Countering Russian Aggression and Tackling Illicit Finance

Anthony Mangnall Excerpts

Wednesday 23rd February 2022 Commons Chamber

[Mr Baron]

I thank my hon. Friend for the intervention, and I certainly think there is greater scope for cross-party consensus on these key issues. We come together in condemnation of Russia and events such as this, but we need also to come together on such things as defence spending and diplomatic spending.

Let me return to soft power. I am chairman of the all-party parliamentary group on the British Council, and I know that some Members on the Opposition Benches have served with the British Council. We work together in trying to promote the interests of the British Council, but let me cite a further example of where we are going wrong as a country. Last year, the Government failed to meet the £10 million shortfall between the British Council’s commercial activities—predominantly the teaching of English in the far east, mostly in China—and the money the Government supplied. That £10 million shortfall has resulted in the closure of 20 country operations. That is not global Britain or the furthering of the interests of soft power. The British Council is a key instrument of our soft power capability. We are a soft power superpower, but we should never take that for granted.

[Anthony Mangnall (Totnes) (Con)]

My hon. Friend is taking us on a journey. I appreciate the point he made about increased military spending and an increase in boots on the ground in our armed forces, but does he feel that we as Members of Parliament do not have the full facts, whereas Ministers and officials do and see far more than we do? It is not necessarily right to criticise them for what they may or may not have seen. On top of that, we should be aware that there must be a sliding scale in respect of the sanctions on Russia. We cannot put everything on Russia all at once; we have to see how the situation develops.

[Mr Baron]

I am afraid my hon. Friend has greater faith than I have. We have an excellent civil service and, by and large, parties on both sides of the Chamber have supplied good Ministers, but I would not have blind faith in every single Minister or official. The bottom line is that we are making cuts when there should not be cuts. When it comes to the calibration of the response, what my hon. Friend says may be the case, but there has been no calibration of the response since Russia’s invasion of Georgia in 2008. There has been absolutely nothing, so I would not necessarily assume that we should suddenly come round and say there must be a calibration now.

I have had the nod from Madam Deputy Speaker, so I am conscious that I need to move on. On the issue of soft power, in addition to the closure of 20 country operations last year, we face further country closures this year because, despite the FCDO’s budget going up 21% in the comprehensive spending review, the British Council’s budget is, believe it or not, falling again, stirring up questions about cuts.

In conclusion, in taking on the oligarchs and those who do not believe in democracy, we have to have a rounded response. We need to increase defence spending—I have called on the Labour party to help us to move the dial on that and to work in as cross-party a fashion as possible; we need more money for the diplomatic service; and we need to make sure we fund every avenue of our soft power capability, because it is going to be a battle of minds and ideas as much as it is going to be a battle of hard power.

--- Later in debate ---

[Dame Angela Eagle (Wallasey) (Lab)]

It is a pleasure to follow the hon. Member for Basildon and Billericay (Mr Baron). I wish to focus a bit more on the economic crime and money laundering aspect of today’s debate, because we talked about sanctions last night and the political situation has been well covered.

I am a member of the Treasury Committee. A couple of weeks ago we published our 11th report of the Session, which is before the House, and we await the Government’s response with interest. It was frustrating to take evidence for that report in the knowledge that in 2019 our predecessor Committee had come up with detailed recommendations on dealing with the issues of money laundering, economic crime and fraud that were then becoming a problem, only for us to have seen the levels of all those crimes rise rapidly from 2019 and onwards into the pandemic, costing this country billions of pounds.

Others have pointed out how we allow London to be described as a laundromat for dirty Russian money, which is what the Intelligence and Security Committee’s Russia report told us was the case when it was published in 2020, after a significant delay that was down to the Prime Minister’s not allowing it to be published. It is frustrating to be two years further on from that report and to see no effective response to many of the things it said. If the Minister had come to the Dispatch Box and said, as a result of this debate, “We’ve seen the Russia report; we’ve been a bit tardy but we’re now going to put its recommendations into effect”, I would have been reassured. Yesterday, I asked the Prime Minister whether, in the light of Putin’s actions in Ukraine, he would do that, but he did not answer in the affirmative.

We are, then, in a situation in which London can still be described as a laundromat for dirty Russian money. It is now seen as the jurisdiction of choice for dirty money. One of the most vivid things I recall from when the Treasury Committee sought evidence for its report on economic crime was the ministerial evidence we were given. Ministers provided no satisfaction whatsoever that proper progress was being made. Where is the hold-up? Where is the blockage that is preventing what should be obvious progress from being made? Some measures have been announced for years and years, yet we have seen no proper or legislative progress.

We all welcome our City’s importance as a financial centre, but it is now being compromised by a baffling lack of urgency in dealing with economic crime. Our security is being threatened by international criminal gangs, kleptocrats and terrorist financing, yet the Government seem to have become fixated on describing complex processes rather than acting to stop their outcome, which is rising levels of economic crime and fraud, affecting many of our constituents when they are scammed out of hard-earned money.

[Anthony Mangnall]

I apologise for interrupting the hon. Lady and for not having read that report. Did it include anything on the reform of Companies House to include more transparency in respect of ownership and structures? That is a huge issue.

[Dame Angela Eagle]

Perhaps the hon. Member should read the report, which is very comprehensive. If he had read it, he would know that it did indeed deal with that issue. It is something that we have been talking about, and our predecessor Committee was talking about, for a very long time, yet there is still no action. Apparently, the Chancellor has put aside a little money and the Government are talking about doing something in 2023-24. Our predecessor Committee was talking about this in 2019. Nothing has happened. Why has nothing happened?

We urgently need greater transparency, tougher regulation and tougher enforcement. As others have said, we need to introduce an open register of beneficial ownership of companies. The Prime Minister repeats that that is what the Government are doing, but there is no sign of it. David Cameron promised one in 2015 to get him through a G20. The legislation exists in draft—the hon. Member for Glasgow Central (Alison Thewliss) served on the Joint Committee on it and read it in minute detail—but there is still no progress. The Prime Minister reiterated that we were going to have an open register of beneficial ownership of companies to get him through the G7 in 2020, but there is still no sign of it. Why? We have enough time. The Prime Minister has had offers from the Opposition to facilitate the passage of legislation quickly to get it on the statute book, but the will does not seem to be there.

We need an economic crime Bill. Lord Agnew, who was responsible—you could not make it up, Madam Deputy Speaker—for fighting fraud in the Treasury, resigned at the Dispatch Box in the House of Lords in frustration because he could not perceive any urgency or determination to tackle the rising levels of fraud in the pandemic support schemes. He was so aghast at the lack of willingness there seemed to be in the Government that he felt he had to resign to “smash some crockery”, as he put it.

We need reform of the corporate liability law to crack down on money laundering and facilitation of this kind of crime in the banks. We need to deal with the urgent reform of Companies House. I have already discussed this. It is on the Government’s so-called agenda year after year after year. People can still create a company at Companies House, say that the owner of it is Vladimir Putin or Mickey Mouse and nobody will tell them not to do it. They can then use that to defraud various people and launder their cash. This is a joke and there is still no urgency in dealing with it.

We need to deal with the fragmentation of law enforcement if we are to deal with economic crime. No one part of the law seems to have any kind of coherent responsibility for enforcing it, so even if we had tougher regulation, we do not have the enforcement muscle to make sure that we get the outcome. Why are the Government dragging their feet? Why are they so ineffectual? Why is there no measurement of the outcome? Why do we have this kind of benign neglect as the forces of darkness gather, as they focus on laundering their dirty money through the City of London? We know how this affects people in terms of property prices. How can we have sanctions if we do not know who owns the companies that the money is flowing through? This has to be dealt with. The problem is getting far, far more urgent than it has ever been before. Our democracy is at stake and we expect this Government, finally, to get off their backside and do something about it.