Exiting the European Union: Sanctions

Hannah Bardell Excerpts

Wednesday 19th July 2017 Commons Chamber

[Hannah Bardell (Livingston) (SNP)]

I warmly welcome the hon. Member for Saffron Walden (Mrs Badenoch). She made a fantastic maiden speech, and she is a great credit to her community. Her speech was delivered with verve and class, and a good deal of wit. While I may not have agreed with everything she said, I am sure that her contributions will be very welcome to the Chamber.

The world looks at the United Kingdom as the Brexit negotiations develop, to see how we will manage the situation in which we find ourselves, and what kind of relationship we plan to have with the European Union and, indeed, the rest of the world. Given that the UK is without a coherent strategy and seemingly bereft of ideas—and, as we have seen in recent photos, notes—I suspect that the external image of how things are going is not entirely positive. Our international reputation is on the line. SNP Members, however, welcome the opportunity to debate the real impact that leaving the EU will have on our international influence and clout.

There is a risk that after leaving the EU, the UK will be marginalised and diminished on the international stage. I know that no one in the Chamber wants that to happen, but there will inevitably be a reduction in our ability—if not a complete loss of ability—to impose meaningful sanctions on our own, or to make any meaningful contribution to a progressive international agenda. One of the Government’s own colleagues, the former Foreign Secretary, has called for the UK to keep its seat on the EU’s Political and Security Committee. I hope that the Secretary of State and his fellow Ministers will enlighten us as to whether he agrees with his colleague.

As has already been pointed out, sanctions rarely operate effectively in isolation. Success depends on a combination of dialogue, agreement and conflict prevention between various countries. Clearly, working with the EU presents a broader range of tools than would be available to the UK when operating alone. Giving up our seat at the sanctions table will see the UK lose the ability to apply sanctions with the same breadth and weight. It will also lose access to key forums through which to push for ongoing momentum and accord among fellow EU member states. There must not be any serious divergence from EU partners in respect of sanctions. The UK must not relax any sanctions that are materially more restrictive than existing or new EU sanctions, especially when the UK has significant trade with a particular country.

Many have expressed fears that the UK may be dragged on to the new United States President’s rather unpredictable turf. For example, as President-Elect he severely criticised the Joint Comprehensive Plan of Action with Iran. If he were to impose new sanctions on Iran, there might be pressure on the UK—and our “special relationship”—to follow suit. The new President has also indicated that the US would ease sanctions on Russia. The EU’s foreign policy chief, Federica Mogherini, has indicated that the EU will not change its policy on Russia, even if the US does. The UK must do likewise. Leaning more closely towards an Administration led by Donald Trump creates concern for many. We must hear from the Government that they will continue to take their international obligations seriously, keeping fairness and decency at the heart of any new trade deals and sanctions policies.

As the largest trade bloc in the world, the biggest global aid donor and a notable international investor, the EU adds weight to the UK’s foreign and security policy efforts. Commenting on the possible impact of Brexit on the EU’s own sanctions policy, Dr Erica Moret at the Graduate Institute of International and Development Studies in Geneva recently said:

“A Brexit-weakened EU sanctions policy is likely to intensify the need to employ other, more expensive, controversial or complicated forms of diplomacy, coercion or pressure. It will also likely strengthen Russia’s hand against Europe, as it benefits from a fragmented Europe with a weaker toolbox of security instruments at its disposal.”

Those comments are deeply concerning and should worry us all.

Indeed, a Foreign Affairs Committee report said that the United Kingdom’s relations with Russia gave an interesting insight into trouble ahead for the UK acting alone on sanctions. The report concluded that

“it will be increasingly difficult to sustain a united western position on sanctions, not least if they become a bargaining point during Brexit negotiations.”

Our worry is that there is everything to play for, but also everything to lose.

We should all be concerned, because our international role and responsibilities extend much further than just Russia. On 4 April, the latest in a series of barbaric chemical weapons attacks took place in Khan Shaykhun in Syria. More than 80 people were killed and estimates suggest more than 500 were injured. Just this week in Brussels the UK was able to play a central role in imposing sanctions against those involved in that horrific attack. The EU’s Foreign Affairs Council agreed on Monday that 16 individuals will be sanctioned, their movements restricted and their assets frozen. But after Brexit the UK will be diminished and we will have no clout to impose meaningful sanctions, resulting in the UK losing its opportunity to contribute to a progressive international agenda.

After Brexit the UK will need to establish the necessary independent policy development and sanctions design architecture, for which it has mostly relied on Brussels until now.

[Chuka Umunna (Streatham) (Lab)]

The hon. Lady is making some important points, but does this not underline the arguments she is making about the complexity of imposing travel bans, asset freezes and so forth, and stopping those who are the target of sanctions? Does this not underline the argument for a proper transition period in respect of our withdrawal? The suite of instruments the hon. Lady refers to are complex in nature, not least legislatively. I do not see how we are going to be able to complete the process of putting in place a framework that we can apply independently in the tiny timescale that we have before our scheduled exit from the EU.

[Hannah Bardell]

I am grateful to the hon. Gentleman and think he may have been reading my mind, as will become clear from my next point.

If the UK Government cannot agree among themselves on a transition policy for Brexit and a deal, as we have seen this week with the vastly differing approaches of the Chancellor and the International Trade Secretary, I and others seriously doubt their capacity to design sanctions architecture, let alone agree on what and where those sanctions should be imposed. And even if they do, the effectiveness of UK-only applied sanctions will be severely diminished.

The UK Government’s own White Paper sets out, in pretty stark language:

“The UK needs to be able to impose and implement sanctions in order to comply with our obligations under the United Nations (UN) Charter and to support our wider foreign policy and national security goals. Many of our current powers flow from the European Communities Act 1972 so we will need new legal powers to replace these…It is not possible to achieve this through the Great Repeal Bill, as preserving or freezing sanctions would not provide the powers necessary to update, amend or lift sanctions in response to fast moving events.”

And events are moving fast; we have a short period, so the Government need to think very carefully and give us a response on that transition period.

Any new legislation must be clear about how these powers will be developed and implemented and, further, what infrastructure and regulation will look like to support those new powers. Additionally, the Law Society of Scotland has raised a number of pertinent points in relation to the UK Government’s White Paper. These points are significant because they highlight the complexity—as the hon. Member for Streatham (Chuka Umunna) has just said—and scale of the task at hand, not to mention just how many sectors and areas of competence will be impacted by exiting the EU, and the need for a new set of rules and regulations. It is clear that lawyers, accountants and consultants will be very busy over the next few years—and, no doubt, considerably richer. But what estimate have the Government made of the cost of training lawyers and accountants to deal with the new laws and regulations, and what provision has been considered for the teaching of the new regulations and laws at our universities, colleges and institutions? We need a workforce that will be ready to go when those new provisions arrive.

An interesting point about cross-border jurisdiction also arises on page 23 of the Government’s White Paper. The Law Society of Scotland is very concerned about this. The White Paper identifies special advocates as

“barristers in independent practice of the highest integrity, experience and ability, from civil and criminal practices. They are bound by the ethical standards of the Bar Council.”

I know that many in the profession would like clarity and assurances that special advocates should be able to be drawn from the ranks of not only the Bar in England and Wales but the Bar in Scotland and Northern Ireland, and from suitably qualified solicitor advocates in all those jurisdictions, but it appears that the UK Government have again—whether by accident or intent—failed to recognise at the most fundamental level that the devolved nations exist.

According to the Law Society of Scotland, the Government’s proposed additional power to seize funds and assets in order to freeze them appears to be unrelated to the withdrawal of the UK from the EU. This therefore seems like a curious thing to sneak in. Will the Secretary of State clarify why this has appeared at this juncture? It concerns me and, I am sure, others that the UK Government would introduce new legislation that is potentially unrelated to the UK exiting the EU. This is not good practice, and we need to understand the rationale behind it. It is clear that the UK Government are going to have very little, if any, time in which to do their day job as they deal with the enormity of Brexit, but they have some serious questions to answer on how they will manage and develop their sanctions policy. It is key to our reputation on the global stage, and to how we will work with the rest of the world.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

I call Mr Andrew Lewer to make his maiden speech.

--- Later in debate ---

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

It is a great pleasure to follow two such excellent maiden speeches. I congratulate the hon. Member for Saffron Walden (Mrs Badenoch) on her speech. We share a background and a love for the London Assembly, of which we have both been members, and for Nigeria; I sense that she shares not just my love for it, but my frustration that that wonderful country still faces so many challenges. I look forward to working with her over the coming years. I also congratulate the hon. Member for Northampton South (Andrew Lewer) on his speech. He has described his interesting and illustrious predecessors, but his track record, both in Europe and as an excellent council leader, augurs well for his future here. I am sure that he will be named similarly in future maiden speeches. I welcome them both to this place.

Today, we are here to focus on exiting the European Union and sanctions. I want to discuss both those things—together and slightly separately—because they are very connected. I reiterate the comment made by my hon. Friend the Member for Bishop Auckland (Helen Goodman), which is: where is the Bill, Minister? We have already seen the publication of the grand repeal Bill, but this Bill has a pretty important connection with that. We cannot do the one without the other, and it really sums up, as the hon. Member for Livingston (Hannah Bardell) said, the challenges of how we timetable and deliver on this hugely challenging programme for our Parliament over the next 20 months. The Minister’s response to that from the Dispatch Box underlines the lack of planning that we have seen on the Public Accounts Committee, which I have had the privilege of chairing for the past two years, where we have repeatedly heard examples from permanent secretaries about the lack of planning—a deliberate policy.

For example, on 7 July, the permanent secretary to the Treasury confirmed, when questioned, that the Prime Minister had said at several points that the civil service was not, as a whole, preparing for Brexit. On 13 July, Sir Martin Donnelly, the permanent secretary to the then Department for Business, Innovation and Skills, said:

“We were following the guidance given by Ministers, which was not to make contingency plans for this outcome.”

On 26 October, we heard from Jon Thompson, the permanent secretary and chief executive of Her Majesty’s Revenue and Customs, of the eight serious areas that his Department has to consider now that Brexit is a reality. I will not run through them all, because it is not the main point of the debate, but let me just mention customs. He said that,

“we run £40 billion-worth of the benefits system in tax credits and child benefit…there is excise and the decisions to be made there…there is VAT…and the question of what difference this would make to direct taxes and state aid.”

He went on to list other big concerns.

Let me take HMRC as an example of the challenges that this Government, this Parliament and this country face as we move to leaving the European Union over the next 20 months. That Department is already going through huge change in its estate management, in its IT and in the way that it tackles and deals with taxes.

We all know that it takes about 18 months on a fair wind to make a major change to the tax system, which is why budgets are planned some time in advance for those technical points, and yet the permanent secretary and the chief executive of HMRC has listed to our Committee and to this House eight other serious areas of concern—more than one Government Department can realistically manage—and that is just one Department. I have to say that that permanent secretary was the only one who actually had a long list. Other Departments—I will not name them all—mentioned the discussions they were having, but nothing really concrete about how they were planning to implement our exit from the European Union.

[Hannah Bardell]

The hon. Lady is making some pertinent points about HMRC and the challenges of the customs system going through a transitional phase when it is already creaking under the pressure. Does she not also share my concern that in constituencies such as mine in Livingston, a high proportion of staff who are highly skilled in such systems and processes will be lost because of the transition the Government are going through? If we put Brexit on top of that, it becomes a perfect storm that is about to hit us.

[Meg Hillier]

The hon. Lady makes an important point. If we add on the other changes in Government Departments—the DWP is going through some changes of property and where jobs might be—that poses a challenge. We face a challenge with skills in this country anyway, and we can add to that our exit from the European Union and the fact that we have so many unanswered questions about what will happen to EU citizens residing in the UK and others who need to come here. We heard only the other day that the NHS needs to bring in a large number of GPs from the European Union because we are unable to recruit in this country. Whatever one might have thought of these policies before, we are now seeing skilled people who are potentially unable to move to new locations and we do not yet have a skills strategy to fill not just those gaps but the others we might see as we leave the EU. A perfect storm is perhaps a polite way of putting it; I could think of fruitier ways of describing it, but I will leave the fruity conversation to the hon. Member for Saffron Walden, who stretched the boundaries further than I will on this occasion.

I will not list every Department and its problems, but we have a long list if other hon. Members are interested in seeing it, given the challenges that each Department faces in its exit from the EU, the lack of planning, and the lack of joined-upness across Government. A problem in one Department, such as HMRC, will have knock-on effects in another, such as the Department for International Trade. We cannot see these things in isolation and there is not yet a coherent plan.

I hope that when he sums up the Minister can reassure me that what I am saying is not true, but the evidence we have seen in Committee suggests that this is the reality. As I have said, senior civil servants acknowledged that they were told very definitely not to plan for the leave scenario, which has put us very much on the back foot.

--- Later in debate ---

[Sir Alan Duncan]

I will come to that in just a moment, if I may.

A sanctions Bill will enable the UK to continue to impose, update and lift sanctions in response to fast-moving events. The European Union (Withdrawal) Bill will not be sufficient to do that, since we need powers to do more than simply preserve or freeze existing sanctions. The United Nations Act 1946 is also insufficient for UN sanctions, because in 2010, the UK Supreme Court ruled that it could not lawfully be used to implement asset freezes, and that additional powers were needed for measures of this kind involving any infringement of individual rights. In short, the sanctions Bill will enable the UK’s continued compliance with international law after we leave the EU, ensure that, as a permanent member of the UN Security Council, the UK continues to play a central role in shaping UN sanctions, and return decision-making powers on non-UN sanctions to the UK.

As my hon. Friend the Under-Secretary said, the Bill will focus on powers, not policy. As such, it might be described as a framework Bill. It will provide powers to implement UN sanctions and to impose UK sanctions independently or in co-operation with allies. The question of how we use those powers will be addressed later, when we introduce secondary legislation applying sanctions to particular countries. We are obliged to implement UN sanctions, but we will face political choices on how far to replicate current EU sanctions.

The Bill will take account of the consultation mentioned by my hon. Friend in his opening speech. We envisage four main elements: powers to impose sanctions where justified and appropriate; powers to ensure that individuals and organisations can challenge the sanctions imposed on them; powers to exempt or license certain types of activity that would otherwise be restricted, such as humanitarian deliveries and supplies, in countries that might have been sanctioned; and powers to amend and adopt regulations for anti-money laundering and counter-terrorist financing.

Detailed scrutiny of the Bill can obviously come only once it is published. That is why we will have Second Reading, Committee, Report and so on, as this House always does. However, perhaps I can respond as rapidly as I can in the time I have—and I am running out of time—to some of the questions that have been asked, mainly by Opposition Front Benchers. “Where is the Bill?” was one question. We have a consultation. We have just had an election and purdah, and we need to consider the responses and then decide our final position. Only then can we publish the Bill—but we will do so. The hon. Member for Bishop Auckland (Helen Goodman) asked who will lead on it. The Foreign and Commonwealth Office will take the lead on foreign policy, including sanctions.

On the question by the hon. Member for Darlington (Jenny Chapman) about whether the procedures we intend to adopt will be affirmative or negative, we note—this is very important for the efficacy of sanctions—that the delay involved with affirmative procedures can lead to asset flight before assets are frozen or caught. We are considering this issue, and will respond in our consultation response, which will be published very shortly.

[Hannah Bardell]

Will the Minister give way?

[Sir Alan Duncan]

I have no time; I am very sorry.

The hon. Member for Bishop Auckland asked about the overseas territories. The UK has responsibility for the external relations and national security of overseas territories and Crown dependencies, and we will continue our policy of ensuring that the overseas territories and Crown dependencies apply international and UK imposed sanctions. My hon. Friend the Under-Secretary is chairing regular meetings with the overseas territories and Crown dependencies on how best to achieve this end. We will include a power in the Bill for the UK to continue to legislate directly where appropriate.

It was suggested that we would lose the ability to be part of international sanctions development. I would say very clearly that I believe that we will not lose this ability. The Bill is intended to give us all the necessary powers to work internationally. We note that the UK, with its international allies, was a key player in securing the Iran nuclear deal. We will continue our constructive and productive relationship with our European and international partners after we leave the EU.

The hon. Member for Glenrothes (Peter Grant) asked about the legal risk of the UK adopting EU sanctions—in other words, our having a separate regime and doing this individually. The UK will take responsibility for the sanctions it adopts, including taking on legal risks. When working with the EU, we will take all necessary steps, co-ordinating sanctions and sharing information, to reduce the risk, and if the risk is not acceptable, we do not have to follow the EU.

There are some other issues that we have not had the chance to discuss, but I am sure we will do so on Second Reading and in further consideration of the Bill. On civil liberties, for example, there is a very delicate balance to be struck between using sanctions to counter threats such as terrorism and respecting due process to protect the rights of individuals.

Another issue is abuses and violations of human rights as a reason to impose sanctions. The Government are firmly committed to promoting and strengthening universal human rights, and holding to account states responsible for the worst violations. Indeed, during the previous Parliament the Government amended the Criminal Finances Act 2017 to allow law enforcement agencies to use civil recovery powers to recover the proceeds of human rights abuses or violations, wherever they take place, where the property is held in the UK. We also have powers to exclude from the UK individuals whose presence is not conducive to the public good, and we operate a watch list system to support this.

We know that innocent individuals and organisations can sometimes be inadvertently affected by sanctions. We hear reports of this, for example, from humanitarian organisations delivering assistance in countries subject to sanctions. We will do everything we can to minimise these unintended consequences. We will publish guidance to make UK sanctions regimes as clear as possible to the individuals and companies affected. We will have more flexibility to issue general licences to humanitarian organisations in order to cut bureaucracy and make it much easier for them to continue operating in the most difficult of circumstances.

The Bill will be published in due course, and the response to the consultation will come out soon. I urge the House to appreciate that as we look across the world and see the dangers of terrorism and misconduct of all sorts, having an effective sanctions regime is absolutely crucial to our foreign policy and to making the world a better place. Replicating a sanctions policy once we have left the EU is absolutely essential. If we did not do that, the world would be a poorer place.

Question put and agreed to.

Resolved,

That this House has considered Exiting the European Union and Sanctions.