Overseas Aid: Charities and Faith-based Organisations

Lord Bates Excerpts

Thursday 12th July 2018 Lords Chamber

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, I join other noble Lords in paying tribute to my noble friend Lady Stroud for securing this debate on this important and timely topic. She began by drawing on her own experience of the work that she had seen, such as the work of Hand in Hand for Syria, in Aleppo, and the assistance it had given. She told us about small charities and faith-based organisations, particularly those which work on the Ebola outbreak in Sierra Leone to stop the spread of that disease. She pointed to the area of conflict, where people are often in search of those they can trust, and how they frequently turn to people from faith-based and local community-based charities.

We will of course long remember this debate for the maiden speech of the noble Lord, Lord McNicol. He brings passion and expertise to this House, and we welcome him. I have to tell him that it is not every Back-Bencher who gets the Leader of the Opposition responding to a debate in which they have made their maiden speech. He clearly has a bright future ahead of him. Although he is from West Kilbride—I am treading dangerously here; I tried to pick up a signal on my smartphone so that I could check the facts—in the great town of East Kilbride is the headquarters of the administration of all British overseas aid. We have over 800 people there. I think it is a new town. I am not sure of the distance between the two but the name Kilbride certainly connects them. The noble Lord talked about the importance of trade unions. Internationally, we are working increasingly with trade unions and the International Labour Organization in the area of human trafficking, because often they are the first ports of call and essential partners in combating that evil trade.

My noble friend Lady Hodgson talked about a number of examples from Liberia to Mali, as well as about peacebuilding in Iraq. I was glad that she mentioned the work of Afghan Connection. It is an inspirational organisation whose chief executive is Sarah Fane. It is incredible to see the impact that a very small charity focused simply on building schools in remote rural parts of Afghanistan is having. I must not get too carried away with enthusiasm about the charity because I think it might be applying for a grant from DfID. Officials are saying, “You have to be careful and even-handed”. I am sure that there are other organisations doing similar work, but I was particularly impressed by that one.

The right reverend Prelate the Bishop of Rochester gave a practical example of a partnership between his diocese, Tearfund and the local community in Tanzania. I particularly enjoyed that example because sometimes aid is perceived by people in need as having a patronising element to it. Therefore, helping people to deploy the skills they already have in providing for their own future and building their own schools is very much where we are heading.

The noble Lord, Lord Sheikh, talked about the generosity of Muslim charities. I attended the wonderful event in the River Room. In one of those amazing juxtapositions, in the space of one week I went from announcing an aid match for the Lent appeal for Christian Aid to doing to the same for CAFOD. I then went to the launch of Islamic Relief, involving zakat. We were UK aid-matching them all. The first time I heard that £100 million had been given in one month by the Muslim community of Britain, I had to double-check it. I thought, “Surely there’s an extra nought on the end”, but the figure is absolutely correct. I do not know why we do not hear more in the media about our British Muslim community. It is the most generous of the faith communities in the United Kingdom and we are incredibly proud of the contribution that it makes to this great country.

The noble Baroness, Lady Barker, said that while of course we want faith-based charities to be a channel for aid, providing help to those in need, it is important that they do not become a barrier. That was an important point to make, particularly in reference to sexual and productive health. This country has been at the forefront in advancing that on the international agenda, often against some opposition from different quarters. We held a very successful conference on that very subject just last year to highlight our ongoing commitment to ensuring that people get the sexual and reproductive health treatments and help that they have the right to receive.

The noble Baroness, Lady Smith, reminded us that there is almost a “triple word score” benefit from getting volunteers to do fundraising and to help. Not only do they provide practical support for the charity’s aims but they build a sense of society within our own community, and they also highlight the cause that underlies it. She said it was very important that we remain focused. She will know from her time in ministerial office that it is tempting, when we hear wonderful stories of charities, to focus on their inspirational founders and leaders, but she was right to remind us that our hard focus must be on the outcomes that they deliver for the people in need.

The noble Baroness also underscored the importance of safeguarding. Protecting the safety of those we are seeking to help must be our Hippocratic oath: “first do no harm”. I do not know whether it is correct for me to acknowledge it but, in that context, our distinguished colleague my noble friend Lady Stowell is chair of the Charity Commission, and I am sure she will find this debate very helpful in her work.

As DfID’s Minister for Civil Society, I know that small charities and faith-based organisations do extraordinary good around the world. My department is committed to working with them to deliver the sustainable development goals and to eradicate extreme poverty from the world by 2030. I would like to focus first on small charities and then on faith communities.

Small charities are a vital part of the civil society ecosystem and do remarkable work, as all noble Lords have recognised. They are able to innovate and specialise, and often can better engage with the British public than their larger counterparts. In 2016, DfID’s civil society partnership review found that despite the added value that they bring, small charities often felt excluded from DfID funding, as the noble Baroness, Lady Smith, and my noble friend Lady Hodgson both referred to. This presented an issue for my department, which we have worked hard to resolve.

At the heart of this effort is DfID’s Small Charities Challenge Fund, which was launched last summer to provide funding opportunities for very small, UK-based charities. The noble Baroness, Lady Smith, and the noble Lord, Lord McNicol, asked what more could be done to draw attention to this fund. One thing we are seeking to do is engage parliamentarians, both in this House and in the other place. Parliamentarians have constituency-based connections and, in this House, many noble Lords are representatives, trustees and patrons of particular charities. They can help signpost this fund’s existence. The first round of the fund closed in September last year and I am pleased to announce the commencement of the first four projects, with more to follow over the summer. One of these projects will establish a community recycling centre in the Gambia, creating local employment and reducing pollution; another will provide access to safe water and sanitation in rural Malawi; yet another will focus on quality healthcare and rehabilitation; and the final project will improve access to affordable and clean energy, which is a key issue in sub-Saharan Africa. This is just the start of DfID’s exciting new collaboration, and I look forward to further developments and announcements over the coming months.

I should say that the funding window for the next round is open right now. For those tuning in—people with insomnia might tune in to the Parliament channel in the early hours—if you are involved in a charity, go to a search engine and punch in the words “Small Charities Challenge Fund” and “DfID”, and you will find out how to apply. The window will be open until the end of September.

In the process of doing that, we said that it was very important to ensure that we got feedback from small charities as the pilot progressed. Like my noble friend Lady Hodgson, the small charities told us that our application process was too long. We therefore designed a one-stage application form on a bespoke online platform. They also told us that our due diligence process was too onerous. I should put in a caveat here: we are dealing with taxpayers’ money and with some of the most vulnerable people in the world and it is right that our due diligence be demanding, but not too onerous. Therefore, we have implemented a more proportionate, streamlined process.

My noble friend Lady Hodgson asked about the difficulties of cash flow, which is a critical issue for many small organisations trying to make payments and meet commitments. Therefore, we created a tailored payment-in-advance approach to ensure that grant holders do not have to dip into their own reserves to deliver the project effectively.

My noble Friend Lady Hodgson asked us to think about multi-agreements. We looked carefully at that but we are concerned that we do not create a dependence upon aid. Often these small charities are lean, effective and mobile, as the noble Baroness, Lady Stroud, reminded us, and that is their great advantage. There is a place for the small as well as for the large in the system and we do not want to conscript them into a dependency on future grants of government aid; we want them to continue doing their good work.

These changes are working and the fund is reaching a smaller, more diverse set of organisations. In the second round of the fund, 90% of applicants had not received DfID funding before, and 62% of shortlisted applicants are based outside London and the south- east, an important development of which I know the noble Lord, Lord McNicol, will approve. Sometimes the larger organisations are centred in the capital for obvious reasons but there are brilliant charities across the entire country. However, we will not stop there. As a pilot programme, the Small Charities Challenge Fund is being used to gather evidence on how we can work even more effectively with organisations in the future. To this end, we are increasing our engagement with the sector and are constantly gathering feedback. I will shortly be hosting round tables with both successful and unsuccessful applicants and the information gathered will be used to ensure that we can improve the system for the next rounds.

Our work with small charities is not just limited to funding projects: we are also working to develop their capabilities. To achieve this, we have worked to deliver a bespoke programme of capacity-building initiatives. This includes learning events, webinars and regional roadshows. We are also working to better understand the value of small organisations based overseas. I will come back later to the specific questions I was asked about this. By helping organisations based here and overseas develop their capacity, we can achieve a sustainable legacy that will enable civil society to flourish around the world.

Moving on to faith-based organisations. I am again pleased to confirm a real shift in DfID’s approach in recent years. The noble Baroness, Lady Stroud, drew on evidence which showed the tremendous number of faith-based charities registered in England and Wales—there are 50,000 with a faith-based ethos. DfID clearly and publically recognises that religion is crucial to development. Most people in developing countries believe that faith is important to them, with the Afrobarometer study in Africa showing that 80% of surveyed people felt that religion was a very important factor in their lives.

Faith is also a huge motivator for giving, with statistics showing that, on average, those with faith give nearly twice as much to charity. Faith-based organisations make a significant and distinctive contribution to poverty reduction. They can inspire confidence and trust and are often seen as more embedded in, and committed to, the local communities they serve. They are often uniquely placed to deliver services to marginalised peoples and communities. For example, in sub-Saharan Africa, these organisations provide at least 40% of health services, as the noble Baroness, Lady Barker, rightly remarked. They are also vital in providing humanitarian assistance in crises with their extensive networks and roots in local communities. They stay for the long haul. After the Nepal earthquake, faith-based groups were the first in and the last out.

Faith-based organisations can empower poor people to ensure that their voices are heard, and can subject Governments to essential scrutiny. Civil society has a crucial role to play. It contributes to the building of peaceful states and societies, reducing certain types of conflict and retaining a presence when government can no longer function.

Working effectively with these groups is essential in meeting our objectives. In 2010, DfID established the Faith Working Group and in 2011 it published the Faith Partnership Principles. Since then we have seen a dramatic change in the way that DfID looks at faith and faith-based organisations. The department has invested in a wealth of faith-focused research and has participated in a joint learning initiative with other organisations. It is part of the International Partnership on Religion and Sustainable Development, a major network that brings together bilateral donors. We are also working closely with our colleagues in the Foreign and Commonwealth Office to protect freedom of religion and belief. This work recently culminated in the appointment of my noble friend Lord Ahmad of Wimbledon as the UK’s special envoy on freedom of religion and belief. I should like to make one other point. In my work in this area I often meet with representatives from Humanists UK because it is important to recognise that some of the most persecuted groups around the world are those with no belief at all. Atheism is regarded as blasphemous and people often face imprisonment and punishment for their beliefs. I am pleased to announce that we will be launching the Faith in Development Forum, which will encourage a more active dialogue between the department and faith groups.

In the time available to me, perhaps I may address some of the questions which were asked. My noble friend Lady Stroud asked what steps we are taking to engage with small charities. I mentioned the Faith in Development Forum, and in addition officials and Ministers are undertaking regional visits around the UK to draw attention to the Small Charities Challenge Fund. The noble Lord, Lord McNicol, asked what advice and support was available to charities. Guidance is available on the website, and I have referred to webinars. We are also looking at other ideas on how we can extend awareness of this project.

My noble friend Lady Hodgson asked whether there are plans to expand the fund. Officials are cautious because we are in the middle of a spending review, but I have to say that the first impressions are outstanding in terms of the quality of the bids received, and I am sure that we will want to see this go further forward. My noble friend also asked what we are doing to support NGOs overseas. The recently announced Jo Cox memorial grants—a £10 million fund in memory of Jo Cox—are for both UK and overseas-based charities looking at women’s empowerment and conflict prevention.

The noble Baroness, Lady Barker, asked whether we will collaborate in the distribution of aid, given that the USA has changed the way that it is distributing aid. DfID’s policy on sexual and reproductive health services is clear and has not changed. We will be working with others to make sure that the shortfall caused by the implications of the Mexico City policy is met and that the important work continues. I have to say that it is very important that other countries should step up to the plate as well on this. The UK is doing a lot and other countries should be doing a lot more.

The noble Baroness, Lady Smith, asked me to say a little more about the range of smaller charities. The average income of SCCF-shortlisted applicants is £90,000 a year, which is well below the £250,000 ceiling. That shows that we are breaking new ground. I think that I have covered the key points, but I shall look again at the debate and if there is anything that I have missed, I will write. For now, I do not want to fall foul of the Standing Orders and exceed my 20 minutes in front of the Leader of the Opposition.

Let me therefore conclude by saying that here in the UK, as well as overseas, the picture is made all the more compelling by the wonderful work done by both small charities and faith-based organisations. We at DfID want that to continue and we want to work in increasing partnership with them, as UN sustainable development goal 17 points to. We want to do that because we want to alleviate suffering. We want to bring hope of a better world in future for the vulnerable, the sick, the refugees and those who are most marginalised in our society—and in that I am sure we are absolutely united.

Neglected Tropical Diseases

Lord Bates Excerpts

Wednesday 11th July 2018 Lords Chamber

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, I join other noble Lords in paying tribute to the noble Lord, Lord Trees, for securing this debate on NTDs. The noble Lord, Lord Collins, mentioned that he is a veteran of five such debates. I think that I have probably managed three, the last one, last year, introduced by the noble Baroness, Lady Hayman. I also particularly pay tribute to the noble Lord, Lord Trees, for his work as the chair of the advisory group for DfID on zoonosis. I also take the opportunity to commend the work of the APPG on Malaria and Neglected Tropical Diseases, and I am delighted that part of our proceedings have been observed by Jeremy Lefroy, who has done so much to raise the profile of this area and to continue interest in it. I also thank the noble Lord, Lord Kakkar, for his support, including at the global health forum.

It has been a fascinating debate, with a lot of new areas being raised. The noble Lord, Lord Trees, began by reminding us that NTDs are a result of poverty, as well as a cause of poverty. He placed this debate in the context of the sustainable development goals—particularly three, although others are impacted too.

My noble friend Lady Stroud spoke about the impact she had witnessed at first hand in Rwanda. She referred to the work that had been done and the impact it had on children’s education, reminding us of the connectedness of these diseases with other development needs.

The noble Lord, Lord Stone, again reminded us of the incredible work of Imperial College in the schistosomiasis group and the work of Professor Alan Fenwick, which is well regarded in this area.

The noble Baroness, Lady Hayman, is an example of persistence and perseverance in this area, which is not only necessary to tackle neglected tropical diseases but to advance the issue up the agenda of government. She pressed us on that.

The noble Baroness, Lady Warwick, reminded us that women and girls often bear the greatest burden of these diseases. She then went on to highlight a series of technical innovations—such as the example she gave in Mozambique—and called for new ideas.

The noble Baroness, Lady Sheehan, pointed out that none of the progress which has been made would have been possible without collaboration. She said that it would have remained a pipe dream. She also pointed to the important role that data and diagnostics can play in achieving this.

The noble Lord, Lord Collins, reminded us that investing in health systems and the health of populations is one of the most effective ways of correspondingly lifting people out of poverty. Again, he placed that in the context of further work that will be carried out on 24 July at the global disability summit. I am delighted that he is participating in it.

Let me update the House on progress over the past year and then seek to address some of the questions that have been raised. Neglected tropical diseases impact on the most disadvantaged, especially those living in remote areas or areas affected by conflict. They prevent children attending school, as my noble friend Lady Stroud reminded us. Tackling NTDs enables us to ensure that everyone has the opportunity to reach their full potential, a value protected through UK aid and declared, as the noble Lord, Lord Collins, reminded us, through the SDGs, with no one being left behind.

NTDs can result in families falling into poverty as a result of having to sell assets or borrow money to pay for healthcare. Combating these diseases is a development best buy, with the average treatment for a range of commonly occurring NTDs costing between 20 and 50 cents, as the noble Lord, Lord Trees, reminded us.

As the fifth progress report shows, progress is being made. It demonstrates that the number of people needing treatment for an NTD has fallen from almost 2 billion in 2011 to 1.5 billion in 2016, reducing the numbers of people at risk from these diseases. One billion people received treatment for an NTD in 2016. This progress is continuing. Since the report’s publication, the World Health Organization has verified Ghana’s and Nepal’s elimination of blinding trachoma, a fact mentioned by the noble Baroness, Lady Warwick. Guinea worm disease has fallen from 3 million human cases a year in 1986 to just 30 cases in 2017. However, there is more to do.

These are, of course, huge achievements, but hundreds of millions of people remain without the treatment they need. We know the last mile is often the hardest. The World Health Organization has just announced that a case of Guinea worm disease has been found in Angola, a country previously thought to be free from the disease. This is disappointing to us all but I know that globally we will rise to this challenge on the path to its eradication.

The UK invests in high-performing programmes tackling a range of NTDs. These programmes are delivering results. DfID programmes delivered more than 145 million treatments for NTDs in 2017 and carried out 50,000 surgeries to prevent blindness from trachoma. Asia is making progress towards achieving the elimination of visceral leishmaniasis as a public health problem. We are prioritising the tackling of five high-burden NTDs that we can have the greatest impact on. With our increased investment, we welcome bids that include additional activities to tackle other NTDs included in the London declaration, which identified 10. We have said that we want to focus on five, but I have been persuaded by some of the representations made by noble Lords, particularly on leprosy. I want to see what more can be done there. I received representations from the Leprosy Mission, which I am looking to meet, and Lepra, to see how we can involve leprosy more. Once that meeting is scheduled, I will invite other noble Lords to attend it.

The noble Lord, Lord Trees, focused on rabies. It is a devastating disease. DfID focuses on tackling some of the priority NTDs selected following careful analysis of the disease burden, the value for money and the likely impact of our investment. We welcome the inclusion of other diseases included in the London declaration. We also support the World Health Organization’s NTD efforts, which address an even wider range of NTDs and work to improve health systems in all countries, including those affected by rabies. That is something I will take away.

I am conscious, as officials are now, that noble Lords will be reading the record in a year’s time. I want to do slightly better than I did last year in respect of the questions from the noble Baronesses, Lady Warwick and Lady Sheehan, on the Ross fund. In that context—rather than reading the short response I have from the Box—one of the interesting things about what the noble Baronesses raised on the Ross fund is that we work very closely with the Department of Health and Social Care and we need to co-ordinate a better response there. DExEU has an impact on the relationship with the EU, as does the Department of Health and Social Care. Perhaps the noble Baronesses will allow me to write a more substantive response, which other noble Lords will be copied into.

The noble Baroness, Lady Warwick, also asked what we are doing about technologies. DfID is using smart technologies. An example is trachoma mapping; another is the use of an app to guide medical staff on the dose of drugs and treatments. I know that we are also looking at the use of drone technology, which the noble Baroness also mentioned.

The noble Lord, Lord Stone, asked what we are doing to link water and sanitation work. The UK is committed to supporting people to gain access to water sanitation and hygiene. Since 2015, DfID has provided 27.2 million people with access to clean water or sanitation as part of our commitment to reach an additional 60 million people with water or sanitation between 2016 and 2020.

In passing, I will make a short reference to the Ross fund. We fund research into the development of new drugs and diagnostics for NTDs, as well as operational research. Some £100 million of the Ross fund portfolio, managed by DfID and the Department of Health and Social Care, is allocated to this work, investing in our world-leading research in this area. I also pay tribute the work of Professor Molyneux at the Liverpool School of Tropical Medicine.

Our work on NTDs is one way in which the UK is showing leadership on the global health goal, which will help others. There is a unique public/private partnership. I again pay tribute to the END fund, mentioned by my noble friend Lady Stroud, and the visionary work of Alan McCormick in seeking to advance that particular area. Most of the medicines are donated by pharmaceutical companies. As the noble Lords, Lord Collins and Lord Stone, mentioned, NTDs entered the Guinness book of records in 2017 with the most drugs donated in a 24-hour period. The noble Lord, Lord Trees, was absolutely right to remind us that this must be one of the greatest philanthropic acts in history.

In April 2017, the noble Lord and I attended the NTD summit to mark the fifth anniversary of the London declaration. To mark that conference, we announced an increase in investment to protect more than 200 million people from the pain and disfigurement of NTDs over the next five years. A total of over $800 million was pledged at that conference. The noble Baroness, Lady Hayman, was generous in recognising any small contribution which I may have made to that; I would rather pay tribute to the power of a compelling argument.

There is much more to do in this area, but I assure noble Lords that the UK is meeting our commitments. We must continue to widen the donor base and increase the domestic resources committed to health. We have made considerable progress, but more will need to be done if we are to banish to history the suffering from these dreadful diseases, which we are all committed to do.

House adjourned at 6.30 pm.

Financial Exclusion

Lord Bates Excerpts

Wednesday 4th July 2018 Lords Chamber

[Baroness Tyler of Enfield]

To ask Her Majesty’s Government what assessment they have made of the impact on financial exclusion of (1) bank branch closures, and (2) moves to restrict the use of cash as a means of payment.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, the Government are committed to financial inclusion. Along with the FCA, we are taking steps to ensure that everyone has access to useful and affordable financial services, including face-to-face banking services and free access to cash. The Government recognise that banking and ways of making payments are changing rapidly, but we do not make assessments of branch closures or payment methods.

[Baroness Tyler of Enfield (LD)]

My Lords, I thank the Minister for his response. I am sure that he is aware that since 2015, some 2,900 bank branches have closed in the UK, and that only last year, the banks removed some 2,000 ATM machines, despite the fact that cash remains a very popular choice for many consumers. Does he agree that the increasing lack of face-to-face banking services, particularly in rural areas, not only threatens the financial exclusion of particularly vulnerable groups—I am thinking in particular of older people and those with limited mobility—but risks disrupting the entire cash economy in local communities, especially shops and small businesses? Given that, what concrete steps do the Government intend to take to ensure that physical banking facilities and cash payments remain available to all who want and need them?

[Lord Bates]

Perhaps I may first pay tribute to the noble Baroness for her work as chair of the ad hoc Financial Exclusion Committee of this House, which provided important recommendations which the Government are steadily working to implement. The issue she raises is an important one. The way we pay for things is changing, as is how we use banks. Cash used to account for 60% of transactions. That has reduced to 40% of transactions and is predicted to go down to 20% by 2026. As I say, the way that banking is carried out is changing. However, we recognise that there is a particular issue for vulnerable people and vulnerable communities. For that reason, in January 2017 we launched the banking framework agreement between the high street banks and post offices. Some 98.7% of people live within three miles of a post office, even those in rural communities. We have introduced the Payment Systems Regulator, which monitors ATM machines to ensure that they are maintained as a source of free access to large parts of the community. We have a great deal to keep under review, but this is an important issue that the noble Baroness and the Government are very aware of.

[Lord Empey (UUP)]

My Lords, the Minister will be aware that post offices have taken up a lot of the slack caused by the closure of banks, but post offices close down as well and they do not offer the suite of services that banks can. People who are still dependent on cash are being squeezed even more. While I join the Minister in congratulating the noble Baroness, Lady Tyler, on her work with the ad hoc committee, perhaps I may press him to agree that simply passing the buck to post offices does not solve the problem.

[Lord Bates]

I accept what the noble Lord says, but one of the points about the ground-breaking nature of the framework agreement with post offices on banking services is that 99% of personal financial services can now be transacted at the post office. That is helping to keep post offices open as an important part of the community. Some 95% of banking services can be provided by post offices as well. However, although this is a ground-breaking development, we are keeping it under review.

[Lord Holmes of Richmond (Con)]

My Lords, does my noble friend agree that, while in no sense contradicting what the noble Baroness has said, there is a key role for fintech to play in addressing financial inclusion? Will the Government look at all the opportunities arising in fintech and consider promoting them to all vulnerable consumers?

[Lord Bates]

Again, as another member of the ad hoc Financial Exclusion Committee, my noble friend initiated an important debate on the digital economy. We do believe that fintech, in which the UK is a leading force in the world, can be a powerful way of introducing significant change in this area for the benefit of those who need it.

[Lord Tunnicliffe (Lab)]

My Lords, the Financial Conduct Authority estimates that 2.7 million people are stuck with permanent overdrafts and are using them more than 85% of the time, thus incurring higher and higher charges. Can the Minister tell us what measures the Government are putting in place to end the cycle of persistent debt and whether they will commit to imposing a cap on overdraft fees?

[Lord Bates]

We have done a lot in that area, such as capping payday loans—those egregious payments. The Financial Conduct Authority has looked at the whole issue of buy to rent and is considering whether a cap is necessary. We have also done a number of things to try to help those with low incomes to improve their situation. My noble friend Lord Young took the Financial Guidance and Claims Act, which created a new single financial guidance body, through this House. All these measures are designed to improve the situation. We also announced our ambition to increase the number of people who have access to credit unions in this country from 2 million to 3 million.

[Baroness Hollins (CB)]

My Lords, is the Minister aware of the attempts being made by the Post Office to make cash available to named individuals by arrangement with their bank when they are unable to manage cash withdrawal at an ATM, for example if they have a learning disability or may be at risk of financial exploitation?

[Lord Bates]

I am not aware of that particular scheme. Of course, pressure is now being brought forward. One particular body, the Equality Advisory Support Service, oversees how this operates for people with disabilities. It can report and require the Financial Ombudsman or the Financial Conduct Authority to look at these areas and take action. I am happy to look further into the matter raised by the noble Baroness.

[Baroness Kramer (LD)]

My Lords, many small businesses are still part of the cash economy. Where both the banks and the post office are closed, they face a conundrum: they cannot travel long distances during the day to get to facilities so where do they take their cash in the evening? Old banks used to have cash boxes in the wall where they could deposit cash safely. We are creating a serious security problem for many small businesses.

[Lord Bates]

That reason, among others, is why the Government announced in March a review of and consultation on cash and digital payments in the new economy. That is precisely the type of question that is being looked at now as part of that consultation, to which we will bring forward a response in the autumn.

[Lord Marlesford (Con)]

My Lords, are those who retail goods and services legally obliged to accept cash?

[Lord Bates]

I am pretty sure that the answer is yes. There is a piece of legislation: the Bill of Exchange Act 1882, or something like that. I will probably have to write to the noble Lord. If it is not that Act, another serious piece of legislation is the Equality Act 2010, which carries certain mandates that need to be there to provide access for the wider community to ensure financial inclusion, particularly for the most vulnerable.

South Sudan

Lord Bates Excerpts

Wednesday 4th July 2018 Lords Chamber

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, as always when this subject is raised, it has been a fascinating and extremely well-informed debate. The noble Lord, Lord Curry, to whom we all pay tribute for securing this debate, reminded us at the outset of the level of hope at the birth of the nation in 2011. He went on to explain the layers of complexity that existed then, and about the enormous natural resources and fertile lands that were there. He reminded us that doing nothing is not an option.

My noble friend Lady Anelay, who did so much in this area when she was the Prime Minister’s special representative on preventing sexual violence, and who was of course my predecessor as Minister of State at DfID and a distinguished Foreign Office Minister, reminded us that this is a manmade battle for power and wealth. She included that powerful quote from the South Sudanese MP, Martha Martin Dar, which in many ways captures what is driving this. She described it as a war that is manmade, a political battle for power and wealth and a war that uses sexual and gender-based violence as a weapon. She is exasperated with those who sell arms to both sides to prolong the conflict.

The noble Earl, Lord Sandwich, talked about the resilience of the nation, the depravity of sexual violence and how it is being used, and how women and children are once again the front-line victims of this conflict. The noble Lord, Lord Chidgey, referred to the work of the all-party group on South Sudan, which has done tremendous work. The noble Lord, Lord Alton, referred to it as well. He talked about the initial hopeful migration—almost the exodus, if you like—that had taken place, and then the stark reality, particularly with those stories of children as young as 11 in the capital city.

The noble and right reverend Lord, Lord Harries, reminded us that, whatever the temptation to despair, the international committee must persevere. The right reverend Prelate the Bishop of Rochester reminded us of the importance of the Church’s role. He reminded us of the special connection with the diocese of Salisbury and of the special commitment of the most reverend Primate the Archbishop of Canterbury, who I know Chris Trott, the UK special representative for Sudan and South Sudan, will meet later this week on the importance of peacekeeping and reconciliation.

The noble Lord, Lord Alton, talked about the effect in Uganda of the refugee crisis and urged us to take further action to bring those responsible to justice. The noble Baroness, Lady Cox, again drew on her personal experiences and the incredible work of HART in caring for those in need. She raised questions about how we can improve the way we get emergency funding into crisis situations and work to do more on peacebuilding and conflict prevention.

The noble Baroness, Lady Sheehan, gave that stark statistic that more people die through preventable health crisis situations in conflict areas than through the conflict itself. She stressed the importance of providing support. But she also gave us an element of hope by quoting from the KPMG report, which talked about the incredible natural resources, minerals and agriculture present in that land, if they can only be tapped into securely. The noble Lord, Lord Collins, concluded by saying that we must use every lever and tool that we have in the box in diplomacy, sanctions and funds to ensure that we rally round all nascent peace agreements to try to make progress.

In the time available, I will make some remarks then turn to the specific questions that noble Lords raised. As many noble Lords have already said, the situation in South Sudan is appalling. We should be under no illusions that the humanitarian catastrophe the country is experiencing is entirely manmade. Thousands have been killed and a third of the population have fled their homes. Conflict is driving the largest refugee crisis in Africa. Appalling and widespread human rights abuses continue to be reported, including horrific levels of sexual and gender-based violence.

The conflict continues to drive a severe humanitarian crisis. The UN has appealed for $1.72 billion this year alone to address the acute needs of the people. Food insecurity is at its worst in the country’s history. South Sudan is fertile enough to grow all the food it needs, but fighting continues to impair agricultural production. As the lean season begins, 7 million are in need of humanitarian assistance. Due to ongoing obstructions faced by the humanitarian community, famine remains a risk in some areas.

Conflict has decimated South Sudan’s fragile health and education systems. South Sudan has one of the highest rates of severe poverty in the world and its health needs are vast. The South Sudanese economy is also in crisis, exacerbated by the dire humanitarian situation. Inflation, as the noble Lord, Lord Curry, reminded us, is soaring and average household incomes have fallen by 80% since 2013 when fighting began.

As it acts to address the crisis, the international community continues to face obstructions. According to the UN, in 2017 there were more incidents than ever before of aid being obstructed. It estimates that the Government of South Sudan are responsible for more than half these incidents. In addition, 106 aid workers have been killed since the conflict began. The targeting of those trying to alleviate the crisis is barbaric and must cease immediately.

Noble Lords will be aware that the UK Government have been at the forefront of the international response to the crisis. We are consistently one of the top three donors. UK aid is reaching hundreds of thousands of people and saving lives despite the challenging operating environment. It is clear that the solution to South Sudan’s crisis is political stability. Without it, suffering will worsen and dire consequences for more generations to come will ensue. Efforts to put the peace process back on track have been led by the regional body, IGAD. The UK, along with our international partners, has been working closely with IGAD and its member states to give high-level dialogue between the parties the best chance of success.

Noble Lords referred to the talks held in Khartoum last week between President Salva Kiir and Dr Riek Machar and other opposition parties. They signed the Khartoum declaration on 27 June, including agreement on a permanent ceasefire. The UK, with our troika partners, commends IGAD’s efforts to drive forward the peace process and we take note of the Khartoum declaration. We hope that the principles it outlines will help build confidence between the parties and guide the difficult decisions needed to reach comprehensive wider agreement. While we welcome the renewed commitment to a permanent ceasefire, both the region and the parties to the conflict must ensure that the agreement is implemented in full without delay and is robustly and independently monitored. A sustained end to the fighting is a critical prerequisite for that process.

I will address as many questions as I can in the time available. The noble Lord, Lord Alton, asked about anti-money laundering actions and what sanctions might be available. The Sanctions and Anti-Money Laundering Act provides the power for the UK to impose sanctions on regimes after the UK has left the EU, including against individuals involved in gross human rights abuses, via so-called Magnitsky clauses. The UK is committed to promoting peace and strengthening human rights in South Sudan and holding to account those responsible for the worst violations. I will address the specific points raised about the UN Security Council later.

The noble Lord also asked what we were doing to help South Sudan’s health system. The UK is a leading contributor to the health sector in South Sudan. We are the lead donor to the multi-donor Health Pooled Fund, through which we are supporting 800 front-line health centres, delivering health and nutrition services for children and mothers in 80% of the country. Last year the Health Pooled Fund provided more than 6.5 million health treatment consultations, including 2.5 million to children under five.

The noble Lord spoke about corruption. Corruption continues to plague South Sudan’s development. The international community must ensure that our support does not fuel or prolong the conflict. The UK has a zero-tolerance approach to corruption and the diversion of aid. We do not give any money to the Government of South Sudan and make it clear at the highest levels that we will not tolerate attempts to divert aid for such purposes. On the subject of diplomacy and the work that has been done by President Museveni, we recognise the important role regional leaders can play in pressuring South Sudan’s leaders to allow the peace process to succeed. Ministers regularly raise this issue with regional counterparts. In fact, I did so with President Museveni in Kampala last year.

The noble Baroness, Lady Cox, asked about the availability of emergency funds. DfID monitors the humanitarian situation closely with international partners such as the UN. For example, between January and March 2018, money was released to UNICEF to enable emergency cholera prevention. We have also released emergency money through the World Food Programme. She asked about specific issues relating to HART. I am happy to meet her to see what we can do to improve our performance in that area.

The noble Baroness, Lady Sheehan, asked about the refugee crisis. In December the UK announced an additional £52 million to be made available to cope with the influx of refugees to countries in the region, including Uganda, Sudan and Ethiopia. Through DfID’s South Sudanese refugees and migration programme, we have provided life-saving support and humanitarian assistance for up to 150,000 South Sudanese refugees in Sudan.

My noble friend Lady Anelay asked about the progress of the troika on the ceasefire. We welcome the Government of South Sudan’s commitment as a signatory to the Khartoum declaration. In spite of repeated commitments, the international community continues to face obstructions to the delivery of life-saving aid, and this is unacceptable.

The noble Lord, Lord Curry, called for an embargo on arms. We strongly support the UN arms embargo and have been lobbying in the region for support for precisely that approach. He talked about the dependence on aid and the need for that to be reduced. The humanitarian situation in South Sudan is unprecedented. The UK remains committed to the people of South Sudan but humanitarian aid is not sustainable. Peace must be achieved and prosperity built on the immense natural resources in the country.

My noble friend Lady Anelay asked about our position on current projects and whether we are still the second-largest contributor. Yes, we are. The UK is the second-largest humanitarian contributor to the 2018 humanitarian response in South Sudan, according to the UN, but we are also urging other countries to step up to the plate and meet the entire target that has been set in terms of the needs. She also asked about our plans to protect civilians. As requested by the UN, nearly 400 UK troops have been deployed to support the UK mission, and I join other noble Lords in paying tribute to their performance. They have been awarded peacekeeping medals for the selfless way in which they have worked to protect people, particularly in the camps. My noble friend asked what we intend to do to encourage others to comply. We have played a leading role in the Security Council’s decision in May committing to consider sanctions and an arms embargo if violence does not cease. We also played a leading role in the implementation of EU sanctions against three key South Sudanese leaders in February this year and welcome the introduction by the US of an arms embargo echoing the EU’s long-standing position.

The right reverend Prelate the Bishop of Rochester asked what we will do to continue to engage with faith groups. We believe that they are significant. Indeed, the only institutions on the ground are the faith institutions, the churches. We confirm that the UK will continue to engage with them. The UK recognises the vital role that the Church has to play in establishing peace in South Sudan. The noble and right reverend Lord, Lord Harries, asked which countries contribute troops to the UN mission. They are Mongolia, South Korea, India, Ethiopia and Rwanda, among others.

The noble Lord, Lord Chidgey, asked about actions taken by the UK to address the root causes of the conflict. The UK provides funding for the South Sudan Council of Churches’ action plan for peace.

I realise that I have not covered all the points, but I shall draw to a close by making two points. First, the UK Government are clear that the new ceasefire does not negate the need to respond to repeated violations of the December 2017 cessation of hostilities agreement. We stand ready to support the action of IGAD and the African Union. We will continue to seek measures through the UN Security Council. It is also crucial that the agreement sees the inclusion of a wide range of constituencies, including civil society, and we will continue to work with the South Sudan Council of Churches.

Before I conclude, I should say that I am delighted that Chris Trott has done incredible work with his team in peacebuilding on the ground—the hard work. He is a human dynamo in the way he works around this area. He has joined us in the Box this evening, and if noble Lords would care to adjourn to an appropriate Committee Room where refreshments are served, they can join us to discuss this.

In answer to the challenge about South Sudan, we will not walk by on the other side when people are suffering. That is not what the UK does. That is our reputation in this world. We will not give up hope.

House adjourned at 6.59 pm.

Economy: Productivity

Lord Bates Excerpts

Thursday 28th June 2018 Lords Chamber

[Lord Haskel]

To ask Her Majesty’s Government what assessment they have made of the conclusion reached by the Economic Statistics Centre of Excellence in their paper Below the Aggregate: A Sectoral Account of the UK Productivity Puzzle, published in May, that some of the UK’s largest and most internationally competitive companies account for the biggest reduction in UK productivity growth.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, the Economic Statistics Centre of Excellence paper is an important addition to the evidence base, highlighting sectors where recent productivity slow-down has occurred. However, it remains unclear why this slow-down has occurred, why other sectors did not make stronger contributions to productivity growth before the crisis or to what extent this explains our long-standing productivity weakness.

[Lord Haskel (Lab)]

Does the Minister agree that this report, plus the further research from the Bank of England, indicates that our slow productivity growth is less due to the long tail of zombie companies but reflects the weaknesses of the business model applied by some of our biggest and best known companies—a model that incorporates share buybacks, high short-term bonus culture, and lower corporation tax and tax allowances that do not encourage investment. Will the Minister dust off the industrial strategy and review it so that these lessons can be learned?

[Lord Bates]

I assure the noble Lord that there is no dust on the Government’s industrial strategy. In fact, we have invested some £31 billion in a productivity investment fund for exactly that type of challenge. Moreover, we are conducting a further business productivity review, which is open to submissions along the lines that the noble Lord has referenced until 6 July. He will be aware, as a keen student of this area and indeed very experienced in it, that there has long been a UK productivity puzzle—that is why the centre titled the paper in that way—and it has existed since the 1950s and the 1960s. It has been suggested that, at a sectoral level, productivity gains are easier to make in the manufacturing sector than in the service sector and we have traditionally been a service area. We are far from complacent on this and are making progress on a whole range of issues to ensure that we improve our performance in the future.

[Lord Gadhia (Non-Afl)]

My Lords, the chairman of John Lewis, Sir Charlie Mayfield, has also examined the UK’s productivity puzzle and he found there is significant variability in productivity for SMEs. Can my noble friend say what support we are giving SMEs to improve their batting average?

[Lord Bates]

There are incentives for R&D spend. We know that things such as infrastructure and capital investment—we have had a patient capital review—contribute to improvements in productivity. We know that education and skills are a key part, and that is why we have T-levels and the apprenticeship levy. We also know that investment is very important, and that is why the capital breaks we have for R&D, particularly in small firms, are very important. But this is a whole-economy effort in which small and medium-sized enterprises, as well as the large companies, need to play their part.

[Lord Howarth of Newport (Lab)]

Will the Minister respond to one of the questions asked by my noble friend Lord Haskel about share buybacks and, indeed, excessive dividend payments? There is a management culture that all too often seems more interested in the extraction of wealth than the creation of wealth.

[Lord Bates]

If that criticism were true, we would not see that the UK is regarded as the number one location for foreign direct investment and we would not see companies coming here in the numbers that they are. We have a great strength in our economy. We have an historic weakness in productivity and we need to look at all the possible contributions to that and address them; that is what this review is all about.

[Lord Fox (LD)]

My Lords, I remind the noble Lord that foreign investment has halved over the course of the last year, so perhaps that is not the best statistic to choose. Meanwhile, manufacturing output has fallen for three successive months, construction output is 3% down year on year and the trade deficit is widening. We are pleased to hear that the industrial strategy does not have dust on it, but when do the Government think that some of their measures might actually take effect?

[Lord Bates]

On the point about foreign direct investment, just look over the past couple of weeks: we have seen Amazon announce 3,000 jobs in the east Midlands; a major biomass investment in Cheshire that will bring 3,000 jobs; and Vauxhall has announced the investment of 1,400 jobs in Luton. We are seeing record investment levels and a doubling of tech investment in the UK. This is all part of a strong, vibrant British economy that we are absolutely confident will continue to progress and improve beyond Brexit.

[Baroness Wheatcroft (Con)]

My Lords, businesses need long-term investment if they are to improve productivity. Does my noble friend agree that we need some sort of incentive for organisations to be long-term shareholders? Algorithmic trading is the absolute reverse of long-term investment, and there is far too much of it. We should have incentives for people to hold for the long term.

--- Later in debate ---

[Lord Bates]

My noble friend makes a very interesting point. That was the premise on which we undertook the patient capital review and one premise on which we set up the British Business Bank, so as to offer that kind of long-term patient funding that allows businesses to grow and prosper.

[Lord Campbell-Savours (Lab)]

My Lords, what lessons did the Government learn from the very excellent paper produced by the noble Lord, Lord Heseltine, on industrial strategy? What decisions are they taking to implement some of its recommendations?

[Lord Bates]

My noble friend Lord Heseltine undertook a review for the Government on competitiveness in 2012, which was a key part of what fed into our industrial strategy. The point that he made is that it is absolutely critical that we leverage our technical research and that innovation becomes a core part of what we do going forward. We totally accept that and recognise we need to do more. That is why R&D investment from the public sector is at its highest level for 30 years and why we are investing £4 billion in aerospace research and development; it is all to take forward those types of policies.

[Lord Farmer (Con)]

My Lords, is my noble friend aware of whether any quantitative Treasury analysis has been done on the effect of family breakdown and dysfunctional family relationships on productivity? If so, what conclusions were reached?

[Lord Bates]

First, I pay tribute to the work that my noble friend has done consistently to promote family as a key part of our society. We know the devastating effects that family breakdown can have on people’s health, well-being and educational opportunities. We have not conducted any piece of work in that specific area, but it is certainly something that I am prepared to look at and discuss with him further.

[Lord Soley (Lab)]

Why do the Government think that productivity is lower in the service sector than the manufacturing sector?

[Lord Bates]

It is a very interesting point. There is an excellent book that a long queue of people were trying to access in the Library by a certain Jonathan Haskel—he may be known to the noble Lord—called Capitalism without Capital. In it, he unpacks that we have not really invested enough in intangible assets, such as R&D, patents and intellectual capital within firms. He thinks that there is more to be done. It is a very live, very important, crucial debate that we have to have as a country. That is the reason for the review, the reason for the strategy and the reason we have £31 billion in the fund.

International Widows Day

Lord Bates Excerpts

Thursday 28th June 2018 Grand Committee

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, I join others in paying tribute to the noble Lord, Lord Loomba. I had the privilege of being in the River Room, along with several other noble Lords here, for what was a wonderful occasion. There were some really passionate speeches and lots of concrete examples and testimony of the work that the Loomba Foundation has been doing to help those in need around the world. We are all hugely grateful to the noble Lord for tabling this important debate in the week of International Widows Day, of which he has been a tireless advocate, helping to secure it in the international calendar against incredible odds.

It has been a moving debate. The noble Lord, Lord Loomba, began by illustrating how often, when people arrived needing compassion, they met stigma and rejection. He called for more data. He also talked about the progress that has been made in India and Nigeria. My noble friend Lady Stroud talked particularly about the crisis in conflict situations, about security and refugees in displacement camps. She also gave some positive examples of progress that has been made in Rwanda since the terrible genocide there. The noble Lord, Lord McConnell, challenged us about young women, with his picture of how, because of early, forced marriage, they often become widows in their teenage years. It is almost difficult to comprehend that they could be both mothers and teenagers.

The noble Baroness, Lady Flather, moved us by talking about her own experiences: I am sure we all send our condolences to her, but also assure her of our compassion and friendship. She talked particularly about loneliness as a scourge on society and went on to give examples. The noble Lord, Lord Alton, gave some staggering statistics about the situation in Idlib in Syria. A quarter of women in that area are widows, and he talked about ritualistic practices. The noble Baroness, Lady Burt, reminded us to have an element of humility in recognising that this is not exclusively a problem for the developing world: we have our challenges here in the west about this, which of course is why the SDGs apply just as much at home as they do abroad.

The noble Lord, Lord Collins, reminded us of the importance of human rights; that older women should not be overlooked or neglected; of the central role of women and girls and of their right to progress on all the human rights which were addressed. Widows are too often invisible. The noble Lord, Lord Loomba, and others have begun to make them visible. The UN estimates that there are 285 million widows around the world, with more than 115 million of them living in poverty. As has been outlined, widows can be particularly vulnerable and marginalised, facing stigmatisation and deprivations purely because they have lost their husbands. Once widowed, they often confront a denial of inheritance in respect of land rights, a point raised by the noble Baroness, Lady Burt; degrading and life-threatening mourning and burial rights, which again the noble Baroness referred to; and other forms of abuse which makes the loss of a husband only the first in a long series of traumas in their ordeal.

We know that children of widows are often deeply affected, both emotionally and economically, with the daughters of widows facing increased vulnerability to abuse. The Government are committed to tackling the harmful social mores and deep-rooted gender inequality that is at the heart of much of this cruelty and hardship. Achieving gender equality and empowering women and girls is the right thing to do and is in our national interest. The noble Baroness, Lady Stroud, made the point that no society can ever hope to lift itself out of poverty by leaving half the population behind—often its most productive half. It is at the heart of tackling the barriers and discrimination faced by widows and their children. It is fundamental to building good global prosperity and peaceful society. It is a key part of a value-based global Britain.

In recent decades, the world has made progress towards gender equality. However, we need look only at the findings of the report of the noble Lord, Lord Loomba, on global widows to know that we have not gone far enough and that special focus needs to be paid to reach the most marginalised if we are to ensure that no one is left behind.

The UK is an international leader on gender equality. In March, the Secretary of State for International Development launched DfID’s new strategic vision for gender equality. The vision articulates our commitment to ensure that we reach the most marginalised women and girls, which includes widows as well as other groups such as women and girls with disabilities. It also commits us to stepping up our work on gender equality in conflict and crisis situations. It outlines our commitment to continue the work of our interlinked foundations, which have had a transformational effect on the poorest girls and women, the elimination of violence against women and girls, access to sexual and reproductive health rights, girls’ education and women’s economic power.

It articulates our commitment to do more on women’s political empowerment, including to increase women’s participation in leadership, conflict prevention and peace-building processes. As noble Lords have often pointed out, conflict and war is the greatest destroyer of wealth that has ever been conceived. Women and girls are often more vulnerable than men at the front line, who are often armed and trained. This builds on our strong record of helping women and girls, which I readily acknowledge to the noble Lord, Lord Collins, has been built on by successive Governments. We can all be proud of that.

The noble Lord, Lord Alton, asked for details on what help had been provided. Between 2015 and 2017, UK Aid supported 9.8 million women with water, sanitation and hygiene programmes, and reached 7.3 million women and girls with humanitarian assistance. We are also reaching the world’s most vulnerable women and girls with emergency food assistance, education, financial services and large-scale programmes to improve their land and property rights. In Bangladesh, we have helped more than 96,000 extremely poor households headed by widows with cash grants for business, enterprise, skills training and nutritional awareness. The noble Baroness, Lady Burt, and others will be proud to know that 85% of the households we have supported have graduated out of extreme poverty.

We are also providing increased support to grass-roots, women-led civil society organisations, which the noble Lord, Lord Collins, mentioned and is also something which the noble Lord, Lord Loomba, urged me to consider further in the debate that we had on this subject in February. Through the recently launched Jo Cox memorial work we have a particular focus on loneliness, to which the noble Baroness, Lady Flather, referred. I think that is a fitting memorial to that great parliamentarian who was so tragically killed.

Recognising the sad reality that humanitarian crises are increasing and conflicts are increasingly protracted, we are stepping up to help more women and girls affected by conflict and crisis. This includes large-scale programmes of support to Rohingya refugees, which will include funding for psychological support for women suffering from the trauma of war and survivors of sexual violence, to which the noble Lord, Lord McConnell, and the noble Baroness, Lady Stroud, referred.

At the same time, we are investing in improving even further our ability to reach the most marginalised. In order to know who, where and why people are at risk of being left behind, DfID is investing in data which can be disaggregated on the basis of sex, age, disability status and geography, as the noble Lords, Lord McConnell and Lord Alton, requested us to do. We are working with other partners, including the World Bank, to improve statistics, which will enable us to know where help is most needed and where we need to empower vulnerable and marginalised groups, including those in need of assessment and programming. This is particularly important for widows, who are too often invisible in our data and often face multiple forms of discrimination.

We are also fighting for women’s rights on the international stage, helping to secure an ambitious outcome for the Commission on the Status of Women. The noble Lord, Lord Collins, asked us about the national action plan and which countries will be impacted by it. Through a number of organisations, which the United Kingdom Government are proud to be part of, we were able to raise it, for example, through the recent Commonwealth Heads of Government Meeting in London, and at the G7 summit in the first half of this year. We also work with our European friends and colleagues in addressing these issues through the Foreign Affairs Council. We will soon also hold the first Global Disability Summit on 24 July, where gender equality will be a cross-cutting theme.

In this way and across our UK aid portfolio, the Government are leading international efforts to accelerate progress to make discrimination and inequality a thing of the past for all girls and women, giving particular attention to groups such as widows, who are so often the most marginalised and vulnerable, and to offer them hope and a future in a world where no one is left behind. If we do not succeed, I am sure that the noble Lord, Lord Loomba, will be back again on 23 June next year to hold us to account.

Committee adjourned at 5.57 pm.

Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2018

Lord Bates Excerpts

Monday 25th June 2018 Lords Chamber

Moved by

[Lord Bates]

That the draft Order laid before the House on 9 May be approved. (Special attention drawn to the instrument by the Joint Committee on Statutory Instruments, 26th Report).

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, the UK and London are world-leading financial centres, providing access to a wide pool of investors and international capital. This is built on the expertise of the UK’s financial services sector in providing products that meet the needs of a variety of economic actors in the UK and around the world. The UK has therefore sought to establish itself as a leading western centre for Islamic finance, illustrated by the UK becoming the first western country to issue a sovereign sukuk, or Islamic-equivalent bond, in 2014. The UK attracts business and investment from Muslim and non-Muslim countries around the world, supporting growth and jobs in the UK, as the UK’s financial services framework accommodates Islamic finance instruments alongside their conventional equivalents.

The Government are committed to ensuring that this continues to be the case. Changes were made to the law in 2010 to define alternative finance investment bonds, which cover sukuk, as a specified investment. More recently, we took measures in the Finance Act 2018 to afford such instruments the same tax treatment enjoyed by conventional bonds when traded on new types of trading venue. This was accepted by the House, but the specified investment definition in financial services legislation requires updating to match the tax change.

The order in front of the House today does exactly that and ensures that there is an alignment of the tax and regulatory treatment of alternative finance investment bonds to provide certainty, clarity and consistency for issuers of these instruments in UK markets. The order adds two types of financial trading venue—so-called multilateral trading facilities and organised trading facilities—to the list of permitted venues for alternative finance investment bonds. Conventional bonds can already be traded in these venues. The order also amends the Financial Services and Markets Act 2000 (Carrying on Regulated Activities by Way of Business) Order 2001 so that a person administering a benchmark, as specified in the regulated activities order, will be regarded as carrying on the activity by way of business. This technical amendment is consequential on the coming into force of the EU benchmarks regulation which was given effect in February of this year by the Financial Services and Markets Act 2000 (Benchmarks) Regulations 2018.

The order tracks an amendment made by the Finance Act 2018 which came into force on 1 April 2018. This left a gap in the treatment of alternative finance investment bonds in financial services regulation. We intend to close that gap as quickly as possible in the interests of certainty, clarity and consistency. Similarly, the amendment to the “by way of business” order is the final part of the legislation needed to complete the implementation of the EU benchmarks regulation into UK law. We wish to reassure issuers of and traders in alternative finance investment bonds that these instruments will be legally recognised in UK markets, giving certainty to the market. The London Stock Exchange has warned that continued failure to update the legislation for alternative finance investment bonds in regulation is causing issuers to look elsewhere.

The changes do not cause any new costs for business, as the regulatory framework for alternative finance investment bonds has been in place since 2007. The Financial Conduct Authority confirmed that there is currently only one firm in the UK authorised to operate a trading venue of the type which might be impacted by the proposed amendments. Instruments of this nature are very sophisticated and highly unlikely to be traded in this manner by anyone without a significant level of expertise in financial services—in other words, firms authorised by the Financial Conduct Authority.

We have a situation where differing treatment in regulation and taxation is afforded to alternative finance investment bonds compared to their conventional counterparts. This is unintended from a policy perspective and the Government want to act quickly to address this gap to protect the competitiveness of the UK markets. For that reason, I beg to move.

[Lord Jones (Lab)]

My Lords, I thank the Minister for his assured and persuasive introduction. I recollect him in another place, where I realised that he always mastered his brief. My remarks will be very brief; I have but one question. The Explanatory Memorandum refers, at paragraph 10.1, to the impact on voluntary organisations and charities being minimal. Can the Minister give an instance of a charity or voluntary organisation, to facilitate further understanding of his introduction?

--- Later in debate ---

[Baroness Morris of Bolton (Con)]

My Lords, I had not intended to speak, but I declare an interest as a chairman of the Centre for Islamic Finance at the University of Bolton. During the financial crisis, the Islamic banks were not affected in the same way, because there is a much better relationship between the customer and the issuer. I place on record my thanks to the Government for ensuring that Islamic financial instruments are not an odd investment on the side but are becoming part of the mainstream. Many people can now participate in them, and certainly in Asia, where the markets are booming, a lot of non-Muslims are also taking part in these instruments because they rather like the idea of them. I was going to sit very quietly, but I thought I would place that on record. I also thank the City, which has put a lot of effort into making the UK such a strong centre for Islamic finance.

[Lord Bates]

My noble friend should not apologise for a contribution such as that, which is very welcome. I know that she follows these matters closely and is an outstanding trade envoy to Jordan and to other parts of the Middle East. This instrument carries a strong message: that the UK and London are very much open for business.

The noble Baroness, Lady Kramer, was quite right to highlight the importance of this particular market, worth $3.5 trillion now, but it is also the fastest growing element. If we desire, as we do, to seek to retain our position as the world’s pre-eminent financial market, we need to be as strong in areas of Islamic finance as we are in other areas of finance. Whether it is Masala or rupee-denominated bonds from India or renminbi-denominated bonds from China, this is a great financial centre and we want to keep it that way. That is why we are introducing this instrument.

I want to prioritise my remarks, if I may, by taking probably the most important point first. Several noble Lords raised the 26th report of the Joint Committee on Statutory Instruments. I put on record that I accept that we have not met the standard that we would want to set ourselves for conduct in this. I know there is concern in the committee that, with a lot of SIs about to come down the track, we must maintain very high standards and be held correctly to them. I draw your Lordships’ attention to the substantive response we made which presents the reasons for the provision, contained in appendix 4 of the report. I reiterate to members of the committee—including my noble friend Lord Lexden—that we do take on board the criticism and will look at ways to ensure that this type of situation does not happen again.

Let me turn to some of the points raised in the debate. The noble Lord, Lord Tunnicliffe, undersells himself. Having stood frequently on the other side of the Dispatch Box from him, I know that he is nothing if not assiduous and sharp in getting to the heart of the issue. His point on the Explanatory Memorandum is reflected in the text of the Joint Committee’s report. It falls into the category of things that we need to do much better. The amendment was very narrow and technical, and I do not envy the officials who then had to produce the Explanatory Memorandum. However, I take on board his point.

Similarly, the noble Lord, Lord Jones, drew our attention to paragraph 10.1 of the Explanatory Memorandum. Its reference to the impact on,

“business, charities or voluntary bodies”,

as minimal is standard wording. We certainly would not expect, in instruments of this nature, charities to get involved, but that does not mean to say that they cannot. Despite his great build-up, I am struggling to come up with an example of a charity or voluntary organisation that might want to take advantage of this. I do not know if he has one in mind but, if not—

[Lord Jones]

I could not bring myself to take advantage of the Minister. I have been a Minister and have been in the same predicament, but if I were challenged in such a way, I would never have such facility or charm as he has.

[Lord Bates]

I think I should just sit down now. The noble Lord is very kind.

I will deal with some of the points raised by the noble Baroness, Lady Kramer, and then I will come back to the noble Lord, Lord Tunnicliffe. The noble Baroness asked whether a sukuk could be an asset-backed security as they are not always a sovereign bond. That is exactly right. We keep our regulatory framework under constant review to make sure that it can adapt to emerging market practice. As for it becoming difficult to comprehend, this is not an easy task given its size and complexity. The Government have no current plans to do so, but will revisit the topic later.

The noble Baroness asked about compliance with Islamic principles, which the noble Lord, Lord Tunnicliffe, also touched on. As secular entities, UK regulators do not operate on Islamic compliance. We set the framework to allow consumers to decide what to do with this. We operate on the basis of no barriers but no favours for these types of instruments.

--- Later in debate ---

[Lord Tunnicliffe]

Can I check that point? My understanding is that these are not debt securities but asset-backed securities, and it is hoped that these platforms will change their rules so that it can be done.

[Lord Bates]

The securities that are there are allowed to deal with a variety of different securities; they are not limited in the asset class that they can use. It is simply a catch-all phrase to mean that they can be traded on those platforms. That is very much the view of the London Stock Exchange, which has drawn our attention to the fact that people are interested in using those particular markets for that purpose. This instrument will help the City of London to take advantage of these investment opportunities, which will create jobs and wealth for this country. I commend the order to the House.

Motion agreed.

Royal Bank of Scotland

Lord Bates Excerpts

Wednesday 13th June 2018 Lords Chamber

[Baroness Kramer]

To ask Her Majesty’s Government what assessment they have made of the impact on the value of the Royal Bank of Scotland shares they hold of the actions of the bank’s global restructuring group inside and outside the United Kingdom.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, the Government do not routinely assess the impact of any single factor on the value of RBS shares, and have not made an assessment of the impact of the actions of the bank’s global restructuring group—GRG—on their value. The board of RBS is responsible for the commercial and operational decisions of the bank, including in relation to GRG.

[Baroness Kramer (LD)]

My Lords, does the Minister accept that the £400 million set aside by RBS is inadequate to compensate the several thousand small businesses that were mistreated and the many viable businesses ruined by RBS’s global restructuring group? International regulators in the US, Australia and across the EU are looking at similar behaviour by various RBS-owned branches or subsidiaries. Given that, should not the Government, in the name of full disclosure, hold back on their sale of RBS shares until the full impact and damage done for compensation and liability is completely disclosed to any new buyer of shares?

[Lord Bates]

The point that the noble Baroness makes is right in terms of this particular focus. The FCA identified that there had been widespread inappropriate treatment of firms by RBS. We know that small and medium-sized enterprises are the backbone of the economy, therefore mistreatment of that type is taken extremely seriously. As the noble Baroness knows, the FCA has an ongoing inquiry, and is currently assessing what enforcement actions may be taken in the future, so I will be restricted in what I can say. The fact that the Royal Bank of Scotland has come forward and issued a profound apology, and has established a fund to start the process of providing compensation to the 12,000 firms affected, is a step in the right direction. However, we deplore the actions taken which led to that being necessary.

[Lord Davies of Oldham (Lab)]

But, my Lords, in addition to the appalling treatment by RBS of small and medium-sized enterprises, and the fact that of course the FCA report on what it did pointed out the appalling behaviour of the board, will the Minister also recognise that the Government chose to sell additional shares, not just after this development but as soon as the fine levied by the United States Department of Justice had been paid by RBS? Is it not quite clear, also given the incentive of reducing aspects of the share price, that the Government are out to reward those who could afford to purchase shares, while the taxpayer loses £3 billion on the transactions carried out by a bank which has let the nation down?

[Lord Bates]

First, on the share price, the noble Lord will be aware—he was on this side of the House at the time it happened—that the shares were purchased for £5 per share. Within three months they were worth £2.20 per share, and we sold them at £2.71. They flatlined for about nine years. Rightly, because of the instruments that were set up by the previous Labour Government, these sales are done by arms-length bodies, so UK Government Investments takes independent advice. They are strictly governed as regards when disposals can take place, to ensure, quite rightly, that we are not in possession of any information which the market is not aware of. Those are established practices; therefore, it was right that actions did not take place while the decision by the US Department of Justice about the scale of the fine was not in the public domain. They have followed those procedures, and we follow them independently, but we are dealing with the legacy issues of some very concerning behaviour.

[Lord Tugendhat (Con)]

My Lords, does my noble friend not agree that, although the noble Lords opposite have raised important points, the sale of shares in RBS cannot be dictated by a single situation such as the noble Baroness seems to suggest? It is not just a question of whether the shares can be sold at a profit. They were bought in a distressed situation by the last Labour Government for reasons that we all understand. Now the sale must depend not just on the current market situation but on the way in which the Government feel the market might move in the future and whether the bank would be better off outside the Government’s purview than within it. It might well be able to conduct its business more effectively.

[Lord Bates]

My noble friend is absolutely right. The RBS shares were acquired not as an investment but as a rescue, and all parties supported that systemic action to restore confidence in the sector. When you are left with a large proportion of stock on your hands and you have stated publicly that you want to dispose of that asset, the only way to do it is on independent advice and over a period of time to avoid any market fluctuations, and that is what has been done.

[Baroness Bowles of Berkhamsted (LD)]

My Lords, the Government have been a majority shareholder in RBS for a decade, during which time the GRG small business restructuring scam took place. From the Cadbury report through to the Walker review, UK corporate governance has relied on shareholder stewardship rather than regulation. What stewardship, particularly with regard to culture and GRG, has been or is being made on behalf of the Government as a major shareholder?

[Lord Bates]

The noble Baroness is knowledgeable in these matters and will know that they are dealt with at arm’s length. We have an arm’s-length relationship with the regulator, operational decisions are dealt with by the bank and the investment is managed by UK Financial Investments. We have made our position very clear: it is important that small and medium-sized enterprises are treated properly, and when proven misconduct has taken place, those businesses should, as far as possible, be adequately compensated for the problems they have been caused.

Investment Banks: Client Protection

Lord Bates Excerpts

Wednesday 13th June 2018 Lords Chamber

[Lord Lee of Trafford]

To ask Her Majesty’s Government, in the light of the current Beaufort Securities situation, what steps they are contemplating to ensure that client assets are protected and ring-fenced from administrators of failed stockbroking or fund managements firms operating under rule 135 of the Investment Bank Special Administration (England and Wales) Rules 2011 (SI 2011/1301).

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, the special administration regime is designed to accelerate the administration of failed investment firms, reduce costs and increase recoveries. The administrators’ plans for returning client assets and allocating expenses must be approved by the creditors’ committee and the court.

[Lord Lee of Trafford (LD)]

I hear what the Minister says but I ask him to look again at this situation. I do not think that he quite appreciates the seriousness of it. Unless this loophole is closed, the clients of small and medium-sized broking firms—very well-run broking firms—will leave those firms and go to larger ones. That is already happening, so will the Minister please look at this matter again?

[Lord Bates]

I recognise that the noble Lord has a long tradition of standing up for small shareholders in the field of investing. Small shareholders, like small businesses, are the backbone of our capital markets and we have to restore confidence among them. This issue of the fees was looked at. The noble Lord will know that last week the creditors’ committee, the Financial Services Compensation Scheme and PwC acting as the administrator met and reached an agreement which will mean that 94% of the fees will be covered by the FSCS. Out of 17,000 retail investments that the noble Lord and I are very concerned about, only 10 will suffer a loss under the current programme. We looked at this matter again with the Peter Bloxham review in 2012 and 2013, and we always keep all matters in this complex situation under review.

[Lord Donoughue (Lab)]

My Lords, I commend the noble Lord, Lord Lee, for his persistent, impressive work in defending investors’ interests. I declare a historic interest as a one-time partner in a City of London stockbroking firm. Further to the Minister’s reply, will he and the Government reconsider whether they should amend the special administration rules to stop administrators taking their inflated costs—and they often are seriously inflated—partly from the portfolio holdings of innocent private investors? Moreover, is he aware that a further big problem for these investors is that, on liquidation, their portfolios are frozen, often for months at a time? Is he also aware that there are now electronic trading systems that technically allow the transfer of stocks from portfolios in as little as two to three working days, but that they are voluntary? Will the Government consider making it mandatory for all security firms to belong to one of those systems so that the investors enmeshed in these unpleasant liquidations can have rapid access to their personal assets?

[Lord Bates]

This particular point was looked at by Peter Bloxham, as I have just mentioned. He found that the firm’s assets and the client funds are separated, and felt that a case had not been made as to why the creditors of the firm estate should effectively be liable for the costs of the investors’ pool when the administrator is acting to recover their investment. As I said, we keep these matters under constant review, as does the Financial Conduct Authority.

[Lord Naseby (Con)]

Is my noble friend aware that the total safety of client assets is absolutely vital? For my noble friend to say that only 10 are going to suffer on this particular occasion is not acceptable. While it has been looked at—and I do not chastise anybody for what came out of that—it has not worked and needs to be looked at again urgently because, for all I and other noble Lords know, another situation may be just around the corner. May we please hear from my noble friend that this will be looked at again so that the safety of all client assets is protected?

[Lord Bates]

I hear what my noble friend says, but progress has been made. We have announced that the current threshold of £50,000 for the protection of assets by the Financial Services Compensation Scheme will increase to £85,000 from next April. That is a significant step in the right direction and it underscores again our commitment to small investors and small enterprises.

[Lord Sharkey (LD)]

Can the Minister say what steps are required to be taken to advise clients of the risks to their money held in client accounts in the event of failure or administration?

[Lord Bates]

There is a complex process involving the courts, the Financial Services Conduct Authority and the creditors’ committee. The amount of the fees of the administrator must be agreed and presented. There must be a timely distribution plan for the proceeds, and this must be announced. Also, these are all matters that can be challenged through the courts by relevant parties, and the Financial Services Compensation Scheme has already indicated that it will be looking for an independent assessor to be appointed to look at the level of fees being charged by the administrator in this case.

[Lord Davies of Oldham (Lab)]

My Lords, I thought the Minister did rather well on this Question. Of course, it is the case that only 10 of the investors had to pay, because everyone else was covered by the scheme. But I hope he will put some pressure on and look again at the totality of the scheme, because it is the case that one category is effectively picking up the losses that have been partly incurred by the other category.

[Lord Bates]

I am slightly stunned by the noble Lord’s generous praise. It is very welcome, especially coming from him. As I say, the whole process of regulation in the City includes constant lesson learning. It is a fast-moving environment, and I am sure that lessons will be learned from this process. We will, of course, convey the lessons and the suggestions made by noble Lords back to the FCA for it to take into account.

Electronic Presentment of Instruments (Evidence of Payment and Compensation for Loss) Regulations 2018

Lord Bates Excerpts

Wednesday 13th June 2018 Lords Chamber

Moved by

[Lord Bates]

That the draft Regulations laid before the House on 30 April be approved.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, payment systems sit at the heart of our economy. They allow money to flow between households and businesses, allowing the prompt and proper exchange of goods and services. The Government are therefore committed to ensuring that the United Kingdom’s payment systems are efficient and meet the needs of end-users, taking advantage of technological developments as they arise.

Cheques continue to form a vital part of the British payments landscape. While there is no denying that there has been a decline in their use over the years, cheques are still important for many smaller charities, voluntary organisations and those members of our society who are often the most vulnerable. In the first quarter of 2018, more than 65 million cheques were cleared, with a value of over £80 billion. That is an average of 1 million cheques cleared per working day.

Before we discuss the new legislation I am presenting to the House today, I shall briefly explain how the current cheque clearing system works. Under the current model, cheques deposited into a bank or building society are transported to their associated processing centre where the essential details are read. Afterwards they are transported to an exchange centre, where the cheques are physically passed to the bank of the customer who originally drew them. Finally, the cheques are taken to the relevant processing centre of the paying bank, which ensures that the cheque is genuine before releasing the funds.

Under that anachronistic process, it takes six weekdays before a cheque fully clears and the recipient can be certain that the money is theirs. That is why Parliament legislated to allow UK banks and building societies to accept the receipt of cheques and similar instruments by electronic image. The new cheque image clearing system cuts down clearing times to the next weekday by sending a digital image of the cheque for clearing. Cheque imaging will also facilitate further innovation in the industry—for example, by enabling customers to pay cheques through their mobile banking app.

The purpose of the legislation under discussion today is to ensure that the electronic clearing of cheques has no detrimental impact on cheque users. It makes provision for two measures to achieve this, which will help to protect customers as the image clearing system rollout intensifies over the second half of the year. The first concerns the use of cheques as evidence of payment. Under the current model, a customer can request a copy of the paper cheque that they drew from their bank. This paper cheque can then be used as evidence of payment. To ensure that this right remains available, the measure ensures that a copy of the cheque, along with some additional information, can be provided to the writer of the cheque upon his or her request, and that this copy has the same evidential value as a paper cheque.

The second measure concerns compensation. In cases of fraud or error, the rules for compensation are set out in scheme rules by the Cheque and Credit Clearing Company. There is, however, no legislation stipulating under what circumstances customers must be compensated, or by whom. To prevent any potential harm for consumers from what is a fundamental change to cheque processing, the Government consider it necessary to legislate to ensure that cheque users are not left out of pocket if they incur a loss.

The second measure therefore provides that, where a customer incurs a loss under the image-clearing system and prescribed conditions are met, including that compensation has not already been received, the bank of the customer receiving the cheque must pay the compensation. Similarly, if the bank of the customer writing the cheque incurs a loss, where prescribed conditions are met, the recipient’s bank must again provide compensation if none has been forthcoming.

The Government believe that the existing industry-led approach works well. Indeed, the optimal solution is that the legislation need never be used as the scheme rules continue effectively to resolve losses from fraud or error. In summary, the Government believe that the legislation is necessary to ensure that customers can continue to trust that their cheque will be valid proof of payment under the new image clearing system and to provide a backstop for compensation. I hope this is helpful to colleagues and I commend the regulations to your Lordships’ House.

[Baroness Kramer (LD)]

My Lords, first, I am delighted to hear the Government reaffirm that there is still a place in our financial lives for cheques. I remember that there was a time when the Treasury was considering their abolition. From looking at countries where cheques have in effect disappeared—talking to relatives in Germany, for example—it became clear that the way in which people compensated for that was to carry a lot more cash and leave a lot more cash at home. Much of that seem to be an invitation to petty thievery and street mugging, by which I do not think that any of us would be terribly charmed, so I am very glad that the Government have restated that today.

I looked through the regulations trying to think of something to say without finding very much. I have bank accounts in the United States, a legacy from my 20 years living there, and many states—I am not sure that it is all of them—already use this system of electronic presentation of instruments, so I have seen it first-hand and have never heard of any particular problems. There is a very good article in the Penn State Journal of Law in December 2015. The one issue it raises is that it is crucial to ensure that the rules minimise any surprises in any conflicting claims between the paper copy and its image. I understand from what the noble Lord, Lord Bates, said, that he feels that that issue is covered. If he can give me that assurance, I am delighted to welcome the regulations.

[Lord Tunnicliffe (Lab)]

My Lords, I, too, have worked my way through the instrument and the accompanying Explanatory Memorandum—I also spoke to James Evans of the Treasury—and feel that I understand it. I have no objection. It would seem a sensible, modern improvement to the system.

In looking around the instrument, I alighted on the fact that it is a further extension of the computer systems which underline modern banking. Reflecting on recent press comment, I started to look at just how many computer problems the banking system had had over recent years. I counted at least four for RBS since 2012, three from HSBC, three in Barclays, three at Lloyds and, of course, the recent TSB event where 1.9 million customers were locked out of their online and mobile services.

As we know, banks have a special role in our society. If they fail, the impact is not a mere difficulty, as it is when any large enterprise fails; it is catastrophic to our society. The Bank of England has put an enormous amount of effort into creating an effective resolution regime which, because I have been in this role since 2010, I have seen all the legislation on. It has a resolution directorate staffed with people ready to move in if there is a problem with a bank to solve it over a weekend. But the problem seems to me to be that, just as a bank cannot be allowed to fail for financial reasons, it is increasingly true that a bank failing because of its technical capability—because of its computer services—would have an equally catastrophic effect on society.

I therefore ask the Minister whether, as we hand further tasks to these ailing computer systems, the regulators have an equivalent regime to ensure that the banks’ computer systems will never fail.

[Lord Bates]

I thank the noble Baroness and the noble Lord for their questions. The noble Baroness is right to stress the importance of cheques continuing to be available. The evidence suggests that many voluntary organisations and charities, and some of the most vulnerable in our society, are the ones who rely on cheques the most, so it is important that their interests be safeguarded.

The noble Baroness asked about conflicting claims, and here we can draw on some historic legislation. The Bills of Exchange Act 1882 is explicit: should the payee’s bank compensate a customer for a loss in accordance with the proposed legislation, this does not preclude the payee’s bank recouping this payment from the party where actual liability lies. In addition, where there are competing claims, there is a process for resolving that issue. As I said, these regulations are very much a backstop to a system that we feel is already working quite well.

The noble Lord, Lord Tunnicliffe, who is always assiduous in going through the detail of such regulations, asked about the IT operations. He is absolutely right that, as we place greater and greater emphasis on IT systems, we should be cognisant that sometimes they can fail. The Cheque and Credit Clearing Company has assured the Government that the new clearing process will be as secure and reliable as the one we use now. The security standards used to design and build the ICS are industry-leading and were agreed by all the participants to the company’s security code of conduct. The ICS infrastructure has been fully tested and has been in live operation, processing digital cheques, since October 2017. It has already processed some 250,000 payments to date. Additionally, the ICS infrastructure operates out of two geographically distinct sites in order to provide resilience, and there is full duplication on both sites. Contingency plans and connectivity alternatives are available, should they be required. The infrastructure is 100% operated from within the UK.

I once again thank the noble Baroness and the noble Lord for their comments, and I commend these regulations to your Lordships’ House.

Motion agreed.