Iran (Proposed Nuclear Agreement)

Debate between Guto Bebb and John Baron

Tuesday 16th June 2015 Westminster Hall

[Guto Bebb]

Again, I accept my hon. Friend’s comments. To a large extent, one of my concerns is monitoring, and the access that monitors will be allowed, so that that type of review can be conducted. There are real concerns as to whether that monitoring will be of an acceptable nature.

We also need to address the issue of the nuclear sites. If my understanding of the proposed deal is correct, two sites—Natanz and Fordow—will be retained. I must ask the Government and the Minister a question about that. If such a concession has been made, what concessions have been offered in return by the Iranians to facilitate the agreement?

[Mr John Baron (Basildon and Billericay) (Con)]

I congratulate my hon. Friend on not only securing this debate, but approaching it in a very balanced way. He was good enough to accept that, in the past, mistakes were made by both sides, and we in the west would now gladly take up some of the concessions that we once refused, because things have been moved on.

I say to the Minister that although it is terribly important that we have the proper safeguards in place in any agreement, particularly to protect our friends in the region—I accept that point 100%, and we must focus on it like a laser—we must not lose sight of the benefits that would arise from our reaching some sort of agreement with Iran. There could be many such benefits across the region, which is becoming increasingly unstable, and we cannot ignore the fact that Iran is a major regional power that we created with our misguided invasion of Iraq.

[Guto Bebb]

I agree with many of my hon. Friend’s points, and I agree that the benefits arising from a good deal are worth fighting for. However, I suspect that many Members have concerns about the nature of the proposed deal and about the certainty that any such deal offers Iran’s neighbours, who also have real concerns, as he acknowledged. I accept the point about mistakes made in the past, and the importance of having a proper deal in place. However, the key point is that the deal must be acceptable to all and must give other countries in that part of the world confidence in the long term.

There is also a concern about the proposed length of the deal; we are looking at a deal that will possibly be limited to 10 years. Again, in the context of considering the development of nuclear capacity, we must ask ourselves whether 10 years is reasonable or sufficient. Given that the deal does nothing, as far as I can see, to deal with Iran’s ballistic missile capabilities, there is a real question as to whether 10 years is insufficient.

If the aim is to secure the right deal, can we justify the type of concessions that we have been reading about? Hon. Members touched on verification in their interventions, but we need certainty from the Foreign Office and the Government that there is confidence that the degree of verification allowed under any agreement will be acceptable. Once again, the track record of the Iranian regime does not allow us to be confident in that regard. I understand from those who comment and speculate on what happens in Iran that only last month the International Atomic Energy Agency was refused access, and Ayatollah Khamenei said:

“No inspection of any military site or interview with nuclear scientists will be allowed.”

The question whether we will have a proper verification process in any agreement gives rise to real concern. If we have an agreement with a proper verification process, it must be maintained and foolproof, but once again Iran’s track record does not give us much confidence.

The other question that we need to address is whether an agreement that is as compromising as the proposed agreement appears to be actually contributes to an escalation of the arms race in the region, rather than a reduction of tensions. The agreement appears to state clearly that putting Iran in a position in which it is within six months of a breakout for the next 10 years is acceptable. My concern, which I think is shared by hon. Members, is that other countries in the region would end up in an arms race—not to produce a nuclear weapon, but to be within six months of a breakout. It is worth mentioning that Prince Turki al-Faisal from Saudi Arabia stated clearly that

“Whatever the Iranians have, we will have, too”.

That comment should be taken seriously by the Government when they assess the merits or otherwise of the deal.

Any proposed deal has to satisfy the needs of the P5+1, a very unstable region and our allies in the region. However, the real test is whether it satisfies the original intention, which was to ensure that Iran did not develop a nuclear capacity. Dr Bruno Tertrais stated that we must not

“ignore the lessons of history: nuclear-capable countries never stay at the threshold for very long.”

Looking at the bare bones of the proposed agreement, it would appear that the P5+1 are now willing to accept Iran’s being at the threshold of a nuclear breakout and that that threshold will be maintained for the next 10 years. Dr Tertrais’s words are important in that context. Countries with the capacity to develop a nuclear weapon will almost invariably end up developing it.

Interest Rate Swap Derivatives

Debate between Guto Bebb and John Baron

Thursday 24th October 2013 Commons Chamber

[Guto Bebb]

Hon. Members have made their feelings about that intervention very clear; we all share that frustration.

The FCA and the banks have made it clear that the suspension of swap payments is a concession that has been offered, but as yet only 1,000 businesses have been offered the opportunity to suspend payments. A key message that this debate needs to send out is that if a business wants to request a suspension, it has to be in financial distress. Some banks are stating that a business requesting a suspension is admitting to being distressed and therefore needs to go into special measures. Any small business would be loth to find itself dependent on a team of specialists from its bank’s restructuring department. We need to ensure that a suspension of payment can be offered without the need for a business to go into special measures with its bank.

The delays are the reason that we called this debate, but I also want to highlight other concerns that have been expressed about the redress scheme. I have touched on some of them in response to interventions. A key issue is the sophistication test. I acknowledge the need for such a test. Huge businesses can derive benefits from these products, and they will have the sophistication and expertise to understand what they are being sold. However, there is concern about the decision to introduce a sophistication test as part of the redress scheme.

Anyone who takes out a swap in excess of £10 million will be excluded from the scheme because they will be deemed to be sophisticated. The FCA has found that a key aspect of mis-selling involves banks over-hedging loans taken out by businesses. In other words, a business might have a loan facility of £5 million but a hedge in excess of £10 million. In such a situation, the fact that the bank was guilty of mis-selling would provide it with protection within the redress scheme. That is unacceptable. We need a greater degree of flexibility on the issue of sophistication.

[Mr John Baron (Basildon and Billericay) (Con)]

Would my hon. Friend also accept that the banks have made these processes unduly complex, which has resulted in delays in addressing the issues? In the case of one company in my constituency, it has taken the bank 16 months just to recognise the fact that the company was unsophisticated, to use my hon. Friend’s language. That is clearly unacceptable.

[Guto Bebb]

I agree that 16 months is a very long time. Even when cases are accepted into the redress scheme, they seem to be taking a long time. The banks would argue that businesses need to engage with them, but I believe we still need to look carefully at this matter. The sophistication test should be more flexible, and the discrepancies that I have described need to be acknowledged.

Another discrepancy involves the asset value. A business could be excluded from the scheme because of the asset value that it holds. In effect, it could be argued that a business that had been lucky enough to invest in property at the right time should be excluded from the redress scheme because of that piece of luck. If the asset value had increased to a certain level, that could result in the company being excluded from the scheme.

There is also a lack of consistency. In some cases, the banks are ignoring the sophistication test because they believe that a customer would fail it and therefore be eligible for the redress scheme. Instead, they are moving the customer straight into the assessment of redress. If they can ignore the sophistication test in some cases, where is the consistency? A member of the all-party parliamentary group argued strongly on behalf of a constituent who had a £12 million swap and, lo and behold, the constituent was subsequently allowed to become part of the redress scheme. That was an excellent result for that business, but again, where is the consistency? The FCA needs to look carefully at the sophistication test.

My final point on the sophistication test is that, if a business spends six months waiting to be assessed, those six months will be lost in regard to the statute of limitations for taking legal action. The FCA needs to recognise that, because it is potentially dangerous for the businesses concerned.

A further concern relates to the alternative products on offer. It has been said time and again that if these complex products are unsuitable, it cannot be right to introduce a redress scheme in which a swap can be substituted by a slightly less complicated swap. It is also important to note that a business will be offered an alternative product only if it has failed the sophistication test—that is, if it has been deemed to be unsophisticated. I find it difficult to understand how any alternative product other than a cap could possibly be suitable.

Another reason why the cap is the obvious alternative product is that if businesses had been told clearly of the cost of the products they were taking on board back in 2006-07, they would have seen that a cap would have offered them significantly better value for money. Why was the cap not offered? Probably because of the financial imperative of the banks to sell something more complex and more rewarding. It is thus important to highlight the fact that having a complex derivative rather than a cap as alternative product is a real concern. If businesses have been classified as unsophisticated, that issue should be recognised and we should try to ensure that we provide a cap as the only acceptable alternative product.