Russia (Sanctions) (EU Exit) (Amendment) (No. 15) Regulations 2022

Catherine West Excerpts

Monday 14th November 2022 General Committees

[Catherine West (Hornsey and Wood Green) (Lab)]

It is a pleasure to serve under your chairmanship, Mr McCabe. I thank the Minister for her remarks, and I thank all the staff at the Foreign, Commonwealth and Development Office and the Treasury who are working so assiduously to devise and implement the sanctions that make up our regime.

I am aware that there is a general debate on Ukraine taking place in the Chamber later today. I associate myself with the comments by the shadow Defence Secretary and the shadow Foreign Secretary, my right hon. Friends the Members for Wentworth and Dearne (John Healey) and for Tottenham (Mr Lammy). We are now over eight months into a brutal and illegal war that President Putin expected to be over in days. Instead, here we are, with Ukrainian flags once again flying over Kherson and Russian troops in chaotic retreat from territories that they illegally annexed. We cannot overstate the significance of this victory, and I am sure that all Committee members would join me in expressing solidarity with President Zelensky and the Ukrainian people at this critical juncture in the conflict. [Hon. Members: “Hear, hear.”]

However, I am sure that the Committee will also agree that this is no time for complacency. British support for the Ukrainian advance has been critical, and if we are to demonstrate to Putin that his illegal war is doomed to fail, we must keep the pressure up. The sanctions regime, and its continued expansion and evolution, is integral to pushing Putin back and isolating Russia from the global economy and the international community.

We in the Labour party have been clear since before the Russia report was released that we should take a tough line against President Putin’s aggression. My colleagues and I on the Front Bench have consistently called for the widest-ranging sanctions to be applied to halt Putin’s aggressive rhetoric and warped imperial notions. Labour therefore welcomes the designations and sanctions announced today, which place additional trade restrictions on goods and commodities essential to the Russian economy.

The announcement of a further expansion to the prohibition on loans to certain companies is also welcome, although I have some minor questions for the Minister. What assessment has been made of the revenue loaned to Russia-connected persons and companies since the start of the war in February? Given that it has taken eight months for the change to be made, it would be useful for the Committee to know how much Russia-connected entities have obtained, monetarily, since the onset of the war through securing loans in that way. In other words, have we missed an opportunity?

While we welcome the widening of the scope of the regulations to include companies outside Russia, including UK-based companies, the explanatory memorandum cites a phasing-out period for the existing category of loans. How long does the Minister expect that process to take?

Labour fully supports the prohibition on the import of liquified natural gas, which is integral to Russia’s economy, and welcomes that commitment. However, will the Minister please account for why that measure does not come into force until next year? What will happen between now and 1 January? Will we be importing Russian LNG until then? What assessment has been made of the effect of that delay on the short-term impact that we need the sanctions to have? The period until Christmas is crucial because of where we are at in the conflict.

As with the other sanctions and measures that we have debated over many weeks and months, the official Opposition do not oppose the regulations, and we will not divide the Committee. We welcome the steps taken to expand the UK sanctions regime, make it more robust and remedy any cracks in it. However, we must do so with expediency and as part of a whole-Government approach to not only shut off the streams that feed Putin’s war machine but decisively end the Kremlin’s influence in our economy and our politics.

For years now, my hon. Friend the Member for Wigan (Lisa Nandy) and my right hon. Friend the Member for Tottenham, as Labour shadow Foreign Secretaries, and the shadow Minister, my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), have raised the Intelligence and Security Committee’s Russia report. It made many prudent and practical recommendations, but, unfortunately, the Government have rather dragged their heels in implementing them, seemingly without reason. There has been no real answer forthcoming from the Minister, or her team, as to why those recommendations have not been adopted in full. Some gaps still remain.

I am also particularly concerned about the pace of action to tighten up the provisions on the overseas territories and the transparency of their institutions. While progress has been made, organisations such as Transparency International continue to raise concerns that anonymous companies registered in Britain’s offshore financial centres are being used to evade UK sanctions, weakening the comprehensiveness of the UK’s sanctions list.

Furthermore, could the Minister update the Committee on the Companies House revisions that we recently discussed in the House? What implications does she think they might have for the sanctions that we are debating? Surely, once people have to declare their identity and come clean with Companies House about who owns what companies, there will be much work to be done to root out underlying irregularities relating to businesses in the UK that may be aiding and abetting President Putin’s cronies.

Having reviewed the Office of Financial Sanctions Implementation’s annual report, I am struck by the changes that have taken place this year across the Department, and I commend the staff there for their work and diligence in enforcing the UK’s sanctions regime. For quite some time, Labour has been calling for the Treasury to be more campaigning, in the way that the US Treasury acts, around sanctions and taking a political position on certain countries that we do business with. I noticed in the report that staffing numbers are forecast only to the end of the year, despite there being every reason to believe that they might need to exceed 100. The projections for the long term need to be in place now, with a commitment from the Treasury that the funding is there should we need it.

Will the Minister provide the Committee with her long-term expectation for the number of full-time staff that OFSI will need? We all know that the war could rage on for some time, and that might have a resource implication. I accept that, as an FCDO Minister, she will not want to commit a Department that is not hers, but it would be helpful for the deliberations of colleagues and officials in the Department to know that there could be an expectation of increased need for resource.

Additionally, what conversations has the Minister had with the new Chancellor of the Exchequer regarding the long-term funding of OFSI to ensure that staffing will not be quietly reduced over time? The Government’s capacity to implement sanctions at pace must be commensurate with the scale of the challenge before us. I hope that the Minister will be able to provide the Committee with answers on that.

Since the last time our regime was expanded, what further thought has been given to the permanent seizure and repurposing of frozen Russian assets? To date, excluding property revenues, £18.3 billion-worth of assets have been frozen. Let us think of the impact that that amount of money could have on Ukraine’s short and medium-term humanitarian needs and its long-term recovery if it was repurposed. One must only look to Kherson’s critical infrastructure to recognise how much it is going to take to undo the damage that the war has done. Is that something the Government are currently considering? What steps, if any, have been taken to repurpose those assets?

To see Kherson and other towns and villages liberated by Ukrainian forces is deeply moving and is testament to the courage and resilience of the Ukrainian people. Labour is committed to working with the Government in supporting Ukraine in the difficult winter ahead and well into the future, and to the widening of our sanctions regime. Ukraine will win, and, with our support, we can ensure that its victory ends the Kremlin’s cycle of warmongering for good.