Proceeds of Crime: EUC Report

Lord Hannay of Chiswick Excerpts

Tuesday 22nd May 2012 Lords Chamber

Moved By

[Lord Hannay of Chiswick]

To move that this House agrees the recommendation of the European Union Committee that Her Majesty’s Government should exercise their right, in accordance with the protocol on the position of the United Kingdom and Ireland in respect of the area of freedom, security and justice, to take part in the adoption and application of the proposal for a directive of the European Parliament and of the Council on the freezing and confiscation of the proceeds of crime in the European Union (document 7641/12) (32nd Report, Session 2010–12, HL Paper 295).

[Lord Hannay of Chiswick]

My Lords, I beg to move the Motion standing in my name on the Order Paper. It is in my name because I have the honour to chair the European Union Committee’s Sub-Committee on Home Affairs, which at the end of the last Session prepared the report now before your Lordships’ House.

As your Lordships know, when the House considers reports of the European Union Committee, this is almost invariably on the Motion that the House should take note of the report. In the case of this report, the Motion invites the House to agree the committee’s recommendation. The reason for this is that the report deals with draft legislation falling within the area of freedom, security and justice, and the legislation will apply to this country only if the Government exercise their right under the protocols to the treaties to take part in the legislation—in other words, if they opt into it. They have to do this within three months of the proposal being presented to the Council, which, in the case of the directive we are considering tonight, means before 15 June. The committee believes that the Government should do so, and the Motion invites the House to agree with the committee.

Last year, this Government repeated an undertaking given by the previous Government—usually known as the Ashton undertaking—that time would be found to debate opt-in reports well before the expiry of the three-month period. I am grateful that, despite Prorogation, the Government have made time available for this debate early enough for them to be able to take the views of the House into account before they formally reach a decision on whether to opt in.

Freezing and confiscation of the proceeds of crime is one of the most effective ways of fighting crime. Since criminals are much more mobile and much more ingenious about hiding these proceeds, it clearly strengthens this aspect of the fight against organised crime if such freezing and confiscation can be enforced across the whole of the European Union and not just within one country’s borders. There is current EU legislation on the subject in a series of framework decisions stretching from 2001 to 2006. Two of these establish minimum rules on freezing and confiscation of proceeds of crime. There is, however, nothing to prevent member states enacting more stringent legislation, as this country has done in the Proceeds of Crime Act 2002. The new draft directive that we are debating this evening would supersede these two framework decisions and add to them fresh powers—in particular, the power to confiscate the proceeds, despite there having been no criminal conviction because, for example, of the death or flight of the suspected person. This is a power already available to the courts of this country. My committee supports the proposal that the courts of all member states should be required to have this power.

The confiscation of the proceeds of a crime is of course an integral part of the penalty—the criminal should not be allowed to profit from their ill gotten gains—but even more important is the deterrent effect. Criminals who know that the proceeds of their crimes are likely to be confiscated may think twice before embarking on criminal activities. It is therefore a weakness in our law enforcement system that, as things are, the proceeds are not all that likely to be confiscated. The figures available are, unfortunately, very speculative, as estimates of the proceeds of crime vary wildly. In the United Kingdom one estimate is that, of the £15 billion annually criminally acquired, in 2009-10 only £154 million was recovered to the state. That is net of assets recovered for the victims and of management expenses but, even so, the proportion of the proceeds recovered cannot on any measure exceed 3%. The position in other member states is no better. The deterrent effect is thus currently small but not negligible.

The Costa del Sol has been the haven of choice for criminals to retire to and enjoy the fruits of their labours. The statistics from Eurojust show that in 2010 one case in Spain resulted in the confiscation of €112 million, with many other cases netting smaller amounts and, in addition, a number of properties, boats and luxury cars. This demonstrates the importance of all member states having these powers.

The Government have stated on many occasions their determination to pursue the fight against serious organised crime. In my view, this entails not just having adequate domestic law in the United Kingdom but bringing pressure to bear on other member states to have provisions in their own laws on freezing and confiscation which at least meet the minimum requirements laid down in this directive. The committee therefore believes that it is important that the Government should opt in to the proposal and play a constructive part in negotiating a strong directive, and support other member states which may have weaker law enforcement systems thereafter to implement the system effectively. That is where there have been doubts in the past and I hope that this new legislation will provide a basis for much more effective work in the future.

There is one aspect of the draft which has caused the committee real concern. It is a regular feature of serious crime that the criminal will launder the proceeds internationally and put them into assets in many countries. A conviction in one country will therefore be fully effective only if a confiscation order made by one court is automatically recognised and enforced in other member states. There are two framework decisions dealing with mutual recognition of freezing and confiscation orders, but the directive being discussed tonight does not deal with that topic. We hoped that the directive would repeal, replace and strengthen the provisions of all four framework decisions. Instead, it repeals, replaces and strengthens the two dealing with the making of freezing and confiscation orders, but leaves in place those dealing with mutual recognition of orders made in other countries’ courts. The committee fears that that may be an unintended consequence of the arbitrary and illogical division of the former Commission directorate of freedom, security and justice into two separate directorates, dealing respectively with justice and home affairs. I would like to hear the Minister’s views on this; perhaps he could in any case tell the House whether the Government will argue in the negotiations for the new directive to be extended to include mutual recognition provisions as well.

This is only one of a number of aspects of the directive that we would like to see raised in the negotiations. Others are detailed in our report. Some are technical, but there is one to which I should draw attention. If the Government were not to opt in, the United Kingdom would remain bound by the current provisions of the earlier framework decisions, which will thus be included in the list of those measures on which the Government have to decide—by May 2014 at the latest—whether all or none of them should continue to apply to the United Kingdom. That arises under Protocol 36 to the treaties. I am not wishing to raise that extremely interesting and sensitive issue tonight, but merely say that it is one about which your Lordships will hear more in the period ahead of us, not least from the European Union Committee, which will be carrying out an inquiry into the background to the 2014 decision in due course, and nearer that time.

We are continuing to keep the directive under scrutiny, so at this stage one matter only comes formally for decision to the House: whether or not the Government should exercise the United Kingdom’s opt-in. For the reasons I have given, the committee is firmly of the opinion that the Government should do so. I hope very much that we will hear from the Minister at the conclusion of the debate that this is their intention.

--- Later in debate ---

[Lord Hannay of Chiswick]

My Lords, first, I thank all those who participated in this short debate and have made very valuable contributions. Perhaps I may be permitted to thank in particular the noble Lord, Lord Hodgson of Astley Abbotts, whose departure from the sub-committee that drafted this report is a cause of regret to all its members, because he has made a remarkable and constructive contribution to our work over the past three years. He will be sorely missed.

I join those who spoke about Michael Collon, our clerk, who has guided this committee for so long and has now moved on to greater things. He will also be missed.

As to the points raised in the debate, I followed carefully what the Minister said. I understand the procedural complexities of the matter and the need for the Government to handle their relationship in the other place in a way that is consistent with reaching a decision on this. I admit to a scintilla of regret that the Minister could not rise to his feet this evening and say that the Government had decided to opt in, but patience is sometimes rewarded. I can see why they are in the position that they are in.

The only point that I make is that from my own experience, and I think from the experience of much of the legislation in this area, it is a better way to influence this sort of legislation effectively if one opts in and negotiates as a full negotiating partner than to have to try to do it from the outside with the use of the potential opt-in at a later stage when other people have shaped the legislation. I am sure that the Government would in those circumstances still try to exercise their influence, but in my view they would have less influence than if they opted in before 14 June. So I very much hope that that is a decision that they will come to. This may be a triumph of hope over experience, but I even hope that the scrutiny committee in the other place may take a somewhat less negative view than it has on many matters, particularly given the importance to this country of Europe-wide legislation to deal with the confiscation and recovery of assets. I do not find it believable that they should feel that it is not a reasonable objective of our national policy and in our national interests to see tougher provisions Europe-wide, not just in this country.

I hope that this debate and its outcome, which I suggest will be the House’s approval of the Motion on the Order Paper, will be factored into the Government’s consideration and will be given due weight.

Motion agreed.

Piracy

Lord Hannay of Chiswick Excerpts

Monday 26th March 2012 Lords Chamber

Asked By

[Lord Hannay of Chiswick]

To ask Her Majesty’s Government whether the assistance given by the Serious Organised Crime Agency to the Regional Anti-Piracy Prosecutions and Intelligence Co-ordination Centre in the Seychelles will include information gleaned from suspicious activity reports.

[The Minister of State, Home Office (Lord Henley)]

My Lords, no decision has been made on whether SOCA will share information from suspicious activity reports with the Regional Anti-Piracy Prosecutions and Intelligence Co-ordination Centre. We are still determining the centre’s requirements, which will include safeguards for the protection of personal data.

[Lord Hannay of Chiswick]

My Lords, I thank the Minister for that response—although, alas, there is not a huge amount to thank him for but just a little bit—but I should be grateful if he would ensure that we are told when a decision has been reached on this matter. Would he not agree, moreover, that now that the Government are getting a better grip on all aspects of the problems of Somalia, including that of piracy, it is high time that the Government insisted that anyone assembling a ransom should file a suspicious activity report about that? Would he also confirm that the Prime Minister has now asked for a proper study to be made of all aspects of the issue of assembling ransoms?

EUC Report: Internal Security Strategy

Lord Hannay of Chiswick Excerpts

Thursday 19th January 2012 Lords Chamber

Moved by

[Lord Hannay of Chiswick]

That this House takes note of the report of the European Union Committee, The EU Internal Security Strategy (17th Report, HL Paper 149).

[Lord Hannay of Chiswick]

My Lords, the report of the European Union Committee on the European Union's internal security strategy was published on 24 May 2011. I am therefore glad now, after nearly eight months, to have the opportunity to bring it to your Lordships' House for debate as chairman of the Home Affairs Sub-Committee, which conducted the inquiry. However, in doing so, I cannot simply pass over that remarkable—and, in my view—lamentably long delay. If the House wishes to ensure the topicality and relevance of the debates it holds on subjects such as this and reports such as the one we are considering today, it must improve its record on the scheduling of debates.

Internal security is primarily a matter for member states themselves, but the treaty of Lisbon, although reflecting that, for the first time gave the European Union an explicit responsibility by setting up a committee whose prime aim is,

“to ensure that operational cooperation and internal security is promoted and strengthened within the Union”.

The committee is known as COSI—one of those dreadful acronyms—and I shall have more to say about it in a moment.

The new responsibility of the European Union, although limited, led to the five-year Stockholm programme, which invited both the Council and the Commission,

“to define a comprehensive Union internal security strategy”.

Both institutions took up the challenge. I hope that I am not being disobliging when I say that the Council strategy, which was agreed in March 2010, was an anodyne document of no great weight. However, in November 2010, the Commission published in response to the Council document what was intended to be an implementing communication called, The EU Internal Security Strategy in Action. That document formed the basis of our inquiry.

Security is a complex subject, and we were fortunate to have as our special adviser Stephen Hawker, whose experience and knowledge of counterterrorism and security issues is so wide that I am not permitted to divulge to the House more about his background. I can, however, say that the committee was extraordinarily grateful for his help.

In this Parliament, institutions of the European Union tend to come in for blame rather than praise, and that is particularly true of the Commission. I am glad, therefore, to be able to say that the Commission’s document was, in the view of the committee, pragmatic and realistic, focusing on five areas where the EU could and should have some real influence. These are: the disruption of international criminal networks; prevention of terrorism; security in cyberspace; improved border management; and increased resilience to crises and disasters—natural disasters, in particular. The document is a first rational attempt to articulate a comprehensive approach to the EU’s internal security, and I pay tribute to the impressive work of Commissioner Cecilia Malmström, the Home Affairs Commissioner.

Our inquiry was long and so, I fear, is our report. In this speech I shall concentrate on only a few aspects of it—primarily, not surprisingly, those where we regard the Government’s response to be unsatisfactory. However, the Government agreed with many of our recommendations, and I was very grateful, as was the committee, for that. In particular, I was struck by the fact that they firmly endorsed the committee’s view that Britain’s internal security neither begins nor ends at the water’s edge. That kind of conceptual approach is quite important because it rather gives the lie to the suggestion that we can just do this on our own and that will be fine.

The first of the areas where we are a little at odds with the Government in their response relates to cybercrime. No one nowadays doubts the scale of the damage that can be, and is being, done by cybercrime and by attacks on cybersecurity. Of course, much of the work of defending against them is a national responsibility or is being followed up in a military context in NATO. However, the cybercrime element is a bit different. The Commission recommended the setting up of a new cybercrime centre, through which the member states and institutions would be able to build operational and analytical capacity for investigations and for co-operation with international partners. Our witnesses, including the government witnesses, agreed almost without exception that this would be a worthwhile development, as did the committee. We recommended that it should not be a new free-standing institution, which we thought would be wasteful and duplicative, but that it should be located within Europol, which is increasingly becoming a central part of Europe’s efforts against various forms of crime and which possesses some of the infrastructure needed. The Government, I am glad to say, agreed on both those points. The disagreement between us comes over the funding.

Cybercrime is a huge cost to all our economies and it cannot be fought without resources, yet that is roughly what the Government would like to do. They are prepared—quite rightly, in my view—to allocate £650 million in new funds to the UK’s own national cybersecurity programme but they seem to think that Europol can fund a new EU cybercrime centre out of thin air from its existing budget. The EU’s budget framework for the years 2014 to 2020 is something that the Select Committee and its sub-committees are considering again at this moment, and I shall not stray into that wider territory. We are all realistic enough to appreciate that overall now is not the time for an increase in the EU budget. However, a reallocation of resources within the budget is another matter. The home affairs budget is actually less than 1 per cent of the total EU budget and will reach only about 1 per cent of the total EU budget if the Commission’s proposals for 2013 go through, which they may very possibly not do in the form in which they have been put forward.

I and my committee would argue that it is not really credible for the Government to suggest that the relatively modest cost of setting up the cybercrime centre within Europol cannot be found from other heads of the EU budget. The Government’s position is that it has to be found within the justice and home affairs budget, which is not really credible. I hope that the Minister will be able to undertake to look again at that aspect. I am not expecting him to concede the point here and now—I know where the true decisions on these matters are taken—but I hope that it will be looked at again because the suggestion that this can be found within the JHA budget is not very credible.

Mention of Europol brings me to the question of its parliamentary oversight. The treaty of Lisbon introduced the requirement that national parliaments should join with the European Parliament in overseeing the work of Europol. It had been suggested by the Commission, although not in the strategy document that we are debating today, that that should be done by a new and specially constituted body. My committee thought, and repeated in the report, that this could and should be done not by a new specially constituted body but by the joint interparliamentary meetings which already regularly take place between chairs of the home affairs sub-committees or committees of national parliaments and of the European Parliament.

I went to Brussels last October as chairman of the EU Home Affairs Sub-Committee for a meeting of those chairmen and it was hosted by the equivalent committee, the LIBE committee, of the European Parliament. At a session which I chaired, it was agreed that that oversight should be carried out by such existing annual joint interparliamentary committee meetings. The government response did not deal with the issue but I would like to hear from the Minister whether the Government agree that that is a satisfactory way in which to proceed and whether they will do all that they can to ensure that this approach, and not the more cumbersome approach which the commission proposed, is agreed at EU level.

I mentioned earlier the committee called COSI, which can broadly be rendered into normal English as the committee of senior interior ministry officials. Potentially, that is a high-powered body which could, and should, help to co-ordinate and, where appropriate, direct all the European Union's work on internal security. Currently, that work is distributed among a very large number of committees, working groups and working parties. We actually managed to unearth 14 of them which we listed in our report. I do not doubt that there are some lurking in the undergrowth that we may have missed. Much of their work overlaps. Setting up COSI was an opportunity for some, at least, of these bodies to be merged or abolished, but that opportunity was not taken. Most of them continue. The Government, who supposedly favour the abolition of otiose bodies, seem lukewarm about our recommendation, telling us only that they would be prepared to consider a case for COSI replacing or overseeing such bodies once it has established itself. That was six months ago. I hope that the Minister can now tell the House that he is prepared to press for COSI to have a more significant co-ordinating function and for some of this plethora of committees to be abolished.

The chairmanship of Council working parties usually rotates with the presidency on a biannual basis. Sometimes that does no harm but the committee felt that, in this sector, with a group of experts like COSI, there was a strong case for a more durable, longer-lasting chairmanship. The Government agreed that members of COSI should be senior, operationally focused officials with authority to commit their national operational resources but they could see the benefit of one of the best qualified of these officials chairing the group for, say, two or three years. That is by no means unknown in European Union practice; it was for many years the way in which the European Union’s monetary committee was run, in some years extremely effectively and professionally, by a member of Her Majesty's Treasury. That would be an improvement over the six-month rotation in the chairmanship of that committee. The Government conceded that six-monthly rotation,

“might have a detrimental impact on the Committee”,

but thought this might be mitigated by the adoption of the three-presidency approach, by which three successive presidencies work together. Frankly, mitigation is not quite enough. If a six-monthly rotating chairmanship is detrimental, the Government should seek the agreement of other member states to do away with it and have a more professional approach.

Data protection will shortly be in the news again, when the Commission brings forward its long-awaited proposal for a new directive. This is very relevant to internal security, so much of which depends on the painstaking collection and analysis of personal data. A balance has to be found between the interests of security and those of personal privacy, and this is never easy. It is particularly difficult in the case of the passenger name record data, or PNR: the data on passengers on flights entering or leaving the European Union. Flights from the EU to Australia are already the subject of an agreement which has, in our view, satisfactory data protection provisions. Flights from the EU to the US are the subject of an agreement—the fourth—which has been initialled but is not yet in force. All I can say about that one is that its data protection provisions are marginally better than those in the existing EU-US agreement, which is not saying an awful lot.

Data on flights into the EU are now to be the subject of a directive, not just flights from Australia or from the US. The Government, encouraged by a report which was endorsed by this House, have already opted into the proposal for this directive and I hope that the Minister will confirm that during the course of the negotiations, he will be paying due regard to the importance of the protection of passengers’ data—all the more so if, as the Government hope and the Committee hopes, too, that directive is extended to cover intra-EU flights, not only flights into the EU from outside.

I cannot conclude without mentioning yet again a question which the House has raised time and again in taking evidence from Ministers and officials in this House, and many times in correspondence with Ministers. I refer to the Government’s failure to sign or ratify the Council of Europe convention on money laundering, known as the Warsaw convention. The disruption of international criminal networks is, as I have said, one of the objects of the strategy we were examining and there is no doubt that the tracing and confiscation of the proceeds of crime is one of the most powerful weapons in the armoury of states.

The previous Government undertook to ratify the Warsaw convention early in 2010. For this Government the noble Lord, Lord Henley, who will be replying to this debate, assured the committee only last month that he was pretty sure that the United Kingdom was compliant with the convention, but that the Home Office did not currently have the resources to review this and therefore was not prepared to set a date for signature and ratification. I asked him when the Government would sign the convention, to which he replied,

“I would hope we would do so within the next year or so but I am not going to be any more precise than that”.

I hate to say so but he could not have been any less precise, even if he had tried.

A failure to sign one of the major international instruments for combating serious, organised crime does not give the impression of a Government who take the fight against such crime seriously. If we do not sign and ratify such a convention, how can we expect others to do likewise and how can we hope to play a leadership role in the Council of Europe, over whose intergovernmental activities we currently preside? I know that the Minister has already taken one broadside on this subject in the course of Questions in this House today. I am offering him here a somewhat less difficult matter, which does not raise the issue of extraterritoriality which he referred to earlier. It is frankly a little difficult to believe that the amount of resources needed to be quite sure that we are in conformity with a convention, as he is confident that we are, is such an enormous burden that it cannot be undertaken. It is a shame, frankly, that we are not signed up to and ratifying that convention.

This inquiry was one of great interest to the Committee and our report raised a number of serious questions for the Minister to answer. I look forward to hearing his replies. I beg to move.

--- Later in debate ---

[Lord Hannay of Chiswick]

My Lords, I thank all noble Lords who contributed to this very useful debate. I am particularly grateful to the three members of the sub-committee that I chair who participated in the debate in a singularly apt and helpful manner, but I am grateful also to all other noble Lords. I hope that I will be forgiven if I do not mention everyone, because brevity is the essence of the contribution that I am called on to make at the end of the debate.

I thank the noble Lord, Lord Hodgson, for what he said about cybercrime. He brought a lot of very pertinent evidence to bear and demonstrated that there is a huge cost to all our economies from the—alas—all too successful cybercrime that exists. Therefore, when we come to look at the resources we devote to combating this form of crime, we should bear in mind those massive sums and think about how, not in strictly budgetary terms, they could benefit not only this country but Europe collectively. I am also most grateful for what the noble Lord said about the follow-up to the Foreign Secretary's initiative last November, which the committee warmly welcomed. Perhaps I dare say that we envisaged such a conference before it was even a gleam in the eye of the Foreign Secretary. We had written a report on cybersecurity some time previously, in which we said that we hoped to see the Government taking an initiative to deal with the global issues that the noble Lord, Lord Judd, so wisely put his finger on.

I will make just two points about the reply of the noble Lord, Lord Henley. I am grateful to both noble Lords on the Front Benches for their offer of thanks and support to the committee; it is of great benefit to us. My first point is on the budgetary issue. I will not go any further because the response given today by the noble Lord, Lord Henley, was helpful. However, I must draw his attention to an Explanatory Memorandum that his department put its name to recently, which was less helpful than the response that he gave across the Floor of the House this afternoon. I think it was in paragraph 26 of the memorandum—I cite from memory—that the department stated that any increase in the resources needed for, let us say, cybercrime or anything in the justice and home affairs area must be found within that chapter of the budget. That is unbelievably restrictive and completely contrary to the policy that has been pursued by successive British Governments for I do not know how long, which is that we should look for transfers and shifts in the priorities of the budget, most obviously away from excessive expenditure on agriculture, and should focus the budget on higher priority areas.

The answer that the noble Lord gave just now was spot on. My committee is not saying that we should increase the overall resources allocated to the European Union; we are saying that we should reprioritise them. The Minister’s answer said precisely that: if savings can be found in other parts of the budget, it will be fine. However, it is not what the Explanatory Memorandum stated. I will not go on any longer because the EU Select Committee that is preparing a further report on the budgetary aspects of the multiannual financial framework will come back to this point in that context, and the Government will have an opportunity to give their considered response. I hope very much that the department for which the noble Lord is responsible will play its modest role in ensuring that it is properly understood that if we say that everything has to be found within individual chapters, it will be a recipe for stasis and for no change at all, and that no other member state will have any incentive to support reductions if resources cannot be moved to higher priority areas.

I turn finally to the noble Lord’s reply on the institutional point. I think that there was a slight misunderstanding. The approach that the EU Select Committee and my sub-committee supported was not to create any new institution. However, we are saddled with the fact that the Lisbon treaty instructs the institutions to provide oversight that brings together national Parliaments and the European Parliament. We are not proposing any shift because these meetings already take place on an annual basis between the chairs of the home affairs committees and the LIBE committee of the Parliament. We are merely suggesting that the Government throw their weight behind somewhat formalising that structure as the basis on which to keep an eye on Frontex, Europol, Eurojust and so on. It is totally cost-effective. It does not cost a penny, and it involves no new institutions. I mention that because I think that the Minister rather implied that we were thinking of something more ambitious. We are not.

I thank all those who participated and thank the Minister for his extremely thoughtful response. I am a little sad about the Warsaw convention, and I still hope that he can find some way to accelerate that. It is quite clearly less difficult than what he was dealing with earlier this afternoon. I previously dealt quite a lot with extraterritorial issues, and I understand that they bristle with difficulties. We are not really talking about that sort of thing in terms of the Warsaw convention, and I hope that he will find some way of moving to ratification of that pretty quickly because I do not think it does our reputation any credit and I do not think it is in the interests of this country that people pick and chose the things that they do or do not ratify.

Motion agreed.

EUC Report: Money Laundering

Lord Hannay of Chiswick Excerpts

Monday 19th December 2011 Lords Chamber

Asked By

[Lord Hannay of Chiswick]

To ask Her Majesty’s Government what is their response to the Report of the European Union Committee on Money Laundering: Data Protection for Suspicious Activity Reports (6th Report, HL Paper 82).

[Lord Hannay of Chiswick]

My Lords, dinner hour debates in your Lordships' House are often a welcome interlude between two lengthy sessions devoted to the House’s primary function of rigorously scrutinising and, where necessary, amending the contents of the Government’s legislative programme, an interlude during which we can look at wider horizons and examine issues falling outside the purely legislative framework. I know that that is not the situation tonight but that is by happenstance rather than by design. However, this dinner hour debate is not one of those occasions. It is rather, as I will seek to show in a minute or two, the combination of a long process during which the European Union Select Committee has pressed the Government, eventually with some success, to modify the way in which they implement a particular legislative framework, in this case one based on an EU obligation to clamp down on money laundering. It is therefore in a way an example of that post-legislative scrutiny for which so many calls are made and of which there are few practical examples. It also involves an issue that concerns the balance to be achieved between the unquestionable need to take tough action against a form of criminal activity which has grown exponentially in recent years—namely, money laundering, with the liberalisation of capital movements on a global basis driving it—and the need to respect the protection of the individual against disproportionate action by the state and against the use of information for purposes other than those originally intended. It is therefore very much a piece, albeit a small piece, of that agenda for restoring freedom which the coalition Government have set as one of their principal objectives.

If these introductory remarks may seem a trifle self-congratulatory, I should point out that the whole process was initiated by my predecessor as the chair of the EU Select Committee’s sub-committee on home affairs, the noble Lord, Lord Jopling, and brought to fruition, with rather more delay than we would have wished, only under my own chairmanship. The purpose of this short debate is not simply to ask a question but to receive a detailed answer setting out the changes in the implementation of the rules against money laundering which the Government are now introducing. With that in mind, I look forward with anticipation to the reply of the noble Lord, Lord Henley.

Many of the matters the sub-committee looks at are concerned with the use of personal data in the fight against terrorism and other serious organised crime. The use of personal data is essential for these purposes, and the committee has always said as much. We have been quite clear on that point, but we have also been concerned that personal data should be properly used and not in any circumstances abused. The balance between the interests of national security and data protection is not an easy one to strike. It is something we have considered a number of times, among others in the context of the Schengen Information System and of the proposed EU legislation on passenger name record data, which is currently under consideration in Brussels. Tonight we are considering how that balance is best achieved in the fight against money laundering.

The committee’s involvement arose in the context of our inquiry in 2009 into money laundering and the financing of terrorism. Under the Money Laundering Regulations 2007, which implement the third money laundering directive, banks, other financial institutions, lawyers, accountants, auditors, insurers and many others are required to report to the Serious Organised Crime Agency (SOCA) any transaction or activity which seems to involve funds which are the proceeds of criminal activity. Knowledge is unnecessary. It is a suspicion based regime, and the reports are known as suspicious activity reports, or SARs. As the bankers told us in the evidence we took, “If you smell a rat, you must report it”. We did not then, and I do not now, question the utility of this; it is central to the fight against money laundering. However, we did, and still do, have concerns about the handling of the data. SARs are entered by SOCA onto a database known as ELMER, which is in effect a database of suspects, and, given the number of reports, a very large database indeed. At the time of our 2009 report, there were 1.5 million entries, and the number increases by 200,000 every year. Access to the ELMER database is available, as one might expect, to police forces and others responsible for prosecuting serious crime. However, we discovered that the data were much more widely available; for example, to trading standards authorities, and to Nottinghamshire County Council to investigate housing benefit fraud. This seemed to us to be an unwarranted use of information collected for a quite different purpose.

The committee recommended that the Information Commissioner should review and report on the operation and use of the ELMER database. I pay tribute to the noble Lord, Lord Marlesford, who was then a member of the committee, and who is unfortunately unable to be present tonight, for the persistence with which he pursued this with the Government. Eventually they agreed and the matter was referred to the Information Commissioner. The Information Commissioner conducted a full investigation and prepared a report which he sent to the chairman of the European Union Committee on 29 November 2010—slightly more than a year ago. We published it in January 2011 as an appendix to the report which we are now debating.

The Information Commissioner made four detailed recommendations as to how SOCA might improve the data protection regime of ELMER. Over the past year, we have been monitoring how those recommendations have been implemented. We have had letters from SOCA and from James Brokenshire MP, the Home Office Minister, and in October we held a very useful oral evidence session with the Information Commissioner and the Director of SOCA. Since then, we have received further information from SOCA.

Our first concern was the period for which the data are retained on the database. This used to be 10 years. The Information Commissioner suggested that five years might be more appropriate, but agreed on six years. In his latest letter, the director of SOCA has told us that as of 31 October this year SOCA had deleted some 119,000 records and intended to delete a further 600,000 by the end of this year. This would leave some 1.3 million records on the database—still a very large number. It compares unfavourably with the number on the database at the end of September 2007, which was 932,324. I hope the Minister can tell me when he expects that all records over six years old that are not being used for investigations will have been deleted, how many records he estimates will then remain on the database, and whether the number is likely then still to be increasing every year.

Our other main concern was the range of persons and bodies with access to the database, and the purposes for which the SARs data could be used. I am relieved to hear that all the arrangements for local authorities to have direct access to the database have been terminated. I note that local authorities can still have indirect access to SARs by requesting SOCA to search the database. I should be happier if the Minister could assure the House that local authorities will never have access in any other way, even if they meet the new and more stringent requirements for direct access.

In all the detailed criteria for direct access to suspicious activity reports, I could not find any limitation on the purposes for which the data can be used once they have been accessed. Could they still be used to investigate housing benefit fraud? This is not something that most people would class as serious organised crime. These are still matters about which I and the committee have some reservations, but overall the position has greatly improved over the past year. The hundreds of thousands of people who do not know that their financial transactions are listed on this database have reason to be grateful to the Information Commissioner for his review and his proposals, to SOCA for its implementation of them, although it is still incomplete, and, dare I say it, perhaps even to this committee and to this House for having set the ball rolling. We hope to receive from SOCA over the coming months further details of its implementation of the Information Commissioner’s proposals.

There is one other matter arising out of the committee’s report on money laundering, which has been the subject of correspondence with a number of government departments—the assembling of ransoms for ships and crews seized by Somali pirates. The committee recognises that this activity is not, in the present state of British law, in any way illegal. However, we can see no justification at all for the view that appears to be taken by the Government that those assembling such ransoms do not need to file a suspicious activity report. After all, the money involved is quite certainly set to become the proceeds of crime. The people to whom that money is being paid are certainly criminals and the chances that the money will subsequently be laundered must be very high, even if there is not also at least a risk that it will end up financing terrorist activities. In those circumstances, it seems to me and to my committee odd, to put it mildly, that the Government do not make it clear that an SAR should be filed, particularly since that would in no way constitute an admission of wrongdoing by those assembling the ransoms.

I am afraid that our attempts to address this point through correspondence have been met by evasion and obfuscation. I hope that the Minister can give the House a clearer and more convincing response when he replies to my Question.

--- Later in debate ---

[The Minister of State, Home Office (Lord Henley)]

My Lords, as always, I am grateful to the noble Lord, Lord Hannay, and to other noble Lords who have spoken, particularly the noble Lord, Lord Judd, and my noble friend Lord Dykes who are members of the committee. I am grateful that we have had an opportunity to debate this report of the EU committee as well as, to some extent, the 2009 report and the Information Commissioner’s report which dealt with a number of these matters. I am also grateful to the noble Lord, Lord Hannay, for outlining the very important work that the House does in relation to its post-legislative scrutiny of these matters. I hope that I can give a reasonably detailed response to the various points that have been made.

The first important point is the Information Commissioner’s report. I am grateful to the noble Lord, Lord Rosser, for emphasising that. That made a number of findings, notably referring to the Elmer database. As someone rather new to this, I was fascinated to discover that the Elmer referred to in that name is not an acronym but the first name of the original head of the United States Department of the Treasury intelligence unit, back in the 1920s or 1930s, who was responsible for nailing or achieving the conviction of Al Capone on the famous occasion when they got him for tax evasion rather than for other matters. We must be grateful to that Elmer—I imagine in the United States they are even more grateful—for so doing.

The first point of call with the Information Commissioner’s report is access to the Elmer database. Secondly, the Information Commissioner referred to the retention of records, which are of no concern and which may not comply with data protection principles. Thirdly, the report also refers to how SOCA develops retention policies which are data protection and human rights compliant. I hope that I can deal with all those matters as I know that the noble Lord, Lord Hannay, as chairman of the committee, will have been particularly concerned about how SOCA had been actively working on these recommendations.

I start with access to Elmer. As recommended in the report, SOCA has continued to maintain its robust policies and procedures in respect of access. It must be remembered that Elmer is a very important intelligence tool, not just in respect of financial crime but in respect of all levels of all crime. The use of financial intelligence is not an addition but an essential part of the wider armoury of techniques to investigate criminality. That said, obviously access to Elmer has to be limited and those wanting direct access have to go through a user agreement which sets very strict criteria and which is kept under review. It is also of importance that these are individual financial investigators rather than bodies themselves. SOCA provides guidance to users and all users are required to undertake training which is generally delivered by the National Policing Improvement Agency or some other similarly approved agency before accessing the database.

Having said that, I cannot give any assurance about who may have access to Elmer in the future but, of course, concerns of this House will be considered very carefully as we develop these items.

I move on to the question of record retention and deletion policy. SOCA has introduced a new retention regime that will delete suspicious activity reports that are more than six years old. It expects to complete this task very soon. I will add one further remark. I need not even say “very soon” because the task was completed today. I can assure the noble Lord that as of today there are 1,384,477 entries on the Elmer database, and that 584,351 entries were deleted in a recent exercise. All entries that were more than six months old were deleted today, so we achieved the aim of deleting them by the end of the year.

My third point on the Data Protection Act is that SOCA will implement a Data Protection Act and Human Rights Act-compliant retention policy in three months. It is important to note that the Elmer database does not focus specifically on collecting information relating to individuals. It is essentially an assembly of reports submitted in the light of the Proceeds of Crime Act, the Terrorism Act and associated regulations. SOCA has introduced processes that will provide for the immediate deletion of SARs that are confirmed as being not linked to criminality, and for the deletion of others after six years. That is why I was pleased to make the remark about what we achieved today.

The report also asked if there was a justification for the current arrangements for reporting SARs. We feel that setting a suspicion threshold would send the wrong signal to reporters, who may reduce their scrutiny. Experience shows that criminals will attempt to find ways to circumvent controls in order to avoid arousing suspicion—for example, by breaking down large deposits. Reports that may look minor may take on a much larger significance to law enforcement when matched with intelligence both within Elmer and beyond. A threshold might have the unintended and unwanted effect of causing us to miss vital intelligence opportunities.

I will deal with a couple of further questions. The first, which was raised by the noble Lord, Lord Hannay, referred to Somali piracy. We recognise the committee's concerns regarding possible links between the payment of ransoms and terrorist finance in Somalia. There is currently no evidence of any formal organisational relationship between pirates and terrorist organisations operating in Somalia. However, we are keeping this assessment under review. My honourable friend Mr James Brokenshire, who was referred to by the noble Lord, Lord Rosser, is in receipt of the letter on this matter from the noble Lord, Lord Roper, and will provide an appropriate reply in due course. I cannot take that further and say precisely when it might appear.

The second point I will deal with, which concerns money-laundering and the Financial Action Task Force, was raised by my noble friend Lord Dykes.

[Lord Hannay of Chiswick]

The noble Lord is moving on from the question of Somali piracy, so I must draw his attention to the fact that he has not answered the main point that I made. One can have two views about whether it is meaningful to say that there is no direct evidence of ransom moneys reaching terrorists. However, I am not pressing the point and did not press it in my introductory question. The question that I pressed, to which he did not reply, was why the Government do not consider that the assembling of such ransoms should give rise to the filing of suspicious activity reports, because the ransoms concerned will undoubtedly be the proceeds of crime and will undoubtedly end up in the hands of criminals? In all our correspondence it has been impossible to get an answer on this point. That is why I used the somewhat unparliamentary term, “obfuscation”. Why are the Government not simply telling people who put together these ransoms that if they have reason to believe that these will end up in the hands of criminals—and I cannot believe that they do not have that—then they should file an SAR? That does not mean that the person who files the SAR is committing or admitting any wrongdoing at all. However, I find it hard to believe that since the British Government are, I assume, trying to prevent the laundering of the proceeds of ransoms around the world, are working with many other countries to do that, and have, I believe, an intelligence operation based in the Seychelles to compare evidence and to try to find out where this money goes to—

[Baroness Anelay of St Johns]

My Lords, I think that I ought to point out, without wishing to interrupt the noble Lord, Lord Hannay, although I do, that the Minister is still restricted to a 12-minute response time.

[Lord Hannay of Chiswick]

I am sorry; I am just coming to the end. I just was saying that I still find it very odd—it would be helpful if the Minister would reply on this point—that the Government do not consider that an SAR should be filed in such circumstances.

[Lord Henley]

My Lords, the noble Lord would never expect any obfuscation from me. He is a very distinguished former civil servant from the Foreign Office, a department which also has never obfuscated in any way whatever. I would prefer it if he would wait for a response from my honourable friend Mr James Brokenshire, which I am sure will be provided in due course. I think that that is as far as I can go on these matters, and I hope that the noble Lord will accept that. I am also mindful of the intervention of my noble friend the Chief Whip that I must move on.

I was briefly touching on the question of the Financial Action Task Force, and briefly making it clear to my noble friend Lord Dykes that it is reviewing global standards on countering money-laundering and terrorist financing. In February 2012 the FATF member countries will approve changes to the standards following this review. I hope that my noble friend will be prepared to wait for that review.

I hope that I have given a number of assurances that will satisfy noble Lords, even the noble Lord, Lord Hannay. I hope that he will be prepared to await the response from my honourable friend Mr Brokenshire. Again, I am grateful to all noble Lords for their interventions in this debate. I feel that we have had a useful discussion on these matters.

Immigration

Lord Hannay of Chiswick Excerpts

Monday 19th December 2011 Lords Chamber

[Lord Henley]

My Lords, I do not accept what the noble Baroness says, but if she can provide proper evidence for that, we will certainly look at it in due course. We are not aware that universities are complaining; we are aware that a certain number of private colleges— the bogus colleges to which I referred earlier—are complaining. That is why we will want to deal with that. In the main, I think it is quite right that we should tighten up on people coming to university and that is why, for example, there are rules about family members coming in which, again, the party opposite failed to introduce. Those have been tightened up for undergraduates but not for postgraduates.

[Lord Hannay of Chiswick]

My Lords, has any consideration been given, or is consideration being given, to taking students out of the immigration system? Now that the business of bogus academies has been dealt with rather effectively—I welcome that—would it not be sensible to recognise that the university sector is the most rapidly growing invisible export that this country has? It is simply not good enough to say that universities are not complaining. There may be some vestige of a lack of complaint from some body or other, but I would suggest that, if the noble Lord goes round the universities carefully, he will not find that that is the case.

[Lord Henley]

My Lords, I accept what the noble Lord has to say about universities being a very valuable export—we acknowledge that—but there should also be controls on students coming in. One area where we provided stricter controls is on undergraduate students bringing in families, which was seen as a form of abuse. We were quite right to tighten up on that and to keep more general matters under review, and that is what we will continue to do.

EU: Justice and Home Affairs

Lord Hannay of Chiswick Excerpts

Wednesday 22nd June 2011 Grand Committee

[Lord Hannay of Chiswick]

My Lords, I should preface my remarks by saying that I will concentrate mainly on the matters relevant to the Home Affairs Sub-Committee, which I chair. The noble Lord, Lord Bowness, will be covering the Justice and Institutions Sub-Committee, because we are in a kind of Siamese-twin situation where opt-in issues sometimes fall on his side and sometimes on mine. We do not have any disagreements about which side they fall on, but it sometimes leads to confusion in the audience as to why we have two sub-committees dealing with rather similar material.

I am most grateful to the Home Office for providing the report we are debating today and to the Minister for having introduced the report and the Motion so clearly and comprehensively at a very early date after her assumption of ministerial responsibilities. Both the report and this debate are firsts in the new post-Lisbon process of strengthening transparency and accountability of the Executive to Parliament in a complex area of EU policy-making. As such, they are welcome and will need to be repeated on an annual basis if we are to make a useful reality of these strengthened scrutiny procedures.

As is so often the case with the European Union, it is only too easy to be repelled by the complicated lexicon of acronyms and cross-references to treaty provisions. To assume that this is all about process and not about substance would be a mistake. Many of the measures covered by the report have an important impact on the daily lives and on the security of ordinary citizens. It really does matter, therefore, that the Government get their opt-in and opt-out decisions right and that both Houses of Parliament actively participate in the shaping of those decisions. We must try not to lose sight of the wood as we take a closer look at the individual trees of which it is composed.

We are debating a report which covers the period between 1 December 2009, when the Lisbon treaty entered into force, and 30 November 2010; that is to say that we are already six months out of date, a point made by the noble Baroness, Lady Falkner. I hope that next year we will hold this debate sooner after the tabling of the Home Office’s annual report, ideally within two months of its publication. It will be useful too—perhaps the Minister could say something about this—if the report’s annexe, not the report itself, could be issued in an up-to-date form every six months. That would help the committees to follow the process and to see the wood rather than the trees, if that were possible. I do not think it would put an unreasonable burden on the department; I hope not.

As to the categorisation of the views of this House in the present report, this does leave something to be desired. It said that the House of Lords agreed with the IT management agency opt-in, No. 13. That is only part of the story. We agreed with the decision but not with the way it was done—by relying on an existing opt-in to a different proposal under a different treaty in 2009. I would not ask the Minister to respond to this point; it has been the subject of an enormous amount of correspondence between my sub-committee and the Home Office, at which point we rather decided to accept that we were not going to agree about it. However, we have a serious point which is not reflected in the report. Perhaps a little more care could be taken on that.

As to decision No. 22—on intra-corporate transfers, to which the Minister referred—the note in the report states: “HoL: N/A”. I am not sure what that is intended to signify. In fact, my sub-committee registered our disagreement with the Government’s decision not to opt in to the proposal—I shall not go into all the reasons for it because they are set out in correspondence—and we remain unconvinced by the justifications for opting out provided by the Minister’s colleague responsible for immigration. We believe that the Government should have opted in, but the rather narrower point that I am making here is that the Minister did slightly less than justice to the heroic struggle between us when the report was written. Perhaps in future something slightly more transparent might emerge.

On the process of debating opt-in or opt-out decisions, we are grateful that time was made by the Government in this House to debate the asylum directive in January 2010 and the PNR directive in March 2011, and we welcome the Government’s decision to opt in to the latter. We trust that the Government will maintain that unblemished record for timely debates in the future. We are glad that the Minister for Europe has confirmed to the Commons European Scrutiny Committee that where the Government are considering a post-adoption opt-in—to which the Minister referred—under Article 4 of the protocol, this will be subject to enhanced scrutiny arrangements. Perhaps she will confirm that our committee will be given the time it needs to give its views and, if necessary, to hold a debate on this category of opt-in given that no three-month time limit applies in the case of these decisions—that is to say, they can happen just like that. If the Home Office were to provide a little time for the committees to look at these decisions and if necessary to call for a debate, which is likely to be very seldom, it would be a great help.

As to the draft code of practice, which has been referred to and which is designed to govern the parliamentary and executive handling of these matters, can the Minister confirm that the Council’s secretariat in Brussels has now agreed to a single invariable system for dating the beginning of the three-month opt-in period; namely, that this runs from the date on which the last language translation is published by the Council’s secretariat? Does the Minister agree that there are now no outstanding code-of-practice issues between this House and departments? Therefore the code could surely now be formally agreed between us. The sooner that is the case, the better, because everyone will then know—both the Government and the House—what rules govern this rather complex area.

I have two additional points relating to agreements with third countries. How can it be consistent with the need for legal certainty for the Government to assert, as they do, that the relevant measure does not apply to the UK, when there is nothing in it to suggest that it does not apply equally to all 27 member states? Issues relating to this are, we understand, still being considered with the Commons scrutiny committee. I hope that the Minister will have another look at this. It seems potentially a little unsatisfactory and fragile.

The second point is on the Government’s decision not to participate in the negotiation of a readmission agreement with Belarus. In view of the unsatisfactory state of politics in that country, and of the economic pressure on its citizens to migrate, it was a mistake by us not to participate in the negotiations. We expressed that view in correspondence, and we still hope that a late-stage opt-in will be considered seriously when the agreement is being negotiated—without our influencing it in any way, unfortunately. That does not mean, as was the case with the human trafficking directive, that it would not necessarily be in our national interest to opt in.

I apologise for speaking at some length and in such detail, but the strengthened scrutiny process in which we are participating has no sense or usefulness if it is not taken seriously. I am struck by how closely we now work with our EU partners in this field despite being outside Schengen, and by how many measures we decide to opt into. The figures already given in this debate demonstrate that. The coalition Government are to be congratulated on their pragmatism and open-mindedness. It is surely clearer than ever that, in this highly sensitive area, considerations of interdependence and shared vulnerability are drawing all member states closer together.

--- Later in debate ---

[Baroness Browning]

I am very grateful. I was about to move on to that. I reassure the noble Lord that, as my right honourable friend David Lidington said, we will have a vote in both Houses if the Government decide to opt in under Protocol 21 or opt out under Protocol 19. That commitment was made by the Minister in the other place. It still very much holds good and is the Government’s declared policy. I hope that that reassures him on that point.

I think that the noble Lord also raised the question of a referendum—

[Lord Hannay of Chiswick]

I am sorry to interrupt the noble Baroness and am grateful to her for giving way. As the noble Lord, Lord Pearson, has repeated his view several times in an attempt to get the Minister to state positions prematurely, I want to record that my committee thinks that the Government should take the fullest amount of time necessary to weigh up what will be an extremely important set of decisions. We do not think that the noble Baroness should be rushed into making premature statements of what that decision will be. These are very complex matters that will not be easy to decide, and I do not think that my committee would in any way wish the Minister to be moved towards premature clarification.

[Lord Bowness]

I do not wish to make a habit of interrupting the Minister but perhaps I may repeat the question that I asked earlier. I understand that it takes time for this consideration, but is there any reason why we cannot have a definitive list of the instruments that are in force? I appreciate that the number may vary if they are amended between now and then, but can we have the definitive list of measures? It seems very strange that we are unable to give a positive answer to a Parliamentary Question.

Passenger Name Records: EUC Report

Lord Hannay of Chiswick Excerpts

Thursday 17th March 2011 Lords Chamber

Moved By

[Lord Hannay of Chiswick]

That this House agrees the recommendation of the European Union Committee that Her Majesty’s Government should exercise their right, in accordance with the Protocol on the position of the United Kingdom and Ireland in respect of the Area of Freedom, Security and Justice, to take part in the adoption and application of the Proposal for a Directive of the European Parliament and of the Council on the use of Passenger Name Record data for the prevention, detection, investigation and prosecution of terrorist offences and serious crime (Document 6007/11) (11th Report, HL Paper 113).

[Lord Hannay of Chiswick]

My Lords, the Motion is in my name because I have the honour to chair the European Union Sub-Committee on Home Affairs, which prepared the report now before your Lordships’ House. In the normal course of events, when this House considers reports of the European Union Committee, almost invariably the terms of the Motion are that the House should “take note” of the report. Let me explain why this Motion invites your Lordships not to take note of the report but to agree with the recommendation made by the committee in its report.

The Motion refers to the,

“Area of Freedom, Security and Justice”,

which is treaty language for what are invariably in British parlance known as justice and home affairs. JHA matters first came within the purview of the European Union in 1999 and quite a lot of—perhaps most—JHA regulation at that stage required unanimity. For the JHA legislation which required only a qualified majority of member states’ votes, the Government at that time negotiated a protocol to give the United Kingdom the necessary flexibility. The effect of the protocol is that the United Kingdom does not take part in the negotiation and adoption of such measures and is not bound by them unless, within three months of a proposal for legislation being presented to the Council, the Government notify the president of the Council that they wish to take part in the negotiation, adoption and application of the proposed measure. That is what is known in the jargon as the UK opt-in.

The entry into force of the treaty of Lisbon in December 2009 has made a quantum difference in the number of matters that fall to be covered by the opt-in procedure, because it expands greatly the application of qualified majority voting in the JHA area. Now, virtually all JHA matters are adopted by qualified majority under what is called “the ordinary legislative procedure”. The United Kingdom opt-in therefore now extends to all these. In particular, the opt-in now applies to all provisions on police and judicial co-operation and law enforcement.

In anticipation of this important change, the European Union Select Committee negotiated with the previous Government an undertaking that, where the committee concludes that the question of whether or not to opt into a measure is important and should be debated, the Government would make time for the debate well before the end of the three-month period to enable them to take the views of the House into account when reaching a final decision on whether the UK should opt in. In January, the coalition Government renewed this undertaking. Together with all the committee I express my welcome for their decision to do so and my gratitude to them for having made time for this debate at a very timely and opportune moment when we are only just over half way through the three-month period for opting in on the directive that we are going to debate. In the first full year during which this procedure operated—we are now about 15 months into the operation of Lisbon—23 matters required the Government to decide whether the United Kingdom should opt in. Only one pair of proposals on two asylum directives was thought to be so important that a report and a debate were needed, so the report that is before your Lordships’ House today is thus only the second of its kind and the first since the House approved the procedure for such debates a year ago. This demonstrates the importance that the committee attaches to the directive and to the issue of whether the Government should opt in to it.

I come to the substance of what we are talking about. The report put forward by my committee and supported by the EU Select Committee explains that passenger name record data, otherwise known as PNR, are data about passengers collected by airlines which include information not on the machine-readable part of the ticket. They include such matters as the travel agent, form of payment, contact details, billing address, complete travel itinerary and baggage information, to mention the most prominent. These data, especially when taken in conjunction with the data contained on the machine-readable part of the ticket, are particularly valuable in identifying persons potentially involved in terrorist or other criminal activities who were not previously known to the authorities.

I think one has to recognise that the collection of such data involves a considerable invasion of privacy, and it is sometimes doubted whether this is justified by the benefits flowing from its collection. The committee, I have to say, has no such doubts, although when considering earlier EU proposals on PNR we did express some doubts. However, we do not any longer have those doubts. In fact, this is our third inquiry into PNR in five years, and basically we agree with the view of the Home Office that is summed up admirably succinctly by the following phrase,

“the use of PNR data is ‘a proven and vital tool for the protection and detection of serious crime and terrorism’”.

We are convinced that the Government are right in that respect.

We also agree with the Government about the case for action at the EU level—this is the vexed issue of subsidiarity which is now covered in all explanatory memorandums produced by the Government when a Commission proposal is tabled. The United Kingdom, at the moment alone among member states, already collects PNR data. If member states were to act unilaterally and have different PNR data systems, this could lead to differing requirements being imposed on carriers and there would be no clear basis for the data to be transferred from a carrier in one member state to the authorities of another member state. So we are quite clear that the Government themselves have made a strong case for having an EU directive in this area, given the conjunction of the view about the need to have a single system with the view that PNR data are clearly an effective tool to deal with serious crime and terrorism.

The directive we are looking at is currently in the form proposed by the Commission, and negotiations in Brussels have not really started yet. It is quite clear that there will be prolonged negotiations because these are complex matters, and they are just beginning. Currently, the directive covers only flights between member states and countries outside the EU, not flights from one member state to another. The Government regard this as a major defect which they will do their best to remedy in the course of the negotiations, and we agree with them. The volume of journeys between member states is admittedly three times greater than those of flights between member states on the one hand and third countries on the other, but to limit the directive in the way proposed by the Commission would in our view—I think that it is the view also of the Government, but the Minister will no doubt confirm that when she speaks in reply—seriously and unnecessarily limit the value of the directive.

I should explain at this point that we are not asking the House to take a view on the details of the directive—that would be premature; we have not ourselves conducted full scrutiny of it. We will continue to keep the directive under scrutiny because there are many features of it which still need serious examination, in particular the purposes for which the data can be used, the length of time for which they can be kept and the adequacy of the data protection provisions. I therefore emphasise to your Lordships that, at this early stage, there is only one matter for consideration by the House. That matter was identified in what is known as the Ashton undertakings, which were accepted by the Government at the time that Lisbon was ratified and which relate to whether the UK should opt in or not, and whether it should therefore participate actively in negotiating, make its influence felt and have its views taken fully into account or whether it should walk away and leave the directive to be applied to other member states but not to the UK.

I therefore emphasise that what we are debating is whether the Government should exercise the United Kingdom’s opt-in. For the reasons that I have given, the committee is firmly of the opinion that the Government should opt in. I would hope to hear from the Minister at the conclusion of the debate that this is their intention.

--- Later in debate ---

[Lord Hannay of Chiswick]

My Lords, I thank all those who participated in this brief debate, which has been extremely useful and has shown a wide measure of agreement. I thank the Minister for her response which, although it may have fallen a scintilla short of what I might have hoped for, nevertheless went quite a long way in the direction that your Lordships' committee wishes to go. I will add on a personal note that she and I, so many years ago that I would not dream of embarrassing anyone by saying how many, dealt with some of the more complex aspects of EU policy, mainly the EU budget. That budget pales into insignificance compared with this system of opt-outs and opt-ins.

Perhaps I may respond to one or two contributions. The noble Lord, Lord Hodgson of Astley Abbotts, raised the possibility that the directive asks for too much data. I do not have a strong view on that; we do not have to have a view to support the resolution. However, it is only by opting in that we can affect the amount of data that are collected. That is yet another reason to opt in. I and the committee agree with the noble Lord—and here I part company slightly with the Minister, although I accept absolutely her plea that we should help the Government in their negotiating position by standing firmly in favour of the inclusion of intra-EU flights—that this is not a make or break issue. It is not and should not be a sine qua non for opting in. That is a personal opinion. However, the committee does support, without ambiguity, the Government's desire to include intra-EU flights.

One problem that may come up—I hope it does not, and that the Minister is right in anticipating that real progress will be made at the April council to include intra-EU flights—is that it may not be possible by the time we have to take a decision on opting in to be quite sure one way or the other. However, on one thing we can be quite certain: if we opt out, intra-EU flights will not be included, although I do not want to go further into that. I certainly did not mean in the report to criticise the honourable Member in another place, Mr Brokenshire, who gave evidence to us. He gave excellent evidence on our internal security strategy report, for which we are extremely grateful. He was entirely courteous on this matter and there is no reproach. It is, I think, due to the parliamentary timetable that we have had to publish the report and bring this debate forward at a rather early stage in the three-month period. Therefore, it is not a criticism of him in any way.

My noble friend Lord Erroll seemed a little worried about all the details being taken of his credit cards and other things. Of course, the reality is that they are taken by the Government anyway. I think that his objection is mainly that some foreigners might read them. I am sorry—we are in the European Union. There are an awful lot of things that we share with members of the European Union and this will be one of them. In my view and in the view of my committee, it will strengthen the security of this country if we are able to do that. However, as I said, that information is already being collected here.

[The Earl of Erroll]

Perhaps I may make it clear that I am not worried about the information being shared with the European Union, as of course I give my credit card details on the internet to buy things in Europe. The challenge is in the number of times that it will be propagated around systems where we do not know what the security levels are, and the Government do not have a good track record of maintaining security databases. That is my concern.

[Lord Hannay of Chiswick]

That is a question to be directed firmly towards the Minister and not to me, so I shall not take it further.

The noble Lord, Lord Hunt of Kings Heath, was very helpful and supportive about the report and the recommendations. He rightly pointed out that there is considerable intrusion into personal data and personal security and so on. It is perhaps worth pointing out that one of the changes to which I did not refer at great length is that, as a result of the Lisbon treaty, the European Parliament has now become the co-legislator on this matter. The one thing we can be quite sure of is that the European Parliament is not going to let this bone go without giving it several bites and worrying at it a good deal. Therefore, I do not think that we are at the end of that story. I believe that the privacy aspects will get a very thorough airing in the negotiations between the Council on the one hand and the Parliament on the other. I am sorry to say it again but that is yet another reason why we need to be there, exercising some influence.

Finally, the Minister asked those of us who were involved in this matter whether we could take it up with the European Parliament. So far as I am concerned, I would willingly do so. I can see my chairman, my noble friend Lord Roper, nodding sagely to my left. We are going to Brussels next week to have our six-monthly meeting with British Members of the European Parliament, and we will certainly raise this issue with them. We will try to persuade them to fan out a bit and explain why the inclusion of intra-EU flights is going to help with security for all of us.

Motion agreed.

Cyberattacks: EU Committee Report

Lord Hannay of Chiswick Excerpts

Thursday 14th October 2010 Lords Chamber

[Lord Hannay of Chiswick]

My Lords, it is a genuine pleasure to have the task of following the distinguished maiden speech of the noble Lord, Lord Browne of Ladyton, and giving him the very warmest of welcomes. I first met the noble Lord just over a year ago when we were both members of the cross-party group that went to Washington to discuss issues of multilateral nuclear disarmament. Over our three days there, he displayed three qualities: a sense of humour that survived even a bruising encounter with Senator Jon Kyl, no friend of disarmament of any kind; affability; and the capacity to address even the most complex and technical subjects—and they do not come much more technical and complex than nuclear disarmament and cyberwarfare—in comprehensible and compelling terms. All these qualities were demonstrated today in his maiden speech. He will be a timely reinforcement to the group of former Defence Secretaries and military men in the House whose skill and experience will surely be of value when we come to address the coalition Government's defence and security policy review, due out next week. He will bring the same qualities to discussion of the issues of multilateral nuclear disarmament, to which he has already made a notable contribution as founder and convener of the top-level all-party group set up to match here the advocacy in the United States of Messrs Shultz, Kissinger, Perry and Nunn.

It can be said with a tolerable degree of certainty that this is the first serious full-scale debate in this House, or indeed in this Parliament, on how best to face up to the threat from cyberattacks. However, it will not be the last, because the target against which that threat is directed—our society’s increasing dependence on sophisticated forms of electronic communications—is continuing to grow at a frantic pace which shows no sign of slacking; because that is a worldwide phenomenon which increases the vulnerability of every country in the world; and because the target, as it grows, is likely to become softer unless effective countermeasures and increased resilience can be devised.

To believe that that target will not be at risk in circumstances of heightened international tension or open hostilities would be a triumph of hope over experience. Therefore, this report is surely a timely one—a very necessary reminder of the need for sustained effort at the national, European and wider international levels if we are to deal with that vulnerability. I pay tribute, in particular, to my predecessor as the chair of the sub-committee which produced the report, the noble Lord, Lord Jopling, for the masterly way in which he guided our deliberations and shaped our report, and for his introduction to this debate.

First, I shall say a word about the scope of the report. We were guided, as we had to be, by the EU document that we were examining. That document limited itself to cyberattacks. It did not, therefore, cover cybercrime at all and so nor does our report. However, cybercrime is already a massive enterprise. As usual, the criminals have moved more rapidly to capitalise on the opportunities offered by technological advances than the law enforcers have developed ways of frustrating them and bringing them to justice. Therefore, the scale and nature of the problems faced by us and by other states are a great deal larger and more complex than those that are covered in this report.

This new threat from cyberattacks, which is covered in the report, is in almost every way quite different from most other threats that we have faced, and so will need to be our response. If it resembles any other threat, it is perhaps closer to the one that we faced from nuclear weapons in the early years after their discovery, when we did not have a clear idea of what response would work best and whether deterrence would be effective. I am indebted for that analogy to Professor Joseph Nye of Harvard, whose paper, Cyber Power, was published in May of this year and which I commend for its clarity of thought.

Of course, that analogy is not exact—analogies never are. But just as the doctrine of mutually assured destruction has driven us back towards serious work on nuclear disarmament, the realisation that massive retaliation against cyberattacks could well be a cure worse than the disease, risking bringing the whole or large parts of the internet system down in its wake, should push us in a similar direction. The asymmetry of threats from nuclear weapons in the hands of terrorists, which makes nonsense of earlier deterrence doctrines, is matched in some ways by the inherent asymmetry of threats from cyberattacks, where state origin is so easy to conceal, as we have seen in the cases of Estonia and Georgia, and perhaps now in the case of the Stuxnet attacks on Iran.

This analysis points, as does our report, to the need for a much intensified international dialogue between the main players—the US, the EU and its principal member states, of which the UK is one, China, Russia and a few others—about how best to understand and how best to counter the risks from cyberattacks. Out of better understanding could come better countermeasures and less reliance on what may prove to be faulty doctrines of deterrence. Would all this lead on to international agreements or treaties, or, rather, would it consist in a system of close consultation and confidence-building measures? I suspect that it is too soon to say. Much will depend on the willingness of the main players to work together and to recognise a common interest in avoiding cyberattacks. After all, every cyberattack, however well concealed in its origin, begins in some state's jurisdiction. The willingness of states to act in a co-operative manner is, therefore, crucial. I hope that the Minister will feel able to respond to that analysis when she replies to the debate.

Apart from these wider international considerations, our report focuses naturally on the EU dimension. Here both the report and the Government’s very constructive response reveal much common ground. Although national security remains a national responsibility, the UK has an important interest in strengthening the resilience of all 26 member states against cyberattacks and some of them are clearly not well prepared at all. As a member state which is better prepared than most, we could and should play an important role in strengthening overall resilience. After all, these are our biggest markets and our most integrated partners and there should be an opportunity for the UK to play a leading role. It was a welcome sign that all our Commission and ENISA witnesses, as well as those from outside Government, seemed to share that analysis and to welcome a very active British role. I hope that the Minister will confirm that we will do just that; we will do what we can to make Europe-wide training exercises and the testing of systems a real success.

On ENISA and the possible widening of its mandate in the review of its activities which is now taking place, I thought that there was a rather grudging tone in the Government's response, which perhaps is a reflection of financial concerns. But using ENISA to strengthen the European response to cybercrime would surely make sense. Cybercrime does not stop or start at our borders. Weak handling of it elsewhere in the EU will impact negatively on us too, so I hope that the Government will think again about that and will take a positive attitude towards an extension of ENISA’s mandate. Of course, the siting of ENISA in Heraklion should never have happened and it would be good if the Government would confirm that that sort of aberrant decision will not be repeated. All the evidence that we received indicated that ENISA was valued by practitioners and was rated as doing a good job, so the case for putting it to better use would seem to be quite compelling.

In conclusion, I would like to pay tribute to the previous Home Office Minister, the noble Lord, Lord West, who is not in his place, and whose evidence to the committee was frank and valuable. We look forward to maintaining that relationship with his successor; I hope that the noble Baroness will keep the Committee closely informed of developments in this area of EU activity. We look forward to taking evidence from her when the occasion justifies it.