Grand Committee
Russia (Sanctions) (EU Exit) (Amendment) (No. 3) Regulations 2024
(1 day, 13 hours ago)
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Lord Collins of Highbury
That the Grand Committee do consider the Russia (Sanctions) (EU Exit) (Amendment) (No. 3) Regulations 2024.
The Parliamentary Under-Secretary of State, Foreign, Commonwealth and Development Office (Lord Collins of Highbury) (Lab)
My Lords, this instrument amends the Russia (Sanctions) (EU Exit) (Amendment) Regulations 2019. It was laid on 30 July using powers provided by the Sanctions and Anti-Money Laundering Act 2018. It entered into force on 31 July. For clarity, this instrument was first laid on 24 May under the previous Government. This Government support the aims of this instrument so we revoked and relaid it to provide additional time, post-election, for the required parliamentary scrutiny. There are no amendments to the policy in relation to Russian sanctions and the substance of this instrument is the same.
The United Kingdom’s commitment to Ukraine is ironclad. In July, the UK contributed £40 million to NATO’s comprehensive assistance package for Ukraine, which ensures that Ukraine will have access to vital assistance for counter-drone technology, demining of reclaimed land and the medical rehabilitation of injured Ukrainian personnel. Ukraine has placed new orders for ammunition worth £300 million through the International Fund for Ukraine, which is administered by the UK.
Sanctions, too, are a crucial tool to weaken Russia’s ability to attack Ukraine. In July, the UK hosted the European Political Community at Blenheim Palace, where over 40 countries signed a “call to action” to tackle Russia’s so-called shadow fleet, a fleet of ageing oil tankers which use deceptive shipping practices and substandard insurance to attempt to undermine sanctions on Russian oil. At the event, the UK spearheaded action against the shadow fleet when we sanctioned 11 oil tankers. We have since built upon this with a further 10 such sanctions in September. Through this action, we continue to demonstrate the UK’s steadfast commitment to Ukraine and to underline our leading role in eroding Russian oil revenues.
Targeted sanctions against oil tankers have had a material impact. The majority of UK-sanctioned tankers have been heavily disrupted and have struggled to re-enter the Russian oil trade. A good number of these tankers have even been left idling or at anchor since sanctions were imposed. This instrument provides the basis for those sanctions and has enhanced the UK’s ability to respond to Russia’s increasingly desperate and reckless attempts to undermine our and our partners’ sanctions. This instrument broadens the designation criteria under the Russia regime. It expands our powers to target those who provide financial or material support to Russia’s war machine. This could include, for example, foreign financial institutions that facilitate significant transactions on behalf of or in support of Russia’s military-industrial base. This is in line with steps taken by partners and the G7’s commitment to curtail Russia’s use of the international financial system to further its war in Ukraine.
I will now consider each measure in the instrument in a bit more detail. On ship specification, the instrument adds new relevant activities to the existing powers in the Russia sanctions regime under Regulation 57, which provides the criteria to sanction individual ships, called ship specification. The amendment provides that a ship may be specified by the Secretary of State where there are reasonable grounds to suspect that the ship is, has been or is likely to be
“used for any activity whose object or effect is … to destabilise Ukraine or undermine or threaten the territorial integrity, sovereignty or independence of Ukraine”
or
“to obtain a benefit from or support the Government of Russia”,
That includes where a ship is involved in carrying dual-use or military goods, oil or oil products that originated in Russia, or any other goods or technology that could contribute to destabilising Ukraine or undermining or threatening the territorial integrity, sovereignty or independence of Ukraine.
Where a ship is specified under Regulation 57F, it will be subject to measures in Regulations 57A to 57E called shipping sanctions. Where shipping sanctions apply, a specified ship is prohibited from entering a port in the United Kingdom, may be given a movement or port entry direction, can be detained, and will be refused permission to register on the UK Ship Register or have its existing registration terminated.
Additionally, United Kingdom persons and persons in the United Kingdom cannot provide funds and financial services, including maritime insurance or brokering services, in relation to specified ships that are transporting oil and certain oil products, and cannot use specified ships to supply or deliver Russian oil and oil products, regardless of the price of the oil on board. Once again, the United Kingdom has already specified ships using this enhanced power. The previous Government specified six vessels on 13 June to coincide with the G7 summit in Italy, and recently this Government have specified five tankers operating in the Russian LNG industry, as well as 11 vessels in July and a further 10 in September that were operating as part of Russia’s shadow fleet of oil tankers. This fleet attempts to undercut our sanctions, undermines the maritime rules-based order and presents an environmental and maritime security threat to coastal states.
The SI amends Regulation 6 in the Russia sanctions regime, which is the criteria for the designation of individuals or entities under the Russia regulations for the purposes of asset freezing and other relevant measures. Specifically, the instrument adds additional activities for which a person may be designated, including individuals or entities
“providing financial services, or making available funds, economic resources, goods or technology”
to persons involved in obtaining a benefit from or supporting the Government of Russia within the meaning of the regulations. In practice, that widens the set of actors and enablers who can be targeted for providing financial or material support to Russia and its war machine as Putin continues to prosecute his illegal war in Ukraine,
The instrument consolidates powers under the Russia regulations to designate individuals or entities involved in the destabilisation of Ukraine. Specifically, the additional activities that the instrument adds to the designation criteria make possible the designation of persons who own or control entities involved in destabilising Ukraine, as well as individuals who work as directors or managers of such entities.
European security is a key focus of this Government. Supporting Ukraine remains vital to that end, and the United Kingdom is committed to doing so. We will work with our international partners to ensure that the values of democracy, human rights and international law are maintained. This legislation and the subsequent sanctions made under it show our commitment to Ukraine as it defends its freedom in the face of Russian aggression. British support remains ironclad. I commend the regulations to the Grand Committee and beg to move.
Lord Alton of Liverpool (CB)
My Lords, the Minister introduced these regulations with great clarity. I doubt that there will be any hostility to the principles that he has outlined this afternoon. I wonder whether I could ask him a number of questions, though, about the way in which the regulations were made—that is, the procedures that were used—as well as clarification on some of the points he just made to the Committee.
For most of us, as parliamentarians, when we look at regulations that were made on 29 July, were laid before Parliament on 30 July and came into force on 31 July, that kind of pell-mell rush and retrospective approval is not normally something that we would want to countenance; the Minister would agree with that, I think. However, I accept that, in these circumstances, there is an inevitability about it. I am not being argumentative in raising this but, in future, if it is possible for us to know more about regulations such as these in advance, that would be well received.
I wish to ask the Minister about the general matter of sanctions. Given that we now have 2,000 entities and individuals from Russia who are sanctioned in the UK and, as I understand it, we hold five times as much money as we have given in total to Ukraine since the beginning of the war, it is not unreasonable for us to ask some questions about how that money is being used. Is it being released? How can we get it back into the system to support the Ukrainians in the way the Minister outlined to us in his remarks? My first point, then, is about retrospectivity and process.
My second point is about how we can have better oversight. For instance, could the Minister look at something such as regular reporting back to Parliament on the effectiveness of the sanctions and how they are being used? Could that be done through reports on a six-monthly basis, perhaps, or opportunities for us to ask questions in situations such as this, which do not arise very often?
His Majesty’s Government have taken important steps to address Russia’s war on Ukraine, including by way of imposing sanctions and freezing assets. I agree with what the Minister said about this being a crucial tool, but that raises some questions about how the sanctions can be used to provide compensation to victims and survivors and to rebuild Ukraine. So, my third point is about knowing more about how we are going to repurpose these sanctions.
Noble Lords may recall that, last year, I laid an amendment to the legislation on how we dealt with sanctions and criminal offences. It received cross-party support in the House and the noble Lord, Lord Sharpe of Epsom, who dealt with amendments at that time, was extremely helpful. Eventually, an agreement was reached with the Government that there would be secondary legislation to give effect to some of the ideas in my amendment. What progress has been made on that?
Again, that touches on how effective the sanctions have been. One good example of this, for instance, is an issue that both the noble Lord, Lord Collins, and I raised when we were in opposition: the sale of Chelsea Football Club. We are not talking small sums of money here; we are talking about £2.5 billion. That money could—indeed, should—be channelled back towards those who have suffered at the hands of Putin’s army. The destruction of Ukraine has been truly appalling; I think we are all agreed about that, so anything that we can do to get support to victims and for reconstruction, we should do.
In addition to the targeted approach of repurposing assets that are, after all, a product of criminal activity—namely, sanctions evasion—what is the Government’s assessment of other ways in which frozen assets could be repurposed? This could include, for instance, following the much more transparent and open approaches of the United States and Canada. I am told that, because their approach is open, it has a much stronger effect on people who are likely to be sanctioned; it might, therefore, be in our interest to emulate that.
Lord Vaux of Harrowden (CB)
My Lords, I too welcome this SI, as far as it goes—in particular, the expansion of the sanctions regime against ships that are used to facilitate Russian oil exports, the so-called shadow tankers to which the noble Lord referred.
Could the Minister perhaps explain in a bit more detail what actual real-world impact that this will have on the number of shadow tankers that Russia uses and the amount of oil that Russia is currently able to export? I am slightly dubious as to how much real difference this will make, so I would be interested to know how it will work in reality. In particular, will this have any impact on the very dangerous ship-to-ship transfers that seem to be taking place off the coast of Greece, which are obviously an environmental disaster waiting to happen? The size of the shadow fleet is continuing to grow. I gather it is 70% bigger this year than it was last year. What other actions are we taking to deal with this problem?
There would not actually be a problem with the shadow tankers, if there were not countries ready and willing to take the Russian oil. That brings me to another loophole that Russia is using to keep its oil exports running and under which this country is still importing oil products that originate in Russia. The loophole is that, if Russian oil is refined in another country, it is no longer considered to have originated in Russia. As a result, third countries—in particular, China, India and Turkey—are buying large quantities of Russian crude, processing it and selling it on. India is now importing 13 times as much crude from Russia as it was before the war started.
Since Russia’s invasion of Ukraine, direct imports of Russian oil into the UK have fallen from about £4.5 billion a year to pretty much zero, which is a good result. But UK imports of refined oil products from India, China and Turkey have all risen quite significantly, to around £2.2 billion in 2023. A significant proportion of those will have originated in Russia. There is an estimate of 5.2 million barrels of Russian-originated oil having been imported into the UK in 2023, mostly for the aviation industry. Apparently, about one in 20 UK flights has used Russian-originated oil.
This laundering of oil through China, India and Turkey means that the UK is continuing to contribute, albeit indirectly, to Russia’s war coffers. Does the Minister recognise those figures and this problem? If he does not recognise those figures, how many Russian-originated oil products does he believe the UK is currently importing? What plans do the Government have to close the loophole? Given that a very big chunk of this comes through India, is this matter being taken into account in the trade agreement discussions with India?
Lord Purvis of Tweed (LD)
My Lords, following the very valid points made by noble Lords in this short but important debate, I offer the Government support for this. The Government were caught by a timetabling aspect, with the Summer Recess and then the conference break, so it is positive that they have ensured that there will be some parliamentary scrutiny and the ability for Members to ask questions on these matters. We have just seen the value of raising these pertinent points.
The Minister will not be surprised that I support these measures. He and I have been in many debates—in fact, all the debates on the Russian sanctions when the noble Lord, Lord Ahmad, was the Minister—and there was consensus across the Committee. I will ask a few further questions that have not been asked so far, and will perhaps emphasise some of the points that have been made.
First, I return to the issue of enforcement. Not for the first time, the noble Lord, Lord Alton, asked questions that I was going to ask. I would be grateful if the Minister could give an update on the securing of frozen assets that could be put to good use by Ukraine in this conflict. The Minister was a doughty campaigner on Chelsea when he and I were asking the noble Lord, Lord Cameron, about this in the Chamber. An update would be very useful. Is it still the case that we need to change any of the legislative or administrative processes in the UK so that we can carry out the repurposing of frozen assets into secured assets that can be put to use, around which consensus was sought in the G7? Or is it the Government’s position that we look purely at the EU proposals on the interest of assets—or, if assets are sold, that we use some of that? An update would be useful.
I periodically monitor the website of the Office of Financial Sanctions Implementation, which is tasked with ensuring that the sanctions regimes we put in place in the UK are properly enforced and policed. It is interesting that only one enforcement for circumventing UK sanctions has been carried out this year, to the tune of £15,000; since 2022 and the full invasion of Ukraine, there have been only four, totalling £60,000. Given the scale of the impact of the sanctions regime that the previous and current Governments have indicated, is it the Minister’s view that this is an accurate reflection of how the sanctions are being enforced?
We could look at it in two ways: either there is circumvention and the enforcement is not effective; or the UK is remarkably good at getting all our businesses to adhere to all of the sanctions. There may be an element of truth in both, but what is the Government’s assessment? That speaks to the valid point made by the noble Lord, Lord Alton, about the opportunity for a fundamental review not just of the overall impact of the sanctions—including an assessment of the impact of the sanctions, given the fact that they are in place until we rescind them—but of their enforcement.
The second aspect I wish to ask about is the services provided, either those in the shadow fleets or those that can now be determined under the sanctions regimes. I strongly support the Government with regard to not only persons who are directly or indirectly in the enterprises or linked with the fleets but those providing financial services to them. Why have the Government taken the view that legal services are not included in that? We all know that London in particular is the home of many legal services that have been part of the grey area of advice when it comes to these sanctions. I would be grateful to hear whether the Minister has any comments on that. We would certainly be supportive of ensuring that there is no loophole when it comes to financial services that can be masked as legal services; we need to ensure that there is no loophole for that.
I also wish to pick up on the point about our support for those in the fleets as far as the oil or dual-use goods on the shipping are concerned, as well as with regard to our position on the countries where they are landed. The point was made eloquently that many of those are our trading allies. I know that the Government have previously had frank—I hope—conversations, but surely we are now beyond the point of having frank conversations; we need to be considering actions.
In that regard, I would be grateful if the Minister could comment on the news from the end of August that the United States is moving towards secondary sanctions on those operating on financial services in jurisdictions where it believes that the sanctions regimes are being circumvented. I believe that secondary sanctions on financial institutions would be effective; I would be grateful if the UK were part of that. Indeed, what is the Government’s current position on considering secondary sanctions? This is obviously a sensitive diplomatic area, but I believe that it is important.
Can the Minister address a question that I asked his predecessor on jurisdiction? I acknowledge that these measures are UK-wide but I asked previously about the overseas territories when it comes to shipping and potential licences that are exemptions to them. We know that, when certain tankers land in overseas territories, they can operate under a different regime. I would be grateful for clarification that they are also covered by these sanctions.
I wish to ask a minor question regarding limited exemptions. Obviously, we know that there should be the capacity for some kind of exceptions in the regulations, but, to prevent an exception becoming a loophole, can the Minister confirm that the exceptions in these sanctions are defined across the G7 and our partners, so that there is no distinction between exceptions under these sanctions and those in the United States or the European Union? If the Minister could respond to these points, I would be grateful.
My final point is that the Government have our full support in ensuring that there is as much consequence for the Russian war economy as possible. No UK entities, whether in the City of London, finance, shipping or insurance, should have any part in supporting the Russian war regime. We continuously support the Government to ensure that there are no limits to what we can do to ensure Ukraine’s support.
Lord Callanan (Con)
My Lords, there is a great degree of unanimity on this subject because I, too, very much welcome these regulations. I particularly welcome the Minister’s assurance that the United Kingdom will continue to stand with Ukraine. These sanctions will clamp down on Russia’s so-called shadow fleet by targeting 17 Russian oil tankers. I very much welcome this action because, no matter how sly and cunning Russia may seek to be, I am pleased to see that the United Kingdom and its partners will continue to sanction Putin’s Government appropriately.
However, this is, of course, very much a game of legislative whack-a-mole: every time we clamp down in one area, another seems to pop up. I am particularly interested in hearing the Minister’s reply to the excellent questions from the noble Lord, Lord Vaux. It seems blindingly obvious that India and Turkey, in particular, are circumventing these sanctions by helping Russia to “launder” its oil into the rest of the world. I hope that His Majesty’s Government are raising these matters at the highest level with the Indian and Turkish Governments. I would certainly be supportive of any further action that the Government take because it is very important that the Russian war machine, as the noble Lord, Lord Purvis, correctly described it, is clamped down on. We should target any entities in the UK or the overseas territories that are helping it to do this, either in these regulations or in future ones.
Having said that, although we fully support these regulations, I want to ask the Minister a couple of questions in consequence. The regulations allow the Government to take a similar approach to that of the US Government and implement asset freezes against actors engaging in what is otherwise lawful activity. The law firm Eversheds Sutherland has claimed that the expansion of the designation criteria
“has the potential to create a considerable burden on entities from a due diligence perspective”.
That could just be special pleading, but I would be interested to hear the Minister’s response. Eversheds Sutherland also claims that it
“will not be enough to rely on sanctions screening”
to comply with these regulations, and that the UK Government have
“potentially created significant challenges for UK … businesses”.
Can the Minister inform the Committee as to what steps have been taken to help UK businesses comply with the regulations? What level of due diligence is required?
On this point, a briefing published on 28 August by Eversheds Sutherland stated that no persons have been designated under the regulations, as has been made clear. Can the Minister confirm whether that is still the case?
As I said, we fully support these regulations. I ask these questions purely in the nature of wanting to see their enforcement be as effective as possible. I will continue to support the Government and to hope that they will go further, if necessary, so that any UK entities, companies or businesses involved in helping the Russian war machine face the strongest possible action. We support the Government in this, but I would welcome the Minister’s assurances and answers to some of the questions that have been asked.
Lord Collins of Highbury (Lab)
I start by thanking all noble Lords for their contributions. I totally accept that we are at one on ensuring that we are able to defeat the illegal efforts of the Putin regime, and that we show complete solidarity on support for Ukraine, so I welcome noble Lords’ comments.
The scope of this instrument strongly reflects the work we are doing on sanctions by consolidating and ensuring that we can react. Picking up on a couple of reflections from noble Lords, in particular the noble Lord, Lord Alton, before this debate, I thought that I had better see what I said as an Opposition spokesperson so that I remain consistent. I have just realised that, in March 2019, we debated this question in this very Room. In fact, it was a repeat of a question picked up from Anne-Marie Trevelyan, whom I was quoting, particularly on the challenges around shadow and dark fleets of oil that we were seeing move around the world. That was in 2019, so we know exactly what has been going on.
One of the things that we have to do is to be constantly fleet of foot. Wherever there are sanctions, people try to avoid them. Those who do so tend to be the most innovative people, so we have to be pretty sharp and quick in our response. Strengthening our enforcement capacity and making it harder for entities to circumvent these sanctions is absolutely key to implementing them; indeed, keeping our regimes under review and lifting them when they no longer serve the purpose that was intended when they were originally introduced is also key.
Let me respond to some of the specific points made. To pick up on a point raised by the noble Lords, Lord Alton and Lord Purvis, we have acted speedily and need to do so but there is a requirement under the Sanctions and Anti-Money Laundering Act 2018, which we took through together in the Chamber. We keep all aspects of that sanctions regime’s legislative framework, established under that Act, under review in order to ensure that it remains fit for purpose. Under that Act, there are a number of routes for parliamentary scrutiny and designation so that, at any time, a designated person can request a reassessment of their own.
Picking up on the legal representation point, we need to make sure that our regime is watertight and legally test-proofed. We will certainly continue to do that, but I hear what the noble Lord, Lord Alton, says. We will continue to ensure that we have a dialogue—not necessarily fully in the Chamber, but we all share the same objectives. We need to ensure that the regime is effective, so I welcome the comments from the noble Lord and will continue to engage.
We have raised the seizure of assets repeatedly. There is no doubt that Russia must be held responsible for its illegal war. This includes its obligations under international law to pay for the damages that it has caused in Ukraine. We will work with our allies to pursue all lawful ways to ensure that Russia is made to meet those obligations. Together with our G7 partners, we have agreed to make approximately £50 billion available to Ukraine by the end of the year by advancing the extraordinary profits generated by immobilised Russian sovereign assets in the EU and in other relevant jurisdictions. Our focus now is on working with our partners to implement the G7 leaders’ commitment as quickly as possible. It is an absolutely vital step to ensure that we continue to hold Russia to account and to make it pay.
All noble Lords have raised the sanctions’ effectiveness and impacts. They have deprived Russia of more than £400 billion since February 2022; that is equivalent to four more years of funding for the invasion. There is no doubt that we are having an impact. The impact of sanctions, alongside Russia’s military spending, has forced the Russian Government to undertake the first major tax hike in more than 20 years, with Russia having increased its profit tax from 20% to 25%. Putin thought that he could take Kyiv in three days but, two and a half years on, his military is turning to North Korea and Iran for supplies. Russia is no longer a major arms supplier. Its military exports have fallen to levels not seen since the collapse of the Soviet Union. So we are definitely having an impact.
Lord Alton of Liverpool (CB)
I am grateful to the Minister for giving way. He will have seen that President Zelensky’s spokesman said earlier this week that 60% of the components in the weaponry and missiles that are being so brutally used against Ukraine were made in the People’s Republic of China. He referred also to the presence of North Korean soldiers and munitions in Ukraine. What can we do to apply greater sanctions on those nations that, certainly in the case of China, still have many economic and financial links with the United Kingdom? Is there a way in which we can apply leverage through sanctions on them?
Lord Collins of Highbury (Lab)
The first point of call is to ensure that all our allies who support our efforts to try to defeat Putin’s aggression deliver on those sanctions. Along with all the other nations, we are working through the multilateral system—particularly at the United Nations; I did so last month—to ensure that our concerns are fully recognised and that we uphold international law. I hear what the noble Lord says but that is the effective route we have to address.
The noble Lord, Lord Alton, raised the question of Chelsea. I thought that he must be back-reading Hansard because he knew that I had focused on that issue when I was the shadow Minister. Let me be clear: this Government are working hard to ensure that the proceeds from the sale of Chelsea Football Club reach humanitarian causes in Ukraine as quickly as possible. The proceeds are currently frozen in a United Kingdom bank account while a new independent foundation is established to manage and distribute the money.
The United Kingdom’s unilateral declaration makes it clear that we will only issue a licence which ensures that the money from the sale is used for exclusively humanitarian purposes in Ukraine. This Government are fully committed to that position as part of our iron-clad support for Ukraine. UK officials continue to hold discussions with Abramovich’s representatives, experts and international partners, and we will double down on our efforts to reach a resolution. The fact that we want to ensure and guarantee where that money goes is key to delivering on that.
The noble Lord, Lord Purvis, and others asked how we are immobilising Russian sovereign assets, particularly regarding the actions of others such as the US and Canada. The fact is that the impact of that has not actually happened. The real impact is what we have been able to agree within the G7; it is working with G7 partners that guarantees that the amount of money we are determined to give to Ukraine will be delivered.
The noble Lord raised the question of insurers. Here, I have to repeat the script: with regard to insurance providers, we cannot comment on plans for future sanctions, not least because, as we know and as the noble Lord, Lord Ahmad, used to say, if we announce them, the people who want to evade them will have adequate notice, so I cannot comment. However, we have sanctioned Russian insurers such as Ingosstrakh. We believe that tackling tankers through insurance has been impactful, so we will continue to monitor that, but I have no doubt that we will have to keep it under effective review.
I will obviously follow up with a letter on the India trade agreement, having consulted with my colleagues in the Department for Business and Trade. I will also write on the broader issue of legal services, another point raised by the noble Lord, Lord Purvis.
I think it was the noble Lord, Lord Vaux, who raised the impact on the shadow fleet and Russian oil supply. Ship specifications, together with US and EU action, have disrupted Russia’s shadow fleet, which it spent over £8 billion on purchasing. We are determined that it will have and has had an impact. UK and partner sanctions have forced many of the sanctioned tankers to cease their irresponsible trade in Russian oil. We will closely monitor how sanctions impact specified ships and the wider impacts on Russian oil trade and oil markets. I do not want to keep repeating myself, but we have proved that this is a sharp tool that is exacting a price. Each specification must be robust and proportionate to our objectives.
The key element is enforcement, as I have raised. It is one thing to introduce regulations to say that we will sanction, and good to have a regime of laws and regulations, but those regulations are meaningful only if we are able to properly enforce them. We are committed to significantly strengthening our sanctions enforcement tools. For example, we have introduced new civil monetary penalties for transport and certain trade sanction breaches.
The new Office of Trade Sanctions Implementation, which was launched on 10 October—another issue that I raised with the previous Government was about the speed of that—is now in place, with enhanced civil enforcement powers to maximise the impact of our trade sanctions. Those new powers will include civil monetary penalties to make the details of breaches public. The Government are committed to doing whatever is necessary to clamp down on sanctions offenders. The introduction of additional capacity, which is a key element, and the powers are starting to pay off. We are seeing an increase in the reporting of suspected breaches, which we expect to result in further fines and referrals for prosecutions.
Lord Purvis of Tweed (LD)
I am grateful, because the Minister is addressing a point of my ignorance. Might he feel able to write to us to outline what may then be necessary under UK law to allow us to have secondary sanctions—that is, can he tell us where the gaps are in extraterritorial jurisdiction over some of our sanctions? I think our debates may be heading towards that; it is a point that the noble Lord, Lord Vaux, mentioned. While I am on my feet, I do not expect the Minister to answer at the moment, but could he write to us regarding whether the overseas territories are within scope here? I would be happy if he wanted to write to us rather than address that today.
Lord Collins of Highbury (Lab)
I was going to come to that point. I am more than happy to sit down and write on the question of secondary sanctions, because this is not simply about how we extend our regime; it is a point of principle as well. As I and the noble Lord, Lord Ahmad, have said repeatedly, sanctions are effective only if we act as a collective with our allies, not by working in isolation. If we want sanctions to be more effective, we have to convince our allies and others to support those objectives. Anyway, I would be happy to try to pick up on those points in writing.
My next point, which I was going to come to, is precisely on the overseas territories. The noble Lord, Lord Purvis, has asked questions about them before; I have done so myself. At the time, the noble Lord, Lord Ahmad, answered that
“all UK sanctions regimes apply in all the UK Crown dependencies and overseas territories, either by Orders in Council or through each jurisdiction’s own legislation”.—[Official Report, 20/7/22; col. 2021.]
The UK, the Crown dependencies and the overseas territories all stand united in condemning Russia’s aggression and have been working in lockstep to enforce UK sanctions, including freezing £9 billion worth of assets. Each territory’s Government are responsible for the implementation and enforcement of sanctions within their territory. We and the OFSI already provide technical support, including through targeted use of programme funds, to build capacity and strengthen sanctions enforcements within those Governments’ jurisdictions. This Government will explore with the overseas territories’ Governments what more we can do to further strengthen their enforcement capability.
I think the question about India, separate from the trade agreement, is: is India undermining our sanctions by selling to Russia? We regularly raise Russia’s actions in Ukraine with India. The Foreign Secretary did so most recently during his opening conversation with the Indian Foreign Minister. The Foreign Secretary highlighted the importance of tackling Russia’s shadow fleet and the need for continued dialogue on this issue. India is a key partner for the United Kingdom and we are committed to working together across a range of issues, including on our commitment to tackle all forms of sanctions circumvention.
The final point was made by the noble Lord, Lord Callanan, about Eversheds Sutherland.
Lord Vaux of Harrowden (CB)
Before the Minister moves on to that, on India and, actually, the wider Turkey and China issue, he has not answered the question about how many Russian-originated oil products we are bringing into this country indirectly through India, China, Turkey and others, and what we are doing to try to prevent that. We are indirectly pushing money to Russia because of that process. There is also the unintended consequence of the sanctions on the shadow fleet: the ship-to-ship transfers, which are happening in various places. What environmental impact could that have and what can we do about it?
Lord Collins of Highbury (Lab)
We are working on that latter point and, obviously, taking safeguards. The point is that when people conduct illegal activity, you need to be able to police it. Again, that is something that we will work with our allies on.
I am happy to write to the noble Lord on the specific point about quantity, but it is extremely difficult to quantify how much processing is done. We talk about it being simply a refining process, but the refining is more complicated for the products that might be imported into the UK. There might be other products that are coming in.
Lord Vaux of Harrowden (CB)
It seems to be particularly aviation that is a problem.
Lord Collins of Highbury (Lab)
Yes, I know. I will write to the noble Lord and see what we are able to estimate.
I come to the final point, on the law firm Eversheds Sutherland. I am afraid I will have to write to the noble Lord, Lord Callanan, on that as well.
I have spoken for some considerable time on this, but it has been an extremely useful debate. I thought we would broaden out the discussion to the more general question about how our regime can be strengthened. I reassure noble Lords that we have transformed the use of sanctions. The measures in the regulations show our commitment to continuing to strengthen our sanctions regimes and their implementation and enforcement, and, more importantly, to review their ongoing appropriateness and changing foreign policy contexts.
Once again, I thank all noble Lords for their insightful contributions and continued cross-party support and co-operation, which are vital in sending a strong message to Putin and his regime. I hope the Grand Committee will support the regulations.
Syria (Sanctions) (EU Exit) (Amendment) (No. 2) Regulations 2024
(1 day, 13 hours ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Collins of Highbury
That the Grand Committee do consider the Syria (Sanctions) (EU Exit) (Amendment) (No. 2) Regulations 2024.
Relevant document: Not yet reported by the Joint Committee on Statutory Instruments
The Parliamentary Under-Secretary of State, Foreign, Commonwealth and Development Office (Lord Collins of Highbury) (Lab)
My Lords, this instrument amends the Syria (Sanctions) (EU Exit) Regulations 2019. It was laid on 30 July using powers provided by the Sanctions and Anti-Money Laundering Act 2018. It entered into force on 31 July. For clarity, this instrument was first laid on 24 May under the previous Government. This Government support the aims of the instrument, so we revoked and relaid it to provide additional time, post election, for the required parliamentary scrutiny. There are no amendments to the policy, and the substance of this instrument remains the same.
With the conflict in Syria now in its 14th year, the humanitarian situation remains dire, and a record 16.7 million people are estimated to be in humanitarian need. Nine in 10 people in Syria are living in poverty, and nearly 13 million lack sufficient food. Many more have been forced to flee their homes and are living in settlements and camps.
Our support for the Syrian people is unwavering. The United Kingdom has spent over £4 billion to date, our largest ever response to a single humanitarian crisis, and we continue to provide life-saving support to those in need. It is imperative that aid reaches the most vulnerable and that United Nations agencies, international organisations and NGOs have the support necessary for their work. The United Kingdom has engaged with financial institutions and humanitarian actors to fully understand how they use the humanitarian provisions in our sanctions legislation. Last year the Government issued general licences following the earthquakes.
The United Kingdom has acted to ensure that aid continues to reach those most in need in Syria. These amendments to the regulations will allow trusted organisations to focus on delivering aid, support efficient and effective humanitarian delivery, and provide assurances for these organisations and their service providers. They will ensure that we continue to meet our humanitarian objectives while ensuring that our sanctions regime is robust.
United Kingdom sanctions are designed to encourage the Assad regime to refrain from actions, policies or activities that repress the civilian population in Syria. They also serve to encourage the regime to participate in good faith in negotiations for a political settlement in line with United Nations Security Council Resolution 2254, and to bring about a peaceful solution to the conflict in Syria.
The instrument amends the humanitarian exception to the petroleum measures contained in the 2019 regulations, with the aim of improving the delivery of humanitarian aid in Syria. The amendments will expand the eligibility for the humanitarian exception from solely UK-funded persons to all organisations covered by United Nations Security Council Resolution 2664, to the extent that those are captured by UK sanctions. The extension will enable more organisations to benefit from the humanitarian exemption.
The instrument extends the 2019 regulations to ensure that they apply to those involved in the humanitarian delivery chain. This will ensure that the delivery chains of relevant persons as outlined in the regulations will benefit from being able to use the humanitarian exception. That provides assurances to relevant delivery partners on the ground and to financial service providers when approving payments.
The instrument also amends the 2019 regulations to authorise financial service providers of relevant persons to use the humanitarian exception, removing the requirement for those providers to apply for individual licences to facilitate activities authorised by the exception. This change will also provide greater assurances to both humanitarian organisations and their financial providers, reducing delays in payments.
Lord Purvis of Tweed (LD)
I thank the Minister for highlighting what are, in many respects, the neglected humanitarian needs of Syrians in an ongoing crisis. I believe that this debate will be shorter and I will contribute to that by reducing what I say, but I want to ask the Minister a couple of questions, if I may.
First, I acknowledge that the humanitarian exceptions are necessary in times of conflict and when there are problems, but there are consequential sensitivities, especially when they are operating in militarily controlled areas. Obviously, under international humanitarian law those providing humanitarian aid have access rights, and those should not be impeded, but in many times of ongoing conflict or where there are belligerents who occupy territory, they operate in very complex and often dangerous circumstances. I acknowledge that the previous Government considered that this was justified and that the current Government accept it, but is it necessary to have further monitoring mechanisms on the expansion of these exceptions, when it comes to ensuring that they will not be misused by those who control the territory, or is the Minister satisfied that the current reporting mechanisms are sufficient?
Secondly, when it comes to the extension to “relevant persons”, I note that non-UK-based organisations have been within the scope of UK sanctions. It is interesting to compare that to what we heard in the previous debate. Are the Government able to outline what the category of “relevant persons” would be as regards the delivery of certain services, and are those humanitarian services different from what had previously been provided?
Finally, as the Minister knows, there are many displaced Syrians who require humanitarian assistance. Part of my concern is the many Syrians who are just across the border in Lebanon at the moment, including across the whole stretch of the Bekaa valley and up to the area of Baalbek-Hermel. Is this measure linked to providing humanitarian support to Syrians, who may be displaced outside the country, or does it apply only to the provision of humanitarian assistance within Syria?
Lord Callanan (Con)
My Lords, I, too, thank the Minister for his speech and his words on this matter. As this Committee, and the House, knows, the people of Syria have suffered a great deal since 2011. Over 90% of Syrians live in poverty and in fear of Bashar al-Assad’s brutality, or the threats now posed by Daesh, the Iranian-backed militias and the Wagner Group. It is truly a lamentable state, and in many respects a humanitarian catastrophe, only compounded by the terrible earthquakes in 2023.
It is absolutely right that we continue to sanction the Syrian Government, and we welcome the Minister’s action on this. It is important that Ministers keep sanctions under constant review to ensure that we are not penalising those who deliver much-needed humanitarian aid, and I am sure the Government are doing that.
This instrument was, of course, originally laid by the previous Conservative Government and, therefore, the Minister will be unsurprised to know that we fully support it. As it widens the exemptions for humanitarian groups to access fuel under strict management systems, we hope that it will support those who are working to alleviate some of the terrible suffering of the Syrian people.
On the issue of the sanctions regime, have the Government looked at the proliferation of Syrian Captagon? Captagon is a highly addictive amphetamine, which is now produced in large quantities in Syria and, sadly, distributed worldwide. The MP for Rutland and Stamford in the other place has said that Syria is now effectively
“a narco-state, producing 80% of the world’s Captagon”.—[Official Report, Commons, 9/9/24; col. 626.]
A number of seizures have already cropped up in the UK, and I would be interested to know whether the Government are looking at this for a future sanctions regime or have developed a strategy on this.
I am delighted that this country has always stood up for the people of Syria in their time of need. We have given £4 billion of humanitarian aid to the people of Syria. I hope that the Government will continue to clamp down further on Russia, as we heard in the previous debate, and on the Syrian Government, who are one of Russia’s principal backers. As I said, these sanctions were tabled by the previous Government, and we wholeheartedly support them.
Lord Collins of Highbury (Lab)
My Lords, I thank both noble Lords for their contributions; they certainly have staying power, and I welcome that. I say again that it is important that there is cross-party consensus on these regulations, particularly because of the huge number of human rights abuses.
The noble Lord, Lord Purvis, talked about risk mitigation and the potential abuse of this exemption. The humanitarian exemption authorises a limited set of activities when they are conducted by certain trusted humanitarian organisations with strong risk-management systems. It is not like a blank cheque: systems must be in place to ensure compliance with the exceptions. Other organisations must continue to apply for individual licences. That risk management is absolutely an essential part of the licences. The amendment also contains reporting requirements to assist with monitoring and enforcement. I hope that that gives the noble Lord the assurances he seeks.
I turn to the specific point that the noble Lord, Lord Callanan, raised in relation to Captagon in Syria. We are closely monitoring the regime’s links to this trade. As he said, the regime bears responsibility for, and is profiting from, the production and trading of this narcotic. We are deeply concerned by the growth of the Captagon industry, which, as well as enriching the regime, is fuelling regional instability and generating vast revenues for criminal gangs and armed groups in Syria and across the region. The United Kingdom is sharpening global awareness of the risks posed by Captagon. In March 2024, the UK hosted an event with Jordan that brought together the international community, alongside expert researchers, to discuss the impact of this trade on the region. In March 2023, in co-ordination with the United States, the UK imposed sanctions on 11 individuals who facilitate the Captagon industry in Syria, including politicians and businesspeople alike.
The other point raised by the noble Lord, Lord Purvis, was in relation to the displacement of refugees into Syria from Lebanon. Was that what the noble Lord asked about?
Lord Purvis of Tweed (LD)
I am sorry, Minister, I may not have been too clear. It was the displacement of Syrians into Lebanon.
Lord Collins of Highbury (Lab)
Okay. The simple fact is that the movement of refugees across those borders is a consequence of conflict. We are trying to work closely with the UN and other partners to assess need and provide on-the-ground assistance where possible. How we get assistance in is key. If the noble Lord requires further information, I am certainly happy to discuss it with him outside the Room.
I therefore thank the two noble Lords for their contributions. As I have said throughout this debate, we remain firmly committed to ensuring that the United Kingdom’s sanctions work in tandem with humanitarian efforts, and that the Assad regime, its allies and supporters bear responsibility for the dire plight of the Syrian people. I hope and trust the Grand Committee will support the regulations.
Social Security (Scotland) Act 2018 (Disability Assistance) (Consequential Modifications) Order 2024
Baroness Anderson of Stoke-on-Trent
That the Grand Committee do consider the Social Security (Scotland) Act 2018 (Disability Assistance) (Consequential Modifications) Order 2024.
Relevant document: Not yet reported by the Joint Committee on Statutory Instruments
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, this order, which was laid before the House on 26 July, is the result of collaborative working between the two Governments of Scotland and supports the Scottish Government’s decision to introduce pension age disability payments in Scotland later this month.
As noble Lords will be aware, this is the first Scotland Act order that the House has brought in front of the Committee to approve since the election of our new Labour Government. My right honourable friend the Secretary of State for Scotland moved the order in the Delegated Legislation Committee in the other place last week; I am keen to reflect the points he made, especially as this order comes before us in the year of the 25th anniversary of the Scottish Parliament, which the last Labour Government delivered for the people of Scotland. Devolution happened because of the efforts of two of my political heroes, the late John Smith and Donald Dewar, who believed in a strong Scottish Parliament within the United Kingdom. They also believed in the values of co-operation over conflict and understood that we achieve more by working together than we ever do by standing apart. It is in that spirit that this Government have set out to reset relations with the Scottish Government to deliver for the Scottish people. That is what the majority of Scots want.
The Scotland Act 2016 devolved significant powers, including responsibility for certain social security benefits and employment support, to the Scottish Parliament. The Scottish Government’s introduction of pension age disability payments under Section 31 of the Social Security (Scotland) Act 2018 exercises this responsibility. The Scottish Government will administer this new benefit in Scotland through their executive agency, Social Security Scotland. As, at introduction, the pension age disability payment is broadly in line with the attendance allowance, it is the intention of the UK Government that those individuals in receipt of pension age disability payments should also receive the same treatment in the reserved social security and tax systems as those on attendance allowance. Scottish recipients will transfer from the Department for Work and Pensions to Social Security Scotland.
The order before us today is made under Section 104 of the Scotland Act 1998, which allows for necessary amendments to legislation in consequence of any provisions made by or under any Act of the Scottish Parliament. It is, therefore, the appropriate vehicle to make these technical but important changes to recognise pension age disability payments in reserved systems. Scotland Act orders are a demonstration of devolution in action; I am pleased to say that the Scotland Office has taken through more than 250 orders since devolution began.
Bear with me as I explain the effect this order will have and the provision it will make. This order makes amendments to ensure that the pension age disability payment is recognised as a qualifying benefit in the same way as attendance allowance in the reserved social security system with regards to entitlements to additional reserved UK Government benefits and premiums; this includes the Christmas bonus and carer’s allowance. This means that recipients of pension age disability payments will be entitled to receive the annual £10 Christmas bonus payment if that has not already been paid via another benefit. Should all other eligibility criteria be met, it will also ensure that the reserved carer’s allowance can be paid to someone caring for a person in receipt of pension age disability payments in Scotland.
It also amends the taxation of trusts with disabled beneficiaries to treat those with beneficiaries in receipt of pension age disability payments in the same way as those with beneficiaries who receive the attendance allowance. Once this order is in force, it will also prevent dual entitlement to benefits paid because of the same needs: individuals entitled to pension age disability payments cannot be entitled to receive the personal independence payment, attendance allowance or disability living allowance at the same time. This is in the same way that disability living allowance and personal independence payments are not payable to people in receipt of the attendance allowance.
The order will also prevent overlapping entitlement for pension age disability payments and Armed Forces independence payments. Equivalent provision is being made in Northern Ireland in respect of pension age disability payments and to prevent dual entitlement to child disability payment and adult disability payment with equivalent Northern Ireland Social Security benefits—someone wanted me to say “payments” a lot in this SI. Child disability payment and adult disability payment are forms of disability assistance paid in Scotland, introduced by Scottish Ministers under Section 31 of the 2018 Act.
In summary, the order makes amendments to UK legislation to support the introduction of pension age disability payments in Scotland. It ensures that the new Scottish benefit is able to operate effectively and that its recipients are treated equitably. Twenty-five years on from the establishment of the Scottish Parliament, this is devolution in action. The vast majority of Scots want to see their Governments work together to produce better results, and that is what we are getting on with doing. I beg to move.
Lord Bruce of Bennachie (LD)
I thank the Minister for her introduction and the spirit in which she delivered it. I agree that this is a classic example of co-operation between the UK Government and the Scottish Government. It is part of the continuing transition of social security delivery from the DWP to Social Security Scotland, which is all to be welcomed, given that it allows differences to be respected. However, it also means that there can be conflicts or contradictions, and the Minister has indicated—as is always the case with DWP benefits—the difficulties of not claiming one benefit because you are entitled to another, or vice versa. That is understood and explained.
It was good, although slightly pressured, for a Scottish Minister to say that the delivery of social security is a joint enterprise between the two Governments. It takes something to get that out of a Scottish Minister these days, partly because there are hiccups in the process that mean that blame needs to be apportioned occasionally. So I take that at face value, but I am glad it was said, because it is actually true.
I have one or two questions. First, on the basis of the transfer of benefits from, effectively, the DWP to Social Security Scotland, the allocation to the Scottish block grant is based on forecasts. Given that those are forecasts, what is the potential for either an underspend or an overspend? If that happens accidentally rather than deliberately, what is the scope for a review either way? In other words, if the Scottish Government find that they are overspent for legitimate reasons, will the UK Government compensate, but if they underspend for similar reasons, will the UK Government adjust it accordingly? As I understand it, the forecast, or the block grant adjustment, is based on the estimate of the saving that the UK Government have made in the process of transferring the benefit to the Scottish Government—it can only be an estimate, because the take-up will follow.
The other problem is really a political one. The Scottish Government did not have social security powers 25 years ago, although they campaigned strongly for them and the Smith review recommended them. However, there is a problem of politics, because what is actually happening is that most of these benefits were originally UK, they are transferred in similar format to the Scottish Government and funded accordingly into the block grant. The Scottish Government can then, if they wish, cut them or top them up from their own resource. For example, the Scottish child benefit is £26.70 per child, on top only of UK-funded tax credit—that is, it is only those in receipt of tax credit who qualify for it, which is fair enough. However, the impression given by politicians north of the border is that the combination of the tax credit and the £26.70 has all been delivered by the Scottish Government, so there is a lack of transparency about who is paying for what.
That is important because the people of Scotland need to know what the Scottish Government are genuinely doing on their own merit and what the UK Government are doing for the people of Scotland out of central UK resources. For those of us who, as in my case, are federalists, home rulers and believers in devolution, it is nevertheless important that we understand that Scotland has two Governments and both are contributing to the benefit of the people of Scotland. We need to know which Government provide what benefit, and the presentation in Scotland does not always reflect that.
This raises a final concern. I am not sure whether the Minister can say anything about it, but we will have an election in Scotland in the next 18 months and I worry that these powers could be misused. It might suit a Government—particularly one who feel that they are on the back foot—to introduce a whole load of social security sweeties, knowing that the bill will come after the election. There is nothing to stop that happening other than, possibly, the UK Government pointing it out, but it is entirely within the discretion of the Scottish Government.
I accept entirely the spirit in which the Minister presented the order and I support the principle of what is going on. Nevertheless, I ask her to acknowledge that there is a political tension here that could lead to abuse. That is not a reason for reversing it but may be a reason for doing what I have just done, which is to highlight the fact that the two Governments are doing complementary but different things.
Lord Cameron of Lochiel (Con)
My Lords, I thank the noble Baroness for her remarks in introducing this statutory instrument and I note her comments on the 25th anniversary of the Scottish Parliament. Having spent eight years of my life as a Member of that Parliament, I echo my obvious support for the devolution settlement and a Parliament that, as she said, is 25 years old this year.
This instrument is made, as the noble Baroness said, under Section 104 of the Scotland Act, which allows for legislative amendments to UK legislation that are considered necessary or expedient in consequence of an Act of the Scottish Parliament. As she also said, this statutory instrument is made under that section and as a consequence of Section 31 of the 2018 Act passed by the Scottish Parliament introducing the pension age disability payment, which replaces the attendance allowance in Scotland.
As currently constituted, the attendance allowance interacts with other benefits in a number of ways, including with reserved benefits. It gives rise, for instance, to additional amounts payable in reserved income-related benefits, such as pension credits. I think the DWP has said that while PADP—if I can use that acronym—is broadly equivalent to attendance allowance, it should therefore interact with reserved benefits in the same way as attendance allowance. For that reason, receipt of PADP will passport a person to an additional amount in pension credit in the same way that attendance allowance does.
I welcome the fact that the UK and Scottish Governments are working together to deliver these changes. I think the noble Baroness said this, but while these changes are complex and technical in nature they are of fundamental, practical importance for those in receipt of social security payments. Their complexity also points to the hard work of the various officials involved in formulating them. Having served briefly as a Minister in the Scotland Office, I am well aware of how intricate issues of welfare can be, given that some aspects of social security are reserved and some are devolved. I put on record my thanks to all the officials involved in creating this order. We will support this instrument but I have one issue to raise with the noble Baroness.
There are questions about how PADP might interact with reserved matters in the future, should there be divergence in the rules for those entitled to attendance allowance. For instance, it is possible that eligibility for pension age disability payment might diverge from rules around attendance allowance, and there could be a scenario where eligibility in Scotland is not mirrored by eligibility in the rest of the UK. Is the noble Baroness able to inform the Committee whether the UK Government have considered this? What implications would there be in terms of additional claims resulting from divergence, especially in terms of staffing, administration and resources?
If she could deal with that I would be most grateful but, as it stands, I welcome the order and am happy to confirm my party’s support for it.
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, I thank both noble Lords for their contributions this afternoon and for their tone—given that this is my first outing as Scottish spokesperson, I am very grateful for it. Before I move on, to reassure both noble Lords, I was born in Scotland, so although I do not sound like it I am very much invested in our relationship with Scotland and as part of the union.