Public Spending: Inheritance

Earl Attlee Excerpts

Tuesday 30th July 2024 Lords Chamber

[Lord Livermore (Lab)]

As my noble friend perhaps did not acknowledge, this is not an easy decision and I understand why there is disappointment about it, but it is the right decision in the circumstances. The level of overspend we inherited is simply not sustainable. Left unaddressed, it would have meant a 25% increase in the Government’s financing needs this year, so it falls on this Government to take the difficult decisions to make the necessary in-year savings.

[Earl Attlee (Con)]

My Lords, the noble Lord, Lord Boateng, correctly drew attention to our productivity problems. How much scope does the Minister think there is for improving our productivity? There are, obviously, the welcome planning reforms but how far does he think he can improve our productivity in percentage terms, and to what timescale?

Bank Accounts

Earl Attlee Excerpts

Wednesday 19th July 2023 Lords Chamber

[Baroness Penn (Con)]

The changes to the regulations that the Government are committed to and the review by the FCA do not just cover banks; they cover the provision of credit cards and all other services that are covered by the anti-money laundering regulations relating to politically exposed persons.

[Earl Attlee (Con)]

My Lords, on at least two occasions Lords Ministers have indicated that the complete integrity of the money-laundering regulations is more important than facilitating the export of armoured fighting vehicles to Ukraine, even under export licence. In the light of what has happened recently, will the Minister agree either that this matter will be reviewed or to have a further meeting with me?

[Baroness Penn (Con)]

My Lords, I am not sure that events recently pertain to the particular case raised by the noble Lord. I was pleased to meet with him and as I committed to then and commit to on an ongoing basis, we will continue to engage with the Ministry of Defence to ensure that we have an understanding of the issue and that people do not face a wider systemic barrier.

Financial Services and Markets Bill

Earl Attlee Excerpts

Report stage
Tuesday 13th June 2023 Lords Chamber

Moved by

[Earl Attlee]

98: After Clause 71, insert the following new Clause—
“Withdrawal of banking services
(1) When a provider of banking services in the United Kingdom decides to cease to provide banking services to an existing customer, or decides not to offer banking services to a specific prospective customer, because of one or more of the reasons specified in subsection (2), the bank is required to inform the FCA about that decision within the period of 4 weeks after the decision is taken. (2) The specified reasons are—(a) there is a reasonable suspicion that the customer is, or has, engaged in money laundering;(b) there is a record or specific instance of the customer not complying with requirements under money laundering regulations in a significant and easily-avoidable manner;(c) the provider cannot accept the regulatory risk of providing banking services to the customer despite the reasons set out in paragraphs (a) and (b) not applying;(d) ethical reasons;(e) the customer is in the defence industry.(3) The FCA must maintain a record of decisions notified to it under subsection (1).”

[Earl Attlee (Con)]

My Lords, I will also speak to my Amendments 99 and 100. In Committee, I moved an amendment similar to Amendment 99. I will not weary the House with the arguments I made in Committee in detail. Suffice it to say that, in the new year, I became aware of a small business that was exporting armoured fighting vehicles to Ukraine under export licences granted by His Majesty’s Government’s Export Control Joint Unit. I will call the businessman in question “Peter” for reasons of security.

Peter’s major high street bank has withdrawn provision of banking facilities and will give Peter no reason—exactly the problem discussed in the previous group. In these circumstances, I understand that the banks will generally stonewall a Member of another place. However, the bank in question was very helpful to me, and explained that the problem was the money laundering regulations and the attendant unacceptable regulatory risk. I tried as hard as possible to resolve this problem discreetly and behind the scenes. The bank indicated that it could continue to provide financial services if it received a suitable letter from a Treasury Minister. Sadly, Ministers would not provide one. I am grateful to the Minister for meeting with me many weeks ago, but she was unable to change her position, which is why I moved a suitable amendment in Committee.

All export licences for lethal military equipment are very carefully considered. In Committee, the Minister correctly made the point that the export licensing machinery tests whether or not the equipment should be exported, while the money laundering regulations are a different test to check for, and counter, illicit finance. The reason I drew the export licence point to the attention of the Committee was that it proves that it is within the defence and security policy of His Majesty’s Government for these vehicles to be exported to Ukraine. If it was thought undesirable, or even just unhelpful, a licence would not be granted. I therefore contend that the money laundering regulations are thwarting the intent of His Majesty’s Government.

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[Baroness Penn (Con)]

My Lords, as I set out previously in Grand Committee, I commend my noble friend Lord Attlee for his strong role in supporting Ukraine and bringing the value of his expertise in support of efforts to provide Ukraine with vital supplies. I understand that my noble friend wishes to ensure that the money laundering regulations do not hamper the private export of armoured vehicles or military vehicles to Ukraine. However, this cannot come at the expense of weakening the regulations in a way that would allow them to be circumvented by those wishing to launder money or finance terrorism.

The Government are committed to providing economic, humanitarian and military support to Ukraine. That is why the UK is proud to have pledged £6.5 billion in support of Ukraine, including £1 billion of World Bank guarantees to go towards closing Ukraine’s 2023 financing gap and £2.3 billion in military support for 2023. In 2022, 195 standard individual export licences and three open individual export licences were granted for the export of military items to Ukraine.

I recognise that my noble friend has concerns about a wider issue relating to provision of banking services to those involved in the defence industry and the refusal or withdrawal of services for other reasons connected with money laundering or ethical concerns. As I said in Committee, I am not aware that banks are taking a blanket approach to such customers. I am grateful to my noble friend for setting out some further specific cases today and I am glad that he had the opportunity to meet my noble friend the Defence Minister. The Treasury would be happy to look further into these cases with my noble friend and the Ministry of Defence. Equally, if the defence industry has wider concerns, I would encourage it to bring them to the attention of the Government and the regulators.

My noble friend made a comment on the Government’s ESG policy and its impact on defence companies. Our ESG policy is focused on delivering the net-zero commitment and there is nothing in that policy framework that prohibits or otherwise disadvantages defence companies and the war in Ukraine—

[Earl Attlee (Con)]

I am sorry to interrupt the Minister, but it was not the Government’s ESG policy that had caused me a problem but the banks’ ESG policies.

[Baroness Penn (Con)]

I understand the point that my noble friend makes, but I think that is rather a matter for the banks. Nevertheless, as I have said to my noble friend, if there are wider or more systemic issues in this area, I would encourage him to draw this to the attention of the Government and the regulators. The Government are clear that investment in the defence sector remains important.

My noble friend suggested again that I or another Treasury Minister write to the bank which withdrew services from his associate telling it to relax steps to be taken to comply with MLRs. However, it would be extraordinary and inappropriate to override the MLRs in this way. Further, banks would still be under obligations in relation to the Proceeds of Crime Act which relate to dealing with such money.

I thank my noble friend for raising this issue. I am glad that he has met the Ministry of Defence on it. If there are wider issues that he would like to highlight to the Government, the Treasury is committed to working with the MoD to look at them. None the less, I hope my noble friend does not press his amendments at this time.

[Earl Attlee (Con)]

My Lords, I am grateful for the response of my noble friend the Minister. I detect a little bit of movement, but I am not surprised at her response. Of course, I am very happy to withdraw my amendment.

Amendment 98 withdrawn.

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Moved by

[Earl Attlee]

102: After Clause 71, insert the following new Clause—
“Performance bonds for small or medium-sized enterprises
(1) Within six months of the passing of this Act, the Secretary of State must lay before each House of Parliament a report on the availability of performance bonds to small and medium-sized enterprises from the financial markets to cover stage payments in capital projects.(2) The report must, among other things, cover collateral requirements.”

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[Earl Attlee (Con)]

My Lords, during my research into the money laundering problems identified in the previous group, I identified another problem for SMEs: the availability of performance bonds from the financial markets to cover stage payments in capital projects. I do not need to explain to your Lordships what stage payments are or how bonds work, and it is certainly something that I do not have any expertise in. The difficulties are that the banks require so much collateral that the system is intractable. It is not a problem for large firms with correspondingly large balance sheets; this problem affects only SMEs and tends to keep them small. I talked to a manufacturer of hovercraft, and if all their current enquiries came to fruition, they would simply not be able to secure the necessary bonds to finance the work. I beg to move.

[Baroness Kramer (LD)]

My Lords, this is an issue that I have raised in the House before, having run into the same set of issues—I suspect with some of the same companies down in the West Country involved particularly in large-scale exports which require performance bonds to be able to meet their contractual obligations. In these instances, performance bonds were denied by the banks unless the collateral included the homes and personal possessions of the directors and senior managers of the company. This was despite the fact that the firms had long-standing records of being able to deliver on the projects they engaged in and indeed the customers at the far end had reputations, again, of being excellent payers.

It is a real weakness in the system that we have no one who deals with market gaps, particularly when it applies to SMEs. I attribute part of this to the regulatory perimeter, but regardless of where the fault lies, there needs to be a remedy if we are to build a future economy which will be based very largely on SMEs and, hopefully, very significantly on exports.

[Lord Harlech (Con)]

My Lords, the Government recognise the importance of ensuring that SMEs are able to access appropriate financial products, including performance bonds, and of ensuring the availability of useful information on such products. As noble Lords are aware, performance bonds are a type of financing product that provides a financial guarantee to one party in a contract in the event of the failure of the other party to fulfil its obligations.

More broadly, SMEs already benefit from a diverse financial market, made up of high-street banks, smaller banks and a range of non-banks, to ensure they can continue to access suitable finance. The Government support SMEs’ access to finance through a variety of debt and equity finance programmes through the British Business Bank. These programmes were supporting more than £12 billion of finance to more than 94,000 smaller businesses as of June 2022.

The British Business Bank also produces several reports on access to finance on an annual basis, including the Small Business Finance Markets report, providing expert and independent assessment of the availability and options within the wider funding landscape for SMEs. Fundamentally, the commercial terms that banks and insurers offer, including the collateral they require for performance bonds, are a matter for the firms, subject to meeting the relevant regulatory requirements.

The Government remain committed to maintaining the highest international standards of regulation, and the Financial Services Act 2021 granted the PRA the powers to implement the latest international standards, known as Basel III.1. These include revised capital requirements for performance bonds for banks. The PRA recently consulted on its proposals and specifically requested comments and data from firms and wider stakeholders on its proposals for capital requirements for products such as performance bonds, and it will be considering feedback provided by respondents in formulating its final proposals. For insurers providing performance bonds, the Government are reforming one of the capital requirements, the risk margin, removing a barrier to lower product pricing.

As noble Lords are aware, under the provisions in the Bill, our independent regulators will take on new responsibilities. This means that the PRA will take on responsibility for setting the relevant regulatory requirements that are currently set through retained EU law, acting within the framework set by the Government and Parliament.

As we have discussed a number of times in relation to the Bill, when making rules designed to ensure the safety and soundness of financial services firms it is also important to consider how those firms can support the wider UK economy. That is why the Government have introduced the new secondary growth and competitiveness objectives, which will require the regulators to act to facilitate the competitiveness of the UK economy and its growth in the medium to long term. The PRA’s current consultation has been undertaken before the provisions in the Bill will come into effect. However, the Financial Services Act 2021 requires the PRA to “have regard” to the Government’s economic policy, including investment in SMEs and infrastructure, as well as the effect of its requirements on the UK’s international standing and the provision of finance to businesses and consumers in the United Kingdom on a sustainable basis.

Measures in the Bill also allow for parliamentary scrutiny of the regulators’ performance, including how they have advanced their new secondary competitiveness and growth objective. In addition, the Bill requires the regulators to produce statements of policy on how they will review their rules. Recent government amendments will require these statements to include information on how stakeholders can make representations to review rules, and on the arrangements for ensuring that these representations are considered.

In conclusion, the Government are committed to ensuring that SMEs have access to suitable financial products which are subject to suitable prudential safeguards to appropriately manage any risks. This is particularly important to ensure that UK SMEs are accessing finance to support their goals and contribute to the UK’s growth agenda. I therefore ask my noble friend to withdraw his amendment.

[Earl Attlee (Con)]

My Lords, I am particularly grateful to the noble Baroness, Lady Kramer, for her intervention, which showed how much more she knows about finance than I do. She did a great job. I am not convinced that industry will be cracking open the champagne after listening to my noble friend’s response to my amendment; nevertheless, I am grateful for it. In the meantime, I beg leave to withdraw my amendment.

Amendment 102 withdrawn.

Financial Services and Markets Bill

Earl Attlee Excerpts

Committee stage
Tuesday 21st March 2023 Grand Committee

Moved by

[Earl Attlee]

223: After Clause 71, insert the following new Clause—
“Money laundering regulations: exports to Ukraine
(1) Within three months of this Act being passed, the Treasury must take all reasonable steps to make regulations to amend the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (S.I. 2017/692) so as to secure that they do not prevent a supplier of financial services to a relevant person from supplying financial services in the relevant conditions.(2) For the purposes of this section, a relevant person is a small or medium-sized enterprise which exports armoured vehicles or other military equipment to Ukraine for the use of Ukrainian defence forces, or the agent of such an exporter.(3) For the purposes of this section, the relevant conditions are that an export licence has been granted to a relevant person under the Export Control Act 2002 for the export of items on the United Kingdom Military List of controlled goods to Ukraine for the use of Ukrainian defence forces, and the relevant person is in the process of supporting the export of those items for which the licence has been granted.(4) Regulations under this section are subject to the affirmative procedure.”

[Earl Attlee (Con)]

My Lords, in moving my Amendment 223, I will speak to my Amendment 241FB. They both deal with the unintended and undesirable effects of the anti-money laundering regime in the UK. I do not profess to have any expertise here; my relevant experience is in defence and security.

I fear that I am obliged to weary the Committee with a little detail. Russia has launched an unprovoked attack on Ukraine and, presumably, HMG have an absolute minimum strategic objective of preventing Ukraine being defeated. Failure to achieve this would result in significantly increased world insecurity and the need at least to double UK defence expenditure. EU and NATO Governments have been providing Ukraine with a range of armoured fighting vehicles—AFVs—through Government-to-Government arrangements. Armoured personnel carriers and armoured reconnaissance vehicles allow troops to move around the battlefield without unnecessarily falling victim to artillery or small arms fire.

To supplement Government-to-Government arrangements, the Ukrainians, through commercial agents and UK SMEs, have also been buying up privately and commercially owned AFVs in the UK. There are only a few businesses and individuals in the UK who can efficiently acquire and export these privately owned AFVs. They are generally small. To undertake this activity, they need to have the necessary technical knowledge, workshop facilities, ingenuity, innovation and contacts; have finance and premises; be seen as a fit and proper person to be granted an export licence for controlled goods on the military list; and, most importantly, be trusted by both Ukrainian buyers and UK private sellers.

The Committee needs to understand the facts of the real world. These small businesses simply do not have the resources to perform due diligence on Ukrainian businessmen and their intermediaries. Even if they could, the Committee will recognise that they would soon find red flags galore. However, the Government have the ability to check that the export of these AFVs is in line with their overall strategic objective.

The Export Control Joint Unit at the Department for International Trade grants export licences for controlled goods on the military list, among other things. So far as I can discern, it is doing a very good job. It is important to note that the Export Control Joint Unit has all the facilities of HMG at its disposal to determine whether military equipment should be exported to a certain customer or not. The money laundering regulations add nothing useful to this process.

I now turn to the mischief which my amendment seeks to address. During our debate on Ukraine on 9 February, I explained the problems that “Peter”—not his real name—is experiencing with the provision of banking services in the context of his exporting AFVs to Ukraine. I will continue to use his pseudonym for continuity reasons. I understand that Peter has export licences for around 100 AFVs and has already delivered a considerable number. Although the high street bank’s name is in the public domain, I will not name it, as it has done nothing wrong and has been extremely helpful. Apparently, in these circumstances, MPs will just get stonewalled by the banks, but I have very good relations with Peter’s bank.

On 20 December 2022, Peter’s bank wrote to him, closing his accounts with the bank without any explanation why. Peter was going to completely lose his banking services on 20 February. This would have put him out of business, as he cannot secure banking services from any other provider, and he would not be able to export any more AFVs to Ukraine. Other banks will not step in because they will have the same difficulties as Peter’s current bank. Peter’s bank made it clear to him that it was not prepared to discuss the matter further. This is standard practice, and I understand why. However, I have found out that the problem is that Peter’s current bank cannot accept the regulatory risk of supplying banking services involving large sums of money when Peter does not have the correct anti-money laundering systems in place. But even if he did, he would surely find red flags, as I have already mentioned, because he is dealing with Ukrainian businessmen. Fortunately, I managed to negotiate with the bank an extension to 20 March, which was yesterday.

Initially, I thought that the problem lay with an overzealous junior bank official and that a quick engagement at a senior level in the bank would get it sorted. I then discovered that it was a money laundering problem, as described, but the problem could be solved if a Treasury Minister wrote to the bank relaxing the money laundering regulations in a specific and minor way. I thought all this could be done discreetly and behind the scenes. How wrong I was. Ministers have refused to relax the money laundering regulations because, as I understand it, they believe that the complete integrity of the regulations is more important than facilitating the export of armoured fighting vehicles to Ukraine.

I repeat the question that I asked my good and noble friend Lord Ahmad on 9 February. Is it settled Government policy that the complete integrity of the money laundering regulations is more important than facilitating the export of armoured fighting vehicles to Ukraine? I look forward to the Minister’s reply. The reality is this: each and every additional armoured fighting vehicle that we send to Ukraine will give another group of Ukrainian soldiers protected mobility on the battlefield. Conversely, stopping the export of AFVs will result in avoidable loss of Ukrainian lives, which is quite immoral.

My Amendment 223 works by requiring Ministers quickly to amend the money laundering regulations so that banks do not have to suspend provision of banking services to SMEs that are exporting AFVs or other military equipment to Ukraine under a relevant export licence granted by the Export Control Joint Unit—in other words, a relaxation under very limited circumstances. Of course, my amendment is unnecessary because Ministers can simply write to the bank asking it to relax the money laundering regulations in the way that I suggest.

On my Amendment 241FB, during my investigations it became apparent that there is a wider problem with banks withdrawing provisions of financial services from aerospace and defence SMEs, for two reasons. The most important reason is again the money laundering regulations. In addition, there is a reluctance within some banks to have anything to do with the defence industry, particularly with things that go bang. However, these are highly regulated businesses, and they are dealing with other businesses and Governments, often outside the OECD. Thus the regulatory risk is far too high for the banks when the potential income is often quite small. It is simply not worth the bank’s while to accept the regulatory risk. I accept that my Amendment 241FB is imperfect and does not necessarily solve the problem. At this stage, it is only a probing amendment. I have been briefed by ADS Group, the relevant trade association, on this problem, and it is clear that it is a growing problem that will not go away.

On my Amendment 223, this is a serious and urgent matter. Clearly, the Minister intends to resist, or she would already have relaxed the regulations and saved a lot of the Committee’s time. I am afraid that thus far, I have not been able to generate much interest in this issue. His Majesty’s Opposition in your Lordships’ House do not appear to be very interested, and neither are the media. It does not currently look as if I will be able to win any Division at Report. In view of these circumstances, I was not in a position, nor was it my role, to seek a further extension of service from Peter’s bank when I could not offer any evidence that the policy was likely to be changed. As a result, Peter lost his banking facilities yesterday and will have to stop exporting AFVs to Ukraine. No one can step in, because they will experience the same problems.

The sense of the Committee will be unusually important on this occasion. Your Lordships can merely listen to an interesting debate or make it very clear to my noble friend the Minister that the Committee will not tolerate the money laundering regulations that are causing avoidable loss of Ukrainian lives by preventing the export of AFVs to Ukraine. I beg to move.

[Viscount Trenchard (Con)]

My Lords, I support my noble friend Lord Attlee in his amendment. His story about Peter reminded me that I have had considerable time-consuming discussions—not with my noble friend’s Peter, whose acquaintance I have not had the pleasure of making, but with another Peter. He is a person like Peter, a former military officer in the British Armed Forces of some distinction who now operates an SME and is closely connected with manufacturers of arms that the Ukrainians are importing from other sources and which they badly need, arms which our own Ministry of Defence is happy to assist in the Ukrainians receiving.

I have listened to my Peter—he is not called Peter; let us call him Jonathan—who has had a nightmare time. He is approved and holds an export licence with the SPIRE system in what is now the Department for Business and Trade; I think that the SPIRE system is the same as the export control system.

[Earl Attlee (Con)]

SPIRE is part of the Export Control Joint Unit.

[Viscount Trenchard (Con)]

Thank you. So, Jonathan is licensed—and has been for many years—with the SPIRE system, formerly under DIT. This means that the security services have carried out a considerable amount of due diligence on him. Nevertheless, he found it completely impossible to persuade any bank to open an account to handle the funds necessary to enable him to assist the Ukrainians in this way, not just at the working level. The moment you fill in a form that suggests any military connection in the goods, red flags fly and bells ring all over the place.

However, these anti-money laundering regulations are considered so important that it is difficult to find any way of obtaining exemptions to go round them, even in situations such as this. It is just a pity that, even at the senior director level, banks are completely prevented under any circumstances—even when the individual is approved under the SPIRE system, as my noble friend Lord Attlee explained. I have sympathy with and support his amendment.

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[Baroness Noakes (Con)]

I completely accept that we need to comply with the Financial Action Task Force regulations but, as we discovered the other day when we were discussing PEPs, the regulations we have in the UK have in some instances gone beyond what is actually required by the Financial Action Task Force. The issue with the KYC regulations is one of immense bureaucracy and great irritation for people to no particular end. It is worth looking again at whether the way we have drafted our regulations, to the extent they go beyond what we are required to do, has in turn led to more problems for individuals.

I am sure we have all had problems but I will share one with the Committee. My husband had a very small investment—way below the level at which it would have to be declared as one of my interests in your Lordships’ House—and there was periodic updating of the know your client regulations. Because of the way that firm’s forms were comprised, it refused to accept my noble friend Lady Neville-Rolfe’s signature attesting that the document was a fair copy, because she could not tick a particular box on the form. It was completely ludicrous.

That permeates the way many financial service institutions have come to apply these rules in practice. They have become highly bureaucratic, operated by people who probably have no common sense and possibly not even a brain. To go back to the regulations and see what is absolutely required and then follow it on through the FCA seems a really important thing.

[Earl Attlee (Con)]

My Lords, although I agree with everything my noble friend Lady Noakes said, I point out that I have discussed Peter’s case at a very senior level with his bank and I can absolutely understand the decision the bank made. It looked at it very carefully, but it cannot take the risk because it is dealing with Ukrainian businessmen of whom it knows very little.

[Lord Tunnicliffe (Lab)]

There is no official Labour Party position on this, but I feel enormous sympathy for the position of the noble Earl, Lord Attlee. I hope the Minister will take this away, not as a legislative proposal but as a problem to be solved, and ensure that it is considered at a very senior level in the Treasury.

[Baroness Penn (Con)]

My Lords, before I speak to his Amendments 223 and 241FB, I first thank my noble friend Lord Attlee for his engagement and for bringing to my attention the specific example he has raised today as context for his amendments. I commend his staunch support for Ukraine, and the Government remain fully committed to supporting Ukraine in the face of the relentless Russian bombardment.

I reiterate to the Committee that the money laundering regulations are a vital part of the UK’s comprehensive economic crime response. The regulations are designed to combat illicit finance but should not be barriers to legitimate customers, including those connected with the export of military equipment to the Ukrainian defence forces.

As the Prime Minister has set out, the Government are fully committed to helping Ukraine emerge from the war with a modernised economy that is resilient to Russian threats. Of course it is important that those contributing towards this are not prevented unnecessarily from carrying out their business, but this needs to be balanced with the existing controls which protect this country, and international partners, from risks of money laundering.

It is important that we do not take steps that might allow the money laundering regulations to be circumvented by bad actors, even in circumstances such as this. It is therefore right that financial services firms continue to be empowered to carry out their own, risk-based due diligence when financing the export of armoured vehicles or military equipment, or individuals who are engaged in the international defence industry.

The money laundering regulations are purposefully not prescriptive and are designed to allow firms to make their own decisions about how to comply, balancing their understanding of the risk with proportionality. The Government do not and will not involve themselves in commercial decisions of individual firms but we can be clear that, where all the correct licences are in place, the money laundering regulations should not be a barrier to the financing of legitimate export activity.

[Earl Attlee (Con)]

I am sorry to interrupt my noble friend, but I would like to make it clear that Peter does not need any financing. The other cases that I have come across in the aerospace and defence sector are very well financed; that is why their businesses are not very attractive to the banks, which can withdraw financial services because there is no money in it. Peter does not need finance; all he needs is the bank to process the money, but the bank has a real difficulty processing money from Ukrainian businessmen.

[Baroness Penn (Con)]

My Lords, I was making the point that there is a wider context here that there should be no barrier to the financing of legitimate export activity.

Turning to the point made by my noble friends Lord Attlee and Lord Trenchard, the government process for the granting of export control licences focuses on the end use of goods rather than the source of funds paying for them. It is therefore distinct from the due diligence checks that a bank would carry out before conducting the transaction. I assure noble Lords that, through the Government’s engagement with my noble friend on this, we have engaged with the Export Control Joint Unit, the Financial Conduct Authority and other partners on this issue. While I appreciate the frustrations of individual cases, we are not aware of a systemic issue. The Government will continue to monitor reports of similar problems; if we identify a systemic problem, we will act to address it.

I turn to the solutions suggested by my noble friend. The noble Lord, Lord Eatwell, and my noble friend Lady Noakes are right that our obligations around anti-money laundering regulations stem from our international obligations to the Financial Action Task Force. The approach set out in these proposals would very likely be in contravention of those obligations. My noble friend Lady Noakes is right that the current version of our anti-money laundering regulations reflects our membership of the EU, which is consistent with those obligations from the Financial Action Task Force, but in some areas goes beyond them.

I turn to Amendment 238, tabled by my noble friend Lord Holmes of Richmond. The Government undertook a review of the money laundering regulations, which was published last year. This was a comprehensive assessment of the effectiveness of their implementation and whether they had led to unintended consequences for businesses or consumers. It explicitly assessed whether aspects of the money laundering regulations remain appropriate and proportionate in light of the UK’s exit from the EU and the additional flexibilities that affords us. It identified a number of areas for reform to make the regulations more proportionate and reduce unnecessary burdens on legitimate customers, which we will take forward through future updates to the regulations. These reforms will further tailor the regime to the UK’s risk profile, following the removal of specific European requirements from the money laundering regulations last year.

While the Government remain committed to ensuring the proportionality and effectiveness of anti-money laundering regulations and the regime around it, and monitor the effects on financial inclusion, the review required by Amendment 238 would largely repeat the exercise conducted last year, of which we are still to implement the full results.

My noble friend referred to the previous group on digital identity. He is absolutely right; we recognise that greater clarity on how digital identity services are certified against the Government’s digital identity and attributes trust framework would support requirements under money laundering regulations that will be key for market uptake, so we see the opportunity there and the role for government in providing assurance on that process of uptake as a potential technical solution to make some of these processes easier. As set out in our 2022 money laundering regulations review response, we have committed to consider this fact too.

For the reasons I have set out, I hope that my noble friend Lord Attlee can withdraw his amendment and that my noble friend Lord Holmes will not move his when reached.

[Earl Attlee (Con)]

My Lords, I am grateful for the attention that my noble friend the Minister has paid to my concerns. One thing I would like to pick her up on is that she seems to have been briefed that there is not a systemic problem with the money laundering regulations. I have found out very quickly that there is, and have been briefed by the ADS, which is the aerospace and defence sector trade association and was the Defence Manufacturers Association.

The problem is that where they are exporting around the world, especially outside the OECD, they are immediately coming into contact with money laundering problems. In fact, I had a meeting with a gentleman in Portsmouth who deals in helicopter parts and helicopters. What tends to happen is that he might spend 24 months organising a deal, and then he suddenly gets a cheque for quite a large sum of money from some far-flung part of the world; that is a huge risk for the banks. When we come to Report, I will come back with further examples from the ADS briefing, where sadly this is a systemic problem that is not going away.

I am particularly grateful for the support from the noble Lord, Lord Tunnicliffe, and do hope that the Minister pays attention to what he said. In the meantime, subject to the usual caveats, I beg leave to withdraw my amendment.

Amendment 223 withdrawn.

Financial Services and Markets Bill

Earl Attlee Excerpts

Committee stage
Monday 13th March 2023 Grand Committee

[Baroness Bowles of Berkhamsted (LD)]

So I cannot reconcile what the Minister has just told us with what is in FATF. If it needs detailed and arduous explanation, I am quite happy to have it in writing, but on the face of it, it is irreconcilable.

[Earl Attlee (Con)]

Further to the questions of the noble Baroness, Lady Bowles, can the Minister point to any illegal activity on the part of a parliamentary PEP that has been detected as result of the money laundering regulations?

[Baroness Penn (Con)]

My Lords, to deal with the question of the risk assessment undertaken as part of this work, as I have already said, the Government have engaged closely with law enforcement and the intelligence community to inform our understanding of the risk in this area. It is a difficult area, and it is not particularly appropriate to go into detail on the contents of the risk assessment, given the sensitive nature of the information. As I also set out, the context is that there is potential for those in positions of influence to make domestic PEPs targets for influencing behaviour by serious and organised criminals and hostile state actors. The potential links between domestic PEPs and criminal activity vary, including abuse of political position for personal gain or links to overseas corruption.

I very much understand the desire by those directed by the regulation to hear more about that risk assessment. It was a question that I anticipated and to which I sought to get as full an answer as possible for the Committee. I am under constraints, but I shall none the less take away the requests from noble Lords to see whether there is any more I can do to provide more information on that point.

--- Later in debate ---

[Baroness Penn (Con)]

I am very happy to clarify for the Committee and anyone who may be reading our proceedings, that we, due to our positions of influence, are at greater risk of being targeted by those who may seek to engage in money laundering.

[Earl Attlee (Con)]

My Lords, I say to the Committee that if someone tried to target me in any inappropriate way, I would report it to the appropriate authorities immediately.

[Baroness Penn (Con)]

I am sure that many of us in this Committee would do so—

Wagner Group: Sanctions Regime

Earl Attlee Excerpts

Thursday 26th January 2023 Lords Chamber

[Baroness Penn (Con)]

I do not have that information and I would not comment on that. It is important to understand that this decision was clearly taken within the legal framework for sanctions that we have, which has been approved by this Parliament.

[Earl Attlee (Con)]

My Lords, will my noble friend take the views of this House directly to her right honourable friend the Chancellor of the Exchequer?

[Baroness Penn (Con)]

I can undertake to do that and to include the strength of feeling around the question of other tools that we have at our disposal. As my noble friend noted, this would also need to be drawn to the attention of other government Ministers.

Queen’s Speech

Earl Attlee Excerpts

Wednesday 25th May 2016 Lords Chamber

[Earl Attlee (Con)]

My Lords, I take this opportunity to welcome most of the Bus Services Bill. Buses are vital for the economy, the environment and, most importantly, for people. In the year to the end of March last year, some 4.65 billion passenger journeys were taken by bus in England—that is far more than any other form of public transport. In many cases, they provide the only way to get to work, shops, healthcare facilities and so much more. For buses to serve their passengers, prospective passengers and passengers in the future, they must be reliable, affordable, accessible and environmentally friendly.

Time and again, the annual bus passenger survey carried out by Transport Focus highlights that punctuality is the top priority for passengers. Delivering high-quality bus services with a friendly and fully motivated bus driver, that go where passengers want to go, at times when people want to travel and at a fair price is a shared responsibility. When operators work together with local authorities, real benefits for the passenger are achieved. The most recent Transport Focus surveys have put overall bus passenger satisfaction rates at around 90%. Bus operators must be doing something right. I can think of many sectors that would love to have such a high rating from their customers.

So why is the Bus Services Bill necessary? Partnership working between bus operators and local authorities appears to work pretty well and passengers are happy. The seeds of the Bus Services Bill were sown some 18 months ago when the Chancellor announced a devolution deal for Greater Manchester which would give the combined authority, under the leadership of an elected mayor, powers to take control of its bus services and run them under a franchise arrangement. Can the Minister confirm that his right honourable friend the Secretary of State for Transport was closely involved in the negotiations in the run-up to the announcement? I suspect that the Minister would prefer to write to me on that point.

Bus services are local services, delivered locally to meet the needs of local people by a bus operator with local knowledge. In many cases, these local bus operators have many years of experience—often a life’s work—in doing just that: meeting the needs of their passengers. If a local authority chooses to use the franchising powers afforded to it under the Bus Services Bill, bus operators could find themselves out of business. Your Lordships should be aware that there is nothing in the Bill to suggest that these operators would be compensated. I have some worries about this and the commercial value of data relating to route activity, and I cannot help but worry about the effect on investment.

As I have said, partnership working has served the passenger very well over the years. Where passengers stand to get an even better deal under the new partnership arrangements set out in the Bill, that will be great. However, it will be important that these arrangements allow operators to grow patronage and retain their commercial freedom.

The Bill is very much an enabling Bill; there is no compulsion on local authorities to franchise their bus services. If the existing working arrangements between operators and local authorities are achieving results for all concerned, again, there is no need for any change, so far as I can see.

The measures in the Bill about ensuring that passengers have access to information on routes, timetables and fares are welcome. Making available real-time data on bus arrival time is extremely important and will facilitate exciting new IT capabilities. I look forward to hearing more about that when we get to Second Reading and Committee on the Bill.

Finally, the noble Lord, Lord Giddens, in his interesting speech, talked about what we need to do to improve the manufacturing sector in the UK. I would like to add something: we do not hold our engineers, both at professional and technician level, in high regard socially. In fact, I think we are a bit snobbish about this at all levels. It is vital that we improve the social standing of our professional engineers, much in the way that it is in Germany, where it is Herr Doktor Engineer—do not try to talk to a German engineer about problems with your washing machine because you will get short shrift. We must improve the social standing of our engineers if we want to be in a similar position to Germany.

Queen’s Speech

Earl Attlee Excerpts

Thursday 4th June 2015 Lords Chamber

[Earl Attlee (Con)]

My Lords, I have very much enjoyed listening to the speeches today, in particular the two maiden speeches. I was also struck by your Lordships’ very interesting comments on the problems of productivity.

I take issue with the comments made by the noble Baroness, Lady Kramer, about welfare. We spend about £100 billion on welfare—more than health and several times what we spend on defence. If we do not adjust welfare we will have to cut something else even harder, which could have adverse effects on the economy. The noble Baroness suggested that my party is lurching to the right. The bad news for her is that my right honourable friend the Prime Minister has firmly pitched his tent on the centre ground and he has no intention of moving it.

Towards the end of the last Parliament I initiated a QSD on cyclist fatalities in London caused by HGVs. I was grateful for the participation of the noble Lord, Lord Davies of Oldham, who is in his place. Sadly, since Dissolution there have been a few more of these dreadful accidents. They are simply not tolerable. I can tell the Minister, my noble friend Lord Ahmad, that I will be on the warpath this Parliament. The impression I get is that Ministers would be happy if they could show a measureable reduction in the number of these accidents and fatalities. We do not appear to have a policy or set of policies to get us towards zero—by “zero”, I mean that in some years there are no fatalities. I believe that we can get to nearly zero by using sensor technology. The sooner we get to that point, the more lives we can save in absolute terms. We must not forget the very serious life-changing injuries as well.

I expect that Ministers will still be being briefed that the sensor technology available is simply not good enough to be mandated. That is not surprising, since central government has not promulgated a set of performance or evaluation criteria for manufacturers to work out what they need to do to be mandated. In short, industry does not really know what it has to do, although some manufacturers and suppliers think that they have the solution, which they do not. I do not need an answer this evening, not least because I will be tabling a whole range of helpful Written Questions for my noble friend the Minister to answer.

I was very pleased to hear the comments made by the Minister, my noble friend Lord O’Neill, about HS2. I was rather less enthusiastic about the comments made by my noble friend Lady Noakes in her otherwise excellent speech. She did a rather good job of criticising HS2; I just did not agree with her. The construction industry needs to have a steady and continuous stream of mega-works to be sustainable. That is to the benefit not just of front-line construction workers, but of the enablers: the architects, engineers and all the other specialists who work on these mega-projects. They have already done a considerable amount of work on HS2 phase 1 and they will be on to HS2 phase 2. We also must not forget the plant-hire industry, which hires all the necessary cranes and construction equipment. We have constructed the Olympic park; we are now building Crossrail. After Crossrail we will have HS2 phase 1 and then phase 2 to build. But if we do not build HS2 phase 1, what is the construction industry going to do in terms of mega-projects?

On affordability, we are currently spending around £3 billion on Crossrail per annum. When I was having a pop at the noble Baroness, Lady Kramer, I pointed out that we are spending £100 billion on welfare, so it is not as if we cannot afford HS2—we can.

I appreciate that my noble friend Lady Noakes could not give a full argument against HS2, but she mentioned time savings of 20 minutes to get to Birmingham. She will recognise that those time savings are also applicable to those passengers going north of Birmingham. HS2 is not just about time saving for the few, but about increasing capacity, because otherwise we will run out of capacity on the west coast main line. The noble Lord, Lord Berkeley, is in his place. He will want space for freight trains to run on the west coast main line. We have absolutely got to build HS2. But it is also about connecting all our great cities in this country. As far as I am concerned, there is a very strong case for HS2. The report from your Lordships’ Select Committee on Economic Affairs is a bit unfortunate. No doubt we will debate it fairly thoroughly in due course.

In his interesting speech from the opposition Front Bench, the noble Lord, Lord Mendelsohn, mentioned late payment of commercial debt. This was the subject of my maiden speech many years ago. I can see no good reason why we cannot have a system whereby all normal trading invoices are paid by the end of the month following the month of the invoice. This whole business is simply a waste of effort with the purchase ledger section in one business and the credit control section in another all undertaking perfectly pointless activity. In addition, some commercial organisations, especially in the haulage industry, can run up several months of credit with their customer and the customer goes bust, which can then send the haulage company out of business. Therefore, as I say, there is a very strong case for moving gradually to a system whereby invoices are paid by the end of the month following the month of the invoice.

Finally, I turn to how this House will operate in this Parliament. We are not in a new situation. I am confident that noble Lords on the Benches opposite will recognise the need to act responsibly and that my noble friends on the Front Bench will recognise that for our Parliament to work effectively the Government in this House must be defeated from time to time.

National Infrastructure

Earl Attlee Excerpts

Thursday 22nd January 2015 Lords Chamber

[Earl Attlee (Con)]

My Lords, my first point concerns the cost arguments against HS2—and, for that matter, any other large infrastructure project. My recollection is that we are spending around £3 billion a year on Crossrail. About the time we stop spending large amounts on that, we will move on to the construction phases of HS2. Clearly we can afford these projects, as we are doing so now. Affordability is a red herring used by the opponents of HS2. To put this expenditure into perspective, we spend in the order of £100 billion each year on welfare. I say “spend”, because that is not investment: next year we will have to spend another £100 billion on welfare, if we want to remain a humane and compassionate society—which I suggest we do. The beauty of a railway infrastructure project is that we can enjoy a return for 100 years or more.

My second point concerns the scheduling and sequencing of these large infrastructure projects. The advantage of having an Infrastructure Minister within the Treasury is that there is a much better chance of ensuring that projects are properly sequenced, to avoid feast and famine, and perhaps of providing some predictability for the construction industry. For example, drilling down into the HS2 phase 1 project, I would imagine that in the construction phase all the bridges will be commenced at more or less the same time. Each construction site will require at least one large crane. If we were to build HS2 phases 1 and 2 concurrently rather than sequentially, we would massively increase the demand, and therefore the cost, of the construction equipment—but everyone would know that famine would follow. The same argument would apply to every other capability, including professionals, that we need for HS2 and other projects. It would be much better for my noble friend the Treasury Minister to do his best to ensure a steady flow of work and avoid the stop-go that the noble Lord, Lord Adonis, mentioned in his excellent introduction. We should therefore do phase 1 of HS2 followed by phase 2, and then I hope by HS3 in due course.

My last point is that we cannot undertake large infrastructure projects without very adversely affecting some of the population. Sadly, an infrastructure commission would not change that. Unhelpfully, those who are adversely affected often do not benefit directly once the project is in operation. There are many inside and outside your Lordships’ House who query the economics of HS2. I sympathise with those adversely affected, and respect the opposing views, but I firmly believe that such projects should be authorised at national level, in Parliament, at the earliest possible point. The paving Bill for HS2 has been approved by Parliament, and it would be very difficult to stop it now, because that would involve writing off hundreds of millions of pounds of public money in sunk costs.

My concern is about the use of judicial review to delay, derail or stop a project. Some of the recent cases involved the HS2 consultation procedure, and claims that the consultation was not done in precisely the right way. It was a case not of no consultation, but of exactly how consultation was done. I am pleased to say that most of those claims have been thrown out by the courts, although some minor technical points were upheld.

Financial Services (Banking Reform) Bill

Earl Attlee Excerpts

Wednesday 23rd October 2013 Lords Chamber

House resumed. Committee to begin again not before 8.32 pm.

[Earl Attlee (Con)]

My Lords, the usual channels have set us a bit of a challenge: noble Lords on the Back Benches have two minutes’ speaking time. I can help by reminding noble Lords that when the clock shows “2”, your time is up.