between any action that may have been taken on freedom of speech grounds, or on the grounds of people’s political views, and the PEP regulations, which are to do with people’s status as politically exposed persons. However, the noble Lord is right, and we have discussed this issue in the House many times: the banks have not always applied those regulations and guidance as they should. That is why we had two amendments to the Financial Services and Markets Act to take action in this area, both to amend the regulations and for the FCA to review its guidance and the banks’ adherence to it. My right honourable friend the Economic Secretary has written to the FCA again recently to reiterate the importance of that review and to say that, if any action can be taken during the conduct of that review, we will expect that to happen also.
Lord Forsyth of Drumlean (Con)
My Lords, I declare an interest as the chairman of a bank. I also have an account with Coutts Bank—although, by the way, I have nothing like the wealth that has been mentioned. I point out to my noble friend that Coutts Bank is owned by NatWest, and the largest shareholder in NatWest by a long way is the Government. Should the Government, as a shareholder, not say to NatWest that this kind of conduct is unacceptable? Also, what is the FCA doing? On the basis of what we read in the newspapers, Coutts Bank has been in breach of rule 4, which requires it to treat customers fairly.
Baroness Penn (Con)
My Lords, as my noble friend has noted, the Government have a shareholding in NatWest Group, but it is managed at arm’s length and on a commercial basis by UK Government Investments and I do think that is the right approach. My noble friend also noted the role of the FCA. He is right that it is for the FCA and other relevant independent bodies to determine whether any breach of regulatory requirements has taken place—so I will not comment on that, but I would expect them to do so.
Baroness Kramer (LD)
My Lords, I gently suggest to the Minister that the issue of PEPs and the issue of people expressing their political views and then being treated badly are in fact entangled one with the other. I am just outraged that Nigel Farage was denied a bank account, but I was also denied a bank account at Chase UK this year because I could not produce physical payslips for my husband, who died 17 years ago. That had to be a specious reason, and I suspect that the real reason is that I am a Liberal Democrat who speaks out on issues in a way that the bank does not particularly like.
So I will just say that the PEP regime has got completely out of hand. It has been outsourced to consultants who make their money from dire and irrational interpretations. Will the Government please press the FCA not just to renew sensible guidance but to make sure that it is followed? Could she please tell it to focus its energies on the real abusers and the real money launderers?
Baroness Penn (Con)
Well, I can reassure the noble Baroness that that is exactly what the amendment to the Financial Services and Markets Act requires the FCA to do. It should look not just at the appropriateness of the guidance but at firms’ adherence to that guidance. We have asked it to get feedback from those who are affected by this guidance and take particular account of the impact on family members, which is an issue that many noble Lords have raised with me. We expect the FCA to follow that rigorously. The FCA is required to provide an update to this House on the progress of that work within a few months of it starting, and I am sure noble Lords will pay close attention to that.
Baroness Deech (CB)
My Lords, I know it is customary for children to blame their parents for everything, but will the Minister extend her concern to credit cards? My daughter, who is a very modest earner and has had the same credit card provider for 20 years, is being investigated in depth, with every piece of financial information needing to be produced, and we can think of no reason other than that I am her mother.
Baroness Penn (Con)
The changes to the regulations that the Government are committed to and the review by the FCA do not just cover banks; they cover the provision of credit cards and all other services that are covered by the anti-money laundering regulations relating to politically exposed persons.
Earl Attlee (Con)
My Lords, on at least two occasions Lords Ministers have indicated that the complete integrity of the money-laundering regulations is more important than facilitating the export of armoured fighting vehicles to Ukraine, even under export licence. In the light of what has happened recently, will the Minister agree either that this matter will be reviewed or to have a further meeting with me?
Baroness Penn (Con)
My Lords, I am not sure that events recently pertain to the particular case raised by the noble Lord. I was pleased to meet with him and as I committed to then and commit to on an ongoing basis, we will continue to engage with the Ministry of Defence to ensure that we have an understanding of the issue and that people do not face a wider systemic barrier.
Lord Macpherson of Earl’s Court (CB)
My Lords, I declare my interest as chairman of C Hoare & Co. Does the Minister agree that customer confidentiality should lie at the heart of banking, and that a bank apparently commenting on the income and wealth of a customer is completely unacceptable?
Baroness Penn (Con)
I agree with the noble Lord on both points. When it comes to assessing whether that has taken place, that is a question for the regulator.
Lord Davies of Brixton (Lab)
My Lords, I have to express a bit of concern about what I take to be the mood of the House. Will the Minister confirm that a PEP regime is essential, albeit one that is properly operated, and secondly, that if people cannot account properly for their income, it is right and proper for banks to refuse to continue an account?
Baroness Penn (Con)
My Lords, that is why it is important to distinguish between the PEP regime, which has caused problems for people, and questions about banks’ actions in relation to freedom of speech or political views. It is important, though, in both circumstances, whether you are a PEP or you have expressed any view that is lawfully held, that you have access to bank accounts. In taking forward our work on PEPs in particular, we are mindful of always maintaining our commitment to international standards in this area, and our amendments to the Financial Services and Markets Act do just that.
Lord Swire (Con)
Has my noble friend had any discussions with her colleagues in the Foreign, Commonwealth and Development Office about the fact that some overseas missions find it impossible to open bank accounts in the UK? This happens the entire time, and it seems rather invidious to ask these people to come here to open embassies and then say they cannot bank when they are here.
Baroness Penn (Con)
FCDO colleagues have not raised this with me but if there is an issue, I will be more than happy to sit down with other departments and discuss what we can do about it.
Lord Livermore (Lab)
My Lords, access to financial services should of course never be determined by a person’s political views, but just as those with assets of £1 million should not unduly be denied a bank account with Coutts & Co., so those with substantially less should not be denied access to basic banking services. Yet the Financial Conduct Authority estimates that more than 1 million people in the UK have no bank account and one in four people will experience financial exclusion at least once in their lives. The Government recently overturned Labour’s amendment to the Financial Services and Markets Act to require the FCA to have regard to financial inclusion. Do the Government now regret that decision?
Baroness Penn (Con)
My Lords, I absolutely agree about the importance of financial inclusion, and we have seen significant progress on that issue in recent years, including through establishing provision of basic bank accounts. That means that anyone in society, whatever their means, has the right to access banking, and we will continue to promote access through our work on financial inclusion.
Lord Cormack (Con)
My Lords, in answer to my noble friend Lord Forsyth, my noble friend the Minister said that the Government had their shareholding handled at arm’s length, or words to that effect. I completely accept that, but the moral fact is that the Government are the largest shareholder, so should they not take a particular interest in this political issue?
Baroness Penn (Con)
My Lords, the Government have taken an interest in this issue, which is why we issued a call for evidence earlier this year that covered freedom of speech and bank account closure. That is the right avenue through which the Government should seek to address this issue, rather than through their shareholding in a particular bank.
Lord Blunkett (Lab)
My Lords, I am fully in favour of the Government protecting the rights of the “Coutts one”, as they should be protecting the rights of the 1 million who cannot get a bank account. But is it not perverse, on the day that the Prime Minister has rightly apologised for the egregious treatment of LGBT people in the Armed Forces, for the Home Secretary to widen this debate into a full-frontal attack on equality, diversity and inclusion? Is that not totally unacceptable as well?
Baroness Penn (Con)
My Lords, I think the point we can all agree on is that the right to lawful freedom of speech is fundamental. Where that has been seen to be brought into question through the provision of services, we have cause to worry.
Lord Fox (LD)
The Minister rightly upheld the need for access. One of the ways people access banks is through bricks and mortar branches in our towns and cities. These continue to be closed; every week banks are closing. What conversations has her department had with banks about their closures and what was the content of those discussions?
Baroness Penn (Con)
This is an issue we have discussed, including during the passage of the Financial Services and Markets Act. The Government legislated in that Act to protect access to cash for consumers and business depositors, which will help people continue to access banking. Banking hubs are also being rolled out in areas that may be seeing closures, and those signed up to banking hubs have given a commitment that, where a hub is due to be opened in an area, the last bank will not shut until it is open.
Baroness Fox of Buckley (Non-Afl)
My Lords, as the Minister will remember, I tabled an amendment to the financial services Bill on this very question—as distinct from PEPs—of political values closing down accounts, and I was told that evidence was being sought. Is the Minister concerned that the only reason we now know this is happening is not because of anything the Government have done, but because a high-profile figure is pursuing the issue and getting a lot of attention? Secondly, can the Minister comment more broadly on the danger of the corporate power of financial services being used to bully customers into accepting certain values of equality, diversity and inclusion that have nothing to do with equality or diversity in any real sense, but with imposing their views on customers, for fear they will get their accounts cut off?
Baroness Penn (Con)
I reassure the noble Baroness that the Government’s commitment to issuing a call for evidence included issues of payment account terminations and freedom of expression. I believe the call for evidence closed before the issue that prompted this Question came to light. The Government are delivering on their commitment.
I close by stating once again that the Government unequivocally support the right to lawful free speech and consider it unacceptable for banks or other payment service providers to terminate contracts on these grounds.
Consumer Rights Act 2015 (Enforcement) (Amendment) Order 2023
(1 year, 4 months ago)
Lords ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Baroness Penn
That the draft Order laid before the House on 12 June be approved.
Considered in Grand Committee on 12 July.
Electronic Trade Documents Bill [HL]
Wednesday 19th July 2023
(1 year, 4 months ago)
Lords ChamberRead Full debate Electronic Trade Documents Act 2023 View all Electronic Trade Documents Act 2023 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 19 June 2023 - (19 Jun 2023)
Viscount Camrose
That this House do agree with the Commons in their Amendments 1 to 6.
“(4A) Subsection (4) does not apply if the regulations are to be made by the Secretary of State and the Scottish Ministers acting jointly.”
“(5A) “The appropriate authority”, in relation to regulations under subsection (2)(b), means—
(a) in any case, the Secretary of State or the Secretary of State and the Scottish Ministers acting jointly;
(b) in a case in which all of the provision made by the regulations is within Scottish devolved competence, the Scottish Ministers.
(5B) Provision is within Scottish devolved competence if it is provision which would be within the legislative competence of the Scottish Parliament if contained in an Act of that Parliament.”
“Regulations under section 5
(1) Any power to make regulations under section 5, so far as exercisable by the Secretary of State acting alone or by the Secretary of State and the Scottish Ministers acting jointly, is exercisable by statutory instrument.
(2) For regulations made under section 5 by the Scottish Ministers acting alone, see section 27 of the 2010 Act (Scottish statutory instruments).
(3) A statutory instrument containing regulations made under section 5 by the Secretary of State acting alone, or by the Secretary of State and the Scottish Ministers acting jointly, may not be made unless a draft of the instrument containing the regulations has been laid before and approved by a resolution of each House of Parliament.
(4) Regulations made under section 5 by the Scottish Ministers acting alone, or by the Secretary of State and the Scottish Ministers acting jointly, are subject to the affirmative procedure (see section 29 of the 2010 Act).
(5) Where regulations are made under section 5 by the Secretary of State and the Scottish Ministers acting jointly—
(a) section 29 of the 2010 Act (affirmative procedure) applies in relation to the regulations as it applies in relation to devolved subordinate legislation (within the meaning of Part 2 of that Act) which is subject to the affirmative procedure, but as if references to a Scottish statutory instrument were to a statutory instrument, and
(b) section 32 of the 2010 Act (laying) applies in relation to the laying before the Scottish Parliament of the statutory instrument containing the regulations as it applies in relation to the laying before that Parliament of a Scottish statutory instrument (within the meaning of Part 2 of that Act).
(6) In this section “the 2010 Act” means the Interpretation and Legislative Reform (Scotland) Act 2010 (asp 10).”
The Parliamentary Under-Secretary of State, Department for Science, Innovation and Technology (Viscount Camrose) (Con)
My Lords, the Government’s intention has always been that this Bill should apply UK-wide. In the process of delivering this ambition, we were able to confirm that legislative consent was not required from Northern Ireland or Wales. However, in the case of Scotland, private property law, as affected by this Bill, is a devolved matter and therefore legislative consent is necessary. As a result of amendments made to the Bill in the other place, we have received legislative consent from the Scottish Parliament.
The Bill has been amended to the effect that it now confers the delegated power in Clause 5(2)(b) additionally on Scottish Ministers both to exercise the power alone within areas of devolved competence and to act jointly with the Secretary of State. By including the option for Scottish Ministers to act alone and also to act jointly with the Secretary of State, the delegated powers can be exercised in a flexible manner that best suits the prevailing need for secondary legislation. Moreover, it avoids any future uncertainty as to whether matters are within the devolved competence of Scottish Ministers, particularly if they cut across devolved and reserved matters. The requirement in Clause 5(4) for the Secretary of State to consult Scottish Ministers before exercising the power in Clause 5(2)(b) will be disapplied in circumstances where the Secretary of State and Scottish Ministers act jointly to make regulations.
As noted earlier, while the Bill is unlikely to need future amendment, we believe that such changes are best delivered through concurrent delegated powers, which will allow both the Secretary of State and Scottish Ministers to make those changes. The amendments will therefore enable Scottish Ministers to make such regulations in a case in which all the provision made by the regulations is within Scottish devolved competence, and to act jointly with, or be consulted by, the Secretary of State in other cases.
The delegated powers previously afforded to the Secretary of State by the Bill are not substantively affected by this amendment. In view of this, Amendment 6 provides for regulations under Clause 5 to be subject to the affirmative resolution procedure at Westminster and in the Scottish Parliament.
In addition to these two substantive amendments, we have also had to include four consequential amendments to update and correct cross-references within the Bill. I hope noble Lords will acknowledge the requirement for the amendment to Clause 5 to change the delegated power and the consequential amendments that allow this new clause to be inserted into the Bill.
I reiterate the thanks that my noble friend Lord Parkinson of Whitley Bay gave at Third Reading to all those involved in the passage of this transformational Bill. I beg to move.
Lord Bassam of Brighton (Lab)
My Lords, I have studied the amendments closely and I can see the beneficial net effect of them. I guess that Amendment 4 is probably the most crucial to the package, and I think the noble Viscount was right to introduce them together in the way he did. I do not have much to say other than that, except to congratulate the Government on having the foresight to bring this legislation forward, and to thank the noble Lord, Lord Parkinson, for the work he did both in the Special Public Bill Committee and on the Floor of the House in considering the legislation.
I have a question for the noble Viscount, which I asked the last time we considered the Bill. This is a very important and significant piece of legislation that will go a long way to making the passage of international trade much easier, considering the impact that it could have. It will make it much easier to trade across international boundaries, and the volume of trade is such that removing the constraint on the use of electronic communication is extremely important. It is estimated that it could save as much as 15% of current transaction costs. That would be a considerable net benefit to the UK economy.
The one thing that worried and troubled me during our consideration was that there did not seem to be an implementation plan. When I quizzed the noble Lord, Lord Parkinson, on this, I was less than convinced by his response; I hope he was more convinced than I was. I do not see a plan yet. There is a role for one of the government departments involved in this to take a lead. It is really important that it does so in a way that works well with business, and consults business and all other interests to ensure that we get the maximum from this legislation; otherwise, I suspect it will lie unused.
We are one of only two jurisdictions that have made advances and progress on this. I know that others are looking at our work in the field and, if we can make a success of it, others will undoubtedly follow—but it needs leadership at the top to make this useful piece of legislation workable in future and to enhance our credentials as an international trading country.
Lord Clement-Jones (LD)
My Lords, I add my thanks to the Minister for moving these amendments from the Commons. He has shown remarkable consistency with the words of his honourable friend Mr Scully in the Commons—I think word for word it is what he said, so that is excellent. I see other members of the committee here; I am only sorry that the noble and learned Lord, Lord Thomas of Cwmgiedd, is not here to see the final process and see this legislation go forward.
I welcome these amendments, because it means that the legislation will cover the whole United Kingdom, and that the exception power in Clause 5 will operate across the UK. Could the Minister say whether anything is in contemplation under Clause 5 to be excepted in using that power across the UK?
I very much agree with what the noble Lord, Lord Bassam, said about a plan for implementation. This is a much more important Bill than it appears at first sight, and we should really speed it on its way in implementation terms.
Lord Holmes of Richmond (Con)
My Lords, I rise briefly to support the amendments as set out. In doing so, I declare my technology interests as set out in the register.
This is the most important Bill that no one has ever heard of. It demonstrates what we can do when we combine the potential of these new technologies with the great good fortune of common law that we have in this country. I particularly support the comments made by the noble Lords, Lord Bassam and Lord Clement-Jones, about the Government’s plan for implementation. Although it is obviously critical that we get Royal Assent to this Bill as soon as possible, that is really where the work begins. As my noble friend the Minister knows, the Bill is rightly permissive in nature; it cannot be that, having done all the work through both Houses of Parliament, the Bill is then just left on the shelf. There needs to be an active plan for implementation, communicating to all the sectors and all the organisations, institutions and brilliant businesses in this space to seize the opportunity that comes from electronic trade documents. Does my noble friend the Minister agree— and will he fill out some more detail on what that implementation plan is?
Viscount Camrose (Con)
I thank all three noble Lords who have commented. The noble Lord, Lord Bassam, and others have rightly raised the issue of how we implement the provision, and I could not agree more strongly that the prospect of such a brilliant and transformational Bill gathering dust on a shelf is rather depressing; it would be a great waste.
Industry is very keen to implement this itself, but it is on us to track how that is going and ensure that it does. On how exactly industry goes about it, I would like to write to noble Lords to explain that, because I very much recognise the importance of the question.
With respect to any actions envisaged in Clause 5, nothing is currently envisaged.
Online Safety Bill
Wednesday 19th July 2023
(1 year, 4 months ago)
Lords ChamberRead Full debate Online Safety Act 2023 View all Online Safety Act 2023 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 151-V Fifth marshalled list for Report - (17 Jul 2023)
17:42 - Division on Amendment 245 - Ayes: 196 / Noes: 183 - Amendment 245 agreed.
19:10 - Division on Amendment 258ZA - Ayes: 70 / Noes: 178 - Amendment 258ZA disagreed.
“Power to impose duty about alternative dispute resolution procedure
(1) The Secretary of State may by regulations amend this Act for or in connection with the imposition on providers of Category 1 services of an ADR duty.(2) An “ADR duty”—(a) is a duty requiring providers of Category 1 services to arrange for and engage in an alternative dispute resolution procedure in specified circumstances for the resolution of disputes about their handling of relevant complaints, and(b) may include a duty requiring such providers to meet the costs incurred by any other person in using a dispute resolution procedure which is so arranged.(3) Complaints are “relevant” for the purposes of subsection (2)(a) if they—(a) relate to a Category 1 service,(b) are of a specified kind, and(c) are made by persons of a specified kind.(4) Regulations under this section may not be made before the publication of a statement by the Secretary of State responding to OFCOM’s report under section (OFCOM’s report about reporting and complaints procedures)(report about reporting and complaints procedures in use by providers of Part 3 services: see subsection (10) of that section). (5) Before making regulations under this section the Secretary of State must consult—(a) OFCOM,(b) the Information Commissioner, and(c) such other persons as the Secretary of State considers appropriate.(6) If the power conferred by subsection (1) is exercised, the first regulations made under the power must—(a) require the use of a dispute resolution procedure which is impartial, and(b) prohibit the use of a dispute resolution procedure which restricts or excludes the availability of civil proceedings.(7) Provision made by regulations under this section may have the effect that the duties set out in any or all of sections 17, 18 and 19 which apply in relation to duties imposed by other provisions of Chapter 2 of Part 3 are also to apply in relation to the ADR duty, and accordingly the regulations may amend—(a) section 17(6),(b) the definition of “safety measures and policies” in section 18(8), or(c) the definition of “relevant duties” in section 19(10).(8) The provisions of this Act that may be amended by the regulations in connection with the imposition of the ADR duty include, but are not limited to, the following provisions (in addition to those mentioned in subsection (7))—(a) section 6(5),(b) section 94(12)(a), and(c) section 120(2).(9) If the power conferred by subsection (1) is exercised, the first regulations made under the power must require OFCOM to—(a) produce and publish guidance for providers of Category 1 services to assist them in complying with the ADR duty, and(b) consult the Secretary of State, the Information Commissioner and such other persons as OFCOM consider appropriate before producing the guidance.(10) Section 184(1) applies for the purposes of the references to Category 1 services in this section.(11) In this section “specified” means specified in regulations under this section.(12) For the meaning of “Category 1 service”, see section 86 (register of categories of services).”Member’s explanatory statement
This amendment provides that the Secretary of State may make regulations amending this Bill so as to impose a new duty on providers of Category 1 services to arrange for and engage in an out of court, impartial dispute resolution procedure. The regulations may not be made until the Secretary of State has responded to OFCOM’s report about content reporting and complaints procedures under the new clause proposed to be inserted after Clause 147 in my name.
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)
My Lords, the government amendments in this group relate to content reporting and complaints procedures. The Bill’s existing duties on each of these topics are a major step forward and will provide users with effective methods of redress. There will now be an enforceable duty on Part 3 services to offer accessible, transparent and easy-to-use complaints procedures. This is an important and significant change from which users and others will benefit directly.
Furthermore, Part 3 services complaints procedures will be required to provide for appropriate action to be taken in response to complaints. The duties here will fundamentally alter how complaints systems are operated by services, and providers will have to make sure that their systems are up to scratch. If services do not comply with their duties, they will face strong enforcement measures.
However, we have listened to concerns raised by your Lordships and others, and share the desire to ensure that complaints are handled effectively. That is why we have tabled Amendments 272AA and 274AA, to ensure that the Bill’s provisions in this area are the subject of a report to be published by Ofcom within two years of commencement.
Amendment 272AA places a requirement on Ofcom to undertake a report about Part 3 services reporting and complaints procedures. The report will assess the measures taken or in use by providers of Part 3 services to enable users and others to report content and make complaints. In assessing the content reporting and complaints measures in place, the report must take into account users’ and others’ experiences of those procedures—including how easy to use and clear they are for reporting content and making complaints, and whether providers are taking appropriate and timely action in response.
In this report, Ofcom must provide advice to the Secretary of State about whether she should use her power set out in Amendment 236C to make regulations imposing an alternative dispute resolution duty on category 1 services. Ofcom may also make wider recommendations about how the complaints and user redress provisions can be strengthened, and how users’ experiences with regard to complaints can be improved more broadly. Amendment 274AA is a consequential amendment ensuring that the usual confidentiality provisions apply to matters contained in that report.
These changes will ensure that the effectiveness of the Bill’s content reporting and complaints provisions can be thoroughly assessed by Ofcom two years after the commencement of the provision, providing time for the relevant reporting and complaints procedures to bed in.
Amendment 236C then provides that the Secretary of State will have a power to make regulations to amend the Act in order to impose an alternative dispute resolution duty on providers of category 1 services. This power can be used after the Secretary of State has published a statement in response to Ofcom’s report. This enables the Secretary of State to impose via regulations a duty on the providers of category 1 services to arrange for and engage in an impartial, out-of-court alternative dispute resolution procedure in respect of complaints. This means that, if the Bill’s existing user redress provisions are found to be insufficient, this requirement can quickly be imposed to strengthen the Bill.
This responds directly to concerns which noble Lords raised about cases where users or parents may feel that they have nowhere to turn if they are dissatisfied with a service’s response to their complaint. We believe that the existing provisions will remedy this, but, if they do not, these new requirements will ensure that there is an impartial, alternative dispute resolution procedure which will work towards the effective resolution of the complaint between the service and the complainant.
At the same time, it will avoid creating a single ombudsman, person or body which may be overwhelmed either through the volume of complaints from multiple services or by the complexity of applying such disparate services’ varying terms of service. Instead, if required, this power will put the onus on the provider to arrange for and engage in an impartial dispute resolution procedure.
Amendment 237D requires that, if regulations are made requiring category 1 services to offer an alternative dispute resolution procedure, such regulation must be subject to the affirmative parliamentary procedure. This ensures that Parliament will continue to have oversight of this process.
I hope that noble Lords are reassured that the Bill not only requires services to provide users and others with effective forms of redress but that these further amendments will ensure that the Bill’s provisions in this area will be thoroughly reviewed and that action can be taken quickly if it is needed. I beg to move.
Lord Stevenson of Balmacara (Lab)
My Lords, I am grateful to hear what the Minister has just announced. The scheme that was originally prefigured in the pre-legislative scrutiny report has now got some chance of being delivered. I think the process and procedures are quite appropriate; it does need review and thought. There needs to be account taken of practice on the ground, how people have found the new system is working, and whether or not there are gaps that can be filled this way. I give my full support to the proposal, and I am very glad to see it.
Having got to the Dispatch Box early, I will just appeal to our small but very important group. We are on the last day on Report. We are reaching a number of issues where lots of debate has taken place in Committee. I think it would be quite a nice surprise for us all if we were to get through this quickly. The only way to do that is by restricting our contributions.
Baroness Morgan of Cotes (Con)
My Lords, I will speak briefly to Amendments 272AA and 274AA, only because at the previous stage of the Bill I tabled amendments related to the reporting of illegal content and fraudulent advertisements, both in reporting, and complaints and transparency. I have not re-tabled them here, but I have had conversations with my noble friend the Minister. It is still unclear to those in the House and outside why the provisions relating to that type of reporting would not apply to fraudulent advertisements, particularly given that the more information that can be filed about those types of scams and fraudulent advertisements, the easier it would be for the platforms to gather information, and help users and others to start to crack down on that. I wonder if, when he sums up, my noble friend could say something about the reporting provisions relating to fraudulent advertisements generally, and in particular around general reporting and reporting relating to complaints by users.
Lord Allan of Hallam (LD)
My Lords, I am mindful of the comments of the noble Lord, Lord Stevenson, to be brief. I add a note of welcome to the mechanism that has been set out.
In this legislation, we are initiating a fundamental change to the way in which category 1 providers will run their reporting systems, in that prior to this they have not had any external oversight. Ofcom’s intervention will be material, given that online service providers will have to explain to Ofcom what they are doing and why.
We should note that we are also asking providers to do some novel prioritisation. The critical thing with all these reporting systems is that they operate at such huge volumes. I will not labour the points, but if noble Lords are interested they can look at the Meta and YouTube transparency reports, where it is explained that they are actioning tens of millions of pieces of content each month, on the basis of hundreds of millions of reports. If you get even 1% of 10 million reports wrong, that is 100,000 errors. We should have in mind the scale we are operating at. Ofcom will not be able to look at each one of those, but I think it will be able to produce a valuable system and make sure that quality control is improved across those systems, working with the providers. Having additional powers to create an alternative dispute resolution mechanism where one does not exist and would prove to be useful is helpful. However, the slow and steady approach of seeing what will happen with those systems under Ofcom supervision before jumping into the next stage is right.
I also note that we are asking platforms to do some prioritisation in the rest of the Online Safety Bill. For example, we are saying that we wish journalistic and politician content to be treated differently from ordinary user content. All of those systems need to be bedded in, so it makes sense to do it at a reasonable pace.
I know that the noble Baroness, Lady Newlove, who cannot be here today, was also very interested in this area and wanted to make sure we made the point that the fact there is a reasonable timescale for the review does not mean that we should take our foot off the pedal now for our expectations for category 1 service providers. I think I heard that from the Minister, but it would be helpful for him to repeat it. We will be asking Ofcom to keep the pressure on to get these systems right now, and not just wait until it has done the report and then seek improvements at that stage. With that—having been about as brief as I can be— I will sit down.
Baroness Harding of Winscombe (Con)
My Lords, I promise I will be brief. I, too, welcome what the Minister has said and the amendments that the Government have proposed. This is the full package which we have been seeking in a number of areas, so I am very pleased to see it. My noble friend Lady Newlove and the noble Baroness, Lady Kidron, are not in their places, but I know I speak for both of them in wanting to register that, although the thoughtful and slow-and-steady approach has some benefits, there also some real costs to it. The UK Safer Internet Centre estimates that there will be some 340,000 individuals in the UK who will have no recourse for action if the platforms complaints mechanism does not work for them in the next two years. That is quite a large number of people, so I have one very simple question for the Minister: if I have exhausted the complaints procedure with an existing platform in the next two years, where do I go? I cannot go to Ofcom. My noble friend Lord Grade was very clear in front of the committee I sit on that it is not Ofcom’s job. Where do I go if I have a complaint that I cannot get resolved in the next two years?
Lord Clement-Jones (LD)
My Lords, I declare an interest as chair of Trust Alliance Group, which operates the energy and communications ombudsman schemes, so I have a particular interest in the operation of these ADR schemes. I thank the Minister for the flexibility that he has shown in the provision about the report by Ofcom and in having backstop powers for the Secretary of State to introduce such a scheme.
Of course, I understand that the noble Baroness, Lady Newlove, and the UK Safer Internet Centre are very disappointed that this is not going to come into effect immediately, but there are advantages in not setting out the scheme at this very early point before we know what some of the issues arising are. I believe that Ofcom will definitely want to institute such a scheme, but it may be that, in the initial stages, working out the exact architecture is going to be necessary. Of course, I would have preferred to have a mandated scheme, in the sense that the report will look not at the “whether” but the “how”, but I believe that at the end of the day it will absolutely obvious that there needs to be such an ADR scheme in order to provide the kind of redress the noble Baroness, Lady Harding, was talking about.
I also agree with noble Baroness, Lady Morgan, that the kinds of complaints that this would cover should include fraudulent adverts. I very much hope that the Minister will be able to answer the questions that both noble Baronesses asked. As my noble friend said, will he reassure us that the department and Ofcom will not take their foot off the pedal, whatever the Bill may say?
Lord Parkinson of Whitley Bay (Con)
I am grateful to noble Lords for their warm support and for heeding the advice of the noble Lord, Lord Stevenson, on brevity. We must finish our Report today. The noble Lord, Lord Allan, is right to mention my noble friend Lady Newlove, who I have spoken to about this issue, as well as the noble Lord, Lord Russell of Liverpool, who has raised some questions here.
Alongside the strong duties on services to offer content reporting and complaints procedures, our amendments will ensure that the effectiveness of these provisions can be reviewed after they have had sufficient time to bed in. The noble Lord, Lord Allan, asked about timing in more detail. Ofcom must publish the report within the two-year period beginning on the day on which the provision comes into force. That will allow time for the regime to bed in before the report takes place, ensuring that its conclusions are informed by how the procedures work in practice. If necessary, our amendments will allow the Secretary of State to impose via regulations a duty on the providers of category 1 services to arrange for and engage in an impartial, out-of-court alternative dispute resolution procedure, providing the further strengthening which I outlined in opening.
I can reassure my noble friend Lady Morgan of Cotes that reporting mechanisms to facilitate providers’ removal of fraudulent advertisements are exactly the kinds of issues that Ofcom’s codes of practice will cover, subject to consultation and due process. As companies have duties to remove fraudulent advertising once they are alerted to it, we expect platforms will need the necessary systems and processes in place to enable users to report fraudulent adverts so that providers can remove them.
My noble friend Lady Harding asked the question which was posed a lot in Committee about where one goes if all avenues are exhausted. We have added further avenues for people to seek redress if they do not get it but, as I said in Committee, the changes that we are bringing in through this Bill will mark a significant change for people. Rather than focusing on the even-further-diminished possibility of their not having their complaints adequately addressed through the additional amendments we are bringing today, I hope she will see that the provisions in the Bill and in these amendments as bringing in the change we all want to see to improve users’ safety online.
“Powers to amend sections (“Primary priority content that is harmful to children”) and (“Priority content that is harmful to children”)
(1) The Secretary of State may by regulations amend—(a) section (“Primary priority content that is harmful to children”) (primary priority content that is harmful to children);(b) section (“Priority content that is harmful to children”) (priority content that is harmful to children).But the power to add a kind of content is limited by subsections (2) to (4).(2) A kind of content may be added to section (“Primary priority content that is harmful to children”) only if the Secretary of State considers that, in relation to Part 3 services—(a) there is a material risk of significant harm to an appreciable number of children presented by content of that kind that is regulated user- generated content or search content, and(b) it is appropriate for the duties set out in sections 11(3)(a) and 25(3)(a) (duty in relation to children of all ages) to apply in relation to content of that kind.(3) A kind of content may be added to section (“Priority content that is harmful to children”) only if the Secretary of State considers that, in relation to Part 3 services, there is a material risk of significant harm to an appreciable number of children presented by content of that kind that is regulated user-generated content or search content.(4) A kind of content may not be added to section (“Primary priority content that is harmful to children”) or (“Priority content that is harmful to children”) if the risk of harm presented by content of that kind flows from—(a) the content’s potential financial impact, (b) the safety or quality of goods featured in the content, or(c) the way in which a service featured in the content may be performed (for example, in the case of the performance of a service by a person not qualified to perform it).(5) The Secretary of State must consult OFCOM before making regulations under this section.(6) In this section references to children are to children in the United Kingdom.(7) In this section—“regulated user-generated content” has the same meaning as in Part 3 (see section 49);“search content” has the same meaning as in Part 3 (see section 51).”Member’s explanatory statement
This amendment gives power for the Secretary of State to make regulations changing the kinds of content that count as primary priority content and priority content harmful to children, subject to certain constraints set out in the Clause.
Member’s explanatory statement
This amendment has the effect that regulations made by OFCOM under the Bill must be made by statutory instrument.
Lord Parkinson of Whitley Bay (Con)
My Lords, Amendments 238A and 238D seek to change the parliamentary process for laying—oh, I am skipping ahead with final day of Report enthusiasm.
As noble Lords know, companies will fund the costs of Ofcom’s online safety functions through annual fees. This means that the regime which the Bill ushers in will be cost neutral to the taxpayer. Once the fee regime is operational, regulated providers with revenue at or above a set threshold will be required to notify Ofcom and to pay a proportionate fee. Ofcom will calculate fees with reference to the provider’s qualifying worldwide revenue.
The Delegated Powers and Regulatory Reform Committee of your Lordships’ House has made two recommendations relating to the fee regime which we have accepted, and the amendments we are discussing in this group reflect this. In addition, we are making an additional change to definitions to ensure that Ofcom can collect proportionate fees.
A number of the amendments in my name relate to qualifying worldwide revenue. Presently, the Bill outlines that this should be defined in a published statement laid before Parliament. Your Lordships’ committee advised that it should be defined through regulations subject to the affirmative procedure. We have agreed with this and are proposing changes to Clause 76 so that Ofcom can make provisions about qualifying worldwide revenue by regulations which, as per the committee’s recommendations, will be subject to the affirmative procedure.
Secondly, the committee recommended that we change the