Money Transfer Accounts and Remittance Sector

Stephen Doughty Excerpts

Wednesday 22nd January 2014 Westminster Hall

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

It is always a pleasure to serve under your chairmanship, Mr Owen. I will attempt to be as brief as I can because I would like to hear the Minister’s views, as well as those of my Front-Bench colleague, my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson).

I pay tribute to my hon. Friend and neighbour, the Member for Cardiff West (Kevin Brennan), for securing today’s debate, our second on this important issue. It is important that we have been able to debate it again so that we can get some answers and see what progress has been made. I pay tribute to my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) and, indeed, Members from across the House. It was good to see the right hon. Member for Banbury (Sir Tony Baldry) in the Chamber. I have worked with him in the all-party group on Somaliland and Somalia, and I know that he shares many of the concerns expressed by the Opposition.

I want to emphasise the strength of feeling out there in the local community. Just before the Christmas recess, I attended a packed meeting in Butetown in my constituency in Cardiff South and Penarth. It was filled with people predominantly from the Somali community—young and old, recent migrants to this country and people whose family had been here for generations. As my hon. Friend the Member for Cardiff West mentioned, Cardiff has a strong and long-standing Somali community, as well as Yemeni, Bengali and Indian communities. This issue reaches across people of many different backgrounds, countries and histories. That is a hallmark of the campaign and emphasises the strength of feeling.

One of the most respected imams in the local community, who does not normally attend political meetings, was there, which again emphasises the strength of feeling. My local councillor and colleague, Ali Ahmed, and many other members of the local community attended. They highlighted the issues raised in the debate today: the impact on development, jobs and prospects in countries such as Somaliland and Somalia and elsewhere, and also the impact on jobs and opportunities for small businesses here in the UK—my hon. Friend mentioned a specific case in his constituency. There were also concerns about zakat and the ability to fulfil the responsibilities that many in the Islamic community here in the UK perform so generously and so well. There were concerns about security and about how people could be forced underground if we do not find a solution. As my hon. Friend said, we could find ourselves in a far worse situation than that which Barclays appears to be suggesting has forced it into making its decision.

I pay tribute to the huge efforts of the campaign and the hundreds of thousands of people who have signed the petition and campaigned up and down the country. I thank the Government—there has been some effort and some meetings. My concern is the urgency, the detail and the process going forward, and I want assurances that the concerns raised by the campaign and by the individuals affected are being addressed.

It is important to emphasise the scale of the impact. The UK remits $23 billion annually to third countries. For Somaliland, the figure is estimated at £500 million annually. According to one estimate, Somalia receives 50% of its annual gross national income through remittances, and Oxfam estimates that 40% of the Somali population—some 3.8 million people—depend on remittances. We have heard how remittance figures often dwarf international aid flows, and I think we would see a similar situation if we looked at the detailed statistics for many of the other countries affected. We have heard about the implications for development and economic prospects, and for security and human rights. That is why we need to address the issue with urgency and care.

I have specific questions for the Minister, and I hope he can give some assurances. First, focusing on the way in which Government Departments work together on this issue, we have seen statements by the Treasury, DFID and others, but can the Minister assure us that the Treasury is playing a key co-ordinating role, given the nature of its relationships with the financial sector and the ability to achieve change on a global financial scale? Have the Foreign Office and other bodies for which the Foreign Office has responsibility been included, and have proper assessments been made? I am sure the Minister will not be able to share details, but can he assure us that, for example, the security services have assessed the implications? We have already seen worrying coverage in recent weeks about the activities of al-Shabaab in the horn of Africa, and we saw the terrible events at the mall in Kenya. Can the Minister assure us that full assessments are being made of the implications of not finding a solution to the problem?

I also want assurances on who is attending meetings. Campaigners have raised concerns that, although a couple of representatives from DFID and perhaps the Treasury have been at the meetings, there has not been cross-governmental participation, so I would like assurances that when discussions occur—internally and externally—there is full participation by all Departments, not just the Treasury and DFID, because the matter affects the Foreign Office, the Home Office and many others.

I want to know about discussions at the international level. Like my hon. Friend the Member for Bethnal Green and Bow, I want to know what discussions will take place at events such as the G20. The problem is being instigated largely by decisions taken by United States regulators. Until we can address the legitimate concerns that the regulators are raising, we will not be able to come to a long-term global solution. Like my hon. Friend, I want to know about the interim solution and when the action group is going to meet.

Can the Minister tell us about the discussions he has had recently with DFID about the clear time frame and action plan for the safe corridor? There is a lot of expectation and hope around that, but also a lot of unanswered questions that members of the community and campaigners have asked, so can the Minister reassure us?

There is a wider issue of engagement with the many stakeholders out there in the community, particularly in the diaspora community, and how feedback is being given at different stages of the process. Some members of the community rightly feel that they have not had the feedback and assurances that things are moving forward at the speed and with the seriousness that we would all like. Is the Minister able to share—perhaps in the Library—some of the reports into the wider implications that have been undertaken internally by the Government? There are concerns that some of the reports have not been made public, which adds to a sense of doubt about whether anything is happening or whether solutions will be found.

Finally, what is the Minister’s assessment of the legal situation and the injunction that has been granted? I appreciate that the Government cannot intervene in the judicial process, but it is a key factor in terms of the timing and that window of opportunity in which we have to find a solution. What is his assessment of what has been going on in that process? To what time scales are we working? Will we get into a situation in which we arrive at that process—or an earlier legal process if Barclays continues to challenge the injunction—and suddenly find that Dahabshiil or other money transfer operators have to close down, and the millions of people who to rely on such services are left high and dry?

I am reassured by a letter that was sent to the right hon. Member for Banbury from the Prime Minister. The letter states:

“Let me start by assuring you that I completely understand the importance of remittances and the crucial role they play...supporting economic growth while providing a vital safety net...we can work with them to come up with alternative solutions so that people in Somalia do not lose out.”

That is a welcome commitment in writing from the Prime Minister. I hope that the Minister can give us assurances that that commitment, and the commitment of his colleague in DFID, will be met.

--- Later in debate ---

[Sajid Javid]

The hon. Lady makes a good point. Banks should be concerned about the reputational impact that could arise as a result of their decisions. I confirm that the Treasury, the British Bankers Association and other representatives of the banking industry have discussed the issue. We are engaged with all banks, including state-owned banks. I stress that what a bank does, or does not do, is ultimately a commercial decision for it to take.

[Stephen Doughty]

I say gently that the idea that the Government do not get involved in directly suggesting what banks do and do not offer is a little bit away from the point. For example, the Government work closely with banks, through Help to Buy and other schemes, on what commercial products they offer and how they provide them to serve the public. I wonder, perhaps philosophically, why this matter is being treated slightly differently.

[Sajid Javid]

The hon. Gentleman will know that the state-owned banks came about by accident rather than design, and the Government’s overriding purpose now is to return those banks to the private sector, with the best interests of shareholders paramount. With regard to Government involvement in the banking sector, he mentioned the Help to Buy scheme. That is a good example of a scheme that is designed to work through incentives. No bank is compelled to take part in that scheme or similar ones, such as the funding for lending scheme, which work through incentives. It is important to consider what the Government can do to make it easier for banks to stay in the MSB sector or to get more active in it. That is the right area to explore to help our constituents.

The Government cannot prevent UK banks from facing supervisory and enforcement action from other jurisdictions. Hon. Members know that this is not just about rules in the UK, because European Union rules, and especially rules in the US, affect many money transfer businesses, because most transfers typically have to be converted into US dollars and therefore touch US soil. What the US authorities think is therefore important.

We are committed to doing our utmost to ensure that remittances continue to flow through secure, legitimate channels. The market is adapting, and remittances are continuing to flow into and out of the UK. Particular concerns have been raised regarding Somalia, as we have heard today. That market, too, is adapting and remittance channels remain open. The supervisors and the Government have been monitoring the situation carefully. We know that all MSBs operating in the Somali corridor prior to the decision by Barclays continue to do so, with a number still having bank accounts. Although individual MSBs may be finding trading conditions more difficult, remitters can still service a wide range of customers in the UK and different areas in Somalia. Additionally, many MSBs across a range of corridors are becoming agents of other MSBs, and discussions have been held with various MSB communities on using cash couriers in a manner that is secure and compliant with legal requirements for the cross-border movement of cash.

We must ensure that our constituents are aware of the options available to help them to continue to make remittances. Since the previous debate on the matter in this Chamber, the Government have engaged directly with the Somali community on these options.

Since the previous time I addressed hon. Members on this issue, I have made a written ministerial statement setting out the cross-government effort to find solutions, which included an action plan to secure the continued flow of remittances. The plan includes steps to improve trust in the UK remittance market by the formal banking sector, for example, through building the capacity of money service businesses and providing guidance on the banking of such businesses. It also outlined the creation of an independent action group on cross-border remittances. Through this group, officials from across the Government are working closely with regulators and the private sector to facilitate a sustainable market-based solution. The first full meeting of the group is scheduled to take place next Friday—31 January. I am pleased to announce today that Sir Brian Pomeroy will chair the group. Sir Brian has extensive experience in this field, as the founding chairman of the Payments Council and the previous chair of the Treasury’s financial inclusion taskforce, and through his work with the Alliance for Financial Inclusion.

--- Later in debate ---

[Sajid Javid]

I thank the hon. Gentleman for reminding me of his question. I understand why he raises that matter, and there are two parts to my answer. First, there is a legal dispute, and I do not think it is sensible for any Minister to give an opinion on any matter that is before our courts, which would not be helpful to either party in the dispute. Secondly—this links to my earlier point—Barclays has to make its own decisions. Barclays is a commercial organisation. It has to assess the risks of doing business as well as, as the hon. Member for Bethnal Green and Bow pointed out, the potential impact of its commercial decisions on its own reputation. I will ensure that Barclays receives the report of our proceedings so that it may have an opportunity to reflect on the words of not just the hon. Gentleman, but all hon. Members who have participated in the debate.

[Stephen Doughty]

With your indulgence, Mr Owen, I have three brief points for the Minister to respond to. First, on the time scales and the window of opportunity that we have, will he assure us that there will be key milestones by which certain aspects of the process will have been concluded? Secondly, will the action group report back to the wider community that has an interest after the meeting on 31 January, because one concern is that there has not necessarily been as much feedback and information sharing as possible with the community? Finally, at what level is the weekly group meeting? Is it at the level of directors, heads of team or Ministers? Who is involved in that group?

[Sajid Javid]

First, we all share the sense of urgency on the time scales, which is apparent from all hon. Members who have spoken today and from the Prime Minister’s communication that the hon. Gentleman read out. Naturally, it is always helpful to set targets—I referred to the target that the Somali focus group pilot would be up and running within a year—but we also have to respect that there is no advantage in setting an artificial target and saying that something should be done in six months or a year. This complex issue requires a degree of international involvement and co-ordination, so the most important thing is to ensure that we do the work urgently, but in a way that brings a long-lasting solution. While I share his sense of urgency, I hope that he respects that answer.

In answer to the second question, we will share as much information as possible with all members of the public, although of course the matter is of particular interest to certain communities in the UK. I have had meetings, for example, with representatives of the Somali community, as have a number of officials in the Treasury, DFID, the FCO and other Departments, and we will continue to have those meetings and to share as much information as possible.

Broadly speaking, the weekly meetings involve officials from all Departments, but the hon. Gentleman’s question was more specifically about the level of those officials, and I will have to find that out because I am not sure whether it is always the same officials involved and always people at the same level. Clearly there will be some commonality when the meetings take place, but I can find out more detail and share it with him.