Spending Review and Autumn Statement
Baroness Williams of Crosby Excerpts(9 years ago)
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Lord O'Neill of Gatley
My Lords, as is highlighted in the documents, the removal of the two particularly contentious parts of the tax credits cuts will result in a figure somewhere in the vicinity of just over £3.5 billion. A number of other policies have been adopted, which were there in any case, and have been announced today. Together with the planned phasing-in of universal tax credits, these will achieve over the course of this Parliament the £12 billion of planned savings that were scheduled at the start of it. I highlight the fact that the OBR documents suggest that that is likely to be achieved.
Baroness Williams of Crosby (LD)
My Lords, I congratulate the Government on front-loading the money for the National Health Service, which should enable it just about to get through the coming year. However, will the Minister confirm that the original Nicholson savings still exist, and that therefore the NHS will have to find over this Parliament something of the order of £22 billion?
Lord O'Neill of Gatley
My Lords, the noble Baroness has slightly caught me off guard with that point. Certainly, the additional money announced today for the NHS does not mean that it is not expected to deliver the efficiencies that had previously been announced. It is still expected to deliver those efficiencies.
Tax Avoidance and HSBC
Baroness Williams of Crosby Excerpts(9 years, 9 months ago)
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Baroness Williams of Crosby (LD)
My Lords, does my noble friend agree that the issue before us is much greater than the particular case that has been raised? The City of London was for long regarded as having the greatest integrity and as one of the most honest financial centres in the world. To this day it plays a large part in the economy of this country. Does he agree that it is absolutely crucial that the integrity and honour of the City of London must be rebuilt? Sadly, it is not only about the case of HSBC and the allegations of money-laundering—incidentally, money-laundering in areas which are clearly criminal, such as the laundering of money from drugs and trafficking. Does he also agree that it is crucial that the Government should pursue their policy of mounting a vigorous attack on those who avoid or escape paying their taxes?
I should like to ask my noble friend two questions, because no doubt he shares with me the view that it is absolutely critical that the City of London should be seen as a centre of honour and not a centre of rather clever dodges to escape the law, both national and international. The first question is whether the suggestions made by my noble friend Lord Macdonald that what we are now seeing adds up to something of a conspiracy does indeed provide proper grounds for prosecution. The second question is whether, in the light of Mr Stuart Gulliver’s response and indeed admission that he himself was a client of the Swiss bank, and that in addition he is now considering the right to receive the great bonuses coming up from the considerable profits of HSBC, it would be sensible for the bank and its shareholders to consider very carefully whether those substantial bonuses should be paid in full. I say that given the record of HSBC not only in this matter but, equally disturbingly, in the heavy fines it has had to pay for being part of the so-called forex scandal earlier last year.
Baroness Farrington of Ribbleton (Lab)
My Lords, before the Minister replies, can he inform the House of how many minutes are available for Back-Benchers?
Lord Newby
My Lords, there are 10 minutes for everybody, so let me be brief. I agree with my noble friend in her core view. I have not read in any detail what my noble friend Lord Macdonald has said, but HMRC has made it clear that now that the restrictions on the use of the information from France have been lifted, it is looking closely at that new information and will refer cases to the CPS for prosecution as appropriate. I think that bonuses at HSBC are matters for its board and shareholders.
Banks: Money-laundering
Baroness Williams of Crosby Excerpts(12 years ago)
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Baroness Williams of Crosby
To ask Her Majesty’s Government whether they are satisfied that sufficient steps have been taken to prevent money-laundering by United Kingdom banks.
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, the UK is internationally recognised as having one of the most robust anti-money-laundering regimes in the world. However, no Government should ever be satisfied that sufficient steps have been taken to prevent money-laundering by those who handle money in the UK. It is an ongoing multi-billion pound threat to the financial system. However, the Financial Services Authority is taking an increasingly robust approach to supervision, demonstrated by recent enforcement actions against banks and their staff.
Baroness Williams of Crosby
I thank the Minister for that reply but last year alone the amount of fines paid to the United States regulatory authority from British banks alone came to no less than £6.4 billion, in comparison to the amount paid to the Financial Services Authority from the same banks, which came to £140 million. The discrepancy is clear.
These were not minor crimes. They included not only money-laundering but fixing the LIBOR rate, breaking the sanctions regimes against Iran and other countries and, not least, money-laundering that included drugs cartels in Mexico and Colombia. Does the noble Lord therefore agree with Andrew Bailey, the CEO of the prudential authority that is shortly to be established, that it is impossible to prosecute major banks on grounds of confidence? Does he take that view or the view that I hold, which is that unless we prosecute major banks that commit crimes of this kind, we will find ourselves with a City that no longer has its traditional reputation for integrity and fair dealing, which is absolutely crucial to its future and which many of us recognise must be re-established, if necessary with radical measures?
Lord Sassoon
My Lords, I agree with the numbers that my noble friend shared with us. However, the traditional approaches in the UK and US towards fines have been very different. I believe that my noble friend’s numbers go wider than the narrow question of money-laundering. As I said, the FSA has levied much larger fines in recent years. Prosecutions are, of course, possible and should be pursued where appropriate, whether against bank staff or potentially against the banks. However, Mr Bailey is also correct that there are circumstances in which the prosecution of a bank could have the consequence of putting the future of that bank in jeopardy. Therefore, considerations may arise in extreme cases regarding the stability of the system if a major bank was closed down. Those considerations have to be taken into account.
Banking: Offshore Accounts
Baroness Williams of Crosby Excerpts(12 years, 1 month ago)
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Baroness Williams of Crosby
To ask Her Majesty’s Government what estimate HM Revenue and Customs has made of the value of offshore accounts held by British citizens in the Channel Islands; and what steps are being taken to investigate them.
Lord Newby
My Lords, HMRC estimates that UK citizens hold approximately £19 billion in bank deposits situated in Jersey, Guernsey and the Isle of Man together. The UK has double-taxation agreements with Jersey and Guernsey, and uses these in support of its work in investigating tax evasion. HMRC will also be using the more recent tax information exchange agreements in a similar way. Through the establishment of a specialist offshore co-ordination unit, HMRC continues to enhance its capacity in combating all offshore tax evasion.
Baroness Williams of Crosby
My Lords, my noble friend will know that Jersey is one of the most secretive tax havens in the world. In a tax haven, neither corporate profits nor other profits of a corporate nature are taxed, nor are capital gains. Will he say whether there is any way in which those large, wealthy corporations which make their profits out of the UK consumer in this country can be persuaded or cajoled by HMRC into paying the taxes that they should? Secondly, can any steps be taken to prevent illegal profits—I am referring to those from, for example, fraud and theft, including Mr Paulo Maluf of Brazil—from being placed in secret accounts in a way that enables such people to escape international justice altogether?
Lord Newby
My Lords, I do not think that I will be able to help the noble Baroness in the case of Mr Maluf, who is a Brazilian citizen. We are not in a position to comment on his case. In respect of international corporations, the key thing is the extent to which we can extend international co-operation in that respect, which is why the recent announcement of the UK Chancellor and the German Finance Minister, following a G20 Finance Ministers’ meeting in Mexico, was very important. We are now looking at concerted international co-operation to strengthen international tax standards. However, at the moment, it may mean that international companies can pay less tax than they would otherwise owe. We are trying to catch up with new forms of commerce and to make sure that tax is paid in proportion to where people are undertaking their business.
FSA Investigation into LIBOR
Baroness Williams of Crosby Excerpts(12 years, 5 months ago)
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Lord Sassoon
My Lords, on my noble friend Lord Higgins’ first point, there were two distinct periods during which Barclays was found to have attempted its manipulation. The first period was before the financial crisis, when its traders appear to have been driven by pure greed and tried to drive rate up. The second period was during the financial crisis when the preservation of Barclays’ reputation seemed to be the main driver and it was attempting, it seems, to move the interest rate down. I think there were those two distinct motivations.
Regarding the committee chair, notwithstanding the suggestion that the chair of the Treasury Committee chairs the Select Committee, I would guess that the formal position is that the committee itself will decide who the chair will be. I imagine that this will be taken up either in the Motion itself, in which case your Lordships will have a chance to take a view on it, or the committee will decide who the chair will be in due course.
Baroness Williams of Crosby
My Lords, I want to pursue for a moment the sheer seriousness of the situation that the noble Lords, Lord Eatwell and Lord Blair, and my noble friend all pointed to. I can think of nothing more likely to undo the prospect of this country’s return to prosperity from the crisis than the present, huge doubts about the trustworthiness of the financial system. When I extensively read newspapers from the United States, what comes out very loud and clear is the view that as a result the major beneficiaries will be countries that are in direct rivalry and competition with the City and that hope to gain from what they regard as an extremely dangerous problem that we have brought upon ourselves.
I am satisfied with the prospect of a parliamentary inquiry and I accept what the noble Lord said about the necessity for speed and getting on with it. The noble Lord, Lord Eatwell, and my noble friend Lord Higgins asked about the terms of reference. The missing term of reference that troubles me is the inquiry’s relationship to the role of the regulators. The Daily Telegraph may not be a very good source, but it is becoming completely clear that there were seminars, discussions, meetings and debates throughout 2007 and 2008 about LIBOR, and if anything is likely to be true about those rumours and suggestions it is vital that we explore whether our present regulatory structure is adequate to deal with an issue as serious and as far-reaching as this one. I therefore, with great respect, suggest to the Minister, probably with the support of the Opposition, that the terms of reference should at least extend to the roles of regulators, to the reasons why they failed to probe into this matter at an earlier stage and to what steps could now be taken to give them the confidence and the resources to enable them to do better in future.
Lord Sassoon
My Lords, I certainly agree with my noble friend that these are all relevant and important questions. It is equally important that the proposed Joint Committee’s terms of reference should be clear and should focus on transparency, culture and professional standards. The role of the regulators is rather different, but I am sure that the Treasury Select Committee, in the normal course of its business, will want to ask questions about those matters in due course. However, I take on board what my noble friend has to say.
Euro Area Crisis: EUC Report
Baroness Williams of Crosby Excerpts(12 years, 7 months ago)
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Baroness Williams of Crosby
My Lords, that was a very eloquent speech by the noble Lord, Lord Judd. There are real concerns about what has happened to the moral framework underlying the market. For lack of time, I cannot go into that and will follow the noble Lord in only one respect: in paying tribute to the noble Lords, Lord Harrison and Lord Roper, for an insightful, thoughtful and brilliantly written report. I add my congratulations to the noble Lord, Lord Roper, on the way in which he has led the committee, which still produces work of the highest possible quality.
Let me say right away that the committee report calls for leadership. A necessity for leadership is adequate information, and that leads me to ask the Minister a direct question. Is there any prospect of the Prime Minister’s draft protocol and the safeguards that he called for at the December Council of Europe being made public—after all, it is now nearly six months later—so that this House and those who are concerned about the future of Europe can have the profound discussion that they are capable of, but which is made more difficult because they do not have the information they need to pursue that matter?
Signor Amato, the former and very good Prime Minister of Italy, said honestly, “We have made a great mistake”. The great mistake in the creation of the euro was the failure to recognise that not only was a technical outcome required but a profound institutional change as well. In its pursuit of democracy within Europe, the European Commission and the other European institutions specifically required that. Some Members of the House will remember the Copenhagen criteria, a brilliant set of requirements for creating a real democracy. They range from independent courts up to the necessity for free and safe elections. The Copenhagen criteria are still being discussed with Turkey. They create the kind of countries that become part of the kind of Europe for which the noble Lord, Lord Judd, called. In the case of the euro, no such provision was made. There was no period of transition and no requirement that the basic, fundamental institutions of the eurozone had to be laid down by nation states. One of those institutions is an honest and transparent fiscal system. It is not polite to say so, but the truth of the matter is that very few rich people in Greece, Italy or Portugal ever pay taxes. At most, they pay nominal taxes, and that is not a basis on which one can build a sound and lasting eurozone. Institutional reform is crucial.
For lack of time, I shall make only two other points. First, we should ask why the ESM, which is not yet with us, but will be within a few weeks, decided not to require there to be a general mutual agreement by stakeholders alongside taxpayers to share the pain of the changes that are required. That was a very profound mistake because one of the real challenges to democracy is that when there is pain and sacrifice, it must be shared among society. I agree with the noble Lord, Lord Judd, that it cannot be loaded on only a section of society while the other part goes untroubled and untainted by the need to meet the requirements that are laid down.
Finally, the president of the IMF, Christine Lagarde, made a terrifying, chilling remark: “We may be sliding into a 1930s moment”. I very much commend what noble Lords have said about the real dangers to democracy from what is happening now. We must recognise that none of us can bale out of those requirements. They are part of what it is to sustain democracy at a particularly hard time.
Financial Crime: Legislation
Baroness Williams of Crosby Excerpts(13 years, 9 months ago)
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Baroness Williams of Crosby
To call attention to the United Kingdom’s record on legislation regarding bribery, tax avoidance, corruption and money laundering; and to move for papers.
“Indians’ anger over rising corruption has reached feverish levels”.
It then refers to the $40 billion in revenues that seem to have been lost as a result of deals over telecommunications licences. These are huge issues for India and for China.
Here in this country, it is a long time since we passed serious legislation with regard to bribery and corruption; the last time we did was no later than 1916. One of the consequences is that in many ways our legislation is seriously out of date.
At Question Time we have just been discussing Bahrain. It is perhaps worth saying that one of the major factors in the uprisings throughout the Arab world has been resentment at the sense of widespread corruption and at the benefit that has gone to leaders, many of them not elected, in some cases saving substantial sums of money for themselves. It would be fair to say that we in this country can remember the argument about President Abacha of Nigeria, who salted away many billions of dollars that were then money-laundered through financial arrangements where in most cases the money was not recovered, in a country that desperately needed it.
Today in countries such as Egypt, Libya and Tunisia, huge sums of money appear to have passed out of the possession of their own populations and passed via money-laundering methods into private accounts of various kinds. The present UK Government have been assiduous in freezing some of those assets so that they can be recovered for the people of those countries; I give them due credit on that point. But there is much further to go. One has to say, quite honestly, that a number of our own banks have been profoundly involved in money-laundering activities, at least in the past, that have hidden money coming not only from dictatorial rulers but from the pervasive effects of organised crime.
When we look at corruption today, we have to say right away that the issue requires two parties to it: the people who raise the money—the people who make the bribes—and the people who launder that money at the end of the day. In that respect the Federation of Small Businesses, which has sent me a briefing note, says that it is important that the UK maintains its reputation as a sound and ethical centre in which to do business. I cannot echo that too strongly.
The domestic record of our own country has always been regarded internationally as good. The United Kingdom has been thought to be a relatively incorrupt country. However, we would be less than blunt and honest if we did not admit that our domestic reputation had been substantially damaged by the parliamentary expenses scandal. People may say that it was exaggerated but the huge media coverage that it got, not just in this country but throughout the world, undoubtedly damaged the otherwise high reputation of the UK for domestic non-corruption. It is also the case that the issue of phone-hacking, although very separate, has done some damage to the sense that the UK is free of criminal activity in the way that it conducts its business and its public discussion.
Our international record, however, is bad and getting worse. Some of my colleagues will talk about the way in which Britain’s standing on the index of corruption has dropped dramatically over the past few years. I will not pursue that now beyond saying that our international record has been damaged, particularly since the decision not to continue with the investigation by the Serious Fraud Office into BAE’s relations with Saudi Arabia. The investigation was dismissed by the then Prime Minister on the grounds that it might assist terrorism and dry up sources of intelligence, but nevertheless it did a great deal of damage to the reputation of British business. The Serious Fraud Office is even now pursuing the fallout from that discussion in South Africa and elsewhere, with strong indications that corrupt practices on the part of a major British company were involved.
More recently still there has been a great deal of discussion and controversy over the role of the United Kingdom on the bribery convention. I shall again be very frank. I declare a past interest as for some years I was one of the OECD’s advisers on employment policy, during which time I discovered a lot about its concerns. One of the major concerns of the so-called financial affairs task force, headed by a very distinguished Swiss professor, Monsieur Pieth, was to apply continual pressure on OECD members to sign bribery conventions. Its first major argument was with Japan, which finally signed a bribery convention after many years of delay. That left only one country that had not done so—the United Kingdom. For 13 years we were pressed to draw up anti-bribery legislation and all that time we somehow managed to escape doing so. The previous Labour Government, at the end of their period of office, brought forward bribery legislation, with the strong support of all parties in both Houses of Parliament. There can be no argument that this was seen to be a divisive matter.
The bribery convention came about after years of pressure, particularly on the part of the United States, which passed an extremely fierce piece of bribery legislation, the Foreign Corrupt Practices Act. In the 1980s, the reputation of the United States was poor. It was deeply involved in corrupt practices. In the 1990s, it became aware of that and passed powerful legislation. The United States then became a pioneer—a beacon, if you like—in the battle against international corruption, and pressed the other countries of the OECD in this regard, as I have already described. However, it did more than that. The United States Justice Department is extremely powerful, very determined and has brought one British company after another to book. Fines of up to £250 million have been levied on BAE alone, to take one example only. There are many other examples where the long arm of the Justice Department has reached out across borders to bring to justice any company that has a UK presence but operates internationally.
We are now a signatory to the bribery convention. Good legislation was brought forward by the noble Lord, Lord Bach, and others at the end of the Labour Government’s period of office. However, that does not wholly excuse them from the very long delays and the desperate attempts to stop this matter being advanced. But now, with the coalition Government, we have a further problem. The terms of the bribery convention have been met and the legislation has been drafted, approved and passed in Parliament, but now we are told that there will be a delay in implementation. I cannot say too strongly how troubling that is from the point of view of those who do not wish the UK well and will use this as a reason for saying that once again we are trying to avoid the legislation that now applies to all the other OECD nation states.
I wish to say a word or two about this delay. Apparently, there has been strong pressure from business to produce guidelines that will deal with any ambiguities in the Act of Parliament. That may be said to be fair enough: business needs to know where it stands. On the other hand, it must be said that to try to escape the effects of the bribery convention is deeply damaging to British business as it suggests that our business and trade depend on special deals, often with very dodgy regimes indeed. We have to get away from using facilitation payments and all other forms of bribery in order to do our business. It will not serve us in the long term and, I repeat, it will do huge damage to developing countries with which we are closely associated and where our bribery equals their corruption.
I will say just a word or two about where we are. I wonder very much about the pressures brought to bear by a mysterious and little-known body called the MNCG—the Multinational Chairman’s Group. This is a group of chairmen of British multinational companies, including some of the finest names in British business. That body appears to have been keen to try to soften the impact of the Bribery Act on business. I strongly urge the group to look again at that. These are great companies with great reputations and, in the end, it cannot be in their interests to be seen to be in any way supportive of bribery.
All that will turn on two things: timing and implementation. On timing, we may well have a month or two of grace, because the Government have indicated that they will again discuss guidance and then issue it, probably within two or three months. I might say gently to the House that there have now been no fewer than 11 consultative periods about bribery, and that would seem to be sufficient, even for an audience as articulate and discussant as Members of the two Houses of the British Parliament. Surely after 11 consultations we are close to what we need.
On implementation, I want to ask the Minister, my noble friend Lord Sassoon, if he can tell us more about who is responsible for implementation. The Serious Fraud Office has begun to be an effective arm of British government—much more effective than it used to be. Its director, Richard Alderman, has said in so many words, in a letter to the Secretary of State for Justice, Kenneth Clarke, that he has real concerns about further delays and that this will not stand the United Kingdom in good stead. He was supported by one of the most distinguished Members of this House, the noble and learned Lord, Lord Howe of Aberavon, who said that we could not argue for delay for very much longer. He said that in clear terms a few weeks ago.
Those are the questions. What will be the implementing body? Will it be the Home Office, the SFO or some combination of the two? How aware are they of the significance and importance of doing what they are doing at a decent and rapid pace? Finally, there is the issue of the precise date by which the Minister hopes we will have completed the process of consulting over guidance, to bring this long-required legislation to book and make it operate.
I conclude where I began. Corruption throughout much of the developing world cannot work for very long without the silent co-operation of money launderers, banks and many others. The system of so-called suspicious activities reports has been very effective in beginning to limit money-laundering—much of it the laundering of terrorist money, some of it drug money, all of it bad money. I plead with the Government to take this issue now to its conclusion, so that we can stand up and be counted among those who find corruption and bribery utterly unacceptable forms of behaviour in a free and modern business world.
Baroness Williams of Crosby
My Lords, I thank all those who took part in the debate, which showed once again the extraordinary sweep of experience in this House. I agree with my noble friend Lord Sassoon that the debate has been searching and constructive. I thank him personally because what he said laid to rest many concerns and fears that noble Lords had about the implementation of the Bribery Act. That will be appreciated also in overseas circles, for which I am very grateful.
I end by saying that on the walls of my sitting-room I had a series of lithographs by William Hogarth called “The Election”. I am picking up on what the noble Lord, Lord Davies of Oldham, said when he reminded us that corruption and bribery are hardly new actors on the stage. It was perhaps appropriate that the whole set of lithographs was stolen; that seemed to be the proper end. The series was a reminder of how strong corruption in the democratic system was in the 17th and 18th centuries. We came out of that primarily because of the extraordinarily powerful legislation laid down for public service towards the end of the 19th century by William Gladstone and other famous Prime Ministers. It is perhaps worth putting on record our gratitude to public servants, in the way that the noble Lord, Lord Davies of Oldham, expressed, for their consistent very high standards and moral quality.
I thank the noble Lord, Lord Parekh, for what he said about the need for us to be more aware of a moral dimension to what we do in the financial and economic world—and, indeed, more generally—and about the danger that we could be slowly undermined by failing to pay attention to it, failing to bring our legislation up to date and failing to take it sufficiently seriously. I thank him for what he contributed to the debate and I thank all noble Lords who took part.
Egypt: Mubarak Family Assets
Baroness Williams of Crosby Excerpts(13 years, 10 months ago)
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Baroness Williams of Crosby
To ask Her Majesty’s Government what steps they have taken to freeze the financial assets of the Mubarak family held in the United Kingdom.
Lord Oakeshott of Seagrove Bay
My Lords, with the permission of the House and at the request of my noble friend Lady Williams, who is attending a funeral, I beg leave to ask the Question standing in her name on the Order Paper.
Currency Markets
Baroness Williams of Crosby Excerpts(13 years, 10 months ago)
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Baroness Williams of Crosby
Have the United Kingdom Government had any discussions with the German Government about coming into the European bond market, which, as my noble friend will know well, would have a very favourable effect on yields?
Lord Sassoon
I shall not comment on individual discussions about market matters, but I again note some of the positive developments in Europe collectively as well as the auctions since the beginning of the year by Portugal, Spain and Greece. However, we must recognise that the currency situation remains very fragile.
Banking: Liability.
Baroness Williams of Crosby Excerpts(14 years ago)
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Lord Sassoon
My Lords, I am sure that the FSA will take note of the noble Lord’s suggestions about how it goes about its business. But I can only, as he does, read the conclusion of a report by the FSA that follows an investigation that began in May 2009 and out of which has come one enforcement case.
Baroness Williams of Crosby
My Lords, does the Minister agree that this might be a case for a WikiLeak? Will he also assure the House that, in looking at the proposals that are emerging with regard to the regulation of banking, a heavy emphasis will be put on transparency and openness in future?
Lord Sassoon
My Lords, I am happy to confirm that in everything the Government do, we put a major store on openness and transparency. Indeed, we will bear that in mind in our approach to financial regulation in future.