Draft European Union Budget

Debate between Keith Vaz and Mark Hoban

Thursday 12th July 2012 Commons Chamber

[Keith Vaz]

We did not give notice of that allegation, so we had better not pursue it. However, the hon. Gentleman is right: the issue he raises is another area that can be looked at as a possible means of dealing with this important subject.

The second issue—[Interruption.] My hon. Friend the Member for Glasgow South West (Mr Davidson) keeps reminding me that I said I would speak for three minutes, and my time is now almost up. Let me therefore ask the Minister to look at the cost of enlargement. I am a great supporter of enlargement. When I was Minister for Europe, my job was to go to the European Union, as Tony Blair told me to, and ensure that we became best friends with all the countries in eastern Europe that sought to come into the European Union, and that is what I sought to do. I am therefore very much in favour of enlargement, but I am a bit worried by some of the figures for the cost of it. Croatia has been promised €150 million, while Turkey, which is not even a member, has been given €3 billion. We all support Turkish membership, but I am worried about all the money that is going to candidate countries and the possibility that we do not know precisely what is happening to it.

[Mr Hoban]

The right hon. Gentleman makes an important point. Last week the Commission proposed a €10 billion increase in the financial framework to cover the cost of Croatia’s admission. However, it should find that money from the existing budget, rather than loading additional costs on to taxpayers across all 28 member states, as they will become.

[Keith Vaz]

I am pleased to hear that the Minister is seized of the issue, and presumably he resisted that attempt to increase the budget. However, we seem to be giving a lot of money to some of the other potential candidate countries—Iceland, Serbia and Montenegro, as well as Turkey, of course—without knowing precisely what the benchmarks are. We should therefore look at that issue in the budget.

My final point relates to the Europe 2020 strategy and the benchmarks set when it was created, starting with the Lisbon agenda, which was agreed in 2000. Are we sure that enough of that money is going on growth and jobs in the European Union? There are other issues that need to be dealt with, but ensuring more jobs and growth is the key to getting Europe out of its current mess.

Banking Reform

Debate between Keith Vaz and Mark Hoban

Thursday 14th June 2012 Commons Chamber

[Mr Hoban]

My hon. Friend makes a good point. As I have said, the Bank and the FSA are looking at prudential and conduct requirements to ensure that they are proportionate. However, the other thing I would say is that the implicit guarantee enjoyed by our bigger banks distorts competition. Our reforms tackle that, helping to create a more level playing field for new entrants and enabling them to compete properly with established players.

[Keith Vaz (Leicester East) (Lab)]

The Minister will know that four weeks ago today the liquidation of the largest bank to have gone bust in Britain—BCCI—was completed, after 21 years. The foundation of the system introduced by the last, Labour Government was the Bingham report. The first part has been published; the second part is still confidential. As far as I know, only successive Chancellors have read it. Has the Minister read the second, confidential part, and does he not think it is time to publish it, so that we can have a proper understanding of the reforms that he has set before the House today?

[Mr Hoban]

I know that the right hon. Gentleman has raised this matter on a number of occasions, and I am not going to give a different answer from those that I or the Chancellor have given before.

Eurozone Crisis

Debate between Keith Vaz and Mark Hoban

Thursday 3rd November 2011 Commons Chamber

[Mr Hoban]

My hon. Friend asks some interesting questions. I think that I would rather be here in the House than in Cannes at the moment—[Interruption.] It is important that Parliament should hold Ministers to account on these matters, and I am here to answer its questions. On my hon. Friend’s first question about the strength of the UK banks, there has been a process with the leadership, through the European Banking Authority, which is based here in London, and it concluded that the UK banks did not need to be recapitalised. That is partly a consequence of the measures taken over the past two or three years to increase banks’ holdings of capital and highly liquid assets, which have helped to ensure that they are to an extent insulated from the problems in the euro area.

On my hon. Friend’s wider question about the strength of the European banks, I can tell him that, in calculating the amount of additional capital that banks should hold, the EBA determined that they should hold 9% core tier 1, and that, crucially, their holdings of sovereign debt should be marked to market rather than held at face value. That led to the calculation that banks across Europe need to hold an additional €100 billion of capital.

[Keith Vaz (Leicester East) (Lab)]

May I urge the Minister not to join others who are criticising Greece for its decision to hold a referendum? George Papandreou is a decent and honourable man, and at the end of the day, if he wishes to put this to the Greek people, it is a matter for them. Whatever their decision—I hope that they will vote to accept the bail-out—we should accept it. This is a country that has voted with us on the European Council on many occasions over the last 20 years.

[Mr Hoban]

The right hon. Gentleman makes an important point. This is a matter for the Greek people and the Greek Government to decide. That is a principle to which I am sure everyone in the House would wish to adhere.

Regulatory and Banking Reform

Debate between Keith Vaz and Mark Hoban

Thursday 16th June 2011 Commons Chamber

[Mr Hoban]

My hon. Friend makes an important point about exit. One area on which we are all working, not just in the UK but elsewhere, is to ensure that, when an institution fails, the matter can be resolved and that the resolution can take place without an impact on the taxpayer. That will help with competition and to tackle the broader issues, whereby taxpayers have to stand behind banks. We need to get that right.

On competition, we need to recognise that the role of regulation in financial services is quite broad. Some of it is about promoting competition, and some of it is about consumer protection when there are asymmetries of information. In the blueprint that we have published today, we see an acknowledgement of the role that competition will play, and that is why we have given the Financial Conduct Authority a primary duty to use competition in pursuit of its regulatory objectives. That gets the balance right between the different roles that the FCA has to play.

[Keith Vaz (Leicester East) (Lab)]

In three weeks’ time, 5 July marks the 20th anniversary of the closure of the Bank of Credit and Commerce International. The Minister on that day 20 years ago was a young accountant working for Price Waterhouse, the much-criticised auditors of BCCI. For 20 years, the bank has been in liquidation and for 20 years we have been asking for the publication of the confidential parts of the Bingham report, which, as the Financial Secretary will know, was the basis on which we had the system of regulation that he has just changed. Is he absolutely certain that the best way of dealing with these matters is to hand them back to the Bank of England? If he is, will he please do what the previous Government failed to do and ask the Chancellor to publish the confidential parts of the Bingham report?

[Mr Hoban]

I hear the right hon. Gentleman’s request, and his right hon. Friend the Member for Edinburgh South West (Mr Darling) has made a similar request, to which he did not seem to accede when he was Chancellor of the Exchequer. The new regulatory regime does learn the lessons of the past, and the supervisory style and confused mandate of the FSA mean that we need to change.

The lesson that we have learned from the financial crisis is that, importantly, the Bank of England’s expertise in market surveillance and in understanding macro-prudential trends can best work with the needs of a micro-prudential supervisor by ensuring that that micro-prudential supervisor is an independent subsidiary of the Bank. And, just so the right hon. Member for Leicester East (Keith Vaz) does not get the wrong impression, I did not work on the audit of BCCI.

Terrorist Asset-Freezing etc. Bill [Lords]

Debate between Keith Vaz and Mark Hoban

Monday 15th November 2010 Commons Chamber

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

I beg to move, That the Bill be now read a Second time.

The Bill makes provision for imposing financial restrictions on, and in relation to, certain persons believed or suspected to be, or to have been, involved in terrorist activities. It amends schedule 7 to the Counter-Terrorism Act 2008, and is for connected purposes.

Hon. Members will be aware that the threat to the UK from terrorist attack continues to be judged as severe, meaning that an attack is highly likely. Just a few weeks ago, intelligence agencies uncovered another plot designed to cause death and destruction to innocent people. As my right hon. Friend the Home Secretary revealed, those involved in that air cargo bomb plot were well connected and part of an international network of extremists.

It would seem that the terrorist threat that we face is developing. We see the continued emergence of a more diverse and devolved terrorist threat that is joined more by ideology than by hierarchy, and that is technologically very capable. Small networks, or even individuals acting alone, are able to use technology to their advantage, giving them the ability to wreak havoc worse than their size might suggest. It is clear that those who wish to do us harm operate on an increasingly global scale and are devising ever more sophisticated methods of avoiding detection. This is why we must continue to ensure that the tools we employ to combat terrorism remain effective. We must have the ability to take preventive action to disrupt suspected terrorists.

[Keith Vaz (Leicester East) (Lab)]

I understand that 205 accounts have been frozen under the previous legislation. Does the Minister know whether there is any evidence of a link between any of those accounts and actual terrorist activity? I am not disputing in any way what the Government are doing, and I fully support the Bill, but I would like to know whether any connection has been made between those accounts and any kind of terrorist activity.

[Mr Hoban]

In regard to the Bill, and to the legislation that it will replace, assets are frozen where there is reasonable suspicion. The Bill will change that test in order to strengthen it.

Asset freezing is a tool that we can use to take preventive action to disrupt suspected terrorists, and it is used internationally to prevent and disrupt the financing of terrorism. The impact of our ability to freeze the funds of potential perpetrators should not be underestimated. By cutting off access to finance and preventing money from reaching terrorist networks, we can stop individual acts in their early stages.

Currently, around £140,000 is frozen in the UK under our domestic terrorist asset-freezing regime. That might not seem a large amount, but hon. Members will be aware that it takes only a relatively modest amount of money to carry out a deadly attack. By way of illustration, the dreadful attacks of 7 July 2005 cost less than £10,000 to carry out, and the air cargo bomb plot is also likely to have cost a comparatively small amount.

[Keith Vaz]

No one is disputing the importance of this legislation or the legislation that it replaces, or the decision of the Supreme Court that has meant that this measure has had to be rushed through in this way. The Minister has not really answered my question, however; he has just given me some information about reasonable suspicion. Was there any connection between any of the accounts that have been frozen, for whatever reason, and any terrorist activity?

[Mr Hoban]

May I just dispute the right hon. Gentleman’s point about the Bill being rushed through? It has not been rushed through. The process, of which he might be aware, is that, following the Supreme Court judgment earlier this year, emergency legislation was taken through this House and the other place to ensure that the terrorist asset-freezing regime remained in place until the end of this year. At that point, the previous Government initiated a consultation on the way in which that legislation should be replaced. That consultation started earlier this year, and has continued. My noble Friend Lord Sassoon introduced this Bill in the other place, and further safeguards have been included in it as a consequence of the consultation process. I do not believe that anyone could say that the process has been rushed. It has taken place in the methodical and thorough manner required to balance civil liberties concerns with the importance of national security. Although I am not in a position to disclose the links between the accounts frozen and any activity, those accounts and the evidence are kept under review, and orders are lifted where it is felt appropriate.

Asset freezing is not just a domestic tool used by the UK to combat terrorist financing. We have an international obligation to freeze the assets of terrorists, and it is important to consider it in some detail. In 2001, after the 9/11 attacks, the UN Security Council unanimously passed resolution 1373, requiring states to take a range of measures to combat international terrorism and the financial flows that underpin it. The overarching objective of the resolution was to

“combat by all means…threats to international peace and security caused by terrorist acts”.

It was clearly intended to be preventive, and it calls on states to

“work together urgently to prevent and suppress terrorist acts, including through increased cooperation and full implementation of the relevant international conventions relating to terrorism”.

Those are broad provisions, and intentionally so. They reflect the Security Council’s real and unanimous commitment to take all necessary measures to prevent terrorism.

Although resolution 1373 is quite detailed in its obligations, the Financial Action Task Force, the international standard-setting body for anti-money laundering and counter-terrorist finance, has helpfully provided further detailed guidance on the implementation of UN terrorist asset-freezing obligations. That guidance reflects the intention for the resolution to be preventive in its effect, which is an important consideration when we come to consider in more detail the appropriate legal test for freezing assets.

Particularly for the benefit of hon. Members who did not participate in our debates earlier this year, I should like to explain a little of the history behind the Bill and why we need to act now. Following the adoption of resolution 1373, the previous Government took the decision to implement UN terrorist asset-freezing obligations through secondary legislation, by Orders in Council made under the United Nations Act 1946. Following litigation brought by several applicants affected by one of those orders, which went all the way to the Supreme Court, that court ruled earlier this year that the previous Government had gone beyond the general powers conferred by section 1 of that Act in making Orders in Council to give effect to our UN terrorist asset-freezing obligations. The orders were not subject to parliamentary scrutiny, so Parliament did not have the opportunity to consider how the UK should best give effect to its obligations. The Supreme Court quashed the relevant order with immediate effect.

Many Members will remember that in response to the judgment, the previous Administration rushed through emergency legislation, with cross-party support, to maintain the asset-freezing regime and ensure that terrorist assets would not have to be unfrozen. No one in the House wanted to see the unfreezing of terrorist assets, and that was why my party and others were prepared to support the emergency legislation. At the same time, there was a strong feeling in the House that the terrorist asset-freezing regime needed to be scrutinised by Parliament in more detail at the earliest opportunity, and that there was scope to improve it by strengthening civil liberties safeguards. For that reason, Parliament inserted a sunset clause providing for the temporary legislation to expire on 31 December this year. That is why we are now legislating to ensure that the UK’s terrorist asset-freezing regime can be improved and put on a secure legislative footing in time for that deadline.

As the House will know, this Government are committed to striking the right balance between protecting public safety and protecting civil liberties. We believe that in a number of areas, it is possible to strike a better balance and strengthen civil liberties safeguards without undermining public safety. Terrorist asset freezing is one such area, and that is why the Bill is not intended simply to reintroduce the previous regime that the Supreme Court quashed. I shall explain that.

The Bill, as introduced in the other place, included several changes to strengthen the proportionality, fairness and transparency of the regime. Briefly, they included a narrowing of the prohibitions relating to third parties, so that a third party does not commit an offence if they did not know, or reasonably suspect, that they were breaching a prohibition; excluding payments of state benefits to spouses or partners of designated persons from the scope of prohibitions, even when those benefits are paid in respect of a designated person; and a new requirement that the operation of the regime be independently reviewed nine months after the Bill is passed and every 12 months thereafter.

To strengthen further the protection afforded to designated persons, the Government tabled significant safeguards before the Committee stage in the other place. Those additional safeguards reflect the civil liberties concerns that were raised in Parliament during the passage of the emergency legislation and in the public consultation conducted over the spring and summer.

First, we addressed the legal threshold that must be met before the Treasury can freeze a person’s assets. Under the current Order in Council, the Treasury may freeze a person’s assets on the basis that it reasonably suspects that they are involved in terrorism, provided that the Treasury considers that necessary to protect members of the public. Under the Bill, the Treasury can no longer rely on a threshold of reasonable suspicion if it wishes to make a designation lasting more than 30 days.

The Government consider that there is a good case for retaining a reasonable suspicion threshold for a temporary period of 30 days only. That will enable assets to be frozen when there is sufficient evidence to meet a suspicion threshold, but when, for example, investigations are ongoing, and there is therefore a reasonable prospect of subsequently meeting a higher evidential threshold. A good example of that is when assets are frozen alongside arrest while the police build the evidential case for bringing criminal charges, as happened with the freezing of assets in connection with the transatlantic plane bomb plot in 2006.