Russia (Sanctions) (EU Exit) (Amendment) (No. 3) Regulations 2024

Lord Vaux of Harrowden Excerpts

Tuesday 15th October 2024 Grand Committee

I said I would be brief. I have been fairly brief—by my own standards. I see relief on the Government Front Bench that I do not intend to pursue these points any further. I am grateful to the Minister for all he does on so many fronts. I look forward to his reply.

[Lord Vaux of Harrowden (CB)]

My Lords, I too welcome this SI, as far as it goes—in particular, the expansion of the sanctions regime against ships that are used to facilitate Russian oil exports, the so-called shadow tankers to which the noble Lord referred.

Could the Minister perhaps explain in a bit more detail what actual real-world impact that this will have on the number of shadow tankers that Russia uses and the amount of oil that Russia is currently able to export? I am slightly dubious as to how much real difference this will make, so I would be interested to know how it will work in reality. In particular, will this have any impact on the very dangerous ship-to-ship transfers that seem to be taking place off the coast of Greece, which are obviously an environmental disaster waiting to happen? The size of the shadow fleet is continuing to grow. I gather it is 70% bigger this year than it was last year. What other actions are we taking to deal with this problem?

There would not actually be a problem with the shadow tankers, if there were not countries ready and willing to take the Russian oil. That brings me to another loophole that Russia is using to keep its oil exports running and under which this country is still importing oil products that originate in Russia. The loophole is that, if Russian oil is refined in another country, it is no longer considered to have originated in Russia. As a result, third countries—in particular, China, India and Turkey—are buying large quantities of Russian crude, processing it and selling it on. India is now importing 13 times as much crude from Russia as it was before the war started.

Since Russia’s invasion of Ukraine, direct imports of Russian oil into the UK have fallen from about £4.5 billion a year to pretty much zero, which is a good result. But UK imports of refined oil products from India, China and Turkey have all risen quite significantly, to around £2.2 billion in 2023. A significant proportion of those will have originated in Russia. There is an estimate of 5.2 million barrels of Russian-originated oil having been imported into the UK in 2023, mostly for the aviation industry. Apparently, about one in 20 UK flights has used Russian-originated oil.

This laundering of oil through China, India and Turkey means that the UK is continuing to contribute, albeit indirectly, to Russia’s war coffers. Does the Minister recognise those figures and this problem? If he does not recognise those figures, how many Russian-originated oil products does he believe the UK is currently importing? What plans do the Government have to close the loophole? Given that a very big chunk of this comes through India, is this matter being taken into account in the trade agreement discussions with India?

[Lord Purvis of Tweed (LD)]

My Lords, following the very valid points made by noble Lords in this short but important debate, I offer the Government support for this. The Government were caught by a timetabling aspect, with the Summer Recess and then the conference break, so it is positive that they have ensured that there will be some parliamentary scrutiny and the ability for Members to ask questions on these matters. We have just seen the value of raising these pertinent points.

The Minister will not be surprised that I support these measures. He and I have been in many debates—in fact, all the debates on the Russian sanctions when the noble Lord, Lord Ahmad, was the Minister—and there was consensus across the Committee. I will ask a few further questions that have not been asked so far, and will perhaps emphasise some of the points that have been made.

First, I return to the issue of enforcement. Not for the first time, the noble Lord, Lord Alton, asked questions that I was going to ask. I would be grateful if the Minister could give an update on the securing of frozen assets that could be put to good use by Ukraine in this conflict. The Minister was a doughty campaigner on Chelsea when he and I were asking the noble Lord, Lord Cameron, about this in the Chamber. An update would be very useful. Is it still the case that we need to change any of the legislative or administrative processes in the UK so that we can carry out the repurposing of frozen assets into secured assets that can be put to use, around which consensus was sought in the G7? Or is it the Government’s position that we look purely at the EU proposals on the interest of assets—or, if assets are sold, that we use some of that? An update would be useful.

I periodically monitor the website of the Office of Financial Sanctions Implementation, which is tasked with ensuring that the sanctions regimes we put in place in the UK are properly enforced and policed. It is interesting that only one enforcement for circumventing UK sanctions has been carried out this year, to the tune of £15,000; since 2022 and the full invasion of Ukraine, there have been only four, totalling £60,000. Given the scale of the impact of the sanctions regime that the previous and current Governments have indicated, is it the Minister’s view that this is an accurate reflection of how the sanctions are being enforced?

We could look at it in two ways: either there is circumvention and the enforcement is not effective; or the UK is remarkably good at getting all our businesses to adhere to all of the sanctions. There may be an element of truth in both, but what is the Government’s assessment? That speaks to the valid point made by the noble Lord, Lord Alton, about the opportunity for a fundamental review not just of the overall impact of the sanctions—including an assessment of the impact of the sanctions, given the fact that they are in place until we rescind them—but of their enforcement.

The second aspect I wish to ask about is the services provided, either those in the shadow fleets or those that can now be determined under the sanctions regimes. I strongly support the Government with regard to not only persons who are directly or indirectly in the enterprises or linked with the fleets but those providing financial services to them. Why have the Government taken the view that legal services are not included in that? We all know that London in particular is the home of many legal services that have been part of the grey area of advice when it comes to these sanctions. I would be grateful to hear whether the Minister has any comments on that. We would certainly be supportive of ensuring that there is no loophole when it comes to financial services that can be masked as legal services; we need to ensure that there is no loophole for that.

I also wish to pick up on the point about our support for those in the fleets as far as the oil or dual-use goods on the shipping are concerned, as well as with regard to our position on the countries where they are landed. The point was made eloquently that many of those are our trading allies. I know that the Government have previously had frank—I hope—conversations, but surely we are now beyond the point of having frank conversations; we need to be considering actions.

In that regard, I would be grateful if the Minister could comment on the news from the end of August that the United States is moving towards secondary sanctions on those operating on financial services in jurisdictions where it believes that the sanctions regimes are being circumvented. I believe that secondary sanctions on financial institutions would be effective; I would be grateful if the UK were part of that. Indeed, what is the Government’s current position on considering secondary sanctions? This is obviously a sensitive diplomatic area, but I believe that it is important.

Can the Minister address a question that I asked his predecessor on jurisdiction? I acknowledge that these measures are UK-wide but I asked previously about the overseas territories when it comes to shipping and potential licences that are exemptions to them. We know that, when certain tankers land in overseas territories, they can operate under a different regime. I would be grateful for clarification that they are also covered by these sanctions.

I wish to ask a minor question regarding limited exemptions. Obviously, we know that there should be the capacity for some kind of exceptions in the regulations, but, to prevent an exception becoming a loophole, can the Minister confirm that the exceptions in these sanctions are defined across the G7 and our partners, so that there is no distinction between exceptions under these sanctions and those in the United States or the European Union? If the Minister could respond to these points, I would be grateful.

My final point is that the Government have our full support in ensuring that there is as much consequence for the Russian war economy as possible. No UK entities, whether in the City of London, finance, shipping or insurance, should have any part in supporting the Russian war regime. We continuously support the Government to ensure that there are no limits to what we can do to ensure Ukraine’s support.

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[Lord Collins of Highbury (Lab)]

I was going to come to that point. I am more than happy to sit down and write on the question of secondary sanctions, because this is not simply about how we extend our regime; it is a point of principle as well. As I and the noble Lord, Lord Ahmad, have said repeatedly, sanctions are effective only if we act as a collective with our allies, not by working in isolation. If we want sanctions to be more effective, we have to convince our allies and others to support those objectives. Anyway, I would be happy to try to pick up on those points in writing.

My next point, which I was going to come to, is precisely on the overseas territories. The noble Lord, Lord Purvis, has asked questions about them before; I have done so myself. At the time, the noble Lord, Lord Ahmad, answered that

“all UK sanctions regimes apply in all the UK Crown dependencies and overseas territories, either by Orders in Council or through each jurisdiction’s own legislation”.—[Official Report, 20/7/22; col. 2021.]

The UK, the Crown dependencies and the overseas territories all stand united in condemning Russia’s aggression and have been working in lockstep to enforce UK sanctions, including freezing £9 billion worth of assets. Each territory’s Government are responsible for the implementation and enforcement of sanctions within their territory. We and the OFSI already provide technical support, including through targeted use of programme funds, to build capacity and strengthen sanctions enforcements within those Governments’ jurisdictions. This Government will explore with the overseas territories’ Governments what more we can do to further strengthen their enforcement capability.

I think the question about India, separate from the trade agreement, is: is India undermining our sanctions by selling to Russia? We regularly raise Russia’s actions in Ukraine with India. The Foreign Secretary did so most recently during his opening conversation with the Indian Foreign Minister. The Foreign Secretary highlighted the importance of tackling Russia’s shadow fleet and the need for continued dialogue on this issue. India is a key partner for the United Kingdom and we are committed to working together across a range of issues, including on our commitment to tackle all forms of sanctions circumvention.

The final point was made by the noble Lord, Lord Callanan, about Eversheds Sutherland.

[Lord Vaux of Harrowden (CB)]

Before the Minister moves on to that, on India and, actually, the wider Turkey and China issue, he has not answered the question about how many Russian-originated oil products we are bringing into this country indirectly through India, China, Turkey and others, and what we are doing to try to prevent that. We are indirectly pushing money to Russia because of that process. There is also the unintended consequence of the sanctions on the shadow fleet: the ship-to-ship transfers, which are happening in various places. What environmental impact could that have and what can we do about it?

[Lord Collins of Highbury (Lab)]

We are working on that latter point and, obviously, taking safeguards. The point is that when people conduct illegal activity, you need to be able to police it. Again, that is something that we will work with our allies on.

I am happy to write to the noble Lord on the specific point about quantity, but it is extremely difficult to quantify how much processing is done. We talk about it being simply a refining process, but the refining is more complicated for the products that might be imported into the UK. There might be other products that are coming in.

[Lord Vaux of Harrowden (CB)]

It seems to be particularly aviation that is a problem.

[Lord Collins of Highbury (Lab)]

Yes, I know. I will write to the noble Lord and see what we are able to estimate.

I come to the final point, on the law firm Eversheds Sutherland. I am afraid I will have to write to the noble Lord, Lord Callanan, on that as well.

I have spoken for some considerable time on this, but it has been an extremely useful debate. I thought we would broaden out the discussion to the more general question about how our regime can be strengthened. I reassure noble Lords that we have transformed the use of sanctions. The measures in the regulations show our commitment to continuing to strengthen our sanctions regimes and their implementation and enforcement, and, more importantly, to review their ongoing appropriateness and changing foreign policy contexts.

Once again, I thank all noble Lords for their insightful contributions and continued cross-party support and co-operation, which are vital in sending a strong message to Putin and his regime. I hope the Grand Committee will support the regulations.

Restoration and Renewal

Lord Vaux of Harrowden Excerpts

Wednesday 13th July 2022 Lords Chamber

[Lord Vaux of Harrowden (CB)]

My Lords, I remind noble Lords that I chair your Lordships’ Finance Committee and therefore sit on the commission. In those roles I have become more involved in the discussions around R&R in the last year or so, but I stress that today I am speaking entirely on my own behalf.

I wholeheartedly support the Motion in front of us today and the changes being made to the governance of the R&R project. We have heard quite a lot of doom and gloom so far and I am sure we will hear more, so let me try to put a more positive view on things, if I can.

First, I will say a word on what the proposal is, and what it is not. This is not about prejudging the end result—what options will be chosen, whether we decant or not, the level of accessibility and so on. Those decisions are for the next stage, once the delivery authority has done its job in providing us with a range of options. This proposal is about how we get to that point and ensure that we are able to take the right decisions. I am sure that some will think we already know what the options are, but really, we do not. No intrusive surveys have yet been carried out—they are, at last, happening this summer—and only very limited options have been considered. Like most noble Lords, I expect that a full decant or at least some decant will be required. But again, that is not a decision for today.

I thank our representatives on the sponsor body board. They have worked extremely hard to get us to this stage and, frankly, their task was pretty much impossible. They deserve our sincere thanks. But the existing structure was flawed and, frankly, not working. The sponsor body was created in part to put R&R at arm’s length from Parliament and to remove the politics from it. That failed. It was not the fault of the sponsor body but we ended up with the two Houses of Parliament taking opposing positions. The whole thing became, frankly, rather Brexity, split between “decanters” on one side and “non-decanters” on the other, rather than trying to find imaginative solutions to the problem. One of the great positives to come out of this new situation is that the two Houses are now working much more closely together. Personally, I have been encouraged by the amount of common ground we have had in our joint meetings.

The sponsor body was also meant to be the “critical client” for the delivery authority but, in reality, I am afraid that it has become its de facto communications arm. This has been most evident in the poor control of expenditure, as the noble Lord, Lord Colgrain, previously raised. The combined expenditure of the sponsor body and the delivery authority to date has been well over £200 million—I think the noble Lord said £212 million—which includes incredibly high expenditure on corporate overheads and consultants and, in particular, extraordinary levels of expenditure on IT. The sponsor body itself has been paying between £5 million and £7 million a year to a big four accountancy firm just for the business planning. As I say, the intrusive surveys are only now kicking off, nearly two years later than planned. Most of the work done has been desktop analysis and modelling rather than genuine “sleeves rolled up” investigation.

The structure also created a very “them and us” situation. Our in-house teams, who probably know more about this building than anybody else, have not been sufficiently involved in the R&R process so far. This reset should ensure much closer collaborative working—it is already achieving it. However, we should be looking at how we can improve the situation, and I believe that this reset creates some real opportunities.

First, we have heard comments, and I am sure we will hear more, about kicking the can down the road. I have a more optimistic view. There has been a tendency to defer decisions on important work simply because it will be part of R&R. Part of that is to avoid nugatory spend, but part of it has simply been “It’s simply too difficult to make that decision now: let’s park it.” We now have the opportunity to bring some of those elements forward, especially where they relate to safety and risk, and I very much hope that will happen. I urge the teams to give us tangible examples of that as soon as possible.

Secondly, I hope we will now see a fundamental change in approach and mindset. So far, the way it has worked is that the sponsor body and the delivery authority come to us to ask how we want things to look and then go away to investigate that scheme. To me, that is the wrong way round. As Members of this House, none of us are experts; we do not know what is the art of the possible; and we do not really understand the state of the building. Of course, we know the broad parameters of where we want to end up—safety, accessibility and fitness for purpose as a home for Parliament in the future—but there are many ways to achieve that. To prejudge the detail before we have the options is the wrong way round. In this, I disagree with the noble Lord, Lord Carter: we should not set the endgame before we know the situation and before the delivery authority has imaginatively come up with what we need to do.

We need the delivery authority to do the work, including the surveys—which should have been done two years ago—and come back with a range of options that will allow us to take an informed decision. We must also test some of the articles of faith that have emerged that are not always entirely based on fact. One I hear regularly is that the building is falling down faster than we can maintain it. I see no evidence of that anywhere and, when I asked for it, the sentence was taken out of the paper.

This requires much greater imagination and creativity by the delivery authority. Let me give your Lordships some examples. One reason the costs are so high is the assumption that everything should stay the same. First, we must remove all the services out of the basement and then we put them all back in the same place. That has huge time and cost implications. If it is possible to do it differently—to install services in a different location—we could do those two things in parallel, or even avoid the first step by leaving what is there. We do not have to remove it if we do not have to replace it there.

We have also been overly cautious over heritage constraints. I am quite pleased that the noble Lord, Lord Cormack, is not following me, because he might choke at this point. Of course we need to preserve this amazing building, but not in aspic. Buildings evolve, as this one has since it was built. We should look seriously at options that would reduce costs and, potentially, make the building a better home for Parliament, even if there are heritage implications.

The noble Lord, Lord Newby, mentioned glazing in the courtyards, and I agree. My example is lifts. Putting improved accessible lifts in current locations is very difficult, time-consuming and expensive. An easier solution might be to put them up the outside of the building in the courtyards, where no one can see them. That is easy and cheap, but has not been considered so far. That is just an example—it may not be workable—but I am asking that we think more creatively to save and improve this building. The current proposals would see a 20% reduction in usable space for the £7 billion to £13 billion we are talking about. Where is the imagination in that? Where is the out-of-the-box thinking? I am sure we can do better.

The new governance structure will help, with more co-operative working between the two Houses—it already is. It should allow some work to be accelerated and, I hope, will encourage greater creativity of thought, hopefully leading to better proposals for the Houses to agree. I am completely behind the proposed changes, and I urge noble Lords to accept them.

Coronavirus Grants: Fraud

Lord Vaux of Harrowden Excerpts

Tuesday 25th January 2022 Lords Chamber

[Viscount Younger of Leckie (Con)]

That is a good point. It is certainly something that I shall need to look into and I shall need to write to my noble friend about it. There is no question but that the auditing side is particularly important.

[Lord Vaux of Harrowden (CB)]

My Lords, the sorts of fraud that we heard so vividly described yesterday would have been a lot more difficult if directors’ identities had to be verified. The Government announced some 18 months ago that they would do that. When will they start insisting that Companies House verify identities of directors?

[Viscount Younger of Leckie (Con)]

That is certainly one of the lessons learned; I know that it is on the agenda to be looked at.

Pension Schemes Bill [HL]

Lord Vaux of Harrowden Excerpts

Committee stage & Committee: 3rd sitting (Hansard) & Committee: 3rd sitting (Hansard): House of Lords
Monday 2nd March 2020 Grand Committee

[Lord Vaux of Harrowden (CB)]

My Lords, the noble Baroness, Lady Sherlock, talked about the business model of these dashboards. The noble Earl has just talked about multiple commercial dashboards. There must be a reason why people will wish to create these things, and therefore there must be a business model behind them. What is the Government’s vision for that?

[Earl Howe]

The Government’s vision is for consumers to have access to their own information if they wish, and a multiplicity of ways to achieve that. We believe that more is better in this context. That is not to make comparisons between one provider and another, but multiple dashboards will give consumers more choice in where they access their pensions information, and will drive innovation to meet what are bound to be the varied needs of those 25 million people with private pension wealth who are not yet in receipt of their pension.

[Lord Vaux of Harrowden]

My apologies: my question was not clear. I was asking specifically about the business model behind this. What is the incentive for commercial providers to create these things? Is it advertising? We have talked about transactions, et cetera. If we are going to have this multiplicity of them, there must be a multiplicity of reasons. Do the Government have a view on the best model and controls around that, whether it might be advertising, transactions or charges to funds?

[Earl Howe]

Scheme providers have been absolutely clear that they are keen for this to happen, mainly because the more exposure that the information has to the particular consumer, the more opportunities there may be for a dialogue between the consumer and the scheme provider—“Are you saving enough? Can we do more for you?”, that sort of thing. They see marketing opportunities in this, but that is very distinct from allowing the dashboard to enable them to enter into transactions. I hope that I have already covered that point satisfactorily.

--- Later in debate ---

[Lord Vaux of Harrowden]

I am staggered by the numbers on the cost of doing this that are bandied around. As far as I can see, the main work here is formatting data into a consistent format so that it can be uploaded to whichever platform it needs to be uploaded to. Frankly, the creation of a platform is pretty trivial stuff. It is not dramatically different to what happened with open banking in that respect; that was a question of formatting data and ensuring that it was in a consistent format. Do we have any idea of the open banking process costs so that we can compare them—and, if they are dramatically different, ask why?

[Baroness Altmann]

I echo the words of the noble Baroness, Lady Drake. A number of elements of the expense shown in the impact assessment are elements that one would have hoped that the industry would take upon itself in any case. I sometimes need to remind providers that automatic enrolment has been an absolute gift to them. It has brought them 10 million new customers on a plate, with all the associated tax relief money. Surely they need to take an obligation upon themselves to modernise their processes and bring their IT into the 21st century. The standard answer is: “It’ll cost too much”, or, “We’ve got our own system, we don’t want to change to a new one”, but in Australia, the Government mandated a particular system that everybody had to adopt so that there was a common standard. It worked very well. My noble friend suggested that the industry delivery group is working on such a potential procedure, which would be excellent. It would incur costs but it would set the industry up for much more business in future on a long-term, sustainable basis.

Palace of Westminster: Restoration and Renewal

Lord Vaux of Harrowden Excerpts

Tuesday 6th February 2018 Lords Chamber

[Lord Vaux of Harrowden (CB)]

My Lords, the noble Baroness, Lady Andrews, mentioned Guy Fawkes at the beginning of this debate. I regret to say that 412 years ago some of my ancestors took part in that plot to destroy Parliament. I hope that, by taking part in this debate to save the Palace of Westminster, I can make at least some amends.

As a new Member of your Lordships’ House, I am still getting to know this remarkable building. I understand the reluctance to spend a large sum at a time of austerity and, from a purely personal point of view, I would be sad to leave before I properly got to know it. However, we need to face up to the problems, and I do not think it is really a difficult decision.

Many noble Lords have explained the importance of this building, so I will not repeat what has already been said other than to say that I agree entirely. Report after report tells us of the dangers that the building faces from outdated and dangerous services, asbestos, a lack of proper fire protection and so on. Many of your Lordships have, like me, been on the basement tour. As we have heard, the problems are obvious. As a result, we are spending millions of pounds every year on patches and short-term fixes. This is money that is ultimately wasted.

We really have to do something, and get on with it quickly, or we risk losing the building or even, God forbid, someone being injured or killed. I do not think that I can say it better than our recently departed Black Rod, David Leakey, who said:

“We will … be accused of sitting on our hands. What an embarrassment and a disgrace it would be to our nation if our Parliament suddenly disintegrated in a puff of asbestos”.


Anyone who has ever undertaken a major property renovation knows that it is much easier, quicker, safer and cheaper to move out and get it done in one go—a full decant. The Joint Committee backed this up and highlighted the additional costs, and risks, of the other options. The cost will be met by the taxpayer. We therefore have no choice but to do this necessary work in the most cost-efficient way possible, so I am delighted, if surprised, that the other place has at last voted for the full decant option.

However, the Motion accepts that expenditure on the Palace during this Parliament will be limited to preparatory work. We are told that we will not move out and that real work will not start until 2025. That is at least seven years—seven years in which we will need to continue to waste millions and continue to risk a disaster occurring. We are still kicking the can down the road. I was going to use the word “cowardice” but I will not. We should be looking for ways to accelerate the process, not only to save money but to reduce the risk. I therefore cannot support the amendment of the noble Lord, Lord Naseby. There has been more than enough analysis already and we now need to get on with it. Indeed, if I had my way, we would remove paragraph (5) from the Motion.

Perhaps I may make a suggestion about our moving out that may be more controversial. There are those who believe that Parliament should permanently relocate. I am not one of them. Parliament’s place is in our capital city and in this iconic building, but I wonder whether we should not be a little more creative during our period of relocation.

Over my first few months in this House, I have been deeply impressed by the quality of debate and scrutiny that takes place here. This is a House of extraordinary expertise and great hard work, but I do not think that what happens here is widely appreciated by the public. I had a guest to visit recently—someone unfamiliar with what we do here. He sat in for a bit of the Committee stage of the Data Protection Bill. His comment afterwards was that it was not at all what he expected—more boring, yes, but he was very impressed by the detail of the debate and its lack of political point scoring. He had been expecting something more like Prime Minister’s Question Time in the other place.

He suggested that, if we are to leave this building for a few years, perhaps there is an opportunity to get this message across more widely. Instead of just moving over the road, why not look at some of our other great cities—Birmingham, Manchester or Glasgow, if devolution allows it—perhaps a year or two at a time? I realise that this has been considered. There are real practical difficulties and, from what we have heard already, it is clearly not a popular idea. However, I think that we should look at this as an opportunity to think creatively about how we can better connect with the public, and them with us, more directly during this transitional period and not just try to replicate across the road what we have here.

I will finish with a more short-term plea regarding the wildlife. The mice I can cope with—indeed, there are a couple that have almost become personal friends—but the moths! Given that nothing looks like happening soon, please could we put aside some time during a recess to have the building fumigated? Please forgive me for the image that I may be about to put into your Lordships’ minds but I worry that if I sit still for too long in this Chamber, I will stand up to discover that my clothes have been turned to lace.