Sanctions and Anti-Money Laundering Bill [ Lords ] (Sixth sitting)

Hannah Bardell Excerpts

Tuesday 6th March 2018 Public Bill Committees

[Hannah Bardell (Livingston) (SNP)]

I am a little perplexed by what the Minister said. It seems that he conflated the comments of my hon. Friend the Member for Glasgow Central with the intent of the amendment, which is to encourage—not to compel—Governments in overseas territories to do that. Perhaps I am mistaken and he can clarify that, but it seems that there is a misrepresentation.

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Some of the checking that has been talked about is not necessarily as onerous as the Minister suggests. I am sure many of us will be familiar, if we try to buy tickets—something like that—with having to put in basic identification information. We have to put our name in; the system will check that our postcode matches our address. Currently, you do not have to go to those lengths with Companies House.

[Hannah Bardell]

Does the hon. Lady agree that we are letting our citizens down if we do not legislate properly and close these loopholes? I am sure we have all had constituency cases where people have lost money to unscrupulous companies and company owners. We have an opportunity to take action, and we must take it. The Government are letting citizens down if they do not accept the new clauses.

[Anneliese Dodds]

I am grateful to the hon. Lady for making the point clearly that our proposal has been portrayed as only a burden, when it could help to prevent our constituents from being ripped off by unscrupulous individuals who are able to set themselves up as a company with only minimum requirements for due diligence. As I said, they can be there by day, fly off by night, and leave the unfortunate person who dealt with that company in a very difficult position.

To end my remarks specifically on the Minister’s comments on new clause 13, many of us are worried that, in practice, there are TCSPs that offer UK company formation with a range of optional services, including setting up bank accounts in other jurisdictions such as Latvia, Belize, Switzerland and Cyprus. That would not necessarily be a problem, were it not for the fact that, time and again, we have seen in the cases we have discussed in this Committee that reliance on the third parties—the banks in those other countries—does not lead to a real assurance that money laundering provisions are being followed. The reality is quite the opposite.

In the Russian laundromat scandal, which we have already talked about, of the 440 UK shell companies used in the scheme—in itself, a staggering statistic—392 of them had Baltic bank accounts, with 270 UK firms using Latvian banks and 122 using banks in Estonia. It may be that we are fully confident in every case that anti-money laundering regulations were followed in those countries, but given some of what came out of the Russian laundromat scandal, it could be suggested that that is not the case.

We do need to get at this problem through another route. We need reform of the Companies House system, but we also need the use of another prong, which is requiring a UK bank account.

Question put, That the clause be read a Second time.

Sanctions and Anti-Money Laundering Bill [Lords] (Fourth sitting)

Hannah Bardell Excerpts

Thursday 1st March 2018 Public Bill Committees

[John Glen]

I am very grateful for that clarification. I hope that I will be able to address that in my remarks and give sufficient reassurance about the Government’s plan.

I should make clear from the outset that the Government are in favour of good guidance and we intend to produce it. It is in the Government’s interest to produce thorough guidance, to improve sanctions implementation and to ensure that sanctions can be enforced robustly. It was clearly set out that amendment 27 would require Government to provide guidance on the definition of ownership and control on the face of the Bill.

[Hannah Bardell (Livingston) (SNP)]

Further to the points made by my hon. Friend the Member for Glasgow Central about the efficacy of these amendments, Governments come and go, and I fully appreciate that the Minister is committed to giving proper guidance, but with the greatest respect, his party may not always be in power. Is it not important that if they have the intention, they should put these things on a statutory footing?

[John Glen]

I will address those points in my remarks, and I will be happy for the hon. Lady to come back if she is not content at the end.

Amendment 28 would broaden the scope of guidance to areas such as providing best practice on compliance with financial sanctions and establishing effective banking and payment corridors. As I said at the start, the Government are committed to producing clear and accessible guidance on sanctions implementation and enforcement. Clause 37 requires Ministers to issue guidance about any prohibitions and requirements imposed by sanctions regulations. There is already a mandatory requirement to provide comprehensive guidance for all those affected by sanctions and implementation.

The Government have been consulting extensively; across Whitehall, they have been meeting with NGOs and financial institutions that have asked for this guidance. I can reassure the Committee that we will give them what they have asked for. The Government do not believe that further amendments to clause 37 are needed to provide the type of guidance sought on “owned” and “controlled” in amendment 27. Where sanctions regulations contain prohibitions or requirements about entities that are owned and controlled by a designated person, we are already under a duty to issue guidance. I can reassure hon. Members that the Government already provide guidance on ownership and control and will continue doing so.

The additional guidance sought in amendment 28 would greatly extend the scope of the guidance to specific areas such as mechanisms to limit the impact of prohibitions and requirements on civilian and humanitarian activity, and establishing effective banking and payment corridors. Although I can understand the concerns of NGOs that lie behind this amendment, some of them clearly are beyond the remit of the Government to provide. For example, the Government do not have the powers to require banks to make payments on behalf of particular customer or to open new payment channels. Although I appreciate the spirit of the amendments, the Bill already caters for them in so far as it addresses matters within the Government’s control. Adding extra text to the Bill will only create confusion.

[John Glen]

I acknowledge what the hon. Lady says, but this is a non-exhaustive list. We intend to issue guidance on those issues listed in the Bill and more, as new issues evolve. We may also not need guidance in some areas that the sanctions do not cover. Where we are at cross purposes here is that people think the list is exhaustive when it is enabling and allows the Government to give the necessary guidance as required and as circumstances evolve.

We understand the concerns behind the amendments and have worked closely with NGOs to understand their needs, and we will continue to do so.

[Hannah Bardell]

I appreciate the Minister’s response to my hon. Friend the Member for Glasgow Central, but if he does not think it is the Government’s role to create those channels, whose role is it?

[John Glen]

I am not necessarily denying the role of Government in issuing guidance in a whole range of areas. What I am dealing with here is the necessity of adding the provision into the Bill when the need to give guidance is sufficiently catered for in the text of the Bill.

The Bill will put the requirements in a better place because of the new flexibility on exemptions, licensing grounds and the ability to provide general licences. We are therefore unable to agree to the level of guidance sought, and I ask the hon. Member for Bishop Auckland to withdraw her amendment.

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Transparency International, which as colleagues will know has done a lot of research on the issue, suggests that 71% of all SLPs registered in 2016 were controlled by anonymous companies based in secrecy jurisdictions such as Belize, Seychelles and Dominica. Furthermore, 113 SLPs were used to launder $20 billion to $80 billion between 2010 and 2014 as part of what has been called the “global laundromat”. I will go into some of the different examples in a minute.

[Hannah Bardell]

I congratulate the hon. Lady on making an excellent speech. Will she join me in paying tribute to the former Member for Kirkcaldy and Cowdenbeath, our colleague Roger Mullin, who did a huge amount of work on this? Will she acknowledge as well that despite their name—Scottish limited partnerships —these companies have little to do with Scotland? They were introduced by the UK Government under Liberal Chancellor Herbert Asquith in 1907. The operation, regulation and dissolution of SLPs remain exclusively the preserve of Westminster, so it is vital that this legislation goes through and the changes happen.

[Anneliese Dodds]

I am very grateful to the hon. Lady for bringing those matters to light; I will return to the point about this being a UK Government responsibility later, because it is enormously important. It is important to raise our recognition of those who have done so much to uncover what has been occurring with SLPs. I also pay tribute to The Herald newspaper, which has done a good investigative job in this regard, and I know that Labour’s Jackie Baillie has expressed her concern about Scotland’s name being used potentially to enable offshore tax arrangements and worse. It is important that we look at these arrangements.

Also related to the hon. Lady’s comment, there is huge concern that the unfortunate link between the name SLP and Scotland itself is potentially darkening Scotland’s name. I understand that there is an advertisement that is run on a Belarus TV station, Varyag, saying,

“A company operating in the UK does not need to register with the tax authorities and is therefore automatically freed from any tax payments on an absolutely legal basis. Having registered a company in Scotland, by using offshore rules, you do not need to carry out any audits and, furthermore, there is no requirement to provide financial reports.”

The TV station stressed the kudos of Scotland and the fact that it is part of Britain:

“As a result of Scotland being part of the United Kingdom it does not fall in to the black list of offshore zones”,

presumably meaning either the OECD blacklist or the EU blacklist.

I will briefly mention a couple of specific cases where SLPs have been shown to be problematic, before looking at the current legal context, why this is a UK Government responsibility, and why we require Government to act and hopefully to accept our amendment. The first, which is very worrying, is the Moldovan case. According to the Organised Crime and Corruption Reporting Project, in November 2014 $1 billion was reported to have gone missing from three Moldovan banks. Hon. Members will know that Moldova is not a well-off country—quite the opposite: although it is one of the most beautiful countries in Europe, it is one of the poorest. The corruption that was revealed in that case was enormously damaging for that nation, which has many governance challenges. The World Bank and the International Monetary Fund suspended financial aid to it after revelations about what had occurred in that siphoning off. Two companies registered on Brunswick Street in Edinburgh—a street I know well, as I am sure others do, too—kept coming up in the records for the case, which has had such a significant impact on that nation.

Another example that is commonly adduced in this regard is the Ukrainian one. A Lancashire-based firm called Fuerteventura Inter, which sounds rather like a football team, appears to have been used as an SLP. It was created in February 2015, and was used to siphon off funds from the sale of cannon shells to the United Arab Emirates. The SLP was an intermediary in that deal. The prosecutors allege that it enabled officials to take a large slice of the value of that contract.

Then there is the Azerbaijani laundromat, which I will come back to later. I am sure colleagues have heard of it, and I am sure we will hear a lot more about it in our discussions next Tuesday. “The Global Laundromat” was a piece of investigative journalism that looked into Russian money being laundered through different shell companies. That was going on until 2014. More recently, an investigation of Azerbaijani companies that came out in 2017 showed how companies including SLPs appear to have been used to hide the real ownership of payments.

This is not just about stealing from very poor people; it is about political influence. Some of the payments from the Azerbaijani laundromat were going to individuals who sit on Council of Europe working groups, including those involved in producing reports about human rights in Azerbaijan. Of course, many of the individuals involved have rejected any accusation that those funds had any influence on them. We will draw our own conclusions from looking at the paperwork and what has been said legally about that matter.

[Hannah Bardell]

I declare an interest: I represent my party in the Council of Europe. I spoke to some activists from Belarus, who raised that issue with me and talked about the damage and devastation it is causing in their country. That again highlights why this is so very important.

[Anneliese Dodds]

I am grateful to the hon. Lady for raising that issue. It is particularly important that highly respected international bodies are above any insinuation or reproach. It may be that there has been confusion and a lack of knowledge about the provenance of some of those funds, but we need to remove from the system any opacity that could give that impression.

Operation Car Wash, which came up only last month—it is funny that all of these cases use the washing metaphor, but it is clearly because they are about washing out the provenance of money—covered Brazil and Peru. A giant construction firm in those countries paid £1 billion in bribes for, it appears, political purposes, and it appears that some of the payments went through SLPs. When we look at the evidence, we see we need to have a far stronger grip on this problem.

In early summer last year, legislation was introduced by the Department for Business, Energy and Industrial Strategy to try to regulate SLPs, under which they were to be forced to disclose their beneficial owners within the next 28 days or face daily fines. I am concerned that we still do not know how many such firms have genuinely indicated their beneficial owners—I hope we will hear from the Minister on that now. I am not privy to information on how many fines have been levied, and most commentators suggest that not a single business has been prosecuted. Perhaps some have been fined but not prosecuted. Perhaps we can find out more about that.

The Opposition are concerned that more action needs to be taken. To return to our earlier exchange, it is important that the UK Government take responsibility, because they have reserved powers over Scots corporate law. The Scottish Government have asked the UK Government to act, and it appears that previous actions to require more ownership information may not have gone far enough. I hope the Minister will enlighten us on that and support our amendment.

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[Hannah Bardell]

Does the Minister recognise the reputational damage to Scotland? We have a Liberal Chancellor to thank for that, but it is very important that we make these changes, because Scotland’s reputation is being damaged through no fault of its own and by legislation over which we have no power.

[John Glen]

Absolutely, and that is why it is important that the UK Government act. In June last year, Scottish limited partnerships were brought into the scope of the public register of corporate beneficial ownership maintained by Companies House. That was welcomed by the former Member for Kirkcaldy and Cowdenbeath, who is a leading campaigner on the issue, as was mentioned earlier. He said it was

“the first practical recognition SLPs have been a significant problem”.

That reform further required SLPs to submit an annual confirmation statement that information held on the register is accurate, and to keep the information updated on an ongoing basis. In cases of non-compliance with the duties to deliver information about people with significant control—PSC information—to Companies House and to keep it up to date, officers of Scottish limited partnerships convicted on indictment can face a sentence of up to two years’ imprisonment, a fine, or both.

Additionally, the Department for Business, Energy and Industrial Strategy sought views last year on whether changes need to be made to limited partnership law to further address the concerns that have been raised about misuse of structures, including Scottish limited partnerships. Responses to that call for views are being analysed and options for reform actively considered. BEIS will announce its next steps shortly, and after a response to the call for evidence is published, identified options for reform will be subject to public consultation in the usual way. That process will be used to inform any necessary further reforms to the UK’s treatment of limited partnerships, including Scottish limited partnerships.

I hope that I have addressed in detail the range of concerns about Scottish limited partnerships.

Trade Bill (Third sitting)

Hannah Bardell Excerpts

Committee Debate: 3rd sitting: House of Commons
Thursday 25th January 2018 Public Bill Committees

[Bill Esterson]

Q But what if one of the consequences of the negotiations to produce corresponding agreements was additional quotas that increased imports in your sector? Do you have a view on that?

Gary Stephenson: That is probably more in the food manufacturers’ area, because how the tariff rate quota is divided up is obviously for negotiation between the UK and the EU. I know that the World Trade Organisation has some influence on how it is divided up. This is where the specific industry sector should be consulted on what it believes would be the fair quota. Any of us is probably not in a position to set out a position on any specific quota. Take lamb as an example: what is a suitable quota that the UK would take back from the EU? It is a complex area, and I think it is best to ask that question of the sector responsible.

[Hannah Bardell (Livingston) (SNP)]

Q Happy Burns day to everyone, and I thank the witnesses for joining us today. Following on with the issue of cost, the meat sector is potentially looking at WTO tariffs on meat processors at 60%. If that is coupled with HMRC saying that 130,000 companies have never filled out a customs declaration, what impact, from a food and drink and meat processing perspective, do you think there will be on the sector, broadly and in terms of bureaucracy and staffing? Do you feel that adequate investigation and consultation has taken place?

Gary Stephenson: Wow, that is a big one. There are a number of elements to this. My company is in a fairly unique position in the food industry, in that we already import product into the EU, so we understand the complexities of that process. It is about whether the region you are from is authorised on the EU legislation side. Is your business registered within the EU as a registered business to produce that product? Other countries have similar issues. The US has similar legislation, which requires overseas suppliers to be registered with the Food and Drug Administration.

There is an additional piece: the export health certificates, which are not needed for the EU at present, but will be. Each one of those costs the business. It is not just the cost of the certificates—the vet must come to inspect. Have we got enough vets in the UK to provide that service? That is an additional challenge.

[Hannah Bardell]

Q Can you talk specifically about the vets?

Gary Stephenson: Yes. Every single shipment requires a certificate, which we get from Carlisle, from the Animal and Plant Health Agency. You would have an official vet come in to sign that certificate. For example, in our case, if we need four times more certificates after Brexit than we are currently using, that is four times the cost. I am not saying that the vet would come four times more often, but he would certainly be in there twice as often, so you would be looking at twice the cost. Some businesses have not yet been exporting and will need an export health certificate. All this is going to be new for them. They are going to need a new certificate, and they are going to need to pay the vet to come and sign that certificate.

The additional piece involves shipping agents and border inspection posts. If you are using a shipping agent to export your product, in order to get all the paperwork right and so on, that is going to cost you. As you mentioned, most businesses have not exported in a way that requires customs declarations and so on, so that is an additional cost to businesses that they are probably not very aware of. I cannot give an exact figure for how much more, but it is an extra cost.

[Hannah Bardell]

Q Is there not also a risk, given that we have 40 free trade agreements with 60 countries through the EU, that if we have not done all those bilaterals—with the greatest will in the world, it seems incredible that we would manage to do so, unless the Government have some magic up their sleeves—there will be additional bureaucracy with those individual countries? We have inspectors in each of those countries already inspecting products. Elspeth, can you talk about that?

[The Chair]

I remind witnesses to speak up. Some of those at the back are finding it difficult to hear. Please speak up as best you can.

Elspeth Macdonald: Gary makes some really valid points about the increased burdens and bureaucracy for business, but it is also important to be reminded that the additional level of checking and assurance that may be required in future is also likely to have a significant impact on local authorities, for example. They have an important function in providing assurance about standards and compliance with legislation in food businesses that export to other countries. There is absolutely the potential for a significant impact of a new requirement for veterinary checks and so on, but also, should more checks be needed in future than now, there could be significant impacts on local authorities.

Sarah Dickson: From a Scotch whisky perspective, we may not need the vets, but we benefit from the tariff reductions, the intellectual property protection and the non-tariff barriers given to us by the agreements. About 10% of our exports go to a country covered by an EU free trade agreement. One thing that we have been talking to Department for International Trade officials about is how business can help. We would be more than happy to see if there is any contribution we can make to make sure these agreements are carried over.

Gary Stephenson: There is an additional piece from Elspeth’s comments. Currently, importing countries’ manufacturing sites are visited by an EU vet to assess their suitability and whether they are meeting European standards. When we are outside the EU, that will become a UK responsibility. We do not have the resources available today to conduct those checks.

[Hannah Bardell]

Q On the protections, Sarah, we are all aware of the geographical indicators and their vital importance across different sectors, particularly for Scotch. What would be the impact if we lost our geographical indication?

Sarah Dickson: I am working on the basis that, because we will have the carrying over of all EU legislation into the UK, we will not lose the GI and an intellectual property system will be there to protect protected names such as Scotch whisky. We use it in all markets all over the world to make sure that people do not copy our product and produce lookey-likey fakes and that kind of thing. That is very important to our industry. We are working on the basis that that comes across lock, stock and barrel.

[The Chair]

We have a maximum of 20 minutes left and at least six people still wanting to ask questions. If we have short questions and concise answers, we can get as many people in to ask a question as is possible.

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[Bill Esterson]

Q Again, when you are talking about trade deals, remember that the Bill is about the creation of corresponding deals. You are applying what you say to the provisions of the Bill as much as anything else.

Gordon MacIntyre-Kemp: Yes.

David Scott: Can I echo that? I think uncertainty is a killer at this point, specifically for my customers, whom I trade with on a global basis. They have a global supply chain and have to make contingency plans to ensure that whatever medicines they make are available to patients. Those contingency plans cannot wait until the eleventh hour or the last minute of any negotiations of any sort. I can tell you that they are starting to put those contingency plans in place now, and that they will have a massive effect on companies such as mine, and companies across the UK that support pharmaceutical R&D and the development and release of products on to the European market.

[Hannah Bardell]

Q Thank you for attending, and happy Burns day.

Perhaps I can start with you, David, and pick up on what has been said about confusion. The way I read your comments was that you were talking about concerns about legislative change under the Bill, and the ability to make changes in primary legislation. As we know, the Law Society of Scotland has raised issues concerning the timescale that that might mean for your organisation and sector. Could you talk about that a bit? Also, I notice from your photograph that you are MHRA and Food and Drug Administration approved. On the impact of leaving, and potential disjoint—we have already lost the European Medicines Agency to Amsterdam—can you talk about the impact on your sector and company?

David Scott: Yes, the potential impact is massive. The whole of the medicines regulation is about harmonisation and working under one single set of standards, which are beneficial and mean that the speed to market of life-saving medicines is reduced. If we try to come up with a different set of regulations or way of working, and have duplication of effort, which is what would happen under the current proposal if we became a third country outside the EEA, pharma will look at us and think, “Is the market big enough?”

We are now a net exporter of pharmaceuticals into the European Union and have a trade surplus. We want to avoid anything that puts us into a deficit. If we cannot get some harmonisation and cannot stick with the current harmonisation, I am concerned that we will lose our reputation—or not our reputation, because the MHRA is one of the best in the world, as far as I am concerned, but the ability to get joined-up connectedness. That would have a massive impact on my industry and my company, without question. I would then be forced, contingency-wise, to say “What do I do? I can’t serve some of my customers’ needs in a different regulatory system.” It is a massive thing for us.

[Hannah Bardell]

Q Gordon MacIntyre-Kemp, I know that you did a survey recently that said businesses—your members—did not have faith in the UK Government to act on their behalf. Can you talk about the findings of that survey? You mentioned some of the concerns earlier. The definition of free trade agreements was mentioned by the Law Society of Scotland in its briefing. We know from history some of the challenges and impacts on Scotland, for example on fishing, from trade being negotiated on Scotland’s behalf. Can you talk a bit about the importance of the Scottish Government and business having a say and an active role in those trade deals?

Gordon MacIntyre-Kemp: For sure. In the survey we did, we did not just want to survey our members; we surveyed companies across Scotland. The feedback was surprising to us as an organisation. We had sensed that Scottish business was not happy with how this was being handled, but we have some quotes from non-members of Business for Scotland. A director of a FTSE 100 company said:

“When the virtually inevitable car crash happens the Scottish end of the business will most probably be moved to Europe which is a crying shame as the expertise at home is unsurpassed in our market segment. However with no likelihood of stability it will be a logical step to move.”

A director of a New York stock exchange limited company with 800 employees in Scotland said:

“Stop now and ask the people, do they want to continue with this process, knowing what they know now?”

A director of a UK bank left a pithy statement. He just said: “Absolute bloody shambles.” That was the sort of feedback we were getting. Some 79% want a second EU referendum after the deal is done.

In terms of the Trade Bill itself, what I am finding is that Scottish business is not engaging with the detail of Bills such as this. The information they are being asked to understand is so confusing that the only answer they have psychologically is to keep their heads down and hope that it will all be okay. That is why I suggested that through the whole process there has to be a lot more consultation.

In terms of fisheries, food standards and health, which I mentioned before, there are lots of areas where promises have been made. There are issues around tariffs and protections. For instance, I was told during one debate that it is far better to do a trade deal with India because it is so big and so on, but the wages in manufacturing in India are about 79p an hour, and we are approaching £8 an hour here. If a trade deal is done that opens up markets without the right level of consent from devolved Parliaments and industry groups, that will not be a trade deal but a bonfire of manufacturing in the United Kingdom. There have to be checks and balances in that. Multiple sectors will have to feed that in, because if we do not know that, we are going to be signing trade deals that will have unforeseen consequences, and I think that will be very damaging to the UK economy.

[Hannah Bardell]

Q I have just one final question for Jonathan on control over standards. I understand that standards are one of the key aspects for the furniture industry and the manufacturing of furniture, particularly in respect of fire retardancy and flammability. There have been many stories in the press over the years on the dangers of not maintaining those standards. What are your feelings on what the Bill does and the potential impact of leaving the European Committee for Standardisation? What are the threats or, indeed, the opportunities?

Jonathan Hindle: We have made recommendations to the Department for Business, Energy and Industrial Strategy for some updating of and amendments to the flammability regulations in particular. On a more broad basis, I understand that the British Standards Institution is looking to remain a member of the European Committee for Standardisation and the European Committee for Electrotechnical Standardisation, for example, to keep that continuity. That is what the industry is looking for. By and large, those standards, if they remain in place, are adequate. It is our ability to police, surveil and properly address transgressions that has much more been the issue for the industry. A plethora of products are making their way into the country that do not meet our stringent standards.

[Hannah Bardell]

Q Is there an issue that if we lose the ability to monitor that, we could be looking at substandard products?

Jonathan Hindle: That would be a big concern for the industry. It already is under the current regime, and we are looking for improvements.

David Scott: To Gordon’s point specifically, there is a complexity here that we do not really understand. As you said, my company knew nothing about the Trade Bill or these sorts of things until we were asked to look into this. We focus on our bits. I think that Gordon is absolutely right: if we put in a trade Bill, there will be unforeseen consequences for certain sectors that you cannot foresee at this point in time.

Part of that is the safety element. Regulated drugs are there for a reason. If we start to loosen those regulations to make trade easier, then we open ourselves up to all sorts of problems, in terms of the fitness for purpose of the products that are brought into this country for use by patients.

[Craig Whittaker]

Q I have two questions, if I may. First, I just want to ask David a question. You said earlier that it would be a disaster if the pharmaceutical industry did not operate under the same regulatory framework as Europe—that would be a disaster for pharmaceuticals in this country. Correct me if I heard wrongly. However, is it not true that no matter what country you want to deal with, as an industry you have to comply with the regulation of whatever country you are dealing with anyway? So why on earth would you, as an industry, put yourself at risk anyway and not comply with EU regulations, whether we were in or out of the EU?

David Scott: We would always want to comply with the highest standards of good manufacturing practices—GMP—for the pharmaceutical industry. What we do not want is to see any easing-up of the requirements of that to make trade easier with other parties. That is what I was trying to say. We need to be part of a harmonised system that works on a global basis, because if we have our own system then it becomes much more—not difficult to trade with us or to get things regulated, but we would set up an extra set of barriers. Currently, 60% of all medicines that are used in Europe are released from the UK.

Taxation (Cross-border Trade) Bill

Hannah Bardell Excerpts

2nd reading: House of Commons
Monday 8th January 2018 Commons Chamber

[Kirsty Blackman]

Because the UK Government decided that we are leaving the customs union and we will therefore need our own customs procedures, it is sensible, given that it was an entirely EU competence, for the UK to create its own customs framework. However, if the UK Government had done what we suggested and remained part of the customs union, the Bill would not be necessary. Although the Law Society of Scotland says that the Bill is necessary because of the decisions of the UK Government, it raises several concerns. I ask the Minister to read the briefing, which suggests a number of amendments, particularly on consultation.

[Hannah Bardell (Livingston) (SNP)]

Further to the point made by the hon. Member for Stirling (Stephen Kerr), has my hon. Friend seen the briefing from the Manufacturing Trade Remedies Alliance? It says:

“These proposals are much weaker than we have in the EU (and also weaker than those of most other Trading Nations). Weaker remedies cost jobs.”

Just because we have legislation—and bad legislation—it does not make what is happening a good thing.

[Kirsty Blackman]

I absolutely agree with my hon. Friend, who speaks for us on international trade. She is right about trade remedies and I will come on to that specific point later.

Although the Bill is general, it is also wide ranging. I want to consider some of the issues relating to HMRC that the Minister mentioned earlier. The new CDS software is set to replace CHIEF—customs handling of import and export freight—the current system, in 12 short months. The Public Accounts Committee report in November stated:

“It would be catastrophic if HMRC’s new customs system, the Customs Declaration System (CDS), is not ready in time and if there is no viable fall-back option.”

It expects the number of customs declarations that HMRC must process each year to increase fivefold. Every time I and other hon. Members have questioned the Minister about this, he has been particularly blasé and unflustered about the tight timetable. The PAC also said that HMRC’s timetable is incredibly tight, given the amount of work still to do. HMRC will only know by July 2018 whether the system works as intended—I am surprised that HMRC will only know by July 2018, but the Minister thinks it will all be fine—which is only one month before the first traders start to use it, and gives very little time to take remedial action if anything goes wrong.

It is vital for our exporting businesses that the customs software works. We have consistently raised concerns about this and we will continue to do so. I appreciate that the Minister is nodding, but we will keep the pressure on to ensure that it happens.

[Hannah Bardell]

My hon. Friend is making an excellent speech. How much faith does she have in the Government and the implementation of the software programme, given the disaster they are having with the change programme and the closure of HMRC offices?

[Kirsty Blackman]

UK businesses have several questions about the capacity of HMRC to deal with the volume of customs declarations, and many businesses will have to make customs declarations for the first time. Businesses are already concerned about the loss of the HMRC hotline that they could previously access. One business contacted HMRC with a query and received a reply seven months later. Seven months is not an appropriate timescale. If HMRC cannot respond to complaints and questions timeously now, how will it do so in the future after a fivefold increase in the need for customs declarations?

In a post-Brexit scenario, businesses will—in an incredibly short timescale and whether we have a trade deal or not—have to come to terms with new customs software. They will also have to come to terms with a new system of customs duties, ways to export and other massive changes. That means an incredible amount of uncertainty. When drafting the Bill, the Government could have been clearer about how the new customs system would work, therefore getting rid of a level of uncertainty. I know that they do not yet have a trade deal, but if they had been able to implement the software earlier or be clearer about how the processes will work, it would have been better for businesses.

Broadly speaking, businesses have been in favour of the replication of the Union customs code in the future. I mentioned the issue of rules of origin, and the Minister also referred to it earlier. There is a major problem with those rules. The Minister said that they should be determined by the UK Government in negotiation. As a side note, the current UCC, at 61.3, contains options for declaring origin. That does not appear to have been replicated in the primary legislation, and the British Chambers of Commerce, on behalf of its members, want to see certainty for the future on that matter.

Major problems are brewing on rules of origin, especially the duration of any transition agreement that the UK Government strike. At the very least, the Government need to negotiate interim free trade agreements with countries that the EU currently has FTAs with. Many of those trade deals allow UK companies to export because of the recognition of cumulation with EU content. For example, the trade deal that the EU has with South Korea, for example, says that

“a car will be originating in the EU if no more than 45% of the value of the inputs have been imported from outside Korea or the EU to manufacture it.”

So if the UK—in this brilliant scenario with its amazing negotiating team—manages to convince Korea, at least temporarily, to replicate the trade deal that it has with the EU, changing all references to “EU” to “UK”, for example, that will be all well and good, but it will not solve the issue of cumulation for many of our businesses. Take for example a widget that is created in the UK. It may have many parts from other EU countries. It may have 60% EU content, which it needs in order to be exported to South Korea. However, it may not have 60% UK content. Under the previous rules of origin system that we had as part of the EU, that worked fine and the widget could be exported to Korea. But if Korea says that it wants the widget to have 60% UK content, it will be a major issue for businesses which will no longer be able to export those widgets.

Tax Avoidance and Evasion

Hannah Bardell Excerpts

Tuesday 14th November 2017 Commons Chamber

[Dame Margaret Hodge]

I am really pleased the hon. Gentleman has given me the opportunity to explain the circumstances to the House. My father and his cousins were refugees from Germany. My father was then a refugee from Egypt, so he was a double refugee. I remember as a child that he often said to me, “You will never feel safe in this country. Always have your suitcase ready.” He did keep money abroad. When we discovered that after he died, we closed those funds and put them into a charity.

The level of taxation and who pays is decided by us here in Parliament through our democratic processes. That is how we create a system that is democratic and trusted by all. When a minority choose to ignore and deliberately bypass our rules and regulations and get away with it, they undermine confidence in the fairness of the system. Some people and some Members claim that tax avoidance is okay because it is lawful. Indeed, one of the Government’s Ministers from the other place, the noble Lord Bates, said on Monday that tax avoidance

“continues to be part of the international system and we recognise and value it.”—[Official Report, House of Lords, 13 November 2017; Vol. 785, c. 1611.]

He and others are simply wrong, and they misunderstand the issues. Her Majesty’s Revenue and Customs’ own definition of tax avoidance is clear:

“Tax avoidance involves bending the rules of the tax system to gain a tax advantage that Parliament never intended. It often involves operating within the letter, but not the spirit of the law.”

Those are the words of HMRC. Even it says that tax avoidance is wrong.

[Hannah Bardell (Livingston) (SNP)]

Does the right hon. Lady agree that a feature of a strong tax system is having a proper network of HMRC offices, and that centralisation and the closure of offices such as the one in my constituency is a disgrace that will do nothing to help the situation?

[Dame Margaret Hodge]

I agree with the hon. Lady that resourcing HMRC is absolutely central to the fight against tax avoidance and evasion.

Tax avoidance is completely different from tax planning, whereby, for example, Parliament intended to encourage people to save for their pension by introducing ISAs with tax breaks. Tax avoiders, on the other hand, thwart the intention of Parliament. Their action means our collective will is ignored. We should not tolerate it and we must act urgently to eradicate it.

Economy and Jobs

Hannah Bardell Excerpts

Thursday 29th June 2017 Commons Chamber

[Hannah Bardell (Livingston) (SNP)]

On a point of order, Madam Deputy Speaker. Perhaps I could seek your guidance. As my hon. Friend the Member for Glasgow South West (Chris Stephens) has just exposed, the Government and the Chancellor did not know about a decision on HMRC offices and jobs. Would it therefore be in order for him to come to the House as soon as possible and make a statement on the HMRC closures and the jobs in our constituencies?

[Madam Deputy Speaker (Mrs Eleanor Laing)]

The hon. Lady has cleverly used her point of order to make the political point that she wished to make. I think she knows, as the House knows, that it is not a point that I can answer from the Chair. If, however, she is endeavouring to bring the Chancellor to be held account to the House, then I can tell her that that is exactly the process that we are currently undertaking. The Chancellor of Exchequer is here, and I am sure that the hon. Lady will be able to make her point in debate later in the day.

--- Later in debate ---

[Mr Hammond]

The hon. Member for Livingston (Hannah Bardell) was first, so I will give way to her.

[Hannah Bardell]

I thank the Chancellor for giving way. I hope that he will be able to follow up my point of order and the point made by my hon. Friend the Member for Glasgow South West (Chris Stephens) about HMRC contracts, because the issue is very important to our constituents.

Is it not the case that we have a Prime Minister who disagrees with herself about Brexit, and that—as we now know from the “six jobs” former Chancellor—the whole Cabinet disagrees with the Prime Minister about the status of EU nationals? How on earth can we trust the Tories to run the country, let alone negotiate Brexit? This madness must end.

[Mr Hammond]

I will come back to the hon. Lady on the subject of her point of order, and to the hon. Member for Glasgow South West (Chris Stephens). My understanding is that an issue arose during purdah which involved the risk of immediate financial loss to HMRC, and that under the purdah rules it was able to engage in a negotiation to try to prevent that loss to the public purse. I will, however, write to the hon. Lady, and to the hon. Gentleman, setting out exactly what happened, and I will put a copy of the letter in the Library of the House.

--- Later in debate ---

[Kirsty Blackman]

I absolutely agree; if Northern Ireland is getting £1 billion or £1.5 billion or however much it will be tomorrow, the other nations of the UK should get similar. Our manifesto contained a commitment for extra money for the NHS in England, because we believe that the English NHS should have more money, and that would generate Barnett consequentials for the NHS—or for spend—in Northern Ireland, Wales and Scotland. That is the way we think this should have been done.

On the Conservatives’ economic record, Members should not just take my word for it. They should take the word of the Institute for Fiscal Studies, which described this situation as “dreadful”, projected that child poverty would rise to 30% by 2021-22, and laid the blame squarely on the impact of tax and benefit reforms; they should take the word of the Resolution Foundation, which reported that the Tory Government’s tax and social security policies will drive the

“biggest increase in inequality since Thatcher'”;

they should take the word of the Bank of England, which reported that consumer credit has risen at annual rates above 10%; they should take the word of StepChange Debt Charity, which reported that 22 million people in the UK are not confident that they are saving enough to cope with unexpected bills or a drop in income; and they should take the word of Money Advice Scotland, which, in a damning statement, reported:

“More and more people within the money advice sector already attest to the growing prevalence of debts that are directly related to living costs. People who are borrowing not out of recklessness, but because their level of income cannot sustain a socially acceptable standard of living”.

That is what the Tories are presiding over.

[Hannah Bardell]

I welcome my hon. Friend to her position; she is making a very powerful and convincing speech. Does she share my concern that much of this country’s growth is based on consumer debt, and that the UK has one of the highest rates of consumer debt in the EU? Is that not an economic train crash waiting to happen?

[Kirsty Blackman]

Absolutely. I think we will see increasing problems with that, and I shall come on to that later.

During the election campaign, the UK Government seemed unclear about the causes of poverty, so let me enlighten them: poverty is caused by people not having enough money.

--- Later in debate ---

[Kirsty Blackman]

I understand that the digital single market has the potential to create massive revenues for the nations of the UK. It would be a travesty if we were not to remain a part of that.

We need a UK Government who will tackle gender inequality properly. We eagerly await the proposed legislation on this, and we will press the Government to ensure that it is incredibly robust. The Scottish National party has led the way on this: in Scotland, we have a gender-balanced Cabinet; and in Westminster, we have a gender-balanced leadership team. To overcome gender inequality, this Government must tackle the structural causes of discrimination that are so embedded in our culture.

[Hannah Bardell]

On the matter of gender equality, does my hon. Friend share my concern that when the First Minister of Scotland brought forward legislation for a 50:50 gender balance on public boards by 2020, the Conservatives in Scotland opposed it?

[Kirsty Blackman]

That does not make me feel confident about the gender equality legislation that is coming forward, but we can only hope that this Government do things differently to their colleagues in Scotland.

We have never had a female Chancellor of the Exchequer or a female shadow Chancellor of the Exchequer. Today, I proudly stand here as the first ever House of Commons female spokesperson on the economy. That demonstrates just how far we still have to travel to achieve true gender equality.