Yemen

Lord Bates Excerpts

Tuesday 7th November 2017 Lords Chamber

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, with the leave of the House, I will repeat an Answer to an Urgent Question on Yemen given by my right honourable friend Alistair Burt in another place earlier this afternoon.

“Yemen is the world’s largest humanitarian crisis. Some 21 million people in Yemen are in need of humanitarian assistance. Nearly 10 million are in need of immediate help to support or sustain life. As the third-largest humanitarian donor to Yemen and the second-largest donor to the UN appeal, the UK is already leading the world’s response to the crisis in Yemen. Our funding of £155 million this year will provide enough food for 1.8 million people for at least a month, nutrition support for 1.7 million people, and clean water and sanitation for an expected 1.2 million people. As penholder on Yemen at the UN Security Council, the UK was responsible for a presidential statement earlier this year that called on all parties to provide safe, rapid and unhindered access for humanitarian supplies and personnel to all affected governorates in Yemen. We continue to call on all parties to the conflict to respect the statement and take action accordingly.

As the Foreign Secretary set out in his statement of Sunday 5 November, the UK condemns the attempted missile strike on Riyadh last Saturday in the strongest terms. The ongoing ballistic missile attacks by Houthi-Saleh forces against Saudi Arabia threaten regional security and prolong the conflict. This latest attack deliberately targeted a civilian area. We recognise the coalition’s concern about illicit flows of weapons to the Houthis, which is a direct contravention of UN Security Council Resolution 2216.

We recognise that following Saturday night’s attack, Saudi Arabia needs to take urgent measures to stem the flow of weapons into Yemen. At the same time, it is vital that the country remains open to commercial and humanitarian access. The Saudi-led coalition has confirmed that it will take into account the provision of humanitarian supplies. We are encouraging it to ensure that humanitarian and commercial supplies and access can continue. Our ambassador is actively making this case directly to the Saudi authorities on these points.

There remains a desperate need for a political solution to the Yemen conflict to help end the suffering of the Yemeni people, to counter the destabilising influence and interference there, and to end attacks on neighbouring countries. It is vital this situation does not escalate further. The UK will continue to work towards a political settlement that supports regional stability and calls on all countries in the region to support that goal. We will also continue to support our partners in the region to protect themselves against security threats”.

[Lord Collins of Highbury (Lab)]

My Lords, I welcome the repeat of the Statement. Everyone would agree that the Houthi missile strike was totally unacceptable, but we also now face a blockade affecting hundreds of thousands of people. Some 800,000 people now suffer from cholera in Yemen. It is the biggest humanitarian crisis we face. Does the Minister agree that the blockade is unlawful and that it is some form of collective punishment against innocent people? In these circumstances, will the Government reconsider their position of arms sales to the Saudis until this matter is brought to a peaceful conclusion?

[Lord Bates]

I thank the noble Lord for his questions. He is right about the situation on the ground in Yemen. It is horrendous. The cholera outbreak he referred to is the worst on record. It is appalling. Nearly 6.8 million people face extreme food shortages. Some 400,000 children aged under five suffer severe acute malnutrition and may die without treatment. This is a man-made catastrophe and it requires a man-made solution.

On working towards a solution, as I said in the Statement, we hold the pen on this at the UN Security Council. There is a quad meeting made up of the US, the UK, the Kingdom of Saudi Arabia and the United Arab Emirates. They met under the chairmanship of my right honourable friend Alistair Burt in New York and a couple of weeks ago in London. We believe that that pursuit of a peaceful settlement is the best solution.

The UK Government take their arms export licensing responsibilities very seriously and operate one of the most robust arms export control regimes in the world. All export licences are assessed on a case-by-case basis against a consolidated EU and national arms export licensing criterion. That said, we recognise that we need a solution. We need talks to recommence between the parties because, as in all conflicts, the parties to the conflict need to be the parties to the peace.

[Lord Campbell of Pittenweem (LD)]

The extent of the crisis is clear from the sentence in the Statement stating that,

“funding of £155 million this year will provide enough food for 1.8 million people for at least a month”—

which on one view makes a necessary contribution perhaps not very great. What other countries are contributing and to what extent are they matching the level of funds that the United Kingdom has provided? Secondly, who is providing the Houthi with ballistic missiles?

--- Later in debate ---

[Lord Bates]

The second question from the noble Lord is slightly easier to answer in terms of the fact that the missiles being fired were Iranian. Clearly, the Kingdom of Saudi Arabia has a right to express concern about that and to seek to stop supplies of those ballistic missiles coming into the region. On the appeal, we know that the UK is either the second or third largest bilateral donor into the region—but, sadly, there is a funding gap of $1 billion from the UN appeal. We will use our position at the UN and in the quad to call on all countries to step up to what is one of the greatest humanitarian crises not just at the moment but in recent history.

[Baroness Hayman (CB)]

My Lords, it is almost exactly a year since the Disasters Emergency Committee —I declare my interest as a trustee—launched its Yemen crisis appeal. That raised £24 million and was aid-matched by £5 million from the Minister’s department. UK agencies and their partners have worked unstintingly and reached more than 1 million people, but they have done so against extraordinary operational difficulties and access and security challenges. I wonder whether the Minister can tell me how in the current situation he assesses the safety, the security and the ability to operate of UK agencies, and will pay tribute to the courage and commitment of people doing this humanitarian work on the ground.

[Lord Bates]

I am happy to do that, and to pay tribute to the work of the Disasters Emergency Committee in raising such an amazing sum from the generosity of the British people in response to this humanitarian crisis. The support that we have been operating on the ground has been provided to UNICEF to address malnutrition. Oxfam, Save the Children, ACTED and CARE are also based there to tackle food insecurity. The Yemeni Humanitarian Pooled Fund is operating there, as is the World Food Programme and the UNHCR. It is worth reminding ourselves of the number of humanitarian workers who have lost their lives in serving their fellow citizens. Yemen is one of the most dangerous places for them to operate in, but people are putting their lives on the line to save their fellow human beings. That should give us some hope if it can be extended to the warring parties.

[Lord Alton of Liverpool (CB)]

My Lords, amid the horrors in the Yemen—or we think of the unfolding and continuing tragedy of the Rohingya being displaced in Burma, or the mass displacement of millions of people in Sudan and various places around the world where extraordinary conflict leads to a vast amount of human suffering—where are international agencies such as the United Nations in trying to broker some kind of peace? The Minister referred earlier to discussions in the Security Council, but what is the Secretary-General doing and what role are we playing there in trying to find long-term solutions to this kind of conflict? Otherwise, all we do is end up firefighting.

[Lord Bates]

Yes, I am afraid that we are still in the territory of firefighting. These movements place great strain on neighbouring countries. As we have seen in the case of South Sudan, they can also lead to the spreading of conflict. Instability can be seen also in Syria and elsewhere in the region. The only solution lies in the international institutions and the parties to the conflict coming together with a united resolve to deal with this. I think that we can take some pride in the fact that the British taxpayer, through UK aid, is at the forefront of that international humanitarian effort.

House adjourned at 6.13 pm.

Paradise Papers

Lord Bates Excerpts

Monday 6th November 2017 Lords Chamber

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, with the leave of the House, I shall now repeat in the form of a Statement the answer to an Urgent Question asked in another place. The Statement is as follows:

“Mr Speaker, this Government believe in a fair tax system where everyone plays by the rules. The Government have taken decisive action to tackle tax avoidance and evasion and improve the standards of international tax transparency. The UK has secured an additional £160 billion in compliance revenue since 2010, far more than was achieved under the previous Labour Government. Under this Government, the UK now has one of the lowest tax gaps in the world. We have provided HMRC with tough new powers and in 2015 it received £800 million additional funding to go on tackling tax avoidance and evasion.

Turning to recent events, yesterday evening several international news organisations, led by the International Consortium of Investigative Journalists, reported on an information leak regarding the financial affairs of a large number of individuals. I should remind the House at this stage that Ministers do not intervene in the tax affairs of individuals or businesses, as to do so would be a breach of taxpayer confidentiality. However, I can inform the House that on 25 October HMRC requested that the ICIJ, the Guardian and the BBC share the leaked data so that the information can be compared with the vast amount of data HMRC already holds due to the initiatives that this Government have undertaken. They have yet to respond to this request.

Nevertheless, since this data was retrieved in 2016, the Government have implemented international agreements that have changed the game for those who seek to avoid and evade taxes. HMRC has already started benefiting from the automatic exchange of financial account information through the common reporting standard—an initiative in which the UK has led the world, with over 100 jurisdictions signing up. The Crown dependencies and overseas territories are among those who signed up to this initiative and have begun to exchange information with HMRC for over a year. The Crown dependencies and overseas territories have also committed to holding central registers of beneficial ownership information which the UK authorities are able to access.

It is important to note—and I quote from the ICIJ’s disclaimer in the programme—that:

‘There are legitimate uses for offshore trusts and companies. [The ICIJ] do not intend to suggest or imply that any people, companies or other entities included in the ICIJ Offshore Leaks Database have broken the law or otherwise acted improperly’.


So notwithstanding the generalised aspersions made by the Opposition, the use of offshore accounts or trusts does not automatically mean dishonesty. However, this House should be assured that, under this Government, HMRC will continue to bear down with vigour on any tax avoidance or evasion activity wherever it is found”.

[Lord Davies of Oldham (Lab)]

My Lords, that is a totally inadequate response given the sense of outrage in the country over what has been revealed in the paradise papers. The Government are trying to say that, after seven years of Conservative Chancellors of the Exchequer and Conservative government, condign action is now being taken against aspects of tax avoidance, which has clearly not happened over the preceding period. Therefore, I do not think that we should take these suggestions seriously. After all, only in the last few weeks the Government have rejected any mention of non-dom status in the Finance Bill and have rejected Labour’s demand that this issue be identified and dealt with in legislation.

The Conservative Party has a great deal to conceal. What is the tax status of the former non-domicile Lord Ashcroft? We noticed that for a short while he figured prominently in the newspapers during the election period but, of course, by then he had already paid half a million pounds into the Conservative election fund. Therefore, we cannot take this Statement at face value. The Government purport to say that they are interested in fair taxation. We have seen their record on that over the last seven years and know that many people in this country are being impoverished by them while they still treat the very rich advantageously.

There is nothing in the Statement about the great global companies and their taxation advantages; we do not get a single mention of any of them. What we do get, because the Paradise papers reveal this, is that there has been maladministration by the Government of the Duchy of Lancaster estates. The Chancellor of the Duchy of Lancaster is the elected Member responsible for those estates yet, following the revelations of the Paradise papers, the Queen herself has had her name dragged down by these assertions. The Government do not even think that they owe Her Majesty an apology, because there is no suggestion in the Statement that they recognise that the fault lies with poor government administration.

We seek a full public inquiry into tax avoidance. Nothing less will restore our nation’s confidence that the Government’s approach to this whole wretched issue is adequate.

[Lord Bates]

The noble Lord asked what we had done about tax over the past seven years. The Statement mentioned that we have collected £160 billion in compliance revenue since 2010, that the tax paid by the richest 1% is now 28% of the total, which is more than it was under the previous Labour Government, and that we have introduced initiatives such as a diverted profits tax to tackle just the sorts of corporate manoeuvring of tax, revenues and incomes that he talked about. We have introduced the Criminal Finances Act to make it a criminal offence for employees of organisations, be they professional services firms or others, to give advice on avoiding tax. We are at the forefront of the OECD tax initiatives. This Government included in the Finance Bill, which will come before this House on 15 November, a measure to make it no longer possible to have non-dom status in perpetuity—we are ending that position. Therefore, we have done a great deal but we are not complacent. We recognise that there is an issue to be addressed and fairness will be at the heart of all our actions.

[Baroness Kramer (LD)]

My Lords, do the Government not recognise that the ordinary taxpayer hearing again this news today is utterly outraged that if you are rich or a business, you can avoid tax? There are schemes on an industrial scale, which are protected by a lack of transparency. During the passage of the then Criminal Finances Bill, when there was pressure from all over this House for the registers of beneficial ownership in the overseas territories to be made public, why did the Government resist when that would have stripped away secrecy? Why, also, have they brought a Sanctions and Anti-Money Laundering Bill to this House that gives Ministers the power, with virtually no intervention by Parliament at all, to eliminate every anti-money laundering regulation and replace them by highly watered-down versions? Is this the new Britain we are to expect post Brexit?

[Lord Bates]

Of course it is right that the overseas territories and Crown dependencies take the correct approach on this. That is why the common reporting standard I mentioned—which has just come into effect and on which we led the way through the G7 and various initiatives through that—is coming into effect. That means that the Crown dependencies and overseas territories must inform HMRC about any person from the UK who is registered for tax in the UK but has an account in a different jurisdiction—one of a hundred, including all the overseas territories and Crown dependencies. That is just the type of action we need to ensure that people pay the taxes they are due to pay.

[Lord Howell of Guildford (Con)]

My Lords, of course it is right that companies and entities that operate here in the UK should pay their full weight of tax. However, if the proposition is that all offshore investment is somehow to be disapproved of or stopped altogether, would that not require a return of full capital controls of the kind we had in the distant past, and would it not be a strong disincentive to the inward investment on which this economy strongly relies and a disaster for the UK economy?

[Lord Bates]

My noble friend is right. Indeed the ICIJ, which I mentioned and which released this leak, was keen to point out that it is not suggesting any wrongdoing and that there is legitimate use for these facilities, such as purchasing assets in currencies other than sterling, avoiding double taxation and pooling of investments from different tax jurisdictions. It is important to draw the line between that avoidance and the evasion which we talked about earlier.

[Lord Clark of Windermere (Lab)]

My Lords, 20 years ago I had the responsibility of being the Chancellor of the Duchy of Lancaster, and as such was responsible for the organisation. I well recall chairing meetings of all the senior officials and answering questions in the House of Commons. Does the current Chancellor of the Duchy of Lancaster, Sir Patrick McLoughlin, have the same responsibilities? If not, as Her Majesty had no knowledge of these investments, who is responsible?

[Lord Bates]

I will have to check on the practices. However, my recollection is that Sir Patrick McLoughlin responds in his capacity as part of Cabinet Office Questions during regular Oral Questions. Members of all sides of the House and in both Houses are at liberty to table Questions for Oral Answer or debate at any point, and people will have to respond according to their responsibilities.

[Lord Gadhia (Non-Afl)]

My Lords, I declare my interests as an investor in a wide range of assets, including offshore investments. Will my noble friend agree that millions of UK savers and pensions, let alone Her Majesty, benefit directly or indirectly from investments held offshore, and to suggest that they are avoiding tax is simply fake and false news? Those who take the time to properly understand offshore investment vehicles will realise that their underlying purpose is to provide an efficient and predictable umbrella structure to attract the widest possible range of investors from around the world. They are in fact set up to minimise the amount of tax paid within the offshore entity and consequently to maximise the returns flowing back to investors, allowing them to pay tax directly in their own countries.

[Lord Gadhia]

The use of these investment vehicles therefore maximises the eligible tax take for the UK Exchequer, and to suggest otherwise is either financial illiteracy, political populism or lazy journalism. Will my noble friend agree that we need to collect the tax and that, if it is not paid, that is tax evasion not avoidance?

[Lord Bates]

The key point that must be remembered here is that, if funds are for legitimate reasons allowed to be placed offshore in order to purchase assets, and if the people concerned are domiciled in the UK, the funds need to be repatriated to the UK and full tax needs to be paid on the profits, income and revenue gained.

[Lord Blunkett (Lab)]

My Lords, there is a vast difference between an offshore vehicle intended to facilitate overseas investment and a trust that is set up to ensure that the individual concerned can place money outside this country, then have it loaned back to them, thereby not only avoiding income tax and national insurance on payments but, in the event of their death, ensuring that their estate has to pay the money back into the overseas trust, thus avoiding inheritance tax. That is surely a scandal.

[Lord Bates]

Each of these things will be checked by HMRC, but the point is that evasion of tax and attempting to evade tax is against the law and will be pursued with all vigour by HMRC. Avoidance continues to be part of the international financial system and we recognise and value it.

[Lord Lea of Crondall (Lab)]

My Lords—

Scrutiny of Secondary Legislation

Lord Bates Excerpts

Monday 6th November 2017 Lords Chamber

[Lord Haskel (Lab)]

My Lords, I am a member of the Secondary Legislation Scrutiny Committee, and the Minister will be pleased to hear that I will concentrate my remarks on its work. Our task is to keep the Government up to scratch so that Parliament can properly scrutinise secondary legislation. I thank my noble friend for moving this Motion, which draws attention to this work and helps us in carrying it out.

What was wrong with these regulations? I do not want to repeat everything that has been said but, as my noble friend explained, we were unhappy with both the drafting and the process. We were unhappy with the definition of a “person with significant control”, and explained why that was unclear. We were unhappy with the fact that, although it was promised, there was no analysis of the consultation—this, of course, is standard practice. As my noble friend said, the impact assessment came two weeks after the regulations were laid. When it did come, there was no assessment of the value to be gained from the cost to business.

These regulations were laid in a rush. As the noble Baroness and my noble friend explained, instead of the normal 21 days between a regulation being laid and it coming into force, there were only two or three days. When we drew the Government’s attention to this, we were told that it was “because of the election”. However, as others have pointed out, the consultation ended in November 2016, so why the delay? If the Government want Parliament to scrutinise regulations properly, everything should be done in good time and with proper care; otherwise, Ministers will be called into account—that is what we have to do.

The committee wrote to Stephen Barclay MP, the Economic Secretary to the Treasury, about its concerns. Perhaps it was because of those concerns that, in his reply, he helpfully said that HM Treasury was instituting new proceedings and that he would become the “secondary legislation champion”. That was good news, but that was in July. Will the Minister confirm that this has actually happened, because it would greatly assist Parliament in its scrutiny and the public in their understanding of the law?

[The Minister of State, Department for International Development (Lord Bates) (Con)]

I thank noble Lords for their contributions and the noble Lord, Lord Tunnicliffe, for moving the Motion. I was in the middle of reading my notes seeking to answer the point of the noble Lord, Lord Haskel, and then realised that it was my time to speak. Perhaps he might bear with me as I quickly try to offer a response.

We can confirm that Stephen Barclay is now acting as the secondary legislation champion, as set out in his letter of 17 July to my noble friend Lord Trefgarne, chair of that committee. The new prioritisation and planning process is now operational. I will come back to some of those points, because they overlap with points made by other noble Lords, including the noble Lord, Lord Tunnicliffe, who talked about focusing more on procedure rather than on questioning the argument for the need for these money laundering regulations to be put in place.

I thank the noble Lord for bringing about this debate. I am sure noble Lords will agree that protecting the public and our economy from financial crime is vitally important and something that cannot be taken lightly. Indeed, the size of the UK’s economy, our open economy and the attractiveness of the London property market to overseas investors exposes the UK to money laundering—a point made by the noble Baroness, Lady Bowles, about the importance of London. The Home Office estimates that serious and organised crime costs the UK at least £24 billion every year, which is a significant sum. I am sure that we all agree on that.

In June 2017, the Government updated their anti-money laundering and counterterrorist financing regime. In doing so, the EU’s fourth money laundering directive was transposed into UK law. This was mainly through the 2017 money laundering regulations, but also through two linked statutory instruments produced by the Department for Business, Energy and Industrial Strategy. This brought the UK’s anti-money laundering regime in line with the latest global standards.

The Government’s overarching objective in this area is to ensure that the UK’s anti-money laundering and counterterrorist financing regime is current, effective and proportionate. The money laundering regulations have made it clear to both firms and supervisors that they must take a risk-based approach, as the noble Lord, Lord Tunnicliffe, said, taking steps to avoid putting disproportionate burdens on businesses.

In terms of processes of implementation, before the directive was transposed, the Government sought views and evidence through public consultations. The noble Baroness referred to the consultation exercise and the 186 responses that were received. The responses to the autumn 2016 consultation, which was also referenced by the noble Lord, Lord Tunnicliffe, were used to inform the Government’s decisions. Therefore, the draft regulations were published in March 2017.

The UK was legally obliged to transpose the directive by 26 June 2017 and meeting that deadline was imperative to minimise uncertainty for businesses that had prepared for implementation on this date. While I am not trying to suggest to the noble Baroness, Lady Bowles, that this is in any way an excuse, the Dissolution of Parliament came at a difficult time for the implementation of those directives because it was not possible to lay the money laundering regulations and the two separate but linked BEIS statutory instruments within the appropriate timeframe. That is something that we have acknowledged in our communications with the Secondary Legislation Scrutiny Committee. As the noble Lord, Lord Tunnicliffe, noted, we were unable to lay one of the impact assessments along with the regulations. A draft was however published in September 2016, alongside the first consultation, and eight months prior to the regulations coming in to force.

I shall now address some of the key policy questions raised by noble Lords in the debate. The noble Lord, Lord Tunnicliffe, rightly pointed out that the gambling sector, except for casinos, has been exempted from the scope of the money laundering regulations. While the Government recognise that money laundering risks exist in the gambling industry, in comparison with other regulated sectors, they are lower-risk. That was confirmed by the national risk assessments in 2015 and 2017. The Government will keep that decision to exempt gambling service providers, except casinos, under review as we move forward.

On the national risk assessment that the Treasury and Home Office must produce, I can confirm that that was published on 26 October 2017. It had the benefit of input from across government and the private sector. The noble Lord, Lord Tunnicliffe, also raised the question of the different levels of consumer due diligence that firms should apply and the need to be consistent across sectors. Businesses are required to carry out risk assessments and base their level of customer due diligence checks in line with those risks. To ensure consistency across sectors, all guidance is reviewed by the Money Laundering Advisory Committee, which includes representatives from law enforcement, the Government, industry and regulators, so there is a voice to be heard there. The Treasury is also in the process of reviewing the guidance and ensuring that messaging across sectors is consistent, which I know was a concern of the noble Baroness, Lady Bowles.

On the point made by the noble Lord, Lord Tunnicliffe, about regulators and the strain on their resources, I can confirm that anti-money laundering responsibilities in the FCA, HMRC and the Gambling Commission are paid for by relevant businesses, which they supervise. The noble Lord also notes the steps that businesses have taken to comply with the regulations include appointing a compliance officer. Around 100,000 businesses are subject to the money laundering regulations and, where appropriate, based on the size and nature of the businesses, they may be required to take steps, including appointing a compliance officer. I can also confirm, as I was asked, that the money laundering regulations specifically state what mechanisms are in place if businesses fail to comply.

Overseas Development

Lord Bates Excerpts

Wednesday 1st November 2017 Lords Chamber

[Lord Collins of Highbury]

To ask Her Majesty’s Government, further to the answer by Lord Bates on 3 July (HL Deb, col 670), whether they have concluded their consultation on changing the rules relating to overseas development assistance; and if so, what conclusions they have reached.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, we have engaged widely with NGOs across government and with international partners on how to improve ODA rules. Based on that, the International Development Secretary set out a vision for ODA reform at the DAC high-level meeting on Monday and Tuesday of this week. This vision is based on four key principles: first, to improve the responses to natural disasters and support vulnerable countries; secondly, to build peace and security; thirdly, to review multilateral organisations; and, fourthly, to make aid more effective.

[Lord Collins of Highbury (Lab)]

I welcome the noble Lord’s comments. However, the problem I have is that the Conservative Party manifesto demanded change but did not set out what that change should be. The 2016 changes took on board most of those comments but representatives at the DAC meeting this week did not agree with the Government and asked for a proper assessment of the changes that had already been made. Will the Minister and the Government work with our partners at DAC to build a consensus rather than working unilaterally, as was threatened in their manifesto?

[Lord Bates]

If we had worked unilaterally, we would not have achieved the advances that we did yesterday. I should make clear what those advances were. By working together we managed to increase the coefficient for peacekeeping forces from 7% to 15%. The noble Lord asked about the difference between the position that pertained earlier in the year and now. The difference is that category five hurricanes have hit the Caribbean and caused extensive, catastrophic loss to some small island communities that lack the capacity to rebuild. We consider it important that the rules must be fit for purpose, and that they were lacking in that regard. That is the reason why the Secretary of State secured an important advance so that when an island falls back under the threshold for overseas development assistance as a result of a catastrophic loss, they can be readmitted to the list. That is a major advance. Small countries and small islands welcome it and I hope the noble Lord will too.

[Baroness Sheehan (LD)]

My Lords, as the Minister has already said, the government press release yesterday said that DAC has agreed to work to create a new mechanism to readmit countries previously eligible for ODA back on to the list of ODA-eligible countries if their income per capita falls low enough. I know that the Secretary of State is touting this as a great victory but does the Minister really believe that the income per capita of people in the British Virgin Islands, which is currently greater than in the UK, will drop to a level which will allow it to qualify for ODA any time soon? After all, the hurricanes destroyed shoddily built houses that poor people lived in, not the digitally insulated, prosperous world that those who live in the tax haven enjoy.

[Lord Bates]

It may not be the case in the BVI, but it certainly may well be in countries such as Anguilla which have only recently graduated from the list of least developed countries. We are talking about losses that would be equivalent to the entire GDP of the country, so it is important that we offer assistance to them. After all, the primary purpose of aid is to help people in need—people in poverty—and for the purpose of economic development. In my view, and in the view of the Secretary of State and the DAC earlier this week, all those criteria apply in this case.

[Lord Forsyth of Drumlean (Con)]

Does my noble friend not think that the Secretary of State is to be congratulated on ensuring that money is directed where help is needed and on not being intimidated by bureaucratic rules which have resulted in people in need not being helped?

[Lord Bates]

My noble friend is absolutely right. This country has a proud record of providing leadership in the international community in the area of aid and assistance. It is important to put on record in the case of the Caribbean that the total assistance we provided immediately was some £62 million, of which only £5 million was ODA eligible. So the fact that it was not ODA eligible did not stop us from helping those in need, but because its purpose was obviously humanitarian and obviously going to people in need and distress, it should count.

[Lord Foulkes of Cumnock (Lab)]

My Lords, I commend the Minister on the work that he is doing in DfID—he is an excellent Minister. As he goes around the world, he will have seen the excellent work being done by the European Union in its assistance programme, particularly in countries where DfID does not operate. Is not that assistance in grave danger of being undermined if we withdraw from the European Union?

--- Later in debate ---

[Lord Bates]

It is not a question of if we withdraw: we are withdrawing from the European Union. The point is that our contribution to European Union development funds across all headings is £1.2 billion or £1.3 billion and that, if that money comes back to the UK, it will be used for the poorest people in the world. The only difference is that we will choose where it goes. We may well choose to continue to work with our partners in the European Development Fund, for example, which sets a terrific example of assisting in development around the world and is quite effective. However, that will happen if we choose to do so, as it will be our choice.

[Lord McConnell of Glenscorrodale (Lab)]

My Lords, on that point, can the Minister confirm that the Government’s plans for a transition period immediately following the date of Brexit would include our contributions to those European development funds that are so vital in so many parts of the world?

[Lord Bates]

As the noble Lord knows, those contributions are germane because they are very much part of the exit negotiations. We make a substantial contribution and our European colleagues are keen to retain a close relationship with the UK in respect of these things. We therefore want to work closely with them on these matters to see whether that is possible. At the moment, the EDF, to which I referred, is available only to member states, so there would also have to be changes on their side for us to continue.

[Lord Cormack (Con)]

My Lords, is not the unfortunate logic of the noble Baroness who spoke from the Liberal Benches that in your anxiety to deprive the rich, you are prepared to further impoverish the poor?

[Lord Bates]

You could construe it in that way, but another, perhaps a little more generous interpretation, would be to look at the case of the BVI. Its population is about 28,000. We follow GNI limits, which are $12,754 for graduating. One billionaire can make a profound distortion to the noted wealth of that country. In the BVI there are some very poor and needy people who lack the resources to rebuild their communities. We are committed to them not only because they are overseas territories but because of our humanitarian commitment.

[Lord West of Spithead (Lab)]

My Lords, our Armed Forces have a great tradition of helping around the world when there are catastrophes. We used to be able to do this easily because we had decent-sized Armed Forces. Now they are very small, does the Minister not believe that the defence budget should get recompensed when we give this aid in all parts of the world?

[Lord Bates]

That was very much one of the points that we made—we said that we wanted to see that coefficient increase. The military response in the Caribbean was absolutely essential and critical. HMS “Ocean” was there and 2,000 troops helped with the rebuilding process and the reconnection of power lines. They were a great tribute to, and played a great part in, the Government’s humanitarian effort.

European Investment Bank

Lord Bates Excerpts

Tuesday 31st October 2017 Lords Chamber

[Lord Balfe (Con)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. I draw attention to my entry in the register of interests. There has to be a limit to what is set out in the register, but I should add that I have been friends with members of the EIB for almost 40 years. That is probably relevant to this Question.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, the UK’s relationship with the European Investment Bank will need to be resolved as part of our withdrawal from the European Union. The Government are going through the UK’s potential rights and obligations line by line and are committed to getting the best deal for this country and a fair settlement for UK taxpayers.

[Lord Balfe]

My Lords, I thank my noble friend for that Answer. It has been made fairly clear in another place that the UK wants continuing access to funding, and indeed the Brexit Secretary has used the phrase, “an ongoing relationship with the EIB”. May I counsel that we should be cautious in how we withdraw? Although there are some people who wish us to cut ourselves off from every European institution, a strong case could be made for us to negotiate our continuing membership of the EIB, or at least access to its machinery.

[Lord Bates]

The Chancellor of the Exchequer would echo those words. He has made it clear that a continued relationship with the EIB may be possible and indeed desirable, but that is a matter to be negotiated because at present the EIB’s constitution and formation does not allow for it to happen. Changes will need to be made, but in the meantime it is important that we make clear that we believe that the full rights and obligations which come to the UK as a member of the EIB and its partner organisation, the European Investment Fund, should remain fully intact and that UK borrowers should have equal access with other members while we are exiting the European Union.

[Lord Davies of Oldham (Lab)]

My Lords, things are already happening. Is the Minister aware that a current project to provide support for businesses in the north-east is now on hold because the European Investment Bank is meant to provide half the resources towards it? Action is already being taken to the disadvantage of a section of the British people, even while the Government are involved in this situation.

[Lord Bates]

That is a fair point. The North East Finance application by seven local authorities was put forward. Following the triggering of Article 50, the EIB took the view that it wanted to undertake an additional level of due diligence to make sure that the UK would stand by its obligations after exiting the European Union. We believe we have confirmed that position by producing our position paper on privileges and immunities. We were delighted to see that the EIB, at its September meeting, had started to approve loans again for after that period. We wish North East Finance well in that.

[Lord Garel-Jones (Con)]

My Lords, the European Investment Bank is a major investor in infrastructure projects in the United Kingdom. For example, in 2016, £8.1 billion was invested in projects ranging from the health service to education and telecommunications. Given all that, does the Minister not think that it would be in the interests of both the United Kingdom and the European Union for Britain to have an ongoing relationship with the EIB?

[Lord Bates]

The UK is a major shareholder of the EIB, with 16.1%. We do well out of the arrangement, which is one reason why we have an interest in the relationship continuing. However, it is not the only mechanism. We have set up the UK Guarantees Scheme, a £40 billion-fund that could be available for infrastructure projects, and we are committed to moving forward in that spirit.

[Lord Beith (LD)]

My Lords, the Minister will be well aware of the need for this kind of investment in small, high-technology business in the north-east. Will he make a personal effort to ensure that any remaining difference between the EIB and the Treasury over the kind of assurances that need to be given will be resolved, and that the Treasury’s attitude will reflect the urgency, given that the north-east does not have the northern powerhouse funds that other regions do?

[Lord Bates]

That is right. In fact, the Chancellor of the Exchequer met the chair of the north-east local enterprise partnership on his visit to Gateshead on 22 September. As a governor of the bank, he has been at the forefront, advocating a speeding up in recognising the equal rights of UK borrowers, which must be respected and must continue.

[Lord Cunningham of Felling (Lab)]

My Lords, is it not clear from the record that the European Investment Bank has invested, and encouraged further investment of, billions of pounds in the United Kingdom economy? If the Government decide that we will leave the EIB, what will they do to replace that level of continuous investment, particularly in the regions of England and the nations of the United Kingdom?

[Lord Bates]

One example is the northern powerhouse fund, in partnership with the EIB, but the British Business Bank is there for precisely that purpose, as are the UK guarantees. As the Chancellor said in his Mansion House speech, we still want to explore, as part of the exiting the European Union negotiations, the possibility of our remaining part of the EIB, for the very reason the noble Lord articulates.

[Lord Leigh of Hurley (Con)]

My Lords, the European Investment Fund supplies finance to the venture capital and seed capital industry. London is widely recognised as a centre of excellence for venture capital and seed capital, but the EIF has suspended finance to a number of venture capitalists based in London. Will the Minister write to the EIF to ask why it is depriving British businesses of what is essentially British money?

[Lord Bates]

We are very clear on this. We believe that UK borrowers and companies seeking investment should continue to have equal access on that basis. That is why the Chancellor announced the establishment of the British Business Bank and that it would be increasing its threshold of ability to lend to venture capital funds as part of that. We are absolutely clear: we should have equal access while we continue to be members and continue to negotiate what the relationship will be thereafter.

Sierra Leone: Ebola

Lord Bates Excerpts

Monday 30th October 2017 Lords Chamber

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, I join others in paying tribute to the noble Baroness, Lady Hayman, for securing this debate and for the consistency with which she has followed these issues. As we look back through the briefing packs, we can see the debates she has initiated and the Questions she has asked all the way through. That is a great example of what happens in this place in terms of people sticking with issues. It also demonstrates her personal commitment not only in this area but through her work on the Disasters Emergency Committee and in the field of neglected tropical diseases. I was also struck during the debate by how so many noble Lords drew on their personal experiences of Sierra Leone. The noble Baronesses, Lady Tonge, Lady Sheehan and Lady Hayman, my noble friend Lady Jenkin and the noble and learned Lord, Lord Falconer, all spoke about their close links to and understanding of the situation.

The World Health Organization declared Sierra Leone Ebola-free just 592 days ago. That is less than two years since the country emerged from the devastating epidemic, which killed nearly 4,000 people, destroyed livelihoods, robbed a generation of children of a year’s education and further decimated an already weak healthcare system. While a lot has been achieved in the last 592 days, this work was not just about recovering or rebuilding, it was also about laying the foundations that were absent from the start. The noble Baroness, Lady Hayman, referred to the fact that before Ebola, Sierra Leone had some of the worst health indicators in the world. A quarter of all women of childbearing age died as a result of their pregnancy, an issue referred to by the noble Baroness, Lady Tonge; one in six children died before their fifth birthday; and malaria accounted for half of all out-patient visits. Progress was being made, but not fast enough. As the UK led the international response to the epidemic, saving thousands of lives while protecting our shores, we also stood shoulder to shoulder with Sierra Leoneans during an ambitious and fast-paced recovery. However, I accept the point made by the noble and learned Lord from his own experience: the narrowness of the base of the Sierra Leone economy in terms of its dependence is a structural weakness that needs to be addressed. I shall come on to that later in my remarks.

As we look back over the past 592 days, we can be proud to have fulfilled our pledge to support Sierra Leone’s President’s Recovery Priorities, referred to by the noble Lord, Lord Collins. We have educated 700,000 girls, trained 40,000 teachers and built 393 classrooms. The noble Baroness, Lady Coussins, rightly referred to the importance of education and her points about linguistics as a part of this are important. I have noted them and will take them back to the department and respond further to her.

Defeating Ebola was the second exceptional intervention by the UK following our efforts to end the civil war, helping the country be a stable and prosperous nation that responds effectively to natural disasters. Reference has been made in the debate to the recent floods and landslides, which again have had a devastating effect on people’s lives and on the economy. We want to see a nation that can stand on its own two feet. As our recovery programme comes to an end, our support will remain high and our partnership with Sierra Leone will remain strong with DfID, the FCO, the MoD and Public Health England working hand in hand to deliver the UK aid strategy. The noble Baroness, Lady Hayman, mentioned the commitment we demonstrated following the landslides and flooding in Freetown this summer. UK personnel were at the scene within hours to co-ordinate the response. Two world-leading humanitarian experts provided specialist advice and £5 million of additional support was announced to provide clean water, food and medicines for the thousands of victims.

Our efforts are not limited to humanitarian aid. Sierra Leone will continue to be one of the best-funded countries on a per capita basis. Our focus will continue to be on improving the lives of the people of Sierra Leone, including investing in water and power as well as basic health services to help boost the private sector, which is essential to the country’s development. I recognise the point made by the noble Lord, Lord Collins, about the role played by CDC with small and medium-sized enterprises in providing liquidity at the start of the crisis, which made a major difference. I also recognise that a debate on the subject of CDC and its economic development plans is long overdue, and I am delighted to be joined in this debate by two or even three members of the usual channels. I hope that there will be an opportunity soon to explore that issue further.

We will continue to support children’s education and improve learning outcomes for 700,000 additional girls through to 2021. Our support for basic health services will continue until at least 2020. We will save the lives of more than 22,000 children and 2,000 women, and provide family planning for more than 134,000 women and girls, to which the noble Baronesses, Lady Tonge and Lady Sheehan, referred. We are also helping to tackle global health threats to Sierra Leone to make sure it is ready to contain future outbreaks before they grow into epidemics, protecting people in the UK. People’s preparedness is a point my noble friend Lady Jenkin referred to in particular. The noble Lord, Lord Collins, referred to the importance of that being a community health-based solution. We have looked at the community health elements. One of the approaches we have learned at DfID from previous crises is that imposing a top-down solution never works in the long term. It has to be something that comes from the bottom up. That is why so many of the valid points made in the debate are being adhered to already.

However, as we discuss the recovery of Sierra Leone from Ebola, we should not pretend that the epidemic was just a crisis of the health system; it was a crisis of governance. Several noble Lords referred to this. The noble Baroness, Lady Hayman, referred to the elections, which I will come back to in a second. It was also right for the noble Lord, Lord Giddens, and the noble and learned Lord, Lord Falconer, to refer to the endemic problem of bribery in the country and corruption in general. That is why our Pay No Bribe programme is essential to carrying through and following through our zero tolerance of bribery and corruption where DfID operates. We are also supporting the Government to increase revenue to stimulate growth and spend their resources as effectively as possible.

As we look beyond the last 592 days, the UK’s priority is the delivery of successful parliamentary and presidential elections in March next year, which the noble Lord, Lord Collins, referred to. They must be free, fair and, above all, peaceful. We are focused on ensuring that citizens can exercise their rights at the ballot box. The UK has played a central role in helping Sierra Leone to restore and deepen its democratic governance, help build peace and stability, and make progress on tackling poverty. Our focus will continue to be on improving the lives of the people of Sierra Leone and supporting critical reforms to support the clear leadership of the Government.

In the time I have available I will turn to some of the specific points raised by noble Lords in the debate. The noble Baroness, Lady Sheehan, asked about the vaccine. The vaccine she referred to was used successfully when the country suffered two cases in January 2016. The World Health Organization and the Government of Sierra Leone gave permission for it, but it is still at the trial stage. She also asked about early intervention and the assessment of public health trusts, which I have covered in the reply on vaccines.

My noble friend Lord Ridley asked about one of many innovations that have come out of the great universities of that wonderful city, Newcastle upon Tyne—Northumbria University’s tests. We do not have details on that particular test but I would be very grateful to receive further information on it from my noble friend and to make sure it is put in contact with the relevant officials in DfID. As the noble Baroness, Lady Hayman, mentioned, it is core to the objectives of the Ross fund.

The noble and learned Lord, Lord Falconer, referred to the importance of diversifying the economy. The UK is investing in infrastructure—water, power and roads—to help create jobs, open up markets and attract investment. We are helping small and medium-sized businesses to access finance and learn new skills to grow. We are bringing in UK expertise, including the British Geological Survey, to help Sierra Leone best exploit and manage its natural resources. CDC is also seeking opportunities in that area.

There was some criticism of the World Health Organization, which we recognise. The Secretary of State, who, as the noble Baroness, Lady Tonge, mentioned, has visited Sierra Leone, is adamant that we need to reform the international humanitarian organisations, the World Health Organization among them. We are working on greater transparency, stronger accountability and measurement by results.

My noble friend Lady Jenkin asked what we are doing to empower citizens, particularly young people—she made a good point about the work of Restless Development in the country, which we recognise. DfID’s strengthening accountability and building inclusion programme is building stronger accountability between citizens and service providers. We are investing £9.5 million in that programme between 2016 and 2020. We hope that it will help.

Several noble Lords, including the noble Baronesses, Lady Tonge and Lady Hayman, mentioned female genital mutilation. Sadly, Sierra Leone has one of the highest prevalence rates in the world. We have been at the forefront of looking to implement initiatives such as the Maputo Protocol in this area.

There are many points to which I have not been able to respond. Therefore, it would perhaps be a good opportunity for me to write to noble Lords to follow them up.

Particularly at this time of year, we should pay tribute to the thousands of British military personnel, NHS staff, Public Health England staff, laboratory staff, civil servants and volunteers who risked their lives to fight the Ebola epidemic when it broke out. This was a truly collective effort: the best of Britain working together to help Sierra Leone tackle this horrible disease. We could not have done it without their bravery and compassion for those in need. DfID will remain engaged so that their investment and sacrifice is not lost.

Burma: Rohingya

Lord Bates Excerpts

Thursday 26th October 2017 Lords Chamber

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, I too begin by paying tribute to my noble friend Lady Helic for securing this debate and for the powerful way in which she introduced it, drawing on her personal experiences of the horrific events in Bosnia. It is tragic and salutary that we connected the events of 1995 and now, in the sense that Kofi Annan’s report was the definitive report at the time and he is at the heart of trying to seek a way forward in this crisis as well, drawing on those experiences.

I will try to use my time to respond to some of the detailed and focused questions, but I think that some of the responses will benefit from a further meeting, if noble Lords are willing. However, before I address those questions, I should begin by updating the House on the Government’s response to the situation of the Rohingya in Bangladesh, on the situation in Rakhine state and on the border, and on our diplomatic efforts.

We condemned the attacks by the Arakan Rohingya Salvation Army in late August, but, as the noble Baroness, Lady Sheehan, said, the violence carried out against the civilian Rohingya population was completely disproportionate and utterly appalling, and we condemn it without reservation. The noble Baroness, Lady Sheehan, asked about allegations that funding has been coming from other sources. We will look into that and I will write to her on it.

More than 600,000 Rohingya have fled to Bangladesh in a matter of weeks. Tens of thousands more are believed to be displaced within Rakhine state. Humanitarian access remains severely constrained. The noble Lord, Lord Collins, asked what we are doing to ensure that we get access to that area. The UK co-sponsored a resolution at the Human Rights Council that set up a fact-finding mission to look at the human rights situation in Burma. We recently supported a resolution to extend the mandate of the mission until September 2018. In addition, as noble Lords would expect, I spoke to Jane Edmondson, who is the head of DfID in Bangladesh. I put on record my tribute to her and her team—something which we do not do often enough. They are working down there in the camps at Cox’s Bazar as well as with the Government in Dhaka to ensure that there is NGO access in those areas. I pay tribute to their work, which comes, as usual in many such situations, with great personal risk.

The survivors’ accounts of the suffering have painted a harrowing picture. The noble Baroness, Lady Kinnock, and the right reverend Prelate the Bishop the Coventry referred to that and to other humanitarian abuses. Burmese security forces and ethnic Rakhine vigilante groups have displaced the Rohingya through a brutal campaign of violence that increasingly appears to be ethnic cleansing. Others have gone much further and we would not detract at all from what those organisations have said. The UK is one of the leading actors in the international community in responding to and seeking a solution to this crisis. I emphasise that word, solution, and I will come back to it. We are calling on the security forces and the Burmese Government to protect civilians, to facilitate full humanitarian access in Rakhine and to allow the safe and voluntary return of the Rohingya.

The noble Baroness, Lady Helic, the noble Lord, Lord Collins, and others referred to the pledging conference that took place on Monday of this week and was a major effort. It might be helpful to the House if I put on record that the pledges totalled $344.7 million. That fell short of what was expected but the UK contribution was a pledge of $63 million, which was by far the largest. The next largest donor was the European Commission pledge of $42 million, followed by the United States, at $38 million, and then Sweden at $23 million, along with Australia. We join others in calling for the international community to be cognisant of the severity of this crisis and the urgent need for resources to be found.

Providing humanitarian assistance is the most urgent priority now for hundreds of thousands of refugees who have arrived in Bangladesh and those who remain in dire need in northern Rakhine state. We commend the Government of Bangladesh—as did the noble Baroness, Lady Sheehan, and my noble friend Lady Berridge—for their generosity in welcoming so many refugees. The UK is the largest donor to the refugee response in Bangladesh. Within days of the outbreak of violence in August we committed an additional £30 million to enable humanitarian organisations to scale up, we have committed to match donations given through the Disasters Emergency Committee appeal and we announced an additional £12 million at the pledging conference I referred to.

UK aid is making a tremendous difference on the ground. Our support is allowing food to be provided for 174,000 people and has provided safe water and sanitation. I know that one thing that Jane Edmondson and her team were very concerned about in the camps was the possible outbreak of diseases such as cholera, so the washing facilities were absolutely critical in that initial response.

We are targeting the needs of vulnerable women and children, and my noble friend Lady Helic reminded us of the importance of us doing that. Emergency nutrition support will reach 21,000 pregnant and lactating women and more than 60,000 children under five. UK-funded women’s centres and health clinics will support survivors of gender-based violence and provide medical help for more than 50,000 pregnant women to give birth safely. The UK has provided £1 million to the Red Cross in Burma, which is currently the only aid organisation able to provide humanitarian support in Rakhine. I cannot at this stage answer the pertinent question of my noble friend Lady Berridge about the composition of those who are delivering the humanitarian aid, but I undertake to make investigations and come back to her. Our diplomatic efforts have been focused on directing international attention on to the Burmese security forces. We have raised Burma three times at the UN Security Council and convened an international meeting in New York with Kofi Annan, the chair of the Advisory Commission on Rakhine State. The role of neighbouring countries is vital. We are talking to China and India—which have very important roles to play in the region—and other regional states to encourage them to play their full part in resolving the crisis.

The noble Baronesses, Lady Kinnock and Lady Nye, and my noble friend Lady Helic referred to the role of Aung San Suu Kyi on this issue. I very much understand the criticism and grave disappointment felt by many in this House. However, we should not fail to acknowledge in part—and this is why I say that I will come back to the emphasis on a solution—the pressures she is facing, to which the noble Lord, Lord Alton, referred in his remarks. The noble Baroness, Lady Sheehan, described it as walking a tightrope—we recognise that description as well—between the international condemnation and Burmese public opinion which overwhelmingly supports what the security forces are doing. That is the reality and we need to work within that. We believe that Aung San Suu Kyi has now begun to show more leadership, and she has announced a humanitarian mechanism. She has clearly expressed her willingness to facilitate the safe and voluntary return of the Rohingya to Rakhine, and has set up nationwide interfaith meetings to promote respect for diversity and challenge widespread prejudice.

At this point, I refer to the remarks of my noble friend Lady Berridge on the persecution of both Muslims and Christians in Burma, particularly in Rakhine. It is very clear that they are facing persecution there and in other parts of Burma as well. Ministers including the Foreign Secretary have met community leaders, including some from religious minorities, and we have spoken publicly of our support for the importance of freedom of religious belief. That is all the more important as tomorrow is International Freedom of Religion or Belief Day. I pay tribute to my noble friend Lady Berridge and the All-Party Parliamentary Group on International Freedom of Religion or Belief for the event that it organised yesterday. My noble friend Lord Ahmad attended that event and spoke powerfully about the importance that we place on defending people’s religious beliefs in those areas.

We stand ready to encourage and support Aung San Suu Kyi on taking these initiatives forward, but we will need to see progress. The situation in Rakhine has been difficult for many decades. Noble Lords have referred to that, including the noble Lord, Lord Collins. Resolving the current crisis as well as healing the deep divisions requires sustained and long-term engagement. The UK is committed to supporting the Rohingya, not only now in their time of most urgent need but also during the difficult times ahead.

I will now turn to some of the specific points raised. On citizenship, which was raised by the noble Lord, Lord Alton, and my noble friend Lady Berridge, the Rakhine Advisory Commission makes it clear that citizenship must be addressed in order to make progress in Rakhine. It sets out two approaches on citizenship: making progress on verification under existing laws and reviewing the controversial 1982 citizenship law. It is of course a tragic consequence of those laws, and the failures that are in place, that the Rohingya end up in the situations referred to by my noble friend Lady Berridge, with the difficulty they have in getting visas. To have a visa into any country, you need to have valid identification and travel documents. If they do not have those because they do not have citizenship, then of course it is difficult for that to happen. Again, we will look into that.

My noble friend Lady Helic talked about the response to gender-based violence. DfID is supporting a range of organisations providing specialised assistance on gender-based violence to survivors. At the moment, having spoken to officials in DfID about the stories they are coming across, I know that, anecdotally, the numbers are staggering. We are working with official groups to make sure that those testimonies and reports are recorded so that actions can be taken. She also asked what work we are doing through the UN Security Council. Although we have raised it in three sessions, we also have to be aware of the reality that there is a possibility of veto in the Security Council because countries have an interest in and are prepared to use a veto. However, we were encouraged that on 13 September, for the first time in more than nine years, the Chinese agreed to issue a UN Security Council press statement. We regard that as an encouraging step forward.

Overwhelmingly, this has been a debate which should sober our minds and make the international community wake up and take notice of what is actually happening there. This is yet another man-made crisis which requires a political solution. I pay tribute to all noble Lords who have taken part in the debate, and to my noble friend Lady Helic. I stand ready to meet noble Lords to pursue these matters further as the need requires.

Consumer and Personal Debt

Lord Bates Excerpts

Monday 23rd October 2017 Lords Chamber

[Baroness Liddell of Coatdyke (Lab)]

My Lords, with the permission of the House and at the request of my noble friend Lord Haskel, I beg leave to ask the Question standing in his name on the Order Paper.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, the independent Financial Policy Committee stated last month:

“The overall level of consumer debt relative to household incomes was in line with historical averages”.


We set up the Money Advice Service, which spent £49 million on debt advice last year, and are creating a single financial guidance body to ensure that people can manage their money better.

[Baroness Liddell of Coatdyke]

My Lords, I thank the Minister for his response, but just last week the director of the Financial Conduct Authority pointed out that domestic debt was rising by about 10% per annum. It is not irresponsible debt; it is debt on food and accommodation. The Monetary Policy Committee has also warned of these increases in personal debt. Behind these economic statistics lie great hardship, stress and concern for families. The Minister is known as a compassionate man. When the Financial Guidance and Claims Bill comes before this House tomorrow, will he impress on his colleagues the need to introduce the measure in his party’s manifesto which would give a breathing space to those with problem debt?

[Lord Bates]

Certainly it is correct that the Financial Guidance and Claims Bill will introduce a number of measures that will improve the service for debt advice to those in greatest need. We stand by our commitment on the breathing space, which was in our manifesto and the manifesto of the noble Baroness’s party. We will bring forward measures to deal with it, which underscores the importance we place on dealing with debt, particularly among young people.

[Lord Sharkey (LD)]

My Lords, as people reach or exceed safe borrowing limits, how do the Government expect them to cope with the continued rise in the cost of living and the continued decline in real wages?

[Lord Bates]

The Financial Conduct Authority placed a duty on banks to make sure that lending is on a sustainable basis. In the wider area, it is also important that we maintain the strong and vibrant economy that has record numbers of people in work and record low levels of unemployment. Those things are the greatest help to people’s ability to service debt and are therefore the primary focus of our attention.

[Baroness O'Cathain (Con)]

My Lords, this is all about the horrible situation that people get into because of debt. It is wonderful that the Government are trying to do something to reduce it and to make people more aware of it, but what incentive will they give to people to save? The incentives to have debt are being addressed but there is no incentive at all to save.

[Lord Bates]

The report referred to earlier contained the staggering statement that more than 40% of Britons have less than £100 in savings as a buffer before they get into debt. That is one reason why my noble friend will be pleased to know that we have established the Help to Save scheme. It will help 3.5 million people save £50 per month over two years. If they do that, the Government will give a 50% grant, which represents a very substantial rate of return to encourage saving.

[Lord Kinnock (Lab)]

My Lords, does the Minister recognise that in our debt-dependent economy, average household debt is 150% of average household income? Unsecured personal debt is now back above £200 billion. Council tax and utility bills are at record levels of default and 40% of mortgage borrowers in our country have no experience of dealing with an interest rate rise. In those perilous circumstances will the Minister join others in strongly urging the Bank of England not to increase interest rates, which would devastate families, businesses and the economy and do nothing to diminish inflation, which is in any case largely the result of the post-referendum devaluation of the pound?

--- Later in debate ---

[Lord Bates]

The noble Lord is a very experienced politician and will know that it would be impossible for me to comment on interest rate policy, which of course, rightly, is now set independently by the Monetary Policy Committee. A lot of the points he made are correct. These are areas of concern and happening at a time when we have historically low interest rates. There are some areas where things are better—for example, mortgage repossessions are at their lowest level since 1982—but we must do more, particularly in the area of short-term debt, which he referred to. That is partly what the Financial Guidance and Claims Bill, which has its Report stage in this House tomorrow, is about.

[The Lord Bishop of St Albans]

My Lords, a poll commissioned by Citizens Advice in June found that 18% of people with credit cards who had debt problems had had their credit limits increased automatically without them even asking for it, thereby enabling them to take on even greater debt when they were already facing problems. I understand that the FCA is looking into this, but will the Minister ensure that it is asked to bring in much stronger guidelines on this situation to prevent it getting worse?

[Lord Bates]

I was nodding as the right reverend Prelate made his point about this irresponsible lending—it is very tempting—but of course the Financial Conduct Authority was set up to be an arm’s-length body and to advise the Government on what should be done. As he rightly says, the FCA has produced a report, which it is putting out to consultation, and will be announcing some policy changes in this area. Previously, we have seen the introduction of things such as fee-free bank accounts, which are now benefiting 4 million people, and the cap on payday loans—I pay tribute to the most reverend Primate’s role in bringing that about. These are making a practical difference to people and we need action there too.

[Baroness Meacher (CB)]

Is the Minister aware that as universal credit is rolled out, personal debt is going to increase to unprecedented levels? This is not the fault of the individuals but results from the fact that new claimants have to wait, on average, seven to eight weeks for their first payment. They then get a payment for four weeks. It is not possible for them to survive, and of course we know that their benefits are reduced by the bedroom tax and all the other things, and then debt withdrawals. We heard this morning at a meeting that apparently people are resorting to burglary in order to pay their debts. Can the Minister help them by consulting his colleagues?

[Lord Bates]

There is no need for people to engage in any of those kinds of activities. Help is there, including in the shape of the advance, which over 50% of people now take advantage of, and which can be based on that element. We need to remember that universal credit was brought in with cross-party support, with the very purpose that it would stop the perverse incentives which meant that, under the previous benefit system, people could work more hours and be worse off, and move them to a system where people would always be better off if they worked. We now need to address the details, which my right honourable friend the Secretary of State is doing.

[Lord Davies of Oldham (Lab)]

My Lords, the crisis is upon us, and it is evident that it is. Will the Minister recognise that the Government have an opportunity tomorrow to accept an amendment tabled by the Opposition for a breathing space for debtors? During the general election, of course, the Conservative Party was in favour of this proposal. Can he not see that the urgency of the situation demands that the Government act positively tomorrow?

[Lord Bates]

The Bill is about improving the quality of debt advice to those in need of it and has been broadly welcomed. My noble friend Lady Buscombe has tabled a number of amendments which will be discussed on Report. As I have already said, we remain committed to the concept of a breathing space and will bring forward details on that very shortly indeed.

South Africa: Money Laundering

Lord Bates Excerpts

Thursday 19th October 2017 Lords Chamber

[Lord Hain]

To ask Her Majesty’s Government what action they are taking to prevent money laundering through British banks by families and businesspeople linked to the government of South Africa.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, the Government are committed to tackling corruption in the UK and overseas and preventing the proceeds of corruption from entering the UK’s economy. The recently introduced money laundering regulations set out strict rules that British banks must follow when doing business with those with links to prominent public functions that may expose them to risks of corruption. We are concerned about the allegations in South Africa, and the British high commission is monitoring the issue closely.

[Lord Hain (Lab)]

May I thank the Chancellor for ensuring that the Financial Conduct Authority, the Serious Fraud Office and the National Crime Agency investigate HSBC, Standard Chartered Bank and Baroda Bank, each of which expert South African whistleblowers have told me must have been conduits for the corrupt proceeds of money stolen from their taxpayers and laundered through Dubai and Hong Kong? In my letter of 25 September to the Chancellor, I supplied for investigation 27 names and personal identification numbers, including President Jacob Zuma, 11 members of his family, 11 members of his close friends, the Gupta family, and their five associates, together with 14 entities linked to the Guptas and suspected to have been set up for the purposes of transnationally laundering an estimated £400 million, or 7 billion rand, of their illicit proceeds. Will he ensure that those banks, together with the European banks—about which I have similarly written to Commission President Juncker—track down that laundered money, return it to the South African Treasury and supply evidence to its officials to enable the prosecution of all those connected with such corruption?

[Lord Bates]

My Lords, we are grateful to the noble Lord for the persistence that he has shown on this issue and in drawing it to the Chancellor’s attention and to international attention. The UK has some of the toughest anti-money laundering laws in the world. We have been at the forefront of introducing them—whether it is the Criminal Finances Act this year or the fourth anti-money laundering directive. We realise that London, as the largest financial centre, is a target which can be used for this purpose, but we are determined to root it out. That is why, when we are provided with information—as when the noble Lord, correctly, wrote to the Chancellor setting out that detail—immediate action is taken to refer it to the relevant authorities to ensure that they can pursue the matter and that justice is done, and is seen to be done.

[Baroness Pidding (Con)]

My Lords, as someone who is incredibly fortunate in having a family home in South Africa, in White River, in the province of Mpumalanga, I have seen at first hand the sheer beauty of this amazing country, its diversity and vibrancy and the determination of its people to overcome the many challenges that it faces. Does my noble friend agree with me that, with South Africa as a key trading partner in the region and a member of the Commonwealth, it is in our national interest to make sure that we strengthen our relationship with it?

[Lord Bates]

Well it is certainly right—and I pay tribute to my noble friend for raising this issue—that South Africa is a country with incredible resources, not only naturally but in its people. It is the largest economy in the African continent and is the largest investor in the UK and largest trading partner in Africa for the UK. Whenever countries go through political difficulties, as they are in South Africa at the present time, we recognise that there is a long-term important relationship for the UK to maintain.

[Baroness Kramer (LD)]

My Lords, this is another instance where the US regulators have been ahead of the curve of the UK regulators, even though it appears that London is part of the core allegations. It has happened before in money laundering—it was so evident in the LIBOR scandal. Will the Minister once again look at the resources available and the enforcement strength of our regulators? Will he also look again at the whistleblowing laws which, although improved, are still so weak and career ruinous that the regulator does not have access to information that it should be getting at a much earlier stage?

[Lord Bates]

I do not accept that we are behind the curve on this. In many ways, the UK is leading the world: at the G20, in the Financial Action Task Force, and with the regulations that we have put in place and the reform of the Financial Conduct Authority. That is why this year the Financial Conduct Authority handed out one of the toughest fines ever levied—£163 million—to Deutsche Bank for failing to comply with up-to-date money laundering regulations. We are very tough on this, but we realise that you have to be vigilant all the time. Therefore, when issues are drawn to our attention, we respond to them quickly and appropriately.

[Lord Davies of Oldham (Lab)]

My Lords, this is a very big issue in South Africa, and it will not do for the Government to suggest that they have their eye firmly on the ball. At last we are getting some response, but it is quite clear that a number of British banks have got very significant interests in South Africa. It is important that action is taken now to make sure that these banks are clear of this corruption and, if they are not, that action is taken against them. I urge the Minister to reinforce what he has said today elsewhere. It will not do Britain’s reputation any good at all for us to be tardy on this very significant issue.

[Lord Bates]

I totally agree with the latter part of the noble Lord’s point. That is exactly why we have taken action in referring this matter to the Financial Conduct Authority. That is why we passed the Criminal Finances Act in April this year and introduced the tough new anti-money laundering regulations in July this year. That is why we introduced, just yesterday in your Lordships’ House, the Sanctions and Anti-Money Laundering Bill, which my noble friend Lord Ahmad will take through the House. We are taking this very seriously because we realise the consequences of not doing so for the reputation of the City of London and the UK.

[Lord St John of Bletso (CB)]

My Lords, in light of the endemic corruption of the state in South Africa, what are Her Majesty’s Government doing to deal with the broader issue of state capture, a term used to describe the misappropriation of state funds by a power clique?

[Lord Bates]

I think the other point to recognise is that in South Africa there are democratic processes and systems of law. The parliamentary inquiry is now under way into state capture by the specific companies that were referenced. A judicial commission of inquiry into state capture has been proposed but has yet to start to take evidence. We recognise that South Africa needs to go through its processes to find out what happened and who is responsible so that action can be taken, both domestically and internationally.

Sterling: Euro Exchange Rate

Lord Bates Excerpts

Monday 9th October 2017 Lords Chamber

[Baroness McIntosh of Pickering]

To ask Her Majesty’s Government what assessment they have made of the impact of the relative value of the euro to the pound sterling on individuals and businesses.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, the UK has an inflation target, not an exchange rate target, and the Government do not express a view on the level of exchange rates. The value of sterling adjusts flexibly in response to economic conditions and market forces and sentiment. The Government will continue to monitor economic developments closely, while at the same time taking steps to promote economic growth and to support individuals and businesses.

[Baroness McIntosh of Pickering (Con)]

My Lords, since 2015 the pound has lost between 20% and 30% of its value against the euro, leading to the loss of Monarch Airlines and Air Berlin, among others, in the last few months. Does my noble friend the Minister believe that the quantitative easing programme embarked upon by the Bank of England to shore up the level of the pound and keep interest rates down is sustainable? Will the Treasury come clean on what the real cost to the UK economy—to individuals and businesses—will be if the United Kingdom crashes out of the European Union without a deal?

[Lord Bates]

We can certainly say that a number of those elements are, rightly, matters that are independent of government. The Bank of England has been given the UK macroeconomic mechanisms to make those judgments on interest rates. Interest rates are at an historically low level. Exchange rates can have a negative effect on imports but a positive effect on exports. It is important that we emphasise that the fundamentals of the British economy remain strong. Employment is at record levels and we continue to grow and expand, and we want to see that continue. That is very much the positive outcome we want from this complex negotiation.

[Lord Davies of Oldham (Lab)]

My Lords, if the economy is so strong, why was our credit rating reduced recently? Sometimes Governments preside over the depreciation of their currency in order to improve their balance of payments and trading position. Why is that clearly not working under this Government?

[Lord Bates]

Since 2010, the economy has grown by 15.3%. That is 1.5 times the level of France. I do not necessarily want to remind the noble Lord, who was standing on this side of the Dispatch Box during 2008-09, that the economy contracted by 6.3% during that period. The fact that we have record levels of employment and are seeing sustained growth should be welcomed and built upon.

[Lord Fox (LD)]

My Lords, a fall in the relative value of the pound was advanced by some of the most enthusiastic Brexiteers as the antidote to future potential export tariffs. Can the Minister tell this House whether that is also Her Majesty’s Government’s policy? If the answer is yes, what evidence has been amassed over the last 12 months of a phenomenally low pound to support that view?

[Lord Bates]

As I have said, the Government have not said exchange rates are their responsibility. Those matters are driven by the markets and sentiment. We have to make sure we have a strong, competitive economy. That is why we have lowered taxation rates, why we have high employment levels and why the Chancellor has announced a new national productivity investment fund of £23 billion. We have to do everything in our power; the markets will respond as the markets respond.

[Lord Forsyth of Drumlean (Con)]

My Lords, will my noble friend take this opportunity to remind people that the strength of the euro has been bought on the backs of those unemployed young people in Greece and the southern European states, that the eurozone is embarking on a project to screw that down even harder, and that the misery that will create is one of the reasons why we are best out of the eurozone?

[Lord Bates]

My noble friend is absolutely right that we are out of the eurozone as far as that is concerned. The strength of the UK can be recognised not only in how people respond to our market but in how they respond in terms of foreign direct investment. That is a much more concrete and long-term form of investment. The UK continues to be the second-largest recipient of foreign direct investment in the EU and second in the world only to the United States. The fact that companies such as Nissan, Toyota, Apple and Bloomberg are making major long-term investments in the UK should encourage us to do the same.

[Lord Lea of Crondall (Lab)]

My Lords, in saying that we do not have an exchange rate policy but simply an inflation policy, the Minister has repeated the Written Answer that he gave to a Question that I tabled. In the hypothetical situation of the pound falling further, is it not ever more obvious that it is a totally false binary to say that we have a policy on inflation but not one on the exchange rate, when the one feeds into the other in a very material way?

[Lord Bates]

I acknowledge the noble Lord’s great professional experience in economics, but I am saying something slightly different. I am not saying that we do not pay attention to that and do not watch it at all; I am saying that the way in which it has been configured, through successive Governments, is such that this is a matter for the Monetary Policy Committee of the Bank of England to respond to. Where inflation rises above 3%—its target is 2%—it has to respond. Where it sees matters which are causing concern, it can choose to cut interest rates—as it did after the referendum, to historically low levels of 0.25%. We are not saying that we do not have any policy; we are saying that we have a core set of policies which the Government are responsible for and we are acting on them.

[Lord Brooke of Alverthorpe (Lab)]

Will the Minister explain to the House why we have been downrated?

[Lord Bates]

If someone wants a historical lesson on the accuracy of the ratings agencies in making predictions, the events of 2008-09 might raise some question as to what they were doing then. We are talking about a downgrade of one notch. That reflects some concerns that they have about the transition period as we exit the European Union. They are perfectly entitled to say that. We are saying that we have a clear plan as to how we want that exit to happen, we want it to happen as soon as possible and we believe that the prospects for this country thereafter are very positive indeed.