Financial Services Bill

Lord Rooker Excerpts

Committee stage
Monday 1st March 2021 Grand Committee

[Lord Rooker (Lab) [V]]

My Lords, unlike the noble Baroness, I consider both the amendments to be probing in nature. As I said at Second Reading, I have no expertise or knowledge. I visited Gibraltar privately on holiday in 1977 and 1979, both times quite deliberately to give support because at that time the border with Spain was closed. As I had talked to the Foreign Office beforehand, I had the opportunity to speak with the Governor and members of the Government and the then trade union leader who later became First Minister. The dockyards were winding down, but one thing those people told me they did not want was Gibraltar to be dependent on being a brass-plate economy, and in effect that is what we are talking about. The right reverend Prelate gave some good examples. Transparency is crucial. It is a global issue. Identification of what is going on is required. The gambling figures the right reverend Prelate gave are a concern. My noble friend Lord Eatwell gave the figure of 20% of UK motoring. It is not for no reason that the biggest single donor to the Brexit campaign for exiting the EU has his insurance companies working out of Gibraltar, so there must be some reason that you can make a lot of extra money working through Gibraltar than you can in the UK.

The danger is that if we leave it as it is and build on it, Gibraltar will become the UK’s state of Delaware, the backstreet way to money laundering and other issues. Frankly, the EU will not stand for it. The financial structures of the services of the EU will be working closely and looking in detail at what is happening following Brexit. They are not going to stand for, effectively, a state of Delaware that has been inserted into Europe by the UK. Therefore we have to find a better way of doing this. One way of dealing with it is by openness and transparency. As the right reverend Prelate said, this is in no way an attack on the people of Gibraltar or, indeed, on the structures of Gibraltar. I have always been a strong supporter of Gibraltar having the right to choose, and 96% of Gibraltarians voted not to leave the EU. It was right at the time we did it that we incorporated Gibraltar into one of European UK constituencies. It is different from the other overseas territories of the UK, and because it is different, we must not allow the undermining of the financial system, so we have to find a better way of dealing with it. I look forward to the Minister giving some assurance on this and perhaps explaining, in answer to my noble friend’s question, why such a large proportion of the UK motor insurance system is worked out of Gibraltar. What is the reason for that? It cannot be the sunshine. The only reason can be money and profit—profit where less tax is paid. That is the basic reason that we have these probing amendments today. I look forward to the Minister’s answer.

[Baroness Bennett of Manor Castle (GP) [V]]

My Lords, it is a pleasure to follow the noble Lord, Lord Rooker. What we might label in shorthand “the Delaware danger” is very real. It was my pleasure to attach my name, as has the noble Lord, Lord Sikka, to Amendment 46 in the name of the right reverend Prelate the Bishop of St Albans. I also welcome Amendment 47 in the names of the noble Lords, Lord Tunnicliffe and Lord Eatwell. We heard from the noble Lord, Lord Eatwell, a clear and welcome outline of the peculiarities of the Gibraltar authorisation regime and the reason why we need to hear a lot more from the Minister about the justification for it and an explanation for some of the peculiarities that the noble Lord, Lord Rooker, just outlined.

I do not regard Amendment 46 as a probing amendment; I suggest that it is a modest amendment for improvement. It builds on an amendment from the noble Baroness, Lady Bowles of Berkhamsted, debated last week, which made broader country-by-country reporting proposals. Given that we have just seen the Government’s welcome incorporation into the Domestic Abuse Bill of a significant number of amendments proposed by noble Lords in that debate, we might hopefully see the same thing here before we get to the next stage of this Bill.

The noble Baroness, Lady Neville-Rolfe, suggested that this might be extraordinary, or be targeting Gibraltar in some way. As the noble Lord, Lord Eatwell, outlined, we are incorporating it in a truly extraordinary way within our system, so it is surely important that we have full transparency about what is happening. The noble Baroness, Lady Neville-Rolfe, said that we should not make it more difficult for Gibraltarian businesses. Whether it is motor insurance or the gambling industry, we are not talking here about the issue for Gibraltarian businesses; we are talking about businesses operating and making their profits in the UK, which should be paying their tax in the UK. On the Tax Justice Network corporate tax haven index—what might be called the ranking of infamy—I note that Gibraltar is ranked 28 on a scale where number 1 is the worst. While it is not the worst, given that there are scores of tax havens around the world, it is pretty well right up there.

It is estimated by the Tax Justice Network that the tax loss that Gibraltarian arrangements inflict on other nations is about US$4 billion. I do not have a breakdown of figures of where those losses are inflicted but, given what we have heard about both the motor insurance and the gambling industries, it is clear that a very significant portion of them will be in the UK. We also have to think about the nature of those industries; the gambling industry, in particular, inflicts significant major damage on individuals and communities in the UK and I believe that even the Government are looking to tighten controls on it.

Certainly, Amendment 46 offers a modest measure towards transparency, honesty and openness. If that should mean that certain industries pay tax on their profits in the UK, I do not see how that could be opposed. I ask the Government to comment on that.