Sanctions and Anti-Money Laundering Bill [HL]

Lord Faulks Excerpts

Ping Pong (Hansard): House of Lords
Monday 21st May 2018 Lords Chamber

In conclusion, I congratulate the Government on this most welcome all-party initiative and all those who have joined in with it. I hope it will not now take a long time to implement. Perhaps the Minister can give us some indication of the Government’s current thinking on this so that it can be done as soon as possible. I hope also that the Government will commit to encouraging other countries, perhaps in the Commonwealth and certainly in the EU, to follow our example and those of, yes, the US, Canada, Lithuania and Estonia.

[Lord Faulks (Con)]

My Lords, I endorse everything that the noble Lord, Lord Anderson, rightly said. These matters were a concern across party in both the House of Commons and your Lordships’ House. The Magnitsky law was somewhat incomplete after the Criminal Finances Bill was enacted, and this is a necessary completion of those reforms. I share the noble Lord’s concern that, in our enthusiasm, we must not lose sight of the need for safeguards. This measure seems to be welcome not only here but in a number of other jurisdictions, and I agree that we should continue to do all we can to encourage its take-up worldwide.

[Baroness Northover (LD)]

My Lords, we, too, welcome Amendment 1 and the consequential amendments, which are the concession made by the Government in the Commons explicitly to include gross human rights abuses in the Bill, recognising the vote in the House of Lords led by the noble Lord, Lord Pannick, and others. We also welcome Amendment 16, which deals with the concern raised by the Independent Reviewer of Terrorism Legislation and the Joint Committee on Human Rights. We also welcome Amendment 17, requiring the Government to make periodic reports on the use of powers to make sanctions. How frequently may those occur and what form may they take? Most of all, I thank the Government for listening to the views expressed here and hope that we can take heart in relation to other legislation and votes we have seen in recent times.

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[Baroness Butler-Sloss (CB)]

My Lords, I am a vice-chairman of the All-Party Parliamentary Group for Gibraltar, which, apart from one brief mention by the Minister, has not been so far commented on. Listening to the noble Lord, Lord Anderson, I wondered, as between the United Kingdom and many of the overseas territories, where the mote and the beam lay. I will not pursue that any further, but I think that it may be where the noble Lord may not appreciate that it is.

Gibraltar is entirely compliant with all the current requirements. It is bringing a public register into its law early next year. It is unnecessary, unhelpful and inappropriate that Gibraltar should be held under the clause proposed in Amendment 22. It is not an appropriate way in which to deal, as the noble and learned Lord, Lord Neuberger, and the noble Lord, Lord Beith, have already said, with a country that has had its own constitution since 2006 and is entirely compliant. It is sad to find that countries such as Gibraltar should be under a proposed regime that would interfere with its constitution, as has already been set out.

It is obvious that what should have happened—it seems to me that the Minister was making it very clear—is that there should be encouragement to those countries that are not yet sufficiently compliant. However, that does not apply to any of the countries that have so far been referred to. It is very sad indeed that the way in which the other place has behaved on this matter brings us to this unhappy situation, pointed out so admirably by the noble Lord, Lord Beith.

[Lord Faulks]

My Lords, I think that the noble and learned Baroness is quite right with her mote and beam analogy. We must think about London, as my noble friend Lord Naseby, said. In 2016, David Cameron announced his intention in respect of anti-corruption and a register of beneficial interests. Since then we have had the Criminal Finances Act 2017 and this Bill. In both of those, my noble friend Lord Hodgson and I were keen to ensure that the Government did their best to stem the flood of dirty money, particularly into property money in London, by setting up a register of beneficial ownership which, when combined with unexplained wealth orders, might really do something to prevent what is a real obscenity about London property at the moment. So much money is flooding into the market yet so few people who start their work in London can afford to live. That is the mote that we have in London.

I wanted to press the matter to a vote, because our intention was to hurry this up, but I was met with formidable opposition from the Government, explaining how difficult the whole thing was. Finally, just before a vote might otherwise have taken place, I was reassured that there was much activity in this regard and there would be regular updates and a ministerial Statement. Sadly, the earliest the register would be legislation-ready was 2021—so five years after David Cameron’s summit. Here we have an amendment put down in the Commons after very little of the preliminaries, as has been quite rightly pointed out, with no consultation and nothing of the sort that one would expect with such a radical procedure. It states:

“The Secretary of State must, no later than 31 December 2020, prepare a draft Order in Council”.


It is a “must”, not a “may”. The only part of this amendment which is, perhaps, acceptable, is the very first part, describing the reasonable assistance to be given to the Governments of the British Overseas Territories. However, I apprehend that that is being—and has been—given for some considerable time. I disagree with my noble friend Lord Naseby on only one point: the Minister, not only today but in responding to the amendment so eloquently moved by the noble Baroness, Lady Stern, on Report, vigorously defended the position of the Government and of the British Overseas Territories in their attempt to comply with the natural desire that we all have to stamp out corruption.

This amendment goes on to require an Order in Council to be laid before Parliament, but then provides that it ceases to have effect,

“if not approved by a resolution of each House of Parliament before the end of 28 days”.

I wonder if a resolution of that sort would meet with the approval of both Houses of Parliament, having regard to the hasty way in which this amendment was introduced and to the real difficulties that it will cause to our friends in the British Overseas Territories.

This amendment is ill thought out, no doubt born out of an entirely proper desire to stem the flood of corruption. However, in so doing it damages our relationship with the British Overseas Territories at a time when we need all the friends we can get outside this country. The amendment asks them to do what is required in a timeframe which is much shorter than that for this country: the mote and beam analogy is entirely appropriate.

[The Earl of Kinnoull (CB)]

My Lords, I declare my interests as set out in the register of the House, particularly those in respect of financial services. I support Amendment 22A, in the name of the noble Lord, Lord Naseby. How well we know what a stramash would result if Westminster sought to legislate for Scotland, in a matter of devolved competence, without even consulting the Scottish Parliament. Parliament developed the Sewel convention to cope with this very situation. We have heard, in a very powerful speech, from the noble and learned Lord, Lord Neuberger, and others just how this convention now expressly extends to our overseas territories.

The overseas territories are proud and sophisticated countries and deserve our respect. Constitutionally, our respect includes conventions. Money laundering is, rightly, a devolved matter for them. Bermuda, the Cayman Islands and the British Virgin Islands are large and sophisticated financial centres with well-respected regulators. Accordingly, to legislate without even consulting these Parliaments is conventionally wrong. This is why I feel that the Sewel convention should apply. Westminster has the power to intervene and should exercise this only when things are badly awry. However, evidence of “awryness” is, in fact, the other way.

As other noble Lords have mentioned, Pierre Moscovici delivered a report last year, and this was adopted by the European Council on 5 December. On page 5 of that 35-page report, the Council affirms that,

“these actions collectively taken by EU Member States are in line with the agenda promoted by the G20, the OECD and other international fora”.

None of the overseas territories is on the blacklist.

Annexe 2 of the adopted conclusions, which was updated twice in March this year, lists countries in various categories that have agreed to make changes by the end of this year; it is a large list. In other words, provided that changes are made by those countries, in the EU Council’s view they will be fully compliant with EU, G20 and OECD thinking in this area. Only four of the 14 overseas territories feature on the list of co-operative countries. The other 10 do not; in other words, they are absolutely clean in the eyes of Pierre Moscovici and his very substantial and hard-working staff. In that respect, the 10 that are clean are doing rather better than Switzerland or Hong Kong, which both appear on the list. Indeed, 29 countries are making changes to improve transparency; none of the overseas territories is listed. Twenty-seven countries are making changes to anti-BEPs measures, which are sophisticated corporate tax dodges; none of the overseas territories is listed. Twenty-eight countries, including Switzerland and Hong Kong, are making changes to amend or abolish harmful tax regimes. None of the overseas territories is listed. Nine countries, including Bermuda, Anguilla, the BVI and the Cayman Islands, have agreed to,

“address concerns relating to economic substance”.

Among those nine countries are Guernsey, Jersey and the Isle of Man, the only time their names appear in the annexe at all. Those three islands do not appear in the Commons amendment and, as other noble Lords have observed, I cannot believe that is fair.

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[Lord Collins of Highbury]

I am grateful to the noble Lord for raising that point. We have been talking about money flowing out. We have had debates elsewhere. I have also spent time working in Gibraltar and I know that on financial matters—Bermuda is another good example—it has built its reputation on having proper transparency and controls. That is what we need to establish: that there is a good way of doing this that will help expand the industry. Reputational interests are incredibly important.

The noble and learned Lord, Lord Brown, is absolutely right that we do have time; the point was also addressed by the noble and learned Lord, Lord Mackay. We have had some considerable time already on this issue, but we have time to ensure that we can get everybody on board with this principle. The only way we will get global agreement is for the United Kingdom to go into those international fora and say, “No more—we need transparency”, because transparency is what will ensure that we can find all those activities, particularly tax avoidance.

[Lord Faulks]

The noble Lord says that we have time. I understand why he says that. But the provision of the new clause says that all this must be done—the Order in Council must be drafted—no later than 31 December 2020. Is he satisfied that that is sufficient time, given the complexities?

[Lord Collins of Highbury]

Since David Cameron first made this commitment in 2013, there has been a substantial amount of time. When people say, “When will this come into effect? Will it be done by regulation? What is the commencement date?”, all these things are important considerations, but what the world sees, what the public see—what the citizens of developing countries have seen—is that this country makes a declaration in 2013 and by 2020 nothing has happened. That is what Parliament decided; that is what the debate in the other place was about. I stress that the debate saw cross-party concern about this issue. They know that the court of public opinion will judge this Parliament if we fail to act on the biggest problem that the world faces.

We have had debates in this Chamber about ODA and development support. I have argued that we should create a world where people are self-sufficient; we do not want people to be dependent on aid, but we are giving the means for that aid to be spirited away. That is what we need to stop.

Sanctions and Anti-Money Laundering Bill [HL]

Lord Faulks Excerpts

3rd reading (Hansard): House of Lords
Wednesday 24th January 2018 Lords Chamber

[Lord Naseby]

My Lords, when I studied the amendment that my noble friend on the Front Bench tabled, I was concerned about the expression “overseas entities”, so I went to the dictionary and looked up “entities”. The Bill does not use the terminology “overseas entities” anywhere, nor do any of the proposed amendments, so it is unclear what it means except in the ordinary meaning of the words; that is, they may apply to structures or arrangements that have legal personality and are not formed in the United Kingdom. My noble friend on the Front Bench made it clear that the Bill does not intend to single out the overseas territories but would apply to all entities registered in all jurisdictions around the world.

I do not believe that it is the United Kingdom Government’s intention to allow the power in proposed new subsection (6)(b) to be infinitely broad. My interpretation is that it is an attempt to refer to entities for which the Government launched a consultation in April 2017. It was called the OCBO register at one point; it has also been called the register of OLEs. This extends to overseas entities that are legal owners of UK real estate or that enter into contracts with UK public authorities. As such, it seems aimed primarily at entities used by certain Middle Eastern investors to purchase London real estate.

However, as I understand it, the Government have yet to respond to that consultation with details as to precisely which activities should or should not be captured. There seems still to be degree of indecision. As a result, I hurriedly put down an amendment, which is why it is starred on the Marshalled List.

There is a concern on my part and, I imagine, that of others, that the Government may be attempting through this amendment to give themselves latitude to decide the precise definition at a later date. I hope that that is not the case, but there seems a possibility as the Bill stands at the moment. Either I will withdraw the amendment if I receive a reassurance from my noble friend or it may be left to the Commons to put down a precise amendment to cover this slight difficulty that I and others foresee. I beg to move.

[Lord Faulks (Con)]

My Lords, I was responsible for putting down the amendment which I think provoked this amendment to the Bill. As many noble Lords may remember, the background was anxiety expressed around the House about the fact that large parts of central London and outside London were being bought up by legal entities and companies, often with money laundered proceeds of crime and corruption—it is an increasing problem. Although the Government had committed to set up a register, they were taking some time about doing it and the attempt was to bring matters forward.

I am glad that my noble friend was able to give reassurance to the House that the register would be coming forward and that a Bill would be drafted, and indeed went further by promising that there would be regular reporting about progress. That, as I understand it, is the purport of proposed new subsection (3).

I am sorry that I have banged on about this issue for some time—throughout the passage of Criminal Finances Act, through Questions and through the course of this Bill—but I remain unrepentant. I was particularly reassured about this when I attended a lecture given by the distinguished author and journalist Misha Glenny on Monday. He has spent 10 years or so studying international crime and money laundering and is the author of the book McMafia, which is now the basis of a successful television series. He outlined for the audience the scale of money laundering throughout the world, principally following the collapse of communism, and how it has spread to all sorts of jurisdictions, the United Kingdom being one in principle. He showed the audience a map of central London showing the extent to which prime London property is now owned by kleptocrats: let us not beat about the bush—that is the position. He said, however, that worldwide there is a feeling that we should be fighting back against this appalling scourge of money laundering. He identified the most effective way this country could do this as being to set up a register to make sure that nobody could hide behind the cloak of anonymity and thus be able to launder the proceeds of crime through central London property. This is why this remains an important procedure.

I am very glad that the Government are committed to doing what they said they will do. I will be keeping the Government up to the mark, as I am sure other noble Lords will. My noble friend Lord Hodgson has one query about the amendment. Subject, of course, to the clarification that my noble friend Lord Naseby seeks, I join others in thanking the Minister and his Bill team for their co-operation on this issue and on all issues. My real sense in dealing with the Bill is that it is not a party political exercise at all; there is a real cross-party endeavour to make sure that this is as effective as possible.

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, I have put my name to various amendments on this issue, going back to the Criminal Finances Act last April, and I add my thanks to my noble friend for having listened so intently and for having tabled Amendment 3, which we are debating this afternoon. As I prepared for this discussion in Committee, I raised a couple of points with his office. As ever, he and his office were punctilious in responding, but some clarification might be helpful for those of us who are not as accustomed and learned in the law as others are.

The first issue concerns commencement. Originally, reading this through, it appeared to fall under a clause where the commencement was set by the Secretary of State and that was the trigger for the 12-month clock. I was concerned that we might have a delay in the Secretary of State triggering this clause: it was not in Clause 54. The commencement of each clause is set down, but the commencement might be delayed. The Minister’s office pointed out that Amendment 5 triggers the clock on Royal Assent. It would be helpful if he could make that clear. It would also be helpful if he could say when he expects Royal Assent to take place, although I quite understand that he cannot give a commitment. If Royal Assent is delayed, let us say through the summer, it might be nearly two years before we get the first report: if commencement were to start in August or September, it would be September 2019 before we get news of any progress whatever. So it would be helpful to the House if my noble friend, either now or by writing to those of us who have been involved in the proceedings on this Bill, will say how and when he expects the clock to start ticking.

My second point concerns an omission in the words of Amendment 3, which we are debating. When my noble friend Lord Faulks and I tabled Amendment 75 —and earlier amendments—it did not cover just a register of companies and other legal entities registered outside the UK that own or buy UK property but also covered those which,

“bid for UK government contracts”.

Those words do not appear in the amendment before us today. My noble friend’s officials have drawn my attention to, and indeed he has mentioned, the Written Ministerial Statement, tabled today, that commits the Government to dealing with a public register of beneficial owners of non-UK entities that own or buy UK property or which participate in UK government procurement. So, that is covered in the statement, but it is disappointing that we do not have it in the Bill, which is where we started and what we hoped for when we set out on this long and rather stony road.

Sanctions and Anti-Money Laundering Bill [HL]

Lord Faulks Excerpts

Wednesday 17th January 2018 Lords Chamber

Moved by

[Lord Faulks]

75: After Clause 41, insert the following new Clause—
“Public register of beneficial ownership of UK property by companies and other legal entities registered outside the UK
(1) In addition to the provisions made under paragraph 6 of Schedule 2, for the purpose of preventing money laundering in the UK property market and public procurement, the Secretary of State must create a public register of beneficial ownership information for companies and other legal entities registered outside of the UK that own or buy UK property, or bid for UK government contracts.(2) The register must be implemented within 12 months of the day on which this Act is passed.”

--- Later in debate ---

[Lord Faulks (Con)]

My Lords, in May 2016 at the international anti-corruption summit, the Government committed to create a new register showing the beneficial owners of overseas companies that own, or want to buy, property in the United Kingdom. This was to encourage transparency and was intended to play a significant role in combating corruption and money laundering. Many noble Lords feel a sense of dismay, as I do, that large parts of central London and other parts of the country are dark at night, with property wholly unoccupied or occupied for brief periods only. Who owns these properties? We simply do not know, there being no obligation to identify beneficial ownership of foreign companies which own property yet no restriction on foreign ownership.

We may not know, but we have strong suspicions. Transparency International says that £4 billion-worth of property in London is bought with suspicious wealth. Edward Lucas, a Times journalist with considerable knowledge of this subject, has written that,

“colossal sums of money, stolen from the Russian people”,

have flowed,

into the City of London and into the luxury end of the property market”.

All this at a time when young people struggle to get on to the property ladder and to live anywhere remotely near their place of work.

During the passage of the Criminal Finances Bill, I put down an amendment in similar terms to the one now before your Lordships’ House. That was in April 2017, and I could not follow through because of the wash-up. I was, however, given reassurance by my noble friend Lady Williams that the matter was in hand and would be taken forward,

“as soon as parliamentary time allows”.—[Official Report, 25/4/17; col. 1334.]

In July 2017, I asked an Oral Question about progress with the register. I was reassured this time by my noble friend Lord Young of Cookham—few are more reassuring than he is—that:

“Good progress is being made”,


and that the Government were,

“determined to honour the commitment to introduce such a register”.—[Official Report, 10/7/17; col. 1081.]

Then I put down an amendment to this Bill, as it was plainly in scope. When my noble friend Lord Hodgson of Astley Abbotts moved the amendment in my absence, he also was reassured, this time by my noble friend Lord Bates, who did not commit the Government to any timetable but did say that the Government would publish the response to calls for evidence,

“early in the New Year”. —[Official Report, 6/12/17; col. 1085.]

The responses have been in since March 2017.

I thank my noble friend Lord Hodgson for his support in this matter and the noble Baroness, Lady Bowles, and the noble Lord, Lord Collins, who have also put their names to this amendment. I also thank my noble friend Lord Freeman for his support and the noble Lord, Lord Rooker, who is sadly not in his place, but who left the House spellbound with his description of a kleptocracy tour around central London. I also pay tribute to the Minister, the noble Lord, Lord Ahmad, who has shown characteristic willingness to meet us, and to the Bill team and others across government who have endeavoured to explain how complex this all is.

However, the time has come not for reassuring words but for action. Something more substantial is needed. It is a supreme irony that this country’s adherence to the rule of law encourages criminals and fraudsters to invest here, when in their own countries there may be little or no respect for the rule of law. Are we to stand idly by and to act in effect like a handler of stolen goods? My amendment would allow the Government 12 months from the passing of the Act to set up the register. Given that the Bill has not yet even started in the Commons, there is some time to go before the clock starts ticking. I believe this House is very concerned about this issue. I beg to move.

[Lord Hodgson of Astley Abbotts]

My Lords, my name is on this amendment, and I rise with a sense of what I can only describe as weary resignation to speak in support of it once again. My feelings can probably best be summarised by that oft-quoted remark from a famous football manager—I forget which one—that, “I have a sense of déjà vu all over again”. We have been round this topic many times, both on this Bill and, as my noble friend said, during the proceedings of the Criminal Finances Bill in the spring of last year. My noble friend Lord Faulks has laid out the case with his well-known surgical precision, so I am forced to remember that other famous saying, this time about your Lordships’ House: “Everything that can be said on this topic has been said, but not everybody has yet said it”. Brevity is the order of the day, so I will just set out five quick facts.

First, given this country’s long-standing respect for property rights, stretching back now over 300 years, the UK is a particularly attractive place in which to invest in property assets. Secondly, this country has an extensive and well-resourced financial services sector, in which large transactions can be, if not hidden, at least made to not appear unduly large. Thirdly, a substantial number of investors from all corners of the globe have invested in property in both London and our other leading cities. Fourthly, a number of overseas investors have chosen to make their investments in UK property through a company, so enabling them to conceal their identity. Fifthly, recognising the potentially malign confluence of the above in 2016—two years ago, as my noble friend has mentioned—the Government committed to the creation of a register enabling the identification of the beneficial owners of those overseas companies that had investments in UK property. Those are five facts on which I believe there is general agreement, but still nothing has happened. In another phrase, there has been lots of jaw-jaw but so far no war-war. There have been extensive consultations and discussions of technical difficulties but no clearly timetabled way forward.

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[Lord Ahmad of Wimbledon]

My Lords, this amendment seeks to set down in legislation the commitment made at the 2016 anti-corruption summit to establish a public register of company beneficial ownership information for foreign companies that already own or buy property in the UK or that bid on UK central government contracts.

As we have readily acknowledged in various debates during the passage of this Bill and others, the UK is a world leader in promoting corporate transparency. As I said in the previous debate, we are the only country in the G20 to have established a fully publicly accessible company beneficial ownership register. I assure noble Lords that the Government are committed to leading the world in improving this transparency.

First—and here, I refer to my noble friends Lord Faulks and Lord Hodgson but also to noble Lords across the House—I know this issue has been debated and discussed through various vehicles. I congratulate them on ensuring that the Government remain accountable and the issue remains in the public eye. Let me assure my noble friends and all noble Lords that the Government appreciate the work that all have done in this respect, particularly my noble friend. I assure him that we share his desire, the desire expressed by all noble Lords, to reduce the opportunity for money laundering through UK property as swiftly and effectively as possible. We all acknowledge that it is a serious issue, so let me address that question head-on.

First, what has happened? Following last year’s call for evidence, the Department for Business, Energy and Industrial Strategy sent more than 100 pages of drafting instructions to the Office of the Parliamentary Counsel, and work preparing the clauses for the Bill is under way. The drafting instructions prepared so far cover just the application of the land registration elements of the policy in England and Wales. Once the clauses for England and Wales are complete, an exercise will be undertaken to make specific provision for how they will apply in Scotland and Northern Ireland, both of which have different land registration systems and their own Land Registries. The approaches taken to land registration and overseas entities by the Land Registries have differed until now, so all three approaches will need to be brought together to deliver a streamlined policy, consistent across the UK. I anticipate that exercise taking some months and it will involve expertise from many different teams across the UK Government and the devolved Administrations.

The department has also commissioned a piece of research on potential impacts of the policy, including on investment decisions. That research is ongoing and will feed directly into an impact assessment, work on which is also under way. I am sure my noble friend will agree that this is a crucial moment for the UK’s future trading relationship with the rest of the world, and we must proceed with as good an understanding as possible of the potential impacts on legitimate inward investment.

Having brought noble Lords up to date with the Government’s work so far, let me turn to our next steps. Since our last debate on the matter in Committee, the Government have considered carefully the proposals in front of us and had detailed discussion with my noble friend in this regard. Noble Lords were quite right to point out that the anti-corruption strategy published last month stated that we would publish a draft Bill during the current Session of Parliament. Doing so will help to ensure that any potential weaknesses in the policy are spotted and addressed in what will be new and complex legislation.

Let me now provide some of the certainty requested by my noble friends Lord Faulks and Lord Hodgson. I can confirm that we will publish the draft Bill by the Summer Recess this year. I can also confirm that formal introduction of the Bill will be a priority for the second Session of this Parliament. We anticipate that being in summer 2019, and doing so will put us on track to implement the register itself, which will be operational by early 2021. I further recognise noble Lords’ concern for greater certainty of the Government’s intention. We will shortly formally confirm our intention to meet these deadlines—a point mentioned by the noble Lord, Lord Collins—through a Written Ministerial Statement. We will continue to look at both legislative and delivery timetables for opportunities to implement sooner if at all possible.

Let me say why publishing a Bill in draft is the right approach. As I have said before, the register will be first of its kind in the world and will affect people’s property rights. A robust enforcement mechanism will be essential. As set out in last year’s call for evidence, the Government believe that criminal sanctions may not be sufficient in isolation, but that additional enforcement through land registration law will also be needed if the register is to have teeth. A key proposal is that those who own property who do not comply with the register’s requirements will lose the ability to sell the property or create a long lease or legal charge over it. This will be reflected in a restriction on the register of title.

I am sure that my noble friend will recognise that these are significant steps and will constitute a robust enforcement mechanism. As such, the regime must be able to withstand legal challenge from those who have the means and motive to make such a challenge. That is a key reason why delivering the register through dedicated primary legislation, in accordance with the will of Parliament, is preferable to doing so through secondary regulations to the Bill we are debating today. It is also the key reason why this House should welcome the fullest possible scrutiny of the draft clauses and the mechanisms behind a regime which will be a world first.

But that is not the only reason. New functions must be delegated to Companies House and the land registries, and we must ensure they have the tools and time needed to deliver this successfully. A protection regime must be established, balancing legitimate concerns for personal safety with the need for transparency. All those issues were considered in last year’s call for evidence, but only once we can scrutinise the draft clauses can we really stress-test whether they are going to be effective. We anticipate there being in excess of 50 clauses in the Bill.

Let me say why early 2021 is the appropriate timescale. First, it is because a dedicated primary Bill is the right way of delivering such a policy, and that will take time, given other pressures on Parliament at present. The Government will therefore introduce legislation as soon as possible, but it is impossible for me to make commitments to do so in the very near term—and I have already indicated the specific timetable, which will also be qualified in the Written Ministerial Statement.

Secondly, it is appropriate because that must be followed by secondary regulations, in which we will set out the more technical details underpinning the regime, such as the essential changes needed to the land registration rules. New systems must also be built between Companies House and the three land registries. Their design will depend on the precise content of those regulations. While much preparatory work will be done while the legislation and secondary regulations are passed, there are some inevitable lead times, because the systems and processes can be finalised only after Parliament has approved the legislation.

Finally, an appropriate transition period will be needed to ensure that lenders and other stakeholders can adjust to the new requirements. We believe that the policy must be robust, but fair. Overseas entities that have bought property in the UK, in some cases many years ago, will not have had this in their contemplation at the time. In most cases, the property will have been bought for legitimate and innocent purposes and by those who expected the degree of privacy offered by ownership through a legal entity. We should give those entities, and their beneficial owners, time to understand the requirements and consider their options.

There is a parallel with the development of the register of people with significant control. That policy was announced in 2013, following several rounds of consultation and primary and secondary legislation, and a fully populated register was delivered by June 2017. It may have taken four years, but it still put the UK’s framework in a world-leading position. The new register will take a similar path, but there are numerous additional considerations.

I hope that the detail that I have outlined and the timetable that I have given provide the House and my noble friend in particular with the reassurance of the Government’s continued commitment to enact this policy. But to go slightly further, my intention is also to bring forward an amendment on Third Reading to require the Government to provide regular updates to Parliament on progress on the timetable that I have outlined.

I hope that my noble friend feels that we have had a productive engagement and that what I have offered today from the Dispatch Box are not just warm words but specifics. For those reasons, I hope that he is minded to withdraw his amendment.

[Lord Faulks]

My Lords, I am grateful to all those who have spoken—and, indeed, to many others who might have spoken but who exercised restraint on this matter. I am also very grateful to my noble friend the Minister for giving, for the first time, an actual timetable for this legislation. A number of queries have provoked soothing words and not much else. We now have a timetable, although it is not happening as fast as many of us would like—but he has explained in some detail the difficulties involved in setting up this register.

I would have been a little more impressed had this been the first time that this issue was raised. We are talking about an undertaking by the Government in 2016, so with respect I should have thought that much of this could have been done a great deal earlier. For example, why do we need to commission an inquiry into the danger of inward investment being put off from coming to this country when the whole idea is to stop inward investment of corrupt proceeds from Russia and the like? I found that one of the less impressive parts of the reassurance given by my noble friend.

My noble friend cites the difficulty of setting up the register and uses the fact that the previous register of persons of significant control took four years to set up. My response to that is that, presumably, a great deal of the work that was done in setting up that register would enable a great deal of piggy-backing to go on in setting up this register—something of a dry run, I should have thought. However, despite that minor carping on my part, I want this legislation to succeed and I want the obscenity of having our property market corrupted to be stopped—and I want it done effectively, as I am sure other noble Lords do.

Sanctions and Anti-Money Laundering Bill [HL]

Lord Faulks Excerpts

Report: 1st sitting: House of Lords
Monday 15th January 2018 Lords Chamber

[Lord Collins of Highbury (Lab)]

My Lords, I am particularly grateful to the noble Lord, Lord Pannick, for his comments. He has set me a test here: normally I rely on his powers of persuasion and arguments rather than my own, but on this occasion I will take up the challenge and hope to persuade the Minister why Amendment 3 is important. I was rather hoping that the noble Lord, Lord Faulks, would jump up before me; I am sure he will jump up after me, because he made comments about this in Committee.

I stress that this is not just about adding words for words’ sake; it is not just about being nice, kind and positive. These words are very important in one vital respect. The Bill—we have heard much criticism of this—is heavily reliant on regulation and the Executive taking powers. We have received many assurances from the Minister that they will use these powers wisely and that Parliament will anyway have the opportunity properly to scrutinise secondary legislation.

These words are important because, when Parliament scrutinises secondary legislation, it must know what it is judging the Government’s actions against. It cannot have vague definitions. I heard what the noble Lord, Lord Faulks, said in Committee: that we do not want to limit the powers of the Executive when it comes to foreign policy matters. These words do not limit, they enable. They enable Parliament to do its job of properly scrutinising regulations proposed under the Bill. Is it meeting the clear objectives that we set ourselves, which we all share, particularly, as the noble Lord, Lord Pannick, said in relation to human rights?

The Minister assured the Committee that the Government,

“do not take their human rights responsibilities lightly … the UK has been a bastion and a beacon for human rights. That should and will remain a cornerstone of British foreign policy in years to come”.—[Official Report, 21/11/17; col. 123.]

That is a powerful argument why we should include these words, because it is about being consistent in future. If I were to be slightly partisan—and I am not usually in these matters, as the Minister knows—there have been doubts about the Government’s commitment, and certainly that of the Conservative Party, to the European Convention on Human Rights, and I want to put it beyond doubt that we are wholeheartedly committed to this vital element of our foreign policy. It is, as the Minister said, the cornerstone. I very much hope that he will think hard about accepting the amendment. It would not cause too much pain, because he is already committed to the principle. It is about how these words can help future scrutiny. If he is unable to accept the amendment, I will certainly wish to test the opinion of the House.

[Lord Faulks (Con)]

My Lords, I do not want to disappoint the noble Lord, Lord Collins, by not intervening, albeit briefly, in this debate. My difficulty comes not with the way that the noble Lord and others have expressed their various objectives, which one would expect to be part of the Government’s approach to sanctions generally. I am concerned by the fact that the noble Baroness, Lady Northover, wants to exclude the specific reference to a foreign policy objective. I return to what I said in Committee, which was that it is important that we accept that foreign policy does not remain entirely stable and standing: there are always changes in the world and foreign policy objectives may vary from time to time. The danger of including these albeit admirable objectives is that there might conceivably be a construction placed on the relevant provision which is that foreign policy is not adequately reflected by the provisions.

I prefer the way the Bill is expressed, which gives the necessary flexibility. While I do not differ on the objectives, I differ on the amendments.

[Lord Howell of Guildford (Con)]

Can I just ask my noble friend a question, and apologise to your Lordships that I was not involved in earlier stages of this legislation? Was there ever a time when, in deciding on sanctions policy, we did so other than in alliance with other nations? Unilateral sanctions can always be evaded, and even collective sanctions, when they are only from the west, can be nullified by actions by China, Russia and other Asian powers, for instance. Is not the practical situation one in which we have to take account of our allies and the broad consensus of agreement with them on whether sanctions are justified, or are there individual unilateral instances that I may have missed?

Sanctions and Anti-Money Laundering Bill [HL]

Lord Faulks Excerpts

Report stage (Hansard - continued): House of Lords
Monday 15th January 2018 Lords Chamber

[Baroness Northover]

My Lords, given that I have been named here and therefore have a key interest, I ought to address this in case I get sanctioned in the place of another Baroness Northover. I am sure my kids would think that was an extremely interesting situation for me, but I am not sure that I would. The noble Lord, Lord Pannick, has made a very powerful case on this matter, as he did in Committee. If an error is made with a designation as a result of UN sanctions being imposed then, as he said, the ECJ could, at the moment, protect that person within the EU and allow it to be challenged. There clearly should be a way of doing this. As the noble Lord said, it is a matter of the rule of law.

We have been told that the rights of British citizens will not be lessened if we leave the EU. This protection should, therefore, be carried over into British law. I clearly have an interest here and I support the amendment in the name of the noble Lord, Lord Pannick.

[Lord Faulks (Con)]

My Lords, I was present in the Chamber and listened to the debate when this matter was debated in Committee, although the amendment has changed slightly. Since then, I have read and considered the arguments. At the time, I was persuaded that, on balance, the noble Lord, Lord Pannick, was right and the absence of such a power as is envisaged by the amendment was a real risk of injustice. However, I have changed my mind. It is, of course, fundamentally important that we respect our treaty obligations, particularly Article 103 of the UN charter. What higher obligation could there be?

The UN, in common with all international institutions, is not infallible. For example, we know that the European Court of Justice, which we must obey, and the European Court of Human Rights are not infallible. However, sometimes there is a need to subsume individual, national needs into the need for an overall, international understanding. It is vital that we respect the decisions on sanctions that have been made by the UN. As a permanent member of the Security Council, we can influence those. The Human Rights Council, to which my noble friend referred, can of course make mistakes, but it is undesirable that individual countries can pick and choose which sanctions they want to follow. I look forward with interest to hearing what the party opposite says about our relationship with the UN.

The Secretary of State can, and should, use his best endeavours in appropriate circumstances to try to influence matters, and can be told to do so by the court, but this goes further. Although the amendment has precursors to the exercise of the power, it does ultimately give the court the power to set aside the decision of the Minister. The noble Lord, Lord Pannick, says that this is a rule-of-law issue. It is indeed; it is a rule of international law and international comity, so I am afraid I cannot support the amendment.

[Baroness Kramer (LD)]

My Lords, I have no legal background, but I want to intervene quickly to pick up an issue which has been treated as almost in passing. I understand that the United Nations entirely accepts that the European Court of Justice can provide the kind of protection that the noble Lord, Lord Pannick, has described as being contained within the amendment. If I happen to be Russia, China or some country that wishes to abuse a correct designation by the United Nations, I have the European Union and the ECJ as my example of an entity that does take upon itself the right to provide protection where it believes the UN is in error. Allowing citizens of the United Kingdom to have that same protection adds no particular strength to any such position that might be taken by some other power. We have heard a deep commitment from the Government that exiting the European Union will not reduce the rights and protections that have been provided to British citizens through the mechanism of the ECJ. There can, therefore, be no challenge to the appropriateness of the measure which the noble Lord, Lord Pannick, has put before this House.

Sanctions and Anti-Money Laundering Bill [HL]

Lord Faulks Excerpts

Committee: 2nd sitting (Hansard): House of Lords
Wednesday 29th November 2017 Lords Chamber

[Baroness Northover (LD)]

My Lords, I support the amendment. It is useful to have more precise definitions within the Bill, and it seems that the amendment seeks to tighten up the subsections which relate to the Channel Islands, the Isle of Man and the British Overseas Territories, so that instead of a Minister being able by an Order in Council to add these areas, they are included in primary legislation. It makes sense to clarify that now and in primary legislation in this way to ensure that those whom the UK wishes to sanction cannot evade that sanction by association with these areas. If the UK is to leave the EU, it makes sense to tighten in this way.

The Minister will know that there is a meeting today of the Joint Ministerial Council at the Foreign Office with the overseas territories. Perhaps he could assure us that they would be content to be clearly within the same sanctions regime. I know that they will be less keen on aligning themselves with the UK on anti-money laundering measures; we will of course come to that later.

I also flag to the Minister that, in addition, the Law Society emphasises that guidance should be given on the terms in Clause 17, as well as those in Sections 2, 10, 15 and 46. It points out that in Clause 17 it is unclear whether the UK sanctions regime would apply,

“where UK currency is used, where a non-UK subsidiary of a UK company is involved, or where a UK person on the board of a non-UK company is present when a decision is taken in breach of the UK sanctions regime”.

It suggests that Clause 17 should be renamed “UK nexus” as its current subject matter does not deal sufficiently with “Extra-territorial application”.

It seems that further clarity is required on such issues. Clearly, it would be useful if stakeholders were properly consulted to assess the impact of the scope of application of the UK sanctions regime, simply to identify any unintended consequences. Clearly, intended consequences are fine. So this is a complicated area, but I hope that the Minister will take on board this advice.

[Lord Faulks (Con)]

My Lords, I note the nature of the amendment and the final provisions in the Bill in Clause 51(3). I was at one stage a Minister with responsibility for the Crown dependencies, so I am acutely conscious of the particular constitutional relationship between the United Kingdom and the Crown dependencies. As I understand it, we do not normally legislate without their express consent. I wonder whether that is why the Bill is framed as it is. However, I look forward to hearing the Minister’s response on this.

[The Minister of State, Foreign and Commonwealth Office (Lord Ahmad of Wimbledon) (Con)]

My Lords, I thank the noble Lord for tabling this amendment. The noble Baroness, Lady Northover, talked about the Joint Ministerial Council; as a Minister for the Overseas Territories, today has been one of those days when I find myself shuttling between the Joint Ministerial Council and your Lordships’ House. I can confirm to the noble Baroness that this issue—and other elements that relate to the departure of the UK from the European Union—is very much on the agenda of our discussions with the overseas territories. Indeed, as we speak, my honourable friend Minister Walker is hosting a session with them on the implications of the United Kingdom leaving the European Union. The noble Baroness raised issues on guidance and I will certainly take back the issue of where we can clarify certain elements.

I will pick up on a couple of points so I can clear them at the start. In his intervention, my noble friend Lord Faulks—

--- Later in debate ---

[Lord Falconer of Thoroton]

The width of this power seems extraordinary and constitutionally offensive. As I understand the drafting of the Bill, it is open to a Minister to pass regulations which allow him to identify individuals on whom he can impose a sanction or prohibition that he has invented. What is more, the only restriction on him is that it must be for the purposes set out in Clause 2(1). If the Minister honestly believes that the invention of a new sanction or prohibition is justified by “a foreign policy objective” of the Government—for example, gaining support from one country by attacking its nationals in this country—the power given by Clause 39 would entitle them to invent a new prohibition and impose it by regulations. Furthermore, should any primary legislation stand in the way of a Minister inventing such a new prohibition that he or she believes is designed to promote a foreign policy objective, that primary legislation can be amended to get rid of an objection by the very same regulations under Clause 44(2). That a Minister could do by secondary legislation such a thing—for example, restrict somebody’s spending their own money, prevent them leaving their home, take away their car or stop certain sorts of bank account being used—without primary legislation strikes me as well beyond what any responsible Government would think should be done by secondary legislation. Can the Minister confirm that my analysis of what could theoretically be done is right, and explain why it is appropriate that that be done by secondary legislation?

[Lord Faulks]

The noble and learned Lord puts a rather sinister construction on this clause. I do not want to add to my noble friend’s discomfort, but I need some persuading that Clause 39 is necessary given the width and nature of the sanctions and the purposes. It was important that the Government resisted the attempt to narrow “a foreign policy objective”, which was an amendment that we debated on the previous occasion, but “a foreign policy objective” gives the Government quite a lot of room for manoeuvre having identified an appropriate sanction. While I suspect that Clause 39 was inserted as a “just in case” provision rather than to give Ministers extraordinary power of the sort that has been discovered, it nevertheless remains at least open in theory to a Minister to exercise power in a way I think all noble Lords find difficult to accept.

[Lord Falconer of Thoroton]

I intervene only to say this: I did not suggest that the motive of the Government was to do this. My experience as a Minister is that you put through legislation and many years later, after emollient assurances given in the House of Lords, those pesky lawyers look at what is possible under the Act. What I have described is possible. Let us imagine if those very same pesky lawyers said, “Well, you might have difficulty getting that through with primary legislation because of the extraordinary width of the powers, but actually we’ve found these rather clever powers in the Sanctions and Anti-Money Laundering Bill which allow you to do it without primary legislation”. That is the danger.

Sanctions and Anti-Money Laundering Bill [HL]

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Committee: 1st sitting (Hansard): House of Lords
Tuesday 21st November 2017 Lords Chamber

[Lord Lennie (Lab)]

My Lords, I say for the record and from the outset, and for the avoidance of any doubt in the mind of the Minister, that we on this side of the House recognise the importance of such a Bill coming into being. We are leaving the EU. The Government’s position is that EU jurisprudence will no longer apply and therefore the Bill becomes an imperative. That is not the same thing as saying that everything in the Bill is rosy and we support it all, and that is why we are here. We strongly support the case made by the noble and learned Lord, Lord Judge, the noble Lord, Lord Pannick, and the noble Baroness, Lady Northover.

This amendment is the starting point of the Bill: it concerns the power for a Minister to act. Should it be when the Minister considers it appropriate or should it be when it is provably necessary to do so? One is an opinion, the other an evidential absolute. Does it weaken the Government’s position? No, it makes it more robust to have “necessary” replacing “appropriate”. Will it inhibit the Government? No, it will make for greater certainty as other clauses in the Bill are debated. Does it strengthen the Bill? We believe that it does: it will become more bullet-proof and less able to be challenged.

On Friday, as the noble Lord, Lord Pannick, said, the Delegated Powers Committee considered this and concluded:

“In the light of the width and significance of the powers, we take the view that the Minister should only have power to make sanctions regulations if doing so is considered ‘necessary’ to achieve the purpose”.


That is where this amendment ends. Does the Minister accept this? Will he reflect on this and come back on this point?

[Lord Faulks (Con)]

My Lords, the noble Lord, Lord Lennie, was very quick off the mark: the noble Lord, Lord McNally, and I wanted to make brief interventions. It seems that the case made for these amendments is a pretty strong one, but of course I will listen with great interest to what the Minister has to say. It might be said, I suppose, that the amendment put forward by the noble Baroness, Lady Northover, is more or less understood by the other two amendments. I simply say to the Minister that it might be helpful if he could give some example, prospectively, of where a Minister might think this action “appropriate” but not “necessary”. That would help to clarify the Committee’s thinking.

[Lord McNally (LD)]

My Lords, I agree that the noble Lord, Lord Lennie, was a bit quick off the mark. Just have a glance behind you occasionally—you might find that somebody wants to come in.

I was rather diffident about putting my name to such illustriously signed amendments. My noble friend Lady Northover spoke about the noble Lord, Lord Pannick, and the noble and learned Lord, Lord Judge. I am not sure that I would trust the country solicitors “Judge and Pannick” or “Pannick and Judge”; I am not sure whether it is best to panic after you have judged or judge before you panic. Nevertheless, any sensible Minister who sees those names on an amendment thinks very hard about it. Of course, as the noble Lord, Lord Lennie, said, this will be a very necessary Bill if the Government succeed in their Brexit aims, but that does not mean that every Bill that comes before us has to be given a nod through because of the pressures of the Government’s own making. There is a real danger.

I can almost imagine the discussions in the Cabinet Office: “How on earth do we get this shedload of legislation through?”. Then somebody says, “The only way you can do it, Ministers, is by lots of Henry VIII clauses and lots of powers by secondary legislation”. “Okay, we will do it that way.” The irony of that, as I have said before from these Benches, is that an exercise that was intended to return sovereignty to this Parliament is becoming an exercise in returning power on an unprecedented scale to the Executive. I fear that, unless the Government come up with some new and ingenious proposals for dealing with this flood of legislation short of these broad powers, they will run into trouble time and again.

Of course, we want to get the bad guys, and there is always a temptation, especially if you are the Minister, to go for the Eliot Ness solution—how do we kick down the door and get at the bad guys?—but we cannot ignore a report such as that referred to by the noble and learned Lord, Lord Judge. Go through every page of it. There is reference to the Henry VIII powers, but then:

“We do not consider it appropriate for ministers to have powers … We are concerned about the breadth of the power … We are deeply concerned that the power in clause 16”,


et cetera. It goes on right through the report. This is a really serious warning to Ministers and to Parliament from a very well-respected committee.

Of course, Whitehall does not have a pure record on this. Even in the days when we were simply transferring European law into our own law, there was a well-established practice in Whitehall to do a bit of gold-plating on the way and dig in a few regulations that people had wanted to get anyway. We have to resist this gold-plating. As I say, when someone such as the noble Lord, Lord Pannick, talks about “unjustifiable breadth”, and someone such as the noble and learned Lord, Lord Judge, talks about “a bonanza of regulations” and “extravagant powers”, it is not only the Committee that would be wise to take note; the Minister should as well.

--- Later in debate ---

[Lord Faulks]

My Lords, I regard this amendment with considerable interest and look forward to hearing what the Minister says about it. The noble Baroness, Lady Northover, said that one of the reasons for inserting the words,

“the prevention of acts breaching human rights”,

was because the Government might in due course consider repealing the Human Rights Act or even departing from the convention. The Minister may confirm that it has always been the Government’s policy to protect human rights through a huge number of treaty obligations, whatever might be the position vis-à-vis the European convention. I am a little concerned that these amendments appear to constrain foreign policy objectives, which necessarily have to vary from time to time according to the particular objective that is sought. For the most part, they will comprehend and include the matters included in the amendment but it would be unwise to constrain foreign policy through these sorts of amendments.

[Lord Collins of Highbury (Lab)]

I did not want to tempt myself to get up too soon. I appreciate what the noble Lord has just said but I was struck by what the noble and learned Lord, Lord Judge, said—namely, that when using these powers the Government should proceed only with the fullest scrutiny. The amendments in this group, particularly those in my name and that of my noble friend, are designed not to limit the Government’s powers but to ensure that we scrutinise the Government’s actions. We want clarity on our commitment to humanitarian law and that we are implementing the international treaties to which we are signed up.

I am sure that the Minister will again ask whether these amendments are necessary, as he did on the first group of amendments. It could be argued that they are not. However, I argue that it is important that we state our beliefs in fundamental values, particularly human rights, democracy, the rule of law and good governance. A number of our allies and friends do not comply with those principles and we should be seen to be doing so. That is why we have tabled these amendments. We do not seek to limit but rather to empower Parliament and others to be able properly to scrutinise the powers that are used and measure them against the principles set out.

Amendment 7 asserts that when these powers are used the appropriate Minister must set out how sanctions are consistent with the UK’s objectives. Again, this is to enable effective scrutiny. The problem with executive powers is that often Governments simply assert them; they do not allow for proper scrutiny to measure their actions against the principles we set out. I hope that the Minister will put up a cogent argument. If he simply says, as the noble Lord did, that these amendments might be restrictive and are not necessary, I ask him to look carefully at Amendment 7 and ask what mechanisms can help improve scrutiny of the exercise of these powers and how we ensure that we can scrutinise them.

We heard in the previous debate that everything is going to be hunky dory because the House of Commons and the House of Lords will have a vote on statutory instruments, but we know that is a case of take it or leave it. As the noble and learned Lord, Lord Judge, said, you can agree with 90% of something but how do you measure the other 10%? I want the reasoning to be set out more fully, not just in terms of having a vote on statutory instruments. I hope noble Lords will understand that we do not seek to include these words simply to make us feel better and that we are not doing so unnecessarily. We seek to include them to aid proper scrutiny of the powers exercised by the Executive.

International Criminal Court

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Wednesday 8th February 2017 Lords Chamber

[Baroness Anelay of St Johns]

Yes, my Lords; it is absolutely right that we should do so. I am delighted that the noble and learned Lord asked the question. When I was in The Hague quite recently at the states parties meeting I had a long meeting with the Justice Minister of South Africa and was able to explore in technical detail the reasons why South Africa felt that the way in which the Rome treaty was being interpreted was not in accord with its understanding. Shortly I travel to Burundi and Uganda. Uganda has not withdrawn; it gave its support, although there has been some criticism. Burundi is one of those withdrawing and I shall continue my conversations in person.

[Lord Faulks (Con)]

My Lords, the United States of America is not part of the International Criminal Court; it fears the politicisation of the process. Are Her Majesty’s Government sympathetic to that position? It seems unlikely to change in the near future. Or do they sympathise with the idea that there should be complete and universal ratification of the Rome statute?

[Baroness Anelay of St Johns]

My Lords, we continue to work towards universal and complete ratification of the Rome statute, while understanding that some countries, including allies such as the United States, may be supportive without being signatories to the Rome statute. I can tell my noble friend that since the election of President Trump we have worked closely with the Administration in the United Nations and the ICC in New York and with Nikki Haley, who has been appointed as the US representative to the United Nations, to ensure that United States co-operation with the ICC continues.

European Union Bill

Lord Faulks Excerpts

Monday 13th June 2011 Lords Chamber

[Lord Kerr of Kinlochard]

I look forward to hearing the noble Lord express that view in the debate on the reform of the House of Lords.

[Lord Faulks]

My Lords, the amendment seeks to remove the referendum lock from all potential transfers of powers and competences, with the exception of the euro, Schengen and defence, in the sense that it is defined in the proposed amendment. Noble Lords might have thought, after the amendment proposed by the noble Lord, Lord Williamson, and its 40 per cent threshold, that the principle of a referendum lock had received acceptance, albeit without much enthusiasm except for those who are constitutionally opposed to referenda as a whole. This amendment goes much further. It takes outside the lock all potential transfers included in the big five, as they have been identified by my noble friend Lord Howell, with the exceptions that I have already described. I shall mention just one, referred to by my noble friend Lord Goodhart, the European Public Prosecutor's Office.

[Lord Hannay of Chiswick]

I am most grateful to the noble Lord for giving way, but he has managed in about three sentences to say three incorrect things. He said that in moving the amendment, we paid no attention to what he referred to as the big five. If he had listened to my introductory statement, he would have heard that, exactly to the contrary, we have amended the text that we had on the table in Committee by including Schengen and the international military force. If I may say so, it is clearly not sensible in our debate to pay no attention whatever to the person who introduces the amendment. I covered all that quite thoroughly.

[Lord Faulks]

I am grateful to the noble Lord for his intervention. I listened carefully to what he said and took on board the fact that the suggestion was that some other matters might also be the subject of a referendum if they were joined with those explicitly dealt with by the amendment. I also listened to what he said about the fact that there had been a change since Lisbon because now there was to be parliamentary approval, which was not the case before. I hope that the noble Lord accepts that I had listened to what he said, but, time being as it was, I was trying to truncate my remarks to make them digestible.

I return to the European public prosecutor, which is a matter which I suggest would not be in our national interest for the reasons I gave in Committee. It would involve us adopting the corpus juris, as it has been called; it might well involve us having national prosecutors representing the European public prosecutor; and it might involve an attempt at harmonisation of legal systems, so that we would have to take on board, for example, rules in relation to evidence; hearsay—

[Lord Goodhart]

My noble friend may be right on those particular points, but that would surely be a good reason for Parliament rejecting British participation in the EPPO, not for saying that that is an appropriate matter for members of the public to decide in a referendum.

[Lord Faulks]

I am grateful to the noble Lord and I accept his point. I am not quite sure what is the position of the party opposite in general terms on the European prosecutor. In Committee, the noble Lord, Lord Triesman, said, “Just say no”—as he said in respect of several proposals—from which I understood him to mean that Parliament would not put forward the possibility of a European public prosecutor and that there would therefore be no need for the referendum lock. However, from observations made by the noble Lord, Lord Liddle, I was not at all sure where he stood on the European public prosecutor.

I am, however, in no doubt about the view of the noble Lord, Lord Davies of Stamford, because he described the matter as being, to use his words, a no-brainer. Were somebody with his views to be the Minister for Europe in some Government to come, it would no doubt be said that the establishment of a European public prosecutor was generally to be the policy of the Government. The matter would then go through Parliament without the British people having been consulted and we would then have a European public prosecutor, with all the disadvantages which I have attempted to identify.

I am not in any way lacking in enthusiasm for the European project but, as a lawyer, I am aware that whereas sometimes I would like to conclude a negotiation without consulting my client—often I think I do much better without consulting my client—it is sometimes necessary to do so and to seek their instructions. It seems to be accepted on all sides of the House that enthusiasm for the European Union is, sadly, not as great as it might be. It is therefore, I suggest, incumbent on us as parliamentarians to consult and inform the people by means of a referendum, so that we can reconnect with those who are the source of our power.

Although I accept the qualifications made by the noble Lord, Lord Hannay, the amendment would take away that reassurance which has been identified by the coalition Government. I suggest that they have identified the zeitgeist. The Bill reflects what the country would like. To remove the referendum lock in the way proposed by the amendment would undermine that.

[Lord Risby]

My Lords, perhaps we could return to the Laeken declaration, which signified a very important moment in the history of the European Union. We all recognise the problem of disconnect. The Laeken declaration was intended to inform the individuals who were considering the whole future of the European Union what should be done about that problem. It is a fair summary to say that out of the Laeken declaration we saw the emergence of the constitutional treaty, which became the Lisbon treaty. Anyone, by any objective standards, would have to conclude that the spirit of Laeken, which was meant to inform the constitutional treaty, and later the Lisbon treaty, was not successful. Right across Europe we have seen an increase in Euroscepticism and in the disconnect between the peoples of Europe and the institutions of the European Union. The treaty, which was meant substantively to deal with that problem, has failed, not only in this country but right across the European Union. I suppose that one of the definingly difficult moments in the history of our relationship with the European Union was when Tony Blair substantially gave up the rebate in return for some structural reforms particularly linked to the common agricultural policy.

At the heart of this Bill must be the veto for the very firm purpose of restoring a sense of ownership of the processes of the European Union and our relationship with them. I think we all agree that the rebate is a most sensitive issue. Therefore, I just pose this question: would we wish to delete the requirement for a referendum if a future Government agreed to remove unanimity from the EU multiannual budget? This is a very contentious issue—it covers the whole envelope of European Union spending. The annual budget veto has already gone, and I suggest that nothing, particularly at a time of austerity, would be more damaging. It is precisely the threat of that happening that the Bill attempts to deal with.

I come back to the point that right across the European Union we have failed dismally to give people a sense of ownership or to secure the feeling that they have some sort of control. Therefore, comprehensive but clear processes, with a significant range of vetoes, are crucial in this country if we are to restore a sense of confidence and connection between the people and the European Union.

European Union Bill

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Monday 9th May 2011 Lords Chamber

[Lord Flight]

While there is obviously a differentiation between the European Court of Human Rights and the EU, the point I was making was that if there is accession the result could be an important overriding of UK law by the ECHR and decisions taken by the ECHR in due course becoming binding in the law of this land. This is effectively a change and a giving away of power by the UK to the ECHR rather than the EU in terms of its law making.

To conclude, these two amendments are essentially illustrative. As I commented earlier, looking across the total territory, there are many areas where the arrangements surrounding the EU and bodies such as the ECHR continue to cater for powers being taken without the requirement of an Act of Parliament and certainly without the requirement of citizens having a say in it. The argument that this Bill is right over the top in terms of the areas where it requires a referendum is nonsense. Let me assure your Lordships that there are scores of other areas where a transfer of power could occur where no referendum is being provided for.

Contrary to the arguments put by noble Lords from the other side of the House, a reasonable balance has been adopted by this Bill. Those of us who are perhaps on the other side of the argument would make the point that there are many areas which this Bill does not address where we can still see scope for power being transferred.

[Lord Faulks]

My Lords, I rise to comment on the European public prosecutor, the subject of an amendment by my noble friend Lord Goodhart who is not in his place. The potential establishment of the European public prosecutor finds its origins in concerns about budgetary fraud and the improper diversion of grants and aids. The purpose is to improve co-operation and to co-ordinate legal action among member states. It would potentially involve the establishment of a uniform code of criminal offences of fraud against the EC budget applicable in all member states and a uniform set of procedural rules applicable in investigations. Together that would constitute a so-called corpus juris, which would be enforced by the European public prosecutor’s office. I regard this as a significant potential change as a lawyer, but also not as a lawyer.

It seems that the rationale behind the potential establishment of the EPPO ought on the face of it to attract the support of the United Kingdom. Nevertheless, it would amount to a substantial change in criminal jurisdiction. The idea of national prosecutors on secondment from the EPPO in the UK is a significant alteration to our system, which provides that it is for the Crown to prosecute criminal offences. Once established, there would inevitably be steps taken to introduce rules which might not sit easily with our common law systems.

Article 86 provides that an EPP,

“shall exercise the functions of prosecutor in the competent courts of the Member States”.

This means that we would give up control of a fundamental part of our judicial system; namely, the decision on who can be prosecuted for what and, equally important, the decision not to prosecute in some circumstances. It is now the province of the CPS. The EPP will initially be concerned with only crimes affecting the financial interests of the union, although that definition is likely to prove particularly elusive. However, by a passerelle in the treaty, the powers of the EPP can be extended to cover any serious crime with a cross-border dimension, which gives it a potentially very wide remit. One has to think only of the problems with the European arrest warrant, to which my noble friend Lord Lamont referred, and the definition of serious crimes.

The creation of an EPP has not met with much enthusiasm from our friends on the other side of the House. When the matter was discussed at length in 2002 and 2003, Justice said it thought that a European court of criminal justice would have to be established. The Law Society of England and Wales and the Law Society of Scotland did not think a case had been made out for it. The European Union Committee of your Lordships’ House concluded that a European public prosecutor was not a realistic and practical way forward, stating:

“The benefits of creating another body and in particular an EPP, whose existence and processes could cut across national criminal laws and procedure and which might not be accountable to democratically elected representatives, have yet to be clearly and convincingly demonstrated”.

While even the most ardent Eurosceptic would support all reasonable steps to improve the detection and punishment of fraud in relation to grants and aids, surely this can be better achieved by co-operation between member states in the sharing of information and evidence, and access to information, rather than by the creation of a supranational prosecuting body.

It is suggested that there should be harmonisation of criminal procedures if there is to be an EPP office. The problems with harmonising procedures have been confronted by the courts in this country in the context of the ECHR. For example, Articles 5 and 6 of the convention have had to be interpreted by the courts as to whether they respect or are in total harmony with the right to a fair trial and the right to protect suspects. The courts have had considerable difficulty in the attempt to try to harmonise systems with different origins. It is not impossible that there could be a real conflict between the CPS and its view of what is within its province and the national prosecutor for the European public prosecutor trying to do the same thing.

If a future Government want us to join in with the establishment of a new EPP office, I suggest that the case should be made to Parliament and to the British people. It may not be their everyday obsession, but they should and can be educated, and not just by the Daily Express, about the question of a European public prosecutor. It is an important matter that goes to the fundamentals of justice. This amendment seeks to take away the safeguards that are fundamental to the Bill and to the philosophy underlying it.

[Lord Triesman]

My Lords, we on this Bench have a great deal of sympathy with the noble Lords, Lord Kerr and Lord Hannay, and much of what I say will probably reflect some of the arguments they have made. Like many other noble Lords, I have found this grouping about as unhelpful as it could possibly be. It mixes together propositions that would reduce the scope for referenda, propositions that would increase the scope for referenda, and does not deal with any of the principles that might guide a move in either direction. So, as briefly as I can, let me summarise what I think the amendments we are discussing actually are. In the midst of all the Second Reading speeches we have heard, we probably ought to try to focus on the amendments.

The first amendments, from Amendment 30 onwards, which the mover of the amendment did address, discuss the situations under which a referendum and Act are required and seek to limit the issue of whether the UK should adopt the euro as its currency. That is to some extent elaborated in further amendments. From Amendment 32 onwards we see amendments that would remove the requirement for a referendum and an Act on the list of Clause 6 decisions and change them so that they would simply require an Act of Parliament. That is a proposition where this Front Bench also has an amendment, and with which I strongly agree.

Indeed, in some of the discussions, including the one just introduced by the noble Lord, Lord Faulks, I have found it hard to understand the rationale for the proposition that has been made at all. In almost every area that has been described, the Government would plainly have the capacity to say no and to insist on unanimity. If we wished to reject a proposal to change our judicial system, and I can see perfectly well why we should argue that that might be the case, we should—to paraphrase the wife of a recent American president—just say no. It is not hard; it is not a complicated piece of electoral practice. Just say no. There are a number of areas where it is perfectly possible to do so.