Procurement Bill [HL]

Lord Purvis of Tweed Excerpts

Committee stage
Monday 4th July 2022 Grand Committee

[Lord Wigley (PC)]

Scotland may come in but, at the moment, it is doing its own thing. This is a matter of getting a process where fine-tuning is possible.

It is not so much the content that concerns me—frankly, I was engaged in other things yesterday and did not have an opportunity to work through the amendments. As I said in the Chamber, the previous Sunday I worked through every one of the 80-odd amendments, so that I could have a coherent conversation with the Welsh Minister, civil servants in Cardiff and noble Lords who were involved, including the noble Baroness, Lady Humphreys, and the noble and learned Lord, Lord Thomas of Cwmgiedd. I did so in order to get their understanding. To be fair, they were constructive about this Bill—as the Bill stood, relatively few points were of contention to them. But as I indicated earlier, I am concerned that they have an opportunity to see whether any of the changes that are now being made through this large number of amendments might have an effect on their understanding of its slightly different application in Wales than in England.

That is the general intention: to get a system of procurement that can work for the Welsh Government in delivering their economic targets, which they have using successfully over the past few years, and to do so in a way that does not disrupt the UK market. A balance must be struck there. It is essential that both ends of the M4 understand each other on this. I am sure that the noble Baroness who opened for the Opposition will have had conversations with Welsh Ministers and will know about their concerns.

This is not about undermining or opposing the Bill. It is about making sure that it works properly, as intended, for both sides. That is what I hope for. If it is necessary to step back at this point, check and make sure that that is the case, it would be far better for us to do that now rather than pass into law things that become challengeable in the courts, at which point we will end up with all sorts of mess.

[Lord Purvis of Tweed (LD)]

My Lords, I regret I was unable to participate in Second Reading. However, I followed that debate and have read the Minister’s letter to those who took part. I also have amendments that we will be discussing later in Committee.

The noble Lords, Lord Fox and Lord Lansley, the noble Baroness, Lady Noakes, and I are now veterans of legislation that the Government have sought to change quite radically. There were at least two iterations of the Trade Bill, and then there was the Professional Qualifications Bill. That has raised a wry smile on the noble Baroness’s face, and it has brought back significant memories.

The difference, however, is that, for those Bills, the Minister was able to recognise not only the mood of the House but the practical consequences of bringing forward significant changes without there being a degree of consensus—as the noble Baroness, Lady Hayman, has said—at least on understanding what the Government were intending to do before they brought forward the changes. The passage of the Professional Qualifications Bill was paused. The Government recognised that their case had not been made, preparations had not been in place and that the materials were not available for Parliament to do its constitutional duty to scrutinise. I hear the Minister repeat time and again in the Chamber how much he values this Parliament, and this House in particular, doing our job. However, on this Bill, which he is responsible for, he is denying us the very tools to carry out this proper scrutiny work.

There is a precedent of other Ministers and other departments recognising that a pause is not a government defeat but will strengthen their case when they bring back their properly worked out amendments. Indeed, on the Professional Qualifications Bill and Trade Bill, there was consensus on the amendments brought forward at the end. It helped the Government carry out their job, as we were sincere in believing that they had faith in their proposals.

If we are to be soothsayers as far as understanding what the Government are seeking to do, then the noble Lord, Lord Lansley, made a reasonable fist of trying to interpret Amendment 1—the Minister chose not to do so. If the noble Lord is right or wrong, we should at least know what the Government intend when changing that proposal because, as my noble friend Lord Fox, and the noble Baroness, Lady Hayman, indicated, not a single government amendment has come with an explanatory statement.

I refer to the Cabinet Office Guide to Making Legislation from 2022, which the Minister is responsible for—I am certain the Minister has a copy; I can lend him mine if he wants. Section C is on “Essential Guidance for Bill Teams”; I think the Bill team is sitting behind him. In paragraph 22, on Amendments—this is from the Cabinet Office’s own guidance, not from me—it says:

“All government amendments require an explanatory statement, in plain English, setting what an amendment will do.”


So, why did the Minister refuse that on this Bill? It is a mockery of the guidance.

The Minister, after making his apology to the Grand Committee, chose not to outline any of the amendments. He did not explain whether Amendment 1 and the others will have significant policy implementation differences. If the noble Lord, Lord Lansley, is correct, then they will. That is how all of those who will be putting together procurement and replying to tenders will interpret the legislation, so of course it will have an implication on that. That is why we look at impact assessments to consider what level of consequence there will be.

The Government have not felt it necessary to bring any changes to the impact assessment—unlike for the Professional Qualifications Bill, I remind the Minister. However, this is also stated categorically in the Guide to Making Legislation in paragraph 13, on impact assessments:

“The … impact assessment … will need to be updated during parliamentary passage to reflect any changes made to the bill”.


I therefore ask the Minister: why has there been no update to the impact assessment to take into consideration any changes made to the Bill?

If the noble Lord, Lord Lansley, is correct, there will need to be some quite significant changes to the impact assessment, because the cost is all predicated on the streamlined approach that has been presented under the Bill before the Government sought to amend it. The Committee does not need to be reminded that the Government now want a far more competitive, flexible, streamlined procedure, moving from seven systems to three. If it is now the dance of the three and half veils, of “covered” or not covered, and organisations are having to work out which area they are going to fill in, of course there will be impacts that need to be outlined.

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On the amendment before us—I will deal with the rest of the group in the broadest terms—my understanding is that, as a result of frank and useful discussions in the usual channels, there is an understanding that many of your Lordships are unhappy about proceeding at this juncture without further explanation. Without going through each amendment at this stage, given it is likely that many of them will come forward at a later stage—although this remains to be the outcome of ongoing negotiations—I certainly give an undertaking that I will ask insistently that the Committee has the kind of explanation that the noble Baroness asked for on the amendments that the Government have tabled. We will begin on Wednesday with another clump of government amendments. I fully take the criticisms and will ask that a much clearer schedule is put before your Lordships, bit by bit, on each of the matters we are asking you to deliberate on. Indeed, I heard what was said about the dearth of detailed explanatory statements on the matter. We will do better. I will take that concern away.

[Lord Purvis of Tweed (LD)]

My understanding is that the only way this could be done better is for the Government to withdraw the amendments and bring them back with explanatory statements. Explanatory statement cannot be tabled separately, so if the Minister is sincere that the Committee will not face continuing lists of government amendments without explanatory statements, the sensible course of action would be for him to withdraw them and bring them back with explanatory statements so that we can consider them properly.

[Lord True (Con)]

That was, in a sense, the implication of what I was saying. We are debating only Amendment 1 at this stage, but for the avoidance of doubt, if it helps the noble Lord, at the end of these remarks I will beg leave to withdraw Amendment 1. Your Lordships could indeed obstruct these matters, but I will withdraw the amendment and see that we fulfil the undertaking that I have given.

More generally, important questions were asked about definitions. I must say to the noble and learned Lord that, until relatively recently—I use that word because I do not want to define it more narrowly—I was not familiar with the concept of “covered”. However, it has come forward after careful reflection by the Cabinet Office and the Bill and legal teams. It is intended to make the concepts in the Bill clearer to use and understand. I mentioned “covered procurement” in my opening remarks. “Covered” was intended to refer to those contracts that are fully regulated by the Bill’s provisions, whereas “procurement” refers to those contracts that are less regulated but none the less catered for, such as below-threshold contracts and, as the noble Lord, Lord Purvis of Tweed, said, international organisation procurement.

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[Lord True (Con)]

I do not think that, in public remarks that will be recorded for all eternity in Hansard, Ministers should ever agree to the idea that anyone might be confused by the crystalline words that come before the Committee, but I must say that I did not, at first blush, understand these proposals when they were put forward and laid. I understand the objective, and think that both the noble and learned Lord and my noble friend have understood and divined it. We believe that it meets the requirement but, in the light of what your Lordships have said, I am sure that we can reflect on that. I will withdraw this amendment so that we can come back to it.

My advice from legal advisers is that this amendment adequately achieves the objective we sought. As to the elegance of it, I am not going to go into a disquisition of other circumstances in which “covered”—

[Lord Purvis of Tweed (LD)]

While the Minister is reflecting, might he be able to comment today on the legal advice that he has clearly received? He kindly referred to my reference to international obligations, including the TCA. In the legal text of the TCA, “covered procurement” is stated as the area where the TCA and the UK have an agreement. It is unclear whether the definition, and what the Government are seeking to do in this Bill, will have the same meaning as “covered procurement” in the TCA. Can the Minister clarify that point?

[Lord True (Con)]

My Lords, I was going to make a proposal. The legislation obviously reflects our existing international obligations, including the TCA, but this is not the only definitional point that has been raised. I cannot find the others in my notes but the noble Lord, Lord Berkeley, for example, asked about a centralised procurement authority. A centralised procurement authority is a body that sets up procurement or purchasing arrangements for use by other contracting authorities; examples would be the Yorkshire Purchasing Organisation or the Crown Commercial Service. That is one definitional issue. The noble Lord asked about the meaning of “state” in Amendment 440. That refers to a country with which we have an international agreement.

It is regrettable that this should happen after we have had this debate. Having heard the strength of feeling expressed by your Lordships on these amendments, especially the definitional ones such as the definition of “covered procurement”, I will ask my officials to hold a technical briefing on these matters for interested Peers. I will ask for invitations to be sent out by my office after the debate, in the hope that some of these points can be clarified. I know that is not to the greatest convenience of your Lordships because the Committee is due to come back on Wednesday, but it should help further to explain the rationale and necessity for some of these late amendments, which were advised on us by our legal advisers. I or my office will be in touch with noble Lords who are here with that offer, so that we can undertake that.

I was asked by the noble Lord, Lord Purvis of Tweed, about the impact assessment. Again, we will reflect on that point but my advice, even in the light of these amendments, is that as there has been no change to the general policy intent of the Bill, there is therefore no change to the costs and benefits of the impact assessment. I am therefore not advised that it is necessary to revise it, but I will second-guess that advice in the light of the noble Lord’s contribution. Although there are wording changes, to take up what my noble friend Lord Lansley said, the general intent of the Bill remains the same.

On the question of the devolved Administrations—obviously, there is a particular issue at the moment in the case of the Northern Ireland Executive, which is why some of these matters are ongoing—I am grateful for what the noble Baroness, Lady Humphreys, and the noble Lord, Lord Wigley, said about the sense of co-operation. I believe that is reflected in both directions. I was asked whether all these things had yet been formally agreed. As I understand it, most of these amendments have been; some have been agreed and discussed at official level but may not technically have been signed off by Ministers. It is certainly our intention and, I believe, the Welsh Government’s intention that we will reach full and constructive agreement, which will enable the proposals to be recommended to the Senedd. This has been an area of good and striking co-operation. I say publicly to the Committee again how much we appreciate that, as I did in my opening remarks.

I hope I have briefly dealt with the question of “covered”, “not covered” and some of the other definitional things. I hope that the further formal briefing I have offered can be arranged at a convenient time for most Peers tomorrow, and will go some way to answering this. I give a commitment that, when we go forward, I will not accept to lay before your Lordships and take to a vote something where there is no proper explanation of the individual amendments in the manner that the noble Baroness opposite quite rightly asked for. There should be a clear explanatory statement. I will ask for that to be done in respect of the amendments that are coming forward to explain the whys and whats in detail, and how the various groups interlock. Again, I will not tell tales out of school, but one of the issues is that there are interconnections between these different groups and how they have been sliced. I repeat that commitment.

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I was very struck and, indeed, appalled at the outbreak of the Covid pandemic that one of the contracts for test and trace was given to a multinational company headquartered in Miami, Florida. It seemed so obvious that knowledge of the ground, local circumstances and where to put your test and trace things was held already by local public health officers across the country. The outsourcing then should probably have been done through local authorities and the services they could provide; giving it to a multinational with very little experience of operating in England was clearly counterfactual, counterintuitive and likely to be grossly inefficient, as indeed it proved. The importance of putting in the Bill that local authorities and consortia of local authorities can operate as these unfortunately named “centralised contracting authorities” is because we want to make sure that this does not end up with Whitehall and Ministers taking yet another large bite out of what used to be local autonomy and local initiative, and so that the Bill gives adequate space for those local contracting authorities and others to be involved as fully as possible.

[Lord Purvis of Tweed (LD)]

My Lords, I shall speak to my Amendment 19 and comment very briefly, because it was a pleasure to follow my noble friend, simply to emphasise the point that he and my noble friend Lord Scriven made about local authorities. I want to add just two other elements of that and combine it with a comment, since we started on this group with the noble Lord, Lord Lansley, about universities. In the case of my former constituency, Heriot-Watt University was part of a number of consortia with other universities and other organisations, which included charitable trusts, research trusts and other groups. Since they became procurement bodies themselves, it would be very useful for the Government to be very clear as to how this Act will consider an institution as a procuring body, including as part of a consortium of which the partners are not covered by this legislation.

On the point about local authorities, I would be grateful if the Minister would clarify for those local authorities that work cross-border. There is the borderlands consortium of local authorities in England and Scotland. In my understanding of how the Bill is drafted, that consortium would not come under the Bill because only local authorities, or local authorities in Scotland that operate on fully reserved matters, would do so. The consortium does not operate on fully reserved matters but it is a single consortium that receives a borderland deal from the Treasury and is a procuring authority. It would be very helpful if the Minister would clarify the status, under the legislation, of the border consortium of local authorities.

The purpose behind Amendment 19 is to develop that probing and to ask for consideration of the treaty state suppliers and the international agreements. What comes under the terminology of international agreements? The noble Lord, Lord Lansley, and I have raised questions on many occasions about what the Government consider to be a treaty for international agreement purposes. I understand entirely that the Government’s purpose behind this legislation is flexibility, but also transparency. I support those, particularly the transparency angle. We therefore need to look carefully at the areas that are exempted.

The noble Baroness, Lady Noakes, raised the point about ARIA; I will not intervene in the mutual relationship between her and my noble friend Lord Fox on the relationship with ARIA, and I know that UK Research and Innovation is not linked with ARIA. However, I found it interesting that UK Research and Innovation is included in our trade agreement with Australia under the procurement chapter by virtue of it being a listed body. If we need to look at which bodies will be included in this legislation, there are exhaustive lists—it says: “This list is exhaustive”—in our trade agreements, which are now in scope of this legislation but which many Members may think are not. For example, at 6.9, UK Research and Innovation is included.

Most interestingly, the Bill excludes Government Communications Headquarters, but it is included in the list of bodies in our FTA with Australia under the procurement chapter. I do not know how they will interact. We will come to this when we come to the elements of international trade, but where does GCHQ sit as regards procurement? We are obliged to cover it under the Australia FTA but we are seeking to exclude it under the Bill. I simply do not know the answer, so I look forward to the Minister clarifying that point.

The amendment on international agreements is to clarify what the Government consider an international agreement. Paragraph 19 of Schedule 2 states:

“A contract awarded under a procedure specified in an international agreement of which the United Kingdom is a signatory relating to … the implementation of a joint project between the signatories to that agreement.”


That could be extraordinarily wide, and if it includes agreements which are not under FTAs it could be enormously wide.

I just need to look at two contemporaneous cases under memoranda of understanding. These are agreements which the Government say are underpinned, with commitments to honour them. One is the Rwanda MoU on immigration—I visited the centre in Kigali two weeks ago. There is procurement that could be under that agreement, whether for the aircraft which have been brought from Spain to fly individuals out there, or indeed the Hope Guest House Ltd, a private limited company in Kigali that is to be the reception centre for these people and which I visited myself. I asked the authorities there: “If it is a limited company, how do I know what the details are—the terms and conditions?” They told me that it was under a one-year rolling contract but I have no idea how it was procured, and the same goes for the British side. This is a joint agreement with joint procurement, and I believe that it should be transparent, but under the Bill the Government are seeking to exclude that.

There are a number of different areas. There are international higher education partnership agreements. Even if the noble Lord, Lord Lansley, is successful with his amendment, it would be rendered useless under paragraph 19 of Schedule 2 because the Government will be able to say that it is under an international higher education agreement. We have signed between 15 and 18 agreements with China on preferential market access, including investments through UK pension funds, which potentially come within scope of this as well. We have an investment partnership with the UAE, the details of which have not been published; I have not been able to find them and the Library has asked the DIT for the text but it has not been forthcoming. However, these are potentially joint procurement agreements. Some may be beneficial; others I look at with a cautious eye. Depending on how they are defined and on how the Government wish to use them, the transparency elements of procurement could be bypassed because of paragraph 19 of Schedule 2. Therefore, I would like the Government to explain.

In closing, because it links to a number of international agreements and has been previously referenced on treaties, I recognise the 24 treaties listed in Schedule 20, but the impact assessment relates only to 20, so I do not know why there is that discrepancy. It would be helpful if the Minister could clarify the discrepancy between the two.

[Lord Coaker (Lab)]

My Lords, it is a pleasure to follow my noble friend Lady Hayman after her remarks. I apologise to the Committee for being a few minutes late; I was unavoidably detained on other business. I also thank the noble Lord, Lord True, for dealing with a really difficult situation with—as we might all agree—his normal courtesy. I think it was the best that could be done in the circumstances; withdrawing government Amendment 1 allowed us to move to this group of amendments. We all appreciate his offer of continuing discussions in the next day or so to consider how we take all this forward. It would be remiss to not start with thanks to the Minister for that, otherwise the Committee would have been a complete and utter catastrophe. As we can see, however, with this group of amendments we have got on to the real purpose of the Committee, which is to get to the real detail, as seen in the various contributions made by all noble Lords. All the amendments put forward have asked very reasonable questions, which seek to clarify the Government’s intentions. I shall certainly make those points in the few minutes that I speak for.

I start by saying that I was really interested in the amendment of the noble Baroness, Lady Noakes, because it goes to the heart of the issue. You can read “pecuniary” in all sorts of ways. I looked it up with the help of my noble friend Lady Hayman and it has to do with money, so I was quite pleased to read that—from a non-legislative point of view—because I thought it meant that it was about the supply of the contracts, the pecuniary interests would not matter and it was a “standards in public life” type of approach, but of course it is not. The amendment of the noble Baroness, Lady Noakes, has clarified that for me. What “pecuniary” means in this context is a really interesting point: why are the Government including it and why would the amendment of the noble Baroness, Lady Noakes, not be an improvement? Again, the details of some of these amendments are really worthwhile points to look at.

I wanted to raise some of the points that the noble Baroness, Lady McIntosh, started to get to in the debate on whether Clause 2 and Schedule 2 should stand part. There is also the question of where Schedule 1 takes us. The noble Lord, Lord Fox, will be interested in this, having asked who will police this. The Government use the term “estimated value” in Clause 2 and, to be fair to them, that is very important for this aspect of a public contract. Clause 3 deals with how estimated value is worked out; then, in Schedule 3, it is done by regulation. Schedule 3 lays out how the estimated value may be set, so I will not go through it. What I could not find out—a point also made by the noble Lord, Lord Fox—is who ensures that it is properly done; in other words, that the estimated value is a proper estimated value and that the system laid out in Schedule 3 works. If I understood the Minister, he said that it is a matter for the Minister—a matter for the Crown. Could he just clarify who polices this? Who ensures that the estimated value is indeed a proper estimated value? That would be helpful to the Committee.

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Amendment 19 in the names of the noble Lords, Lord Purvis of Tweed and Lord Wallace of Saltaire, which seeks to remove sub-paragraph 19(b) of Schedule 2, would seriously impair the UK’s current ability under the Public Contracts Regulations 2015 and the Defence and Security Public Contracts Regulations 2011 to conduct joint projects with our international partners, particularly in the field of defence. I will write to noble Lords on some of the particular points made in relation to government communications; defence and security matters will partly be covered by my noble friend Lady Goldie, but obviously they will understand why I will do that.

[Lord Purvis of Tweed (LD)]

I am grateful. Just so that the Minister writes the correct letter to me, I am fully aware that sub-paragraph 19(a) relates to agreements about

“the stationing of military personnel”.

However, sub-paragraph 19(b) is so broadly drawn that it is not directly linked to military agreements. I hope that the Minister does not write to me concerning anything to do with military procurement because that is absolutely not what I raised. My concern about sub-paragraph (b) regards the other agreements that are not military.

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[Lord True (Con)]

I will certainly reflect on anything that is said in Committee. “Combined authority” has a particular meaning and understanding. Local authorities can procure things together without being a combined authority; perhaps the noble Lord, being a good Liberal Democrat, might like to propose a federalised approach. I will take away the point he made. I was going to say that I agree with him and the noble Lord, Lord Scriven, that it is correct that local authorities can band together to form consortia to undertake procurements; that is something we wish to encourage. I will look into the particular case of border lands that the noble Lord—

[Lord Purvis of Tweed (LD)]

It is a federal question that I am asking, about states that border combined authorities.

[Lord True (Con)]

I am not sure that the First Minister is looking for a federation.

Where a procurement is being undertaken by one or more local authorities that are in the business of carrying out procurement for others, as when they form a consortium to undertake several procurements over a period of time, those authorities would constitute whatever we call it—a centralised procurement authority, for the purpose of the Bill—without the need for the amendment. Conversely, where a group of local authorities come together to undertake joint procurement on a one-off or ad hoc basis, they are entitled to do that as joint procurement under Clause 10(4)(a).

There are other aspects in relation to local authorities. The Government have a clarifying amendment in the megagroup that comes up next, which I hope will also give some reassurance to noble Lords opposite that we want freedom for local authorities—although they will have to have regard to the priorities and national procurement strategy, as any other body will. Ultimately, they will remain accountable to their electorates for their own procurement decisions.

I was asked about how integrated care boards fit into the Bill. I understand that we are still in discussion with the Department of Health to agree what matters are within the health and care procurement rules. This will be debated later on in the Bill; I hope to come forward with more clarification on that.

Finally, a lot of general matters were raised relating to Clause 2, not only by my noble friend but by the noble Lord, Lord Coaker, opposite. My note-taking was running out a bit but I will obviously pick up as much as I can of the remarks and write further.

Border Checks on Imported Goods: New IT Systems

Lord Purvis of Tweed Excerpts

Wednesday 25th May 2022 Lords Chamber

[Lord True (Con)]

My Lords, it will be implemented. We will publish a target operating model this autumn, which will set out how and when the new and improved global regime—not just with the EU—of border import controls will come in. As the noble Lord on the Front Bench opposite asked, that will be based on a proper assessment of risk. It will, as the noble Viscount asked, harness the power of data and technology. Also, as I have told noble Lords, we will target the end of 2023 as a revised introduction date for this regime.

[Lord Purvis of Tweed (LD)]

My Lords, this is the fourth deliberate and previously unannounced delay. The Minister has said that it is to save businesses’ costs, so what are the estimated business savings of this deliberate delay?

[Lord True (Con)]

My Lords, we have estimated that there are significant potential savings in annual costs, but I repeat my fundamental point that this is not a delay but a deliberate decision to move towards a new target date.

European Union: Border Control Checks

Lord Purvis of Tweed Excerpts

Thursday 16th December 2021 Lords Chamber

Asked by

[Lord Purvis of Tweed]

To ask the Minister of State at the Cabinet Office (Lord Frost) what plans Her Majesty’s Government have, if any, to extend easements to border control checks on goods from the European Union on 1 January 2022.

[The Minister of State, Cabinet Office (Lord Frost) (Con)]

My Lords, the Government are fully prepared for the introduction of border import controls and, as previously announced, will introduce these controls on 1 January for EU goods coming from mainland Europe. However, in order to create the best possible environment for negotiations on the protocol and to avoid complexity and uncertainty, I announced yesterday, on 15 December, that the current arrangements for goods coming from the island of Ireland will be extended on a provisional basis.

[Lord Purvis of Tweed (LD)]

My Lords, in an earlier answer the Minister said that he had noticed no difficulties in securing trade with the European Union. But the cross-party European Affairs Committee report on trade in goods with the EU, published today, found that small businesses and agri-food sectors have been hardest hit by the changes of the TCA, resulting in GB exports becoming

“slower, less competitive, and more costly.”

The committee calls for an urgent SPS agreement with the EU. When the Minister is discussing this with the vice-president tomorrow, will he signal that an urgent SPS agreement with the EU is a priority, to support our small business and agri-food sectors that have been so hard hit?

[Lord Frost (Con)]

My Lords, I have had the opportunity to look briefly at the report that is referred to, which as always is an extremely comprehensive and worthwhile assessment of the state of play. We have never denied that there are new processes that need to be followed by UK exporters, but experience over the year is that UK business has come to grips with them very successfully and we have brought in, for example, our new export support service to help support smaller companies. On the question of an SPS equivalence arrangement, we asked last year for the TCA to include an equivalence process. That was not possible and, as far as we know, still is not possible, but obviously it would help if the EU was willing to look at that again and move forward.

Northern Ireland: Supply of Medicines

Lord Purvis of Tweed Excerpts

Thursday 9th December 2021 Lords Chamber

[Lord Frost (Con)]

My Lords, it is well known by now that I was the Minister who negotiated this agreement; it is also well known that the agreement required careful handling, which it has not received during this year, and that is why we face so many of the problems that we are now trying to deal with.

[Lord Purvis of Tweed (LD)]

My Lords, the Minister forgot to answer the second question from the noble Lord, Lord Dodds: why were medicines there in the first place?

[Lord Frost (Con)]

My Lords, as I said in answer to an earlier question, medicines are a special case of the general issue of supply of goods into Northern Ireland. As the protocol covers that general issue, it includes medicines. It has created special difficulties that we are trying to resolve.

Money Laundering and Terrorist Financing (Amendment) (No. 3) (High-Risk Countries) Regulations 2021

Lord Purvis of Tweed Excerpts

Thursday 25th November 2021 Lords Chamber

[Lord Purvis of Tweed (LD)]

My Lords, we support this measure and, as the Minister outlined, while this is an uncontroversial measure with regard to Mali, Turkey, Botswana and Mauritius, it is one element of a much wider agenda on which the UK has an opportunity to lead—and in many areas it is, working very closely with our key allies. The timing is, probably by accident, relevant. It is between the debate on the Statement, when we discussed human trafficking and the linked crime of smuggling, and change to the proscription of a terrorist organisation, so it is linked.

The noble Baroness, Lady Williams, mentioned organised crime offences in the Balkans. When I served on the Select Committee on International Relations and Defence, we carried out an inquiry into the Balkans, and I visited. We identified that one of the biggest interests of the UK in the region is organised crime and the finance connected with it. When I visited the Sahel and looked at some of the smuggling routes, I was told by British officials that this industry equates to £10 billion-worth of organised crime. It is on an awful, industrial scale.

We have debated Afghanistan and will again next week. Some 95% of the heroin on the streets of this country is from Afghanistan. More people die every year than died in Afghanistan as tragic British military casualties of that conflict. All of them are connected with a considerable amount of money. None of those awful activities, which lead to tragic victims and innocent deaths, can be separated from those who are party to this and who launder some of the proceeds and facilitate some of this activity.

Therefore, we support the work of the Financial Action Task Force, our security services, the Treasury, the Bank of England and all the agencies who have to work forensically to tackle this awful use of what are often very technical, legal, financial and bureaucratic mechanisms to hide criminal activity.

I press the Minister specifically on a connected issue, which is what the Government say they intend to do, which is to have a public register of beneficial ownership of property. We know that, because of the openness of the property market, especially in our cities and especially in London, this has been an area of concern. Prior to the pandemic, Transparency International identified 87,000 properties in England and Wales that are owned by anonymous companies registered in tax havens. We have seen in the Pandora papers that UK property remains a popular way to wash dirty money, and there have been cases, of which we are all aware, where that has led to actions. That demonstrates the clear need for a public register, so, in supporting what the Minister is doing, I would welcome his comments on when the Government will make good on their promise in this area.

[Lord Tunnicliffe (Lab)]

My Lords, on the face of it, the regulations before us are very straightforward. The Financial Action Task Force has updated its list of high-risk countries, and we are mirroring those changes in our legislation. We have supported such instruments in the past and will continue to do so.

Paragraph 3.3 of the Explanatory Memorandum outlines the usual justifications for this instrument being laid under the “made affirmative” procedure. We accept the arguments, but it is a pity that the urgency in laying these SIs is not always matched when it comes to the Government’s wider efforts to crack down on money laundering. Although it is true that the task force has given the UK a good rating in general terms, we know that concerns have long been expressed about the UK’s supervisory regime. As my colleague Pat McFadden said in the Commons, the Treasury itself has conceded that FATF sees our systems as “only moderately effective” and that the international body also believes that there are

“significant weaknesses in the risk-based approach to supervision”

in the UK.

The UK is understandably a target for illicit funds, given the size and global status of our financial services sector. The Magnitsky case is a well-known example of funds being funnelled through UK institutions, but we know it is not the only one: that much has been seen with the recent publication of the Pandora papers. The Financial Conduct Authority is reportedly running several active investigations in this area. We wish it well with those probes and hope that any wrongful behaviour is punished in an appropriate way.

The Minister said yesterday that, despite the lack of criminal convictions secured through FCA action, the body is nevertheless taking robust action. He pointed to the imposition of a number of major fines in recent years, such as those against Standard Chartered. However, it is not clear that these punishments are changing behaviour or preventing the recurrence of bad practice. On Monday, Minister Whately outlined some of the limited examples of government action. We welcome the allocation of funds to this fight, but it is hard to take seriously her claim that everything possible is being done to make the UK

“a hostile place for illicit finance and economic crime”.—[Official Report, Commons, 16/11/21; col. 532.]

Many of the initiatives cited have been announced and re-announced without meaningful action following. For example, Companies House has been given an additional £63 million of funds to assist with its reform, but there is little sense that the changes being made will empower that body and lead to better outcomes.

Minister Whately also failed to provide clear justification of the UK Government not classifying countries such as Russia and Afghanistan as high risk. It is true that this instrument is designed solely to administer the task force list, but does the Treasury not see a case for taking action of its own where UK interests are at stake? We await with interest the outcome of the task force’s ongoing analysis of recent events in Afghanistan. It will be interesting to see whether that country is added to the list when we consider the first of these SIs in 2022 but, on Russia, I will simply repeat one of Pat McFadden’s questions: do the Government really not judge Russia to be as big a risk as some of the countries listed in these regulations?

As I said earlier, we are privileged to have a significant financial services sector in this country. Lots of talented people, both regulators and people in the sector, work night and day to detect and stop economic crime and obviously we support them in their endeavours. However, the fact remains that, despite the efforts of individuals, the UK Government’s regulatory framework of choice is seen by the international community as insufficient. As a global leader in financial services, we have a responsibility not only to replicate international initiatives but to lead them from the front. I hope the Minister can outline today exactly how the Treasury intends to do this.

Protocol on Ireland/Northern Ireland: Impact on UK Internal Market

Lord Purvis of Tweed Excerpts

Thursday 18th November 2021 Lords Chamber

[Lord Frost (Con)]

My Lords, it is somewhere between 0% and 100%, to be honest. It does not help to put specific numbers on these sorts of things. The noble Baroness makes a good point, though, about the comments of the Foreign Minister of Ireland and many others about what they perceive to be going on in the negotiations. Actually, I will talk to Simon Coveney later today. When I do so—and as I do in all those contacts—I will make our position abundantly clear, as I have set it out to this House. That remains our position, whatever else may be read in the media or by figures in the EU who are interpreting it.

[Lord Purvis of Tweed (LD)]

My Lords, it is the Government’s policy, not the EU’s, to enforce the system whereby any goods entering Northern Ireland will have to be marked as conformity assessed, separate from those sold within Great Britain. That was referred to by the chair of Marks & Spencer, who the noble Lord, Lord Dodds, quoted. It is nothing to do with the European Union; it is British government policy. The British Government have not asked in the negotiations on the protocol for that to be changed. So when will it change? Or is it the Government’s policy that it is permanent?

[Lord Frost (Con)]

My Lords, the processes that goods undergo when they enter Northern Ireland are those that, in our view, are required by the protocol, which, of course, has direct effect in UK law in many respects through the withdrawal Act. People would not want us to proceed in any way other than is consistent with those legal obligations. That is what we are required to do; the difficulty is that it is not consistent with social and economic stability in Northern Ireland.

Ireland/Northern Ireland: Solid Fuels

Lord Purvis of Tweed Excerpts

Thursday 18th November 2021 Lords Chamber

[Lord Frost (Con)]

My Lords, my noble friend makes a very good point. We have been concerned about the threats made against us in the last few weeks, which are not really consistent with a reasonable negotiation. I am glad to see that the French Government have, for the moment anyway, withdrawn those threats. I hope they will do so permanently, because they do not make it any easier to conduct a good process and put relations on to a better footing.

[Lord Purvis of Tweed (LD)]

My Lords, I thank the Minister for his measured responses to earlier questions on this subject, because it is very sensitive. I have in front of me the answer in the Dáil, and there is no reference to border checks. There is reference to Irish local authorities having increased powers to check on solid fuels imported from Northern Ireland, which they had already. Indeed, the north-south Joint Agency Task Force has been operating since 2015 in this regard. Can the Minister please reassure the House that this will not be used to inflame some of the tensions that already exist and that the north-south Joint Agency Task Force will operate normally on fuels to ensure that there is proper consensus on this?

[Lord Frost (Con)]

My Lords, we do not wish to inflame tensions in any way, of course, and I do not think we go about this in a way that would do that. The point that I and other noble Lords have been trying to make is not that this proposal from the Irish Government would require checks at the border—they are not saying that, we are not saying that and nobody wants that—but that it is possible to manage differences without such checks in certain circumstances. This is perhaps a concrete case of that; there are some others.

EU Relations

Lord Purvis of Tweed Excerpts

Wednesday 10th November 2021 Lords Chamber

[Lord Frost (Con)]

My Lords, I think the exchanges that we have had in the last few minutes show the point I was making earlier: that there are in fact starkly divided views in Northern Ireland about these questions. That is why it is impossible to make an instrument such as the protocol work effectively, in the way that the EU insists that it be implemented, when those very stark divisions exist. We need to find a solution that everybody in Northern Ireland can get behind and which supports the delicate balance in the Belfast/Good Friday agreement, which was so painfully negotiated and which is the key to peace in Northern Ireland.

I very much sympathise with the points that were made on timing. Trade diversion is obviously happening every day and is very much on our mind, but we think that the responsible thing to do is to do everything we can, push as hard as we can and explore every possible avenue in and around the talks to see whether we can find an agreement that everybody can get behind. That will be my aim until I have concluded that it is impossible—and we are not at that point yet.

[Lord Purvis of Tweed (LD)]

My Lords, page 58 of the OBR report states that UK GDP will be 4% lower as a result of the agreement negotiated by the noble Lord, Lord Frost. Page 59 of the OBR report states that trade—both imports and exports—is now 15% lower. The Minister said that he was “sceptical” of this and would be presenting his own figures. The Chancellor’s entire Budget and spending review were based on the OBR figures—so should we all now have a high degree of scepticism about the Chancellor’s statement and spending review? Will the Minister join us in scrutinising that set of figures, to show that we should not believe them?

[Lord Frost (Con)]

My Lords, I do not think that I said that I was planning to present my own figures in this respect, merely that I was sceptical about the many judgments that had been made officially about the state of the economy in 2030—which I think is the 4% judgment—which is a long way out, and many things can happen, including policy changes that we will make to ensure that that situation does not develop. That is the way that I look at this problem.

Protocol on Ireland/Northern Ireland: Impact on Trade

Lord Purvis of Tweed Excerpts

Thursday 21st October 2021 Lords Chamber

[Lord Frost (Con)]

So, my Lords, I reject the implication of the question that there is any contradiction between a so-called hard Brexit, which is the only real Brexit and the only form of Brexit that allows this country the freedom it needs, and peace and security in Northern Ireland. Those two objectives are perfectly and absolutely compatible. We agreed a protocol that we hoped would do the job; it needed sensitive handling; it was highly uncertain in some of its mechanisms; and unfortunately it has not had the sensitive handling it needed. Therefore, we need to come back to the question. That is a pity, but unfortunately it is the reality.

[Lord Purvis of Tweed (LD)]

My Lords, the Northern Ireland Statistics and Research Agency’s most recent publication, issued on 4 August, highlighted that in 2019 trade between Northern Ireland and the Republic of Ireland increased by 9.9%, whereas trade with GB increased by 6.6%—so the Minister’s claim that there is trade diversion as a result of the protocol is not the case. There is now a trend, with growth in the Republic. Therefore, is it not part of the UK Government’s responsibility to promote exports from Northern Ireland to Ireland and to make sure that the Northern Ireland economy benefits from certain parts of the protocol? What are the elements of the protocol that the Minister is most proud of?

[Lord Frost (Con)]

My Lords, I am proud of securing a deal that delivered democracy and took this country out of the European Union in 2019, which the people of this country voted for. On trade, the figures from the Irish Central Statistics Office for the first eight months of the year show that trade from Ireland to Northern Ireland has gone up 35% and from Northern Ireland to Ireland has gone up 50%. Those are significant figures and clearly show that there is something unusual going on—which I think is trade diversion.

Imports from EU to GB: Business Preparation

Lord Purvis of Tweed Excerpts

Thursday 16th September 2021 Lords Chamber

[Lord Frost (Con)]

My Lords, we face a complex set of interacting economic facts at the moment, and the decision that we took responds to that. We maintain the controls that are right for us, and we now have the powers to control and manage our economy as we see fit. We do not have to do the same thing as the European Union, and indeed, after 1 July, we are unlikely to have exactly the same levels of physical checks as the EU. We monitor the situation in all its respects, and we will take the decisions that are necessary to support the British economy.

[Lord Purvis of Tweed (LD)]

My Lords, on 21 July, the Government published their new border operating model, page 8 of which gives a commentary about how they have taken into consideration the impacts of Covid as the reason why they had made the delays already. So what has happened in the intervening seven weeks, between 21 July and now, that allows the Government to think that they are still not ready at their ports?