Andrey Lugovoy and Dmitri Kovtun Freezing Order 2020

Debate between Earl of Courtown and Lord Tunnicliffe

Tuesday 11th February 2020 Grand Committee

[Lord Tunnicliffe (Lab)]

My Lords, it is not the intention of the Labour Front Bench to oppose this order nor to rehearse the merits of the case. However, as a matter of principle, I would like the Minister to explain why he had to use the “made affirmative” procedure. When a two-year order is about to expire, the one thing you know is that you would have had two years’ notice of that. It is not clear why a perfectly normal order could not have been made. This procedure should be used only in emergency circumstances.

[The Earl of Courtown]

I thank all noble Lords for their contribution to this short debate. I will do my best to cover all the points raised but should I miss any out, I will write to noble Lords. The noble Baroness, Lady Kramer, asked how the asset freeze affects real property—land, buildings et cetera. She also mentioned cryptocurrencies, which she had referred to in the previous debate, two years ago. Under an asset freeze, all funds and economic resources must be frozen. No funds or economic resources can be made available, directly or indirectly, to a designated person or for their benefit. To do so may be a criminal offence. Funds generally mean financial assets and benefits of every kind. Economic resources—this relates to the noble Baroness’s point about property—generally refers to assets of every kind, tangible or intangible, moveable or immoveable, which are not funds but which may be used to obtain funds, goods or services. This includes, but is not limited to, property. As confirmed in the previous debates, crypto-assets are also covered by this.

Public Bodies (Abolition of Public Works Loan Commissioners) Order 2019

Debate between Earl of Courtown and Lord Tunnicliffe

Tuesday 11th February 2020 Grand Committee

[Lord Tunnicliffe (Lab)]

My Lords, the Labour Front Bench does not intend to oppose these statutory instruments but the essence of the case for getting rid of the commissioners is that, essentially, they do not do anything and taking them away will have no impact or a benign impact. That is quite an attractive argument, until it alerts one to the question of how these loans are actually managed and controlled.

So, my first question is: can the Minister flesh out a bit more how loans to local authorities are managed and controlled? I realise there is a letter from John Glen that may answer this question but there is a crucial difference between a letter that floats around among Peers and a record in Hansard. Local authorities will be reading this debate—poor souls—and a clear statement by the Minister in the record is worthwhile, so can he explain how loans to local authorities will now be managed and controlled?

Secondly, I come to the exact point that was made previously. I do not know, but it sounds as though it is true that some local authorities have been taking loans and investing their money in property, perhaps as a straightforward business exercise to support their other incomes. If the answer to that is yes—it seems that it is—is this practice legal, or at least is it seen as undesirable? In the light of the fact that it has been debated in other places, has it now been stopped?

My next question is: why were interest rates raised—last autumn, I believe—from 1.8% to 2.8%? I do not know the system, so does this apply to current loans or just to new ones?

[The Earl of Courtown]

My Lords, I thank noble Lords for their contributions and questions.

My noble friend Lord Deben asked how Parliament will be kept informed. I may have to write to him with the exact details on that issue, but I will take it back to the department and try to get some clarification on it.

First, I will deal with the point made by the noble Lord, Lord Tunnicliffe, and explain how loans to authorities will now be managed and controlled. The statutory instrument does not change how loans are managed or controlled. The purpose of the statutory instrument is to resolve to administrative risk around the recruitment and maintenance of a quorate board of commissioners, as I said earlier. There is no change to existing debt or to lending terms. Day-to-day operation of the PWLB will continue to be managed by the Debt Management Office. No action is required by local authorities. The Government consulted on this change in 2016 and found widespread support.

[Lord Tunnicliffe]

With respect, that does not answer the question. To be fair, I gave him a few hours’ notice of it. Subsequent questions suggest that it has not gone exactly right—that this money has not been used for general purposes. I cannot take a view on that unless I know how the Debt Management Office does its job. For example, what criteria does it use? How much direct control does it have, or is it a big bag of money? I know that I should know that, but given the number of portfolios I have, please forgive me for not knowing the answer to my own question.

[The Earl of Courtown]

I understand that the noble Lord is for ever on his feet on a wide range of issues. I am probably putting the cart before the horse. If we go to the cart, I will come on to aspects of the management of the governance relating to these loans.

The noble Lords, Lord Shipley and Lord Tunnicliffe, and my noble friend Lord Deben referred to property investments being made by local authorities. Decisions on borrowing and spending capital are devolved to local authorities. They pick capital projects in line with local priorities and choose how to pay for those projects, including whether to borrow. Where local authorities borrow, they must have regard to the prudential framework—as set out by CIPFA and MHCLG, or the respective devolved Administration—to ensure that they borrow prudently.