Grand Committee
Arrangement of Business
The Deputy Chairman of Committees (Viscount Colville of Culross) (CB)
My Lords, if there is a Division in the Chamber while we are sitting, this Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes. I think we are expecting at least six votes this afternoon.
Protocol on Ireland/Northern Ireland: Follow-up Report (European Affairs Committee)
(8 months ago)
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Lord Jay of Ewelme
That the Grand Committee takes note of the Report from the European Affairs Committee Report from the Sub-Committee on the Protocol on Ireland/Northern Ireland: Follow-up Report (2nd Report, HL Paper 57).
Lord Jay of Ewelme (CB)
My Lords, I rise to move the Motion standing in my name on the Order Paper, one of two Motions which invite the Grand Committee to take note of recent work by the Sub-Committee on the Protocol on Ireland/Northern Ireland, which I have the privilege to chair. The first of the reports was published more than a year ago, at the time when the UK’s relationship with the European Union was not good. The second, and most recent, report was published in an altogether more positive climate, following the agreement in February this year on the Windsor Framework between the UK and the EU. Given the changed political landscape since the beginning of this year, it is this most recent report that will be the focus of my remarks this afternoon.
The Government replied to the report earlier this afternoon. I am very grateful for such a speedy response, but I am afraid that I have not yet been able to study it in all the detail that I am sure it deserves. I look forward to doing so after this debate, and it will no doubt inform the Minister’s reply to the debate later this afternoon.
The sub-committee’s membership includes a wide range of views both on the constitutional status of Northern Ireland and on the protocol and the Windsor Framework. None the less, we once again succeeded in agreeing our report unanimously and by consensus. I believe this gives added weight to our conclusions and recommendations.
The Windsor Framework inquiry received many oral and written submissions, including from the British Government, business representatives, trade bodies, academic, legal and trade experts and representatives of community organisations. The sub-committee also visited Brussels in May and had a number of useful and productive discussions, including with Vice-President Šefčovič and his team. I congratulate Maroš Šefčovič on his new and expanded responsibilities, but I hope that he will not lose sight of his continuing responsibilities for relations with Great Britain and Northern Ireland.
On the basis of the wide-ranging evidence we received, we concluded that the Windsor Framework was an improvement on the Protocol on Ireland/Northern Ireland as originally negotiated. Indeed, I would say it is a marked improvement. Nevertheless, it is evident that problems remain. Business representatives and other stakeholders have welcomed the agreement on the Windsor Framework by the UK and the EU and the potential it provides to resolve problems sensibly in future. They particularly highlighted the benefits of the provisions of the Windsor Framework on movement from Great Britain to Northern Ireland via the green lane of retail goods, agri-food produce, including chilled meats, parcels, pets and human medicines. However, for some businesses we heard that the processes under the Windsor Framework would be more burdensome than under the protocol as it has operated with its grace periods and easements. While the green lane will benefit large retailers in particular, some retailers and some other sectors may have to use the red lane.
The report analyses evidence from witnesses on the overall impact of the Windsor Framework. Witnesses describe the technical and legal complexity of the Windsor Framework and the confusion that may arise from the difference in emphasis between the UK and the EU in their description of some of its provisions. We concluded that the UK and EU together really must publish a comprehensive summary of the Windsor Framework provisions, including the consolidated text of the original protocol as amended by the Windsor Framework. Perhaps the Minister can confirm that the Government will indeed do so.
Chapter 3 of our report focuses on the movement of goods, including the red and green lanes and the movement of agri-food, with the attendant requirements for new labelling. We endorse the calls for more clarity about the new arrangements for movements of goods between Great Britain and Northern Ireland.
Our report was in its final stages of preparation when the Government published additional guidance on 9 June. That guidance and the subsequent guidance of 28 July will be the subject of a follow-up committee evidence session next week.
Chapter 4 looks at human and veterinary medicines and the movement of pets. We noted the widespread welcome from the pharmaceutical industry for the Windsor Framework’s provisions on human medicines, which are seen as a sustainable solution to the problems with medicine supply to Northern Ireland, albeit with calls for the Government to intensify their engagement with stakeholders as the pharmaceutical industry prepares for the start of new measures on 1 January 2025.
While welcoming the extension of the grace periods for veterinary medicines until the end of 2025, the veterinary, farming and agri-food sectors all expressed serious concerns that a mutually agreed solution has yet to be reached. The report urges the Government to intensify their engagement with the EU and industry to identify a sustainable solution as a matter of urgency, to avoid a cliff edge in 2025. I hope the Minister will be able to tell us what progress has been made since the report was published.
I do not want to go into detail on VAT, excise duties or state aid, important though they are. I do want to say, as chapter 6 of our report notes, that business representatives stressed to us that regulatory divergence, whether between Great Britain and Northern Ireland or between Northern Ireland and Ireland, remains their number one concern. The report urges the Government and the EU to undertake substantive assessments, for all planned legislation, of the impact of regulatory divergence on Northern Ireland.
The committee also renewed its call, made repeatedly since March 2022 with the support of Northern Ireland stakeholders, for the Government to create and maintain an up-to-date record of regulatory divergence and its impact on Northern Ireland. The committee simply fails to understand why this is apparently either too difficult or unnecessary, or both. Perhaps the Minister can set us straight there, too.
Chapter 7 examines the democratic deficit occurring under the protocol and the extent to which it was addressed by the Windsor Framework, not least by the new Stormont brake. The Stormont brake divides opinion: some regard it as a genuine and innovative attempt to give Northern Ireland politicians a voice on the application of EU law to Northern Ireland, while others argue that the stringent conditions for its use and the limited scope of its application mean that it will have negligible impact. Time will tell us how significant it will prove to be in practice.
Chapter 8 of our report examines the role of the Court of Justice of the European Union, concluding that there has been no substantive change.
Chapter 9 analyses the proposals in the Windsor Framework on enhanced dialogue and engagement, both between the UK and the EU and with Northern Ireland stakeholders. The proposals for enhanced dialogue between the UK and the EU and engagement with Northern Ireland stakeholders are of course welcome. However, the structure for bilateral dialogue between the UK and the EU is more developed than the engagement with Northern Ireland, where detail remains lacking. If such engagement is to give Northern Ireland stakeholders a really meaningful voice, as it must, the UK and the EU need to ensure that it is properly structured and resourced and has real substance.
Finally, as the continued suspension of the power-sharing institutions demonstrates, political tensions in Northern Ireland over the protocol and the Windsor Framework remain acute. In welcoming the Windsor Framework but focusing on the work still to be done, we acknowledge the importance and the difficulty of resolving these issues to the satisfaction of all communities in Northern Ireland. I beg to move.
Lord Frost (Con)
My Lords, I thank the noble Lord, Lord Jay, and his sub-committee for this excellent and important report. It rightly highlights many of the uncertainties around the Windsor Framework and the lack of clarity about its operation. I too look forward to digesting the Government’s response when I have time.
I understand why the Prime Minister wanted to put an end to the tensions of recent years over Northern Ireland, but I am sorry to say that I regret the way in which it has been done. The Windsor Framework is said to be proof that good faith and a softer approach can pay dividends with the EU; I am afraid that I disagree. For me, it is proof that you never get a good result in a negotiation if the other side can tell that you just want a deal. As a result, I fear that its benefits have been oversold and the temporary reduction in friction over Northern Ireland has been bought only by conceding many of the points at issue. I will briefly explain why and highlight four problems.
First, I do not honestly think the Government have been totally clear about the nature of this agreement. The name may have changed, but we are still dealing with, essentially, the old protocol. The EU is still the goods and customs regulatory authority in Northern Ireland; its provisions are implemented by EU laws, not ours. In my view, the Stormont brake is a trivial and probably unusable add-on to something that was already in the protocol. The committee said and the noble Lord, Lord Jay, noted:
“There has been no substantive change to the role of the CJEU”.
It is not a new solution. Fundamentally, it is the old one and can be expected to generate the same problems.
Secondly, the workability of the framework’s limited new elements looks increasingly questionable. I wrote in February that the red and green lanes and the more relaxed rules on food standards and so on would probably improve the situation. I am no longer quite so sure. We are seeing operators setting out the practical difficulties with the green lane; on food standards, we seem to have agreed that people in Northern Ireland can consume GB-standard foods only if they are imported—they are not allowed to make them themselves. The Government claimed six months ago that there would be “no sense” of an Irish Sea border. We cannot really say that that is the case at the moment.
The third difficulty, which is crucial, is that the Government’s stance has changed. They have now committed to defending and supporting the framework. This is fundamental. The Johnson Government, of which I was part, always took the view—many criticised us for taking it—that the protocol was unsatisfactory and temporary. We always hoped that, ultimately, divergence by GB would produce the collapse of the protocol arrangements, whether consensually through a vote, a further negotiation or otherwise. We always wanted something better. Now, though, the Government are committed to the view that the Windsor Framework is better and should be defended. The consequence is that, as problems emerge—as they will—the Government must ally themselves with the EU, defend these new arrangements and impose them on a deeply divided Northern Ireland. They must actively support rules that destroy long-standing trade arrangements in this country and impose laws without consent in Northern Ireland. When problems emerge, as they do, for example over horticultural trade in Northern Ireland, they deny that they exist. I am afraid the Government will not find that comfortable. I fear the long-term consequences.
The final difficulty is that the Government’s commitment to the framework will shape their broader policy. That is why I cannot entirely share the view of those on my side of the argument who say, “Yes it’s imperfect, but it’s time to move on”. The framework creates a huge incentive to avoid diverging from the EU in relevant areas, because doing so will make its arrangements less and less workable, more vulnerable to EU interdiction and harder to defend as a success. Perhaps we have already seen the first consequences in the watered-down retained EU law Act.
The Windsor Framework exists. It seems that we will have to live with it for some years yet, but it is a sticking plaster and not a real solution to the underlying problems. If the Government had said something such as, “This deal softens the protocol but it does not remove it; it is the best we can get for now because we did not want to use the NI Protocol Bill and the EU knew it, but that cannot be the end of the story”, that would have been a fair statement of their position and much easier for people on my side of the argument to get behind. As it is, we are supposed to believe that the problems have been solved, but they have not. It leaves us where we started, with the British Government only partly sovereign over their territory. That is still a bitter pill to swallow, and in the long run I do not see how it can stand.
Baroness Ritchie of Downpatrick (Lab)
My Lords, I record my thanks and grateful appreciation to our chair, the noble Lord, Lord Jay, who has steered a committee of individuals from varying political perspectives to achieve consensus and agreement around two reports: last year’s follow-up report on the protocol and this year’s report on the Windsor Framework. That was no mean achievement, because we all came from different persuasions, some of us supporting the protocol and the Windsor Framework and others opposed to it. However, I want to move on from the reports; they are both very detailed, but we are now in the space where we have to move forward.
For me, the Windsor Framework is the only show in town, and over the next two days we will have business leaders from across the world descending on Belfast. In that context, and the need to, shall we say, underpin our political institutions—I hope they can be restored shortly—I would say that we need political and economic stability. Therefore, why would businesses in Northern Ireland not want to avail themselves of the economic, business and trade opportunities provided by the Windsor Framework when we can trade in the UK internal market and in the EU single market? Other areas would eat our hand to get that opportunity.
We need to top up those opportunities as well as to address the issues that were presented to us by businesspeople, who found the framework burdensome. In that respect, at that stage the Government had not provided the guidance, and only tomorrow will we deal with the four statutory instruments that will implement those guidance issues and information dealing with labelling. I say gently to the Minister that that is all in very short order when much of this stuff has to be implemented by October this year, some three weeks away.
However, in moving forward, we need to look at the Good Friday agreement. It deals with three sets of relationships, and the purpose of the Windsor Framework is to look at those three sets of relationships, obviously, and the accompanying document of the protocol in its entirety. There is, therefore, now an opportunity to look at those north-south opportunities. Can the Minister say what evidence and what work is being done for the EU-UK joint committee to keep under constant review the extent to which the implementation and application of Windsor and the protocol maintain the necessary conditions for north-south co-operation on the island of Ireland? Perhaps the Minister could provide me with an update on this particular area of any work the joint committee may be doing, and, if that has not been activated, provide an undertaking to do so when that happens.
With regard to the specialised committee, will it engage with the north-south implementation bodies? One of them is InterTradeIreland, which deals specifically with trade; another is Tourism Ireland, and there are several others. Will the Minister, working with colleagues, ensure that the specialised committee engages with north-south implementation bodies and the north-south joint secretariat on their experiences of the operation of the Windsor Framework for north-south co-operation? And will the joint committee signal how it intends to review the effect of the implementation and the application of the Windsor Framework on maintaining the necessary conditions for north-south co-operation?
Another area that needs to be examined is apportionment with HMRC. Before the Windsor Framework, there was no problem about apportioning the amount of trade for the EU and the Republic of Ireland and the amount that would stay in Northern Ireland. That information is not available in the guidance. I look forward to the Minister’s response.
Lord Alderdice (LD)
My Lords, the noble Lord, Lord Jay, admirably fulfilled his challenging role as chairman of the Protocol on Ireland/Northern Ireland Sub-Committee in achieving a considerable level of agreement across the wide range of views in the committee about the impact of the Northern Ireland protocol and, in the second report, the Windsor Framework.
The first report found, wholly unsurprisingly, that businesses reliant on trade between Great Britain and Northern Ireland had been negatively affected. Contrarywise, businesses trading with Ireland and the rest of the EU found that the protocol had had a beneficial impact. The committee caveated its observations by noting that the overall impact of the protocol on the Northern Ireland economy was perhaps uncertain because of all the other things that have been happening: the Covid pandemic, labour shortages, rising costs from the war in Ukraine and so on.
Interestingly, the committee noted that those from whom it took evidence could reach opposite conclusions from the same information. That is characteristic of our problems. It is not surprising: those who are unionists but supported Brexit, which they did not all, will naturally look for something other than Brexit to be the main reason for their undoubted problems. Those who are nationalists, who were mostly opposed to Brexit, will see any development towards an all-Ireland economy as in their long-term political interest. Businesspeople, of course, will simply try to do the best that they can, whatever circumstances they work in.
The committee tried to avoid judgments on these issues of deep difference, but we need to address them if we are to take our thinking forward. Those who supported Brexit did not pay much attention to what were quite predictable consequences for Northern Ireland. They thought that it would be relatively straightforward and easy, but it has not been.
A number of realities need addressing and, given my professional background, noble Lords will not be surprised that the first reality I suggest is the psychological one. When a relationship breaks up because one side wishes to walk away from it and the other does not, there are inevitable emotional consequences. The one who is leaving minimises the consequences and says, “We can still be friends”, and the one who is being abandoned feels anxious and angry. The EU was never going to respond with equanimity to Brexit for these reasons, so even where there were some problems that could be mitigated in the early days, it was not going to happen immediately until people had begun to settle down to the reality of what had happened.
There were some problems that I would characterise as real-world problems. It is ironic that those who most fervently upheld the importance of taking back control of national borders were the very ones who dismissed the importance of the national border between Northern Ireland and the Republic of Ireland. That was never a coherent position. If national borders are not important, there was no reason to leave the EU; if they were important enough to leave the EU, they were going to be important and problematic in respect of Northern Ireland and the Republic of Ireland, particularly given the historic, and even current, matter of dispute about that border.
Let me be clear: Brexit was an entirely legitimate ambition and, when it was voted on by the people and the people supported it, it had to be implemented. However, it has consequences. If I jump off a windowsill I will fall and there is no point in me saying how unfair it is that gravity will result in me being crippled. There are certain consequences to our actions, especially in relationships.
One of the other consequences was for our relationships with the EU and the United States. When Prime Minister Sunak took over the reins of government, he realised that the key challenges for his Government were resetting the relationships with the EU and the US. They had been damaged by Brexit and the UK cannot afford to be at odds with its most important trading and security partners. That is why the Windsor Framework was a dramatically successful initiative in resetting relationships with the EU and the United States. I think it extremely unlikely that the current UK Government or any successor Government will embark on an unstitching of those relationships and these arrangements.
There can be some window-dressing about the constitutional position of Northern Ireland, but that position and the devolved settlement of Northern Ireland are of less consequence for Britain as a whole now than relationships with the EU and the United States. The emotional attachment, which was very strong when I came to this House more than a quarter of a century ago, does not feel the same now. For example, I was struck when John Simpson, a very distinguished journalist, on seeing what had happened with the Scottish nationalists, said that the “union is now safe”. I could not help but think to myself that he was not thinking very much about the union with Northern Ireland and that he is not the only one on this side of the water who has that perspective.
Baroness O'Loan (CB)
My Lords, I am privileged to serve on the sub-committee that produced today’s report, under the excellent chairmanship of the noble Lord, Lord Jay. The committee has been well served by its staff. In particular, I pay tribute to Stuart Stoner, who as clerk of the committee played such a pivotal role in the production of this report and in supporting us as Members.
Some 89% of the 80,000 or so registered businesses in Northern Ireland have fewer than 10 employees; just over 2% have more than 50 employees and 42% of businesses have a turnover of less than £100,000. These factors impact on the ability of many businesses to respond quickly and strategically to changes required to IT systems, product modification and haulage and transportation change. Business across the UK faces significant challenge at this time of inflation and uncertainty, and business in Northern Ireland, including those seeking to do business with the rest of the UK, has additional challenges. Regulatory divergence is occurring and will continue to occur as the EU and the UK legislate. Business wants to respond to legislative change and to function effectively but, in the absence of any identifiable strategy within government departments to track and publicise occasions of regulatory divergence, that divergence, whether between Great Britain and Northern Ireland or between Northern Ireland and Ireland, remains the number one concern, as the noble Lord, Lord Jay, said.
Can the Minister inform the Committee today whether His Majesty’s Government have made an assessment of the practical impact of regulatory divergence on Northern Ireland and of the issues that the sub-committee has raised? Can the Minister tell us whether, following the establishment of the EU-UK Trade and Co-operation Agreement, processes have been established that will meet the current information deficit and ensure that information is provided in a way that is coherent, industry-specific and the product of consultation, so that businesses are not hunting through the mass of guidance, policy papers, detail papers and so on to identify divergence? Much of the Government’s response seems to refer to framework structures that require to be underpinned by working groups and other modalities. Will the Minister assure us that such infrastructure exists and is functioning?
There is an underlying fear that Northern Ireland will find itself in a no man’s land between Great Britain and the EU. The processes for changing law in the myriad areas affected by the UK’s withdrawal from the EU are enormously complex. A considerable volume of legislation is produced each year in the UK, while the EU continues to legislate by means of directives, regulations and so on, on matters affecting the internal market as it operates in Northern Ireland. Business needs to know which laws are being introduced and which laws are being repealed, meaning that they are no longer obliged to operate in compliance with those laws.
The bigger question is how regulatory divergence impacts on businesses that wish to operate in both the EU single market and the UK. To what extent are separate manufacturing, labelling, tax, regulatory and enforcement regimes applicable to particular businesses and how can they best respond to maintain and expand their businesses so as to take advantage of the opportunities offered by Northern Ireland’s unique access to both the EU single market and the rest of the UK?
In the context of the EU and excise duties, stakeholders have welcomed the new enhanced co-ordination mechanism to review future legislation. Businesses have welcomed the potential for further flexibilities. The committee has urged the UK and the EU to ensure that the new body is sufficiently resourced. Can the Minister assure the Committee that this has been happening?
The sub-committee has repeatedly called on the Government to maintain a register of regulatory divergence, and we have done so again in this report. Businesses cannot be expected to derive essential commercial information on regulatory issues by way of Explanatory Notes or Memoranda on the potential impacts of proposed legislation. The expertise for tracking and identifying regulatory divergence surely exists within our government departments, which have extensive responsibilities in the areas of legislative drafting, regulation and enforcement. Can the Minister assure the Committee that that expertise will be directed to ensure that there is coherent, timely and accessible information for businesses across the UK?
Lord Dodds of Duncairn (DUP)
My Lords, I am grateful for this debate taking place so quickly after the production of our latest report on the Windsor Framework. Like others, I thank our chair, the noble Lord, Lord Jay, for the presentation today, and the way in which he chairs the committee on which I have the honour to serve. I thank Stuart Stoner and all the staff for their excellent work and the way in which they service the committee.
The committee has done extraordinarily useful work in shining a light on the complex details of the protocol/Windsor Framework because the two are really the same; there are a few tweaks here and there, but they are fundamentally the same mechanism. It has not been easy to shine that light, given the Government’s failure in many cases to be open or transparent on the issues, or to provide full—in some cases any—answers to straight questions. The detailed examination of legislation, from both the EU and His Majesty’s Government, is proving invaluable in holding the Government to account. It is proving very important to those who have a genuine interest in and concern for the facts—not spin or hype. The most recent report of the committee on the Windsor Framework is another example of this.
I would like to take a slightly broader view of where we are at with the framework and political process in Northern Ireland. There has been a lamentable failure, in practice and outcomes, to acknowledge that the Belfast agreement, as amended by the St Andrews agreement, only works when the interests of unionists and nationalists are both respected, and when it is recognised that each of the three strands of the agreement must complement each other. It is now clear that the failure to respect that balance of interests and to uphold the various strands in a balanced and fair way has led us to the place we sadly, but inevitably, find ourselves in.
The protocol/Windsor Framework could only have come about through the adoption of a nationalist interpretation of the Belfast agreement. Things that would never be tolerated by republicans, nor would be imposed upon them, have been recklessly imposed upon unionists with little regard to the need to maintain balance in all the strands and to maintain the confidence of both communities. These are essential for the political process in Northern Ireland to work.
It took a long time to move people away from the original position of rigorous implementation of the deeply flawed protocol. The Alliance Party, the SDLP, Sinn Féin, the Irish Government and, indeed, some here in Westminster were all rigorous implementers, despite the damage it would entail to both the economy and political stability in Northern Ireland. The so-called grace periods and derogations by the British Government, which were so necessary, were condemned to high heaven by many, while they turned a blind eye to similar actions—or indeed threats, such as to stop vaccines—on the part of the EU.
The reality is that the protocol/Windsor Framework and the intended imposition of EU law on Northern Ireland without consent and the creation of an Irish Sea border, which deeply impacts upon Northern Ireland’s place in the UK internal market, are things that were bound to undermine the institutions of the Belfast agreement, as amended by St Andrews. For many months, the Democratic Unionist Party worked with the Government of the day and the various Prime Ministers to bring about substantial change. It maintained its First Minister in Northern Ireland to allow that to happen for well over a year, until patience finally ran out with the continued delay and failure to deliver on commitments made by Prime Ministers.
The fact is that you cannot trash strand one—the internal affairs of Northern Ireland —and strand three—the east-west relationship—and expect no instability as a result. Work remains to be done to fulfil the pledges which have been made to the people of Northern Ireland. The DUP leader Jeffrey Donaldson in setting out his seven tests was merely consolidating and reiterating promises made by British Prime Ministers to the people of Northern Ireland. They were not invented or made up by him. Incidentally, the seven tests were part of our manifesto in the most recent elections.
The basis on which the protocol was brought about was nationalist distaste for any checks on the border on the island of Ireland. Unionists never wanted or sought such but cannot accept that such should be imposed between us and the rest of the United Kingdom. I think that is a fair and balanced position, and it is achievable. It is something that the Government must address. They have not done so so far, and the Windsor Framework has not addressed that problem. Legislation which is currently being considered by the Government must address the entirety of Northern Ireland’s place within the United Kingdom and remove impediments from Great Britain to Northern Ireland as well as reaffirming what we have for Northern Ireland to Great Britain. I trust the Government will addresses these fundamental issues and in doing so achieve political stability in Northern Ireland.
Lord Hannan of Kingsclere (Con)
My Lords, as always, I begin by thanking the noble Lord, Lord Jay of Ewelme, and his staff for these reports. I could give my whole five minutes over entirely to paeans and panegyrics, to odes and oratorios, to acclamations and encomiums, but I have done it before, as have the noble Baroness, Lady Ritchie, and the noble Lord, Lord Dodds, so shall we just take it all as read? It is a great achievement to have balanced the orange/green, remain/leave and left/right tensions three-dimensionally.
I agree with the thrust of the report’s conclusion: the Windsor Framework makes a few things a bit better and in a smaller number of areas it makes things slightly worse than the status quo plus the grace periods. The report is really an example of the importance of compromise, cool-headed temperance and the ability to talk things through in detail. I hope the Grand Committee will forgive me if I extend that logic, especially given the timing of the reconciliation Bill that we have just debated, and look at what is happening in the Province in terms of compromise.
One of the rather beautiful and underreported facts during the Troubles was the extent to which both communities consistently rejected violence. There was a Northern Ireland Life and Times survey in 1998, at the time of the Belfast agreement, and 70% of people who supported a united Ireland had no sympathy with physical force terrorism; only 8% supported it. Come forward one generation and 69% of people in that community now agree with Michelle O’Neill when she says that there was no alternative to IRA violence. Of course, this is partly just the passage of time, the sanitising effect of not being there with the funerals and the body parts and the physical destruction, but it also says something alarming about the readiness to compromise, to let the other side feel that they can live with something, on which all our deliberations, the amended Windsor Framework and the Belfast agreement itself rest.
Do not get me wrong: there has been immense progress in those 25 years—I do not think anyone will disagree with that—such as the Belfast dockyards and the Titanic quarter. The Corn Market, which I remember as a dingy and dangerous place, is now as beautiful a piece of street architecture as you will find anywhere in these islands. The sectarian murals have become tourist attractions. I hope it goes without saying that all of that is desirable and to be praised, but it all rests ultimately on a willingness to, if you like, elevate process over outcome, to accept that sometimes you are going to lose and that sometimes the other side is going to win and that that is not a threat to your whole identity. This point has been historically aimed at unionists, and not always without reason. I was amused by Senator Mitchell’s recollection at the 25th anniversary of David Trimble having said to him “You need to understand about my lot that they will travel hours out of their way to take an insult”, and we have all met politicians like that, but it applies equally to both sides.
Let me put it like this: if I were chiefly motivated by wanting a 32-county state in Ireland—whether I were on either side of the border—I would do things very differently. I would engage with British people in Northern Ireland as Brits rather than as misguided Irish protestants. I would have done a lot of things differently: I would not have left the Commonwealth; I would not have had a different foreign policy in the wars; I would not have made the Irish language a requirement. Those are water under the bridge, but going forward now is about finding a compromise that both sides can live with. We are in a world where we have a general retreat from liberal democracy, a general rise of populism and a “winner takes all” attitude even in countries that are old and established democracies—these are alarming tendencies. If there is one thing that we in this Chamber can do, perhaps it is to spread our irenic influence and to encourage people that, in the Windsor Framework and in everything else, we are never going to get 100% of what we want. That is the essence of any functioning open society.
Lord Hain (Lab)
My Lords, I too thank the noble Lord, Lord Jay, for his exceptional chairing of a group of us that is, to say the least, politically diverse, if not a right handful. My thanks also to our brilliant clerk, Stuart Stoner, who has done a superhuman job since our inception, together with his colleagues.
The Windsor Framework is welcome as an effort by both the Government and the EU Commission to address very serious concerns around the protocol. However, as the report makes clear, a lot is still unresolved. Indeed, the sense of uncertainty risks being compounded by the fact that the Government remain open to doing the bidding of only one party when it comes to further adjustments and legislation with respect to Northern Ireland’s post-Brexit position.
How can the Secretary of State consider it appropriate to tell the leader of one party that he, the Minister,
“can bring forward legislation … that does exactly what he needs it to do for his party”,—[Official Report, Commons, 21/6/23; col. 780]
namely the DUP? Yet after all that, the DUP does not trust the Government, and I do not blame it, because the Conservatives have betrayed the unionist cause that they purport to extol in a deal that the noble Lord, Lord Frost, negotiated but now condemns. When will the Government understand that finding stability in Northern Ireland is not, and never will be, about appeasing one party over others, but is rather about holding firm to the legal obligations and commitments that they have made—and, above all, that it is about being an honest broker? I say that as a former Secretary of State who brought the DUP and Sinn Féin to share power together from May 2007. That could have been achieved only by mutual respect between myself and the DUP—not necessarily agreeing with each other but building mutual trust.
That leads me back to our sub-committee’s report. There are three things worth underlining as a means of shoring up the stability and democratic governance of post-Brexit Northern Ireland, which all are agreed must be a priority. First, the Windsor deal is not merely a diplomatic “win” but a very significant framework for Northern Ireland’s future economic and trading relationships. The Government recognise that Northern Ireland enjoys potential advantages as a result of these arrangements, but those can be secured only by adequate resourcing from London, which is palpably not the case currently. It will be necessary to work in a new way with Northern Ireland officials, stakeholders, experts and—before long, let us hope—the Northern Ireland Assembly and Executive to make sure that the extensive capacity needed is there to make the Windsor Framework a success. It is a very complex animal.
Secondly, the report clearly sets out the need for information and clarity about the details of the Windsor Framework in practice. It is welcome that the Government are issuing more guidance on the details of the implementation of the schemes underpinning the green lanes, for example, but there is need for clarity and detail on a wider range of issues, from the so-called Stormont brake—which does not seem much of a brake at all—to the movement of parcels. The evidence gathered by the sub-committee is a helpful indication of not only what is needed now but what will be needed in the near future.
Finally, as our report concludes, it is vital that the UK and the EU ensure that they remain in close and productive dialogue, rebuilding the trust that is so vital but was squandered so recklessly by bellicose posturing under the Johnson and Truss regimes—trust both with each other and with Northern Ireland stakeholders and its citizens, and with the Irish Government, who are a guarantor for and signatory to the 1998 Good Friday agreement and the 2007 power-sharing self-government. Unless that trust is built with Dublin, nothing will work. It must also be built with Brussels. That is a huge challenge for this Government, which, sadly, they have so far failed to meet, except in respect of the Windsor Framework, which I welcome. I hope they rebuild that trust in future.
Lord Thomas of Gresford (LD)
My Lords, I, too, am privileged to sit on the sub-committee, under the wise chairmanship of the noble Lord, Lord Jay, and with the assistance of a brilliant team under Stuart Stoner, who have helped us so much.
The sub-committee has sought to cut through the hype and overselling of the Windsor Framework. The interrogation of witnesses from all stakeholders in Northern Ireland allowed us to outline in our report a realistic view of the effects to date and the perceived advantages and disadvantages that lie ahead.
I have previously expressed to the House my optimism for Northern Ireland’s future. I have said that, as a Welshman, I am envious of the unique position of Northern Ireland, with its access to both the EU market and the UK internal market. There ought to be a bright future, but I was impressed at a meeting we had in Brussels on 5 May with Brussels-based businessmen and academics, when we were told in no uncertain terms that, while the potential advantages of investment in Northern Ireland were well understood, the fear of political instability was causing investors to hesitate.
The lack of an Executive and a functioning Parliament is the outward manifestation of instability, but beneath the surface there lurks a fear of further violent unrest. Having listened recently to the debates on the Northern Ireland Troubles (Legacy and Reconciliation) Bill, I understand even more poignantly that the wounds of the past in Northern Ireland have not healed. It is ironic that all political parties and the whole of civil society in Northern Ireland came together to denounce the Bill with a unity of purpose ignored by the Westminster Government. Yet such cross-community assent is the bulwark of the Belfast agreement.
Since my first election address in Wales in 1964, I have been a firm advocate of devolution for every nation in the UK, for promoting a stable society. Heaven knows, the Welsh Parliament struggles to address the problems of an ageing population, ageing housing stock and exhausted extractive industries that once made the wages in the Rhondda the highest in the United Kingdom, but for all these difficulties, Wales does not lack stability and the Senedd is able to formulate and fund policies and plans to address them. By contrast, the political structures of the Northern Ireland settlement are unhappily on hold.
It is possible to implement certain aspects of the Windsor Framework, such as the green and red channels, the simplification of trade documents, labelling and so on without input from the Northern Ireland Assembly. The DUP, with its seven tests for any replacement of the original protocol, should be satisfied—at least in respect of their fifth, sixth and seventh tests. However, as our report demonstrates, the parts of the framework that mitigate the democratic deficit cannot be implemented while Stormont remains suspended. The changes to give a voice to Northern Ireland in the joint committee and the Joint Consultative Working Group cannot be carried forward in the absence of the Assembly. The Stormont brake cannot be triggered if the Members of the Assembly are not in place and, accordingly, changes to all modifications of EU law affecting Northern Ireland, and all new EU legislation, cannot be addressed.
In a debate following the publication of the framework, I criticised the Stormont brake as a mechanism that was so complicated as never to be used, but our subsequent visit to Brussels convinced me that, although it is highly unlikely that EU legislation would ever be negatived directly by the Stormont brake, nevertheless the process—from the presenting of a petition in the Assembly to its discussion at Stormont and subsequent proceedings in joint committees, followed by possible arbitration—would likely resolve all difficulties through negotiation, but with the voices of Northern Ireland loudly heard. That should satisfy the DUP’s fourth test of giving Northern Ireland people a say in the laws.
This leaves outstanding for that party its first test: the relevance of Article 6 of the Act of Union of 1800. Our committee did not address that issue because it has been determined already by the Supreme Court of the United Kingdom, whose jurisdiction was invoked by the DUP itself. The Supreme Court unanimously decided that
“The Acts of Union and Article VI remain in place but are modified to the extent and for the period during which the Protocol applies”.
There is no appeal possible from that.
Stability and peace, leading to prosperity, is the future within reach. It can be grasped by the people of Northern Ireland if the mechanisms that are there are used.
Lord Bew (CB)
My Lords, like other noble Lords, I commend the very impressive work of the noble Lord, Lord Jay, and his committee and its staff.
I will make a distinction between the two reports before us. The follow-up report, published on 27 July 2022, is actually the more impressive of the two. Pages 58 to 62 on medicines are absolutely on the button and I think played a benign role in the eventual resolution of the question of medicines in the Windsor Framework. On the other hand, the new and more recent document on the Windsor Framework inevitably must deal with matters of unfathomable complexity, massive technical difficulty and a huge number of known unknowns. It is beyond the wit of any committee, no matter how wise, to produce an accurate crystal ball in this area.
I labour under the disadvantage of being the only person in this debate, so far, to have read the Government’s 32-page reply in the last hour. It is gritty and tough-minded. On page 18, for example, it calls for the committee to come to terms with certain factual errors in the initial report. It is a serious response, probably more so than is often the case in replies to the work of our committees, at least in my experience. However, I acknowledge that the technical complexity of these issues is so great that some degree of weakness, compared with the second follow-up report, was almost inevitable.
There is important evidence from the Irish ambassador in the follow-up report of July 2022. I broadly support the position taken by the noble Lord, Lord Dodds; when the Irish ambassador is questioned by the committee about the Good Friday agreement, it is very clear in the series of replies he gives—although everything he says about the importance of minority rights in the Good Friday agreement is perfectly correct—that the east-west dimension, strand three of the agreement, disappears and that, characteristically, throughout the last three years and until very recently, if at all, Dublin has defined the east-west relationship as Dublin to London. It does not include Belfast and Northern Ireland. Its model for harmonious relationships was clearly totally incompatible with, for example, what Dublin put its name to in the withdrawal agreement launched by the May Government, which did not mention any role at all for the Northern Ireland Assembly. It is to the credit of the noble Lord, Lord Frost, that the agreement he produced, which is unpopular in many areas, makes a fundamental democratic transformation in returning the role of the Northern Ireland Assembly. Subsequently, the Windsor Framework was an attempt to deepen that relationship.
I mention the Irish Government because of another point that was also mentioned by the noble Lord, Lord Hannan: the tone of Irish nationalism at the moment, with the widespread singing of “Ooh ah up the Ra”. This is as important as any deliberation on the role of European law in making it difficult to get a return of Stormont. There are two problems. One is a certain glibness of tone by the Irish state itself, but the other is the popular culture, which is making it very difficult indeed. I am grateful to two people who were very important in 1998, Bertie Ahern and Rory Montgomery, a very important official on the Irish side, who have stood out against this crass, vulgar popular culture, which is more important than many of the technical difficulties in and around this report.
I absolutely accept that it is possible to accept the Government’s document completely, and even to say that the seven tests are completely met, and still not like the options for unionism on the grounds that European law continues to operate in Northern Ireland. What I want to say on this is quite simple: the union has always been impure. Dramatic examples include not having conscription in the Second World War and the failure of the Labour Party to organise in Northern Ireland. These are dramatic indications of the impurity of the union. None the less, it continues to survive and, on the latest polling from the Northern Ireland Life and Times survey, continues to have a solid basis ahead of it, but it is very important to understand that it is always evolving and that there will never be a union in accordance with the ideals of high unionism. Impurities—a role for European law is probably one for the future—are nothing new in the history of the union of Great Britain and Northern Ireland.
Baroness Hoey (Non-Afl)
My Lords, the noble Lord, Lord Jay, has done what he always does: he has managed to get a diverse group of members to agree something. He has a report that has probably not upset anyone at all. Of course, there is quite a lot of “On the one hand, and on the other” in it, but it is a really important, detailed analysis of some of the real problems with the Windsor Framework. I thank him and all of the committee for their work.
One thing struck me when I reread the report at the weekend: not a single person who gave evidence said that what the Prime Minister said when he launched the framework was absolutely correct. I looked up the Prime Minister’s speech when he came to Parliament. It was very clear that he was launching with great fanfare something that, when you look at it now, was not accurate. When you read it now, you wonder whether he really understood what he was saying. Two or three times, he talked about how wonderful it is that we are removing
“any sense of a border”
for goods destined for Northern Ireland. He reminded the House:
“We have achieved free-flowing trade, with a green lane for goods, no burdensome customs bureaucracy, no routine checks on trade, no paperwork whatsoever for Northern Irish goods moving into Great Britain”.—[Official Report, Commons, 27/2/23; cols. 571-76.]
Even a slight reading of the report shows that is just not accurate. So many people said how wonderful the protocol was, how we all should rigorously implement it and how we were really ridiculous even opposing it, but a year on they have all become wonderful supporters of the Windsor Framework. I suggest that, in a year’s time, we will be back discussing how this cannot work and needs to be radically changed, because the fundamentals have not been changed: Northern Ireland is being gradually moved away, drip by drip, from the rest of the United Kingdom.
I will raise three or four real-life examples on the ground in Northern Ireland, where I now live. There is a very large manufacturing company there. Three-quarters of its components come from Great Britain. Recently, the European Union withdrew the general system of preferences, so it now has to pay 4.2% duty on everything while its competitors in Great Britain do not. That is hardly a level playing field. That is a direct result of the Windsor Framework.
On horticulture, the Prime Minister said:
“The same quintessentially British products like trees, plants, and seed potatoes—will again be available in Northern Ireland’s garden centres”.
That is just not happening. Yes, there have been some changes, but the reality is that individuals who normally would have got their seeds and plants directly from a garden centre or a retailer in Great Britain are not getting them. Sometimes it is because the company has deliberately decided it cannot be bothered with the hassle, but that is not giving a level playing field for people in Northern Ireland.
On farming, and buying cattle from markets, I have a friend who came over just last week to buy some animals in a market. On the morning he was buying them, he was sent an email saying that the holding period has now gone up from 30 days to 45. Of course, that brings huge extra costs. They have to feed the animals, and store them for that time, and again, that is a direct result of the Windsor Framework. Cattle now come over to Northern Ireland with an ear tag; as I am sure noble Lords know, each calf gets a tag in each ear, plus the farm’s herd number, and once the cattle get from the mainland to Northern Ireland, the two tags which were in their ears have to be cut out and replaced with the next available number with the herd number on it. That is just another example of the extra bureaucracy that is affecting farmers, and of course we do not have any real clarity about veterinary medicine, where there is a real worry.
There is no mention of duty free in the report, which is disappointing, yet the Prime Minister said in his wonderful speech:
“When I was Chancellor, it frustrated me that when I cut VAT on solar panels … those tax cuts did not apply in Northern Ireland … That means zero rates of VAT”, —[Official Report, Commons, 27/2/23; col. 572.]
and added that the Government would now ensure that all excise duties are the same. They are not. I fly from Belfast to Faro or from Belfast to the EU, I do not get duty free, and the answer I get back over and over again is just a nonsense. No one is honest. The headline today in an article by Owen Polley in the News Letter, is “London Still Not Honest About Windsor Framework Debacle”. That is the reality.
Finally, what really made me angry is that just this week, someone travelling from Cairnryan to Larne on a boat—an ordinary person—gets an email, which includes at the bottom, under “Check-in times for the Cairnryan-Larne route”:
“Please allow plenty of time for border checks, which take place before check-in”.
With the Windsor Framework, individuals are now very affected.
I will simply say that people in Northern Ireland are confused, frustrated and angry, but, most of all, they are very sad that their Government seem to be neglecting them.
Lord Godson (Con)
My Lords, I wish to share in the tributes to the chair, the noble Lord, Lord Jay, and of course to the outstanding work of the committee staff, which has been attested to today and which has been the subject of so much proper and correct unanimity today.
In 2021, our committee found that the dispute over the implementation of the protocol had
“contributed to a serious deterioration in relations between London, Belfast, Dublin and Brussels”
and “a breakdown in trust”. It concluded that urgent steps were required to correct this. That was the starting point for our last two reports, which we are debating today. Our July 2022 report argued that the key to resolving the problem with the protocol was, not surprisingly, a reset in UK/EU relations. The report stated:
“Our witnesses identified four core interlinking principles that are needed to underpin this reset: prioritising Northern Ireland’s interests, constructive engagement, trust, and a renewed commitment to relationship-building”.
The Windsor Framework is based on these principles.
In the UK/EU political declaration accompanying that Windsor Framework, the two parties stated that:
“This new way forward demonstrates the joint determination of the European Commission and the Government of the United Kingdom to constructively work together to address the real issues affecting everyday life in Northern Ireland. Both express their intent to use all available mechanisms in the existing framework and arrangements announced in Windsor today to address and jointly resolve any relevant future issues that may emerge”.
It goes on to say that:
“The new way forward on the Windsor Framework marks a turning point in how both the United Kingdom and the European Union will work together collaboratively and constructively”.
It is this commitment to work together constructively and to use all available means to resolve problems that now offers the best chance of bridging the gap between what is necessary and what is sufficient in providing the answers to the complexity of securing GB to NI trade whilst protecting the EU single market.
Although the Windsor Framework was on the upside of expectations, critics point to many continuing problems, uncertainties with implementation and remaining issues, such as veterinary medicines, which all need resolution. Our witnesses expressed the hope that there will be flexibility to ensure that supply chains are able to operate in the green lane as planned and that any technical barriers that emerge as implementation proceeds will be addressed, to ensure that the aims of the Windsor Framework are delivered. The best hope for these issues to be addressed is through the UK-EU commitment to resolving practical problems and to prioritising Northern Ireland’s interests. Those hopes will only be realised if the EU plays its role as a facilitator of arrangements, not just an enforcer, and stays conscious of the fact that the Belfast/Good Friday agreement seeks to balance the interests and aspirations of both nationalists and unionists and to avoid the alienation of either community.
Our first report further pointed out that the protocol that emerged in 2018 and 2019 was not an inevitable result of Brexit but of the conscious political decisions taken during negotiations by both the EU and the UK on what form those arrangements should take. This analysis therefore contradicts the arguments of nationalists to this committee. The protocol’s basic structure was put in place by December 2017’s EU-UK joint report. We have been trying to push back against this, with some success, but it still leaves in place arrangements that have been very painful for unionists.
It might be that we could have achieved more flexibility through the Windsor accord, but we now have an agreement that the UK Government are committed to in international law. The upholding of this is key to the improved UK-EU relationship we are now enjoying, with all the benefits that brings, such as the Horizon and Copernicus deals agreed last week, which also benefit Northern Ireland. There will be more of this to come.
Therefore, despite the political difficulties for unionists, it is my firm belief that unionists will achieve improvements in these arrangements only by working within the frameworks of consultation and governance that the Windsor Framework established to resolve these problems. This, after all, represents one of the key gains of the Windsor Framework. It is through such engagement that unionists can effectively hold both the EU and the UK Government to account, both in fulfilling their commitments to the people of Northern Ireland and their joint commitment to work together constructively, along with representatives of Northern Ireland on all sides, to solve the practical problems that will arise in future and those we have identified in our latest report.
Baroness Goudie (Lab)
My Lords, I thank my chairman, the noble Lord, Lord Jay, for using every bit of his diplomatic skills on the last two reports we have worked on together. It has been a great pleasure to work with Stuart Stoner and his team, who have given us great advice and attention to detail at every moment. Every question was answered. I really appreciate all their advice.
Going forward, I am so pleased that President Biden appointed Senator Kennedy to lead the team to bring more employment and work to Northern Ireland, both from America and from Ireland itself, from the United Kingdom and from other parts of Europe. I am hopeful about the meetings over the next few days and have been privileged to know some of the company leaders and Senator Kennedy. I know that, if anyone can do this, he will be able to, and he will stick with it until they can get to some resolution. Although, there will not be a resolution—it will just be bringing in more people, because they know that there is a great workforce in Northern Ireland.
I thank the Government for their response, which I had a quick glance at after receiving it early this afternoon. I will look at it more closely ahead of our committee meeting on Wednesday. The committee report rightly underlines the importance of restoring the Northern Ireland Executive and Assembly. The restoration of these vital institutions is essential and increasingly urgent, not least in order to enable Northern Ireland to have a greater say over the operation of the Windsor Framework, upon which the committee has reported.
It is a scandal that Northern Ireland has been without a fully functioning Executive for more than 18 months. The Northern Ireland Assembly elections have not been implemented for well over a year since the Northern Ireland electorate spoke in clear terms. It is disgraceful that power-sharing remains suspended. The people of Northern Ireland must not be held hostage by the DUP. Enough is more than enough. The Windsor Framework is good for Northern Ireland, good for the United Kingdom and good for the European Union. It is not perfect but, as the committee has recognised, it is an improvement on the protocol.
No party should have a veto. The best has to be done in the circumstances in which we find ourselves. The fact is that, as long as the partition of Ireland remains, the United Kingdom and the EU have a land frontier across the island of Ireland, and the United Kingdom is split between the mainland, which has the sea frontier with the EU, and Northern Ireland, which does not.
This is a mess. There is a contradiction between the preservation of the entire United Kingdom on the one hand and Brexit on the other, and we have to do our best to manage this. The Northern Ireland elections in May last year and the Windsor Framework since enabled this to be done in a way that does not threaten the Good Friday agreement and the Irish peace process. We must disapprove when, in the United States, the loser of democratic elections will not accept the result, and we should disapprove when the results of elections in parts of the UK are not accepted on all sides. There needs to be a transition to a new working Northern Ireland Assembly in accordance with the election outcome, and this needs to be done very soon. There needs to be a functioning Northern Ireland Executive. These are categorical imperatives. If the devolved institutions are not restored, devolution in its present form may have to be suspended. The present impasse is not acceptable, and it is time to end the drift. The basis for a working Assembly and Executive, and the solidarity, is here.
Baroness Ludford (LD)
My Lords, I also applaud the excellent work of the Northern Ireland sub-committee under its chairman, the noble Lord, Lord Jay. Its report on the Windsor Framework summed up the situation. The Windsor Framework is the latest attempt to manage the implications of Brexit for Northern Ireland and, in my words rather than the committee’s, I would say that it is the best of a bad job. The noble Lord, Lord Frost, called it a “sticking plaster”, and I agree with him—but our aspirations for a final destination radically differ.
The fact is that we should not have started from here. One major reason to aspire to at least re-entry to the EU single market for the whole of the UK is to solve the problem of barriers between the different parts of our country. The problems come not from the protocol or the Windsor Framework but from Brexit. My noble friend Lord Alderdice referred to its predictable consequences, and the Financial Times journalist, Peter Foster, recently said that
“the original sin remains the prioritisation of a clean-break Brexit over the stability of the Union”.
That is a serious, but in my view justified, charge.
The proponents of Brexit, and particularly those who forced through a hard Brexit, which rejected staying in the EU single market and customs union, gave little if any thought to the effect on Northern Ireland, the Good Friday agreement or the relationship in these islands, which was shameful. If only those who advocated Brexit had given thought to the implications of creating not only economic problems but further political tensions in Northern Ireland after several decades of things seeming to settle down somewhat. The committee noted that the continued application of EU law in Northern Ireland remains politically contentious and—rightly, in my opinion—urges that, in view of these political tensions, the obligation on the UK and EU is for them both to be fully transparent with Northern Ireland stakeholders over the consequences of what they have agreed under the Windsor Framework. As the noble Lord, Lord Jay, mentioned, the committee urged publication of a consolidated text of the protocol as amended by the Windsor Framework. I hope that the Government are doing that—I have not yet had the opportunity to read their response.
It is an uncomfortable fact that, as the report on the Windsor Framework notes, stakeholders argued that, for many businesses, the movement of goods is likely to be more burdensome than the protocol as it has operated to date with various grace periods and easements in place, and that there are concerns that the ability of retailers based in Great Britain to use the green lane to supply the Northern Ireland market could place Northern Ireland businesses, which still need to comply with EU rules for goods, at a competitive disadvantage in their own market.
Views differ on the Stormont brake. In the view of Professor Catherine Barnard, it is something of a nuclear option to be threatened but not used. Indeed, in her opinion, it will very rarely be used. Professor Fabbrini of Dublin City University said it is a
“tailor-made way for Northern Ireland to object to future internal market laws”.
Note that he did not say to “veto” them. He warned against unrealistic expectations. He added:
“the Stormont Brake creates huge pressure for the Northern Ireland Executive to be restored because the mechanism can only be applied if the First Minister and deputy First Minister are in place”.
My noble friend Lord Thomas of Gresford mentioned that point.
The noble Lord, Lord Jay, stressed how the avoidance of divergence in regulation is the top priority for business, while the noble Lord, Lord Frost, said that he and Mr Johnson had hoped that divergence would break the protocol. I think I have quoted him accurately and apologise if I have not. I think that developments suggest that alignment might be winning the day, and I hope that that will be the case.
Can the Minister explain if and how the conditions for trade in halal and kosher meat have been eased and tell us whether the respective Muslim and Jewish religious authorities feel that they can now cater to the requirements of their communities in Northern Ireland? The problems with veterinary and agri-food products will be eased by an SPS agreement. The FT’s Peter Foster, to whom I have already referred, reminds us that in 2021 even the DUP, in the person of Edwin Poots, wanted such an SPS agreement.
Finally, can the Minister give an update on discussions with the Northern Ireland Human Rights Commission on whether issues regarding the application of Article 2 of the protocol on human rights and equalities matters have been satisfactorily resolved?
Lord Verdirame (Non-Afl)
My Lords, I, too, begin by paying tribute to the noble Lord, Lord Jay, and the committee for producing two extremely informative and thoughtful reports that do justice to the diversity of views and the complexity of the issues, including the legal issues on which I concentrate.
My observations are on the second report. The committee invited the Government to clarify the process by which they would decide whether the tests for the use of the so-called Stormont brake had been met. There is one aspect on which I think the Government should reflect. Article 13(3) of the protocol allows the EU to amend or replace EU law applicable in Northern Ireland without the consent of the UK. By contrast, new EU law cannot be imposed on Northern Ireland if the UK objects—that is the effect of Article 13(4). The Windsor Framework added Article 13(3a) to the text of the protocol. Read alongside the unilateral declaration appended by the United Kingdom, Article 13(3a) provides the international legal basis for the Stormont brake. One condition for the use of the Stormont brake in Article 13(3a) is that the amendment or replacement must significantly differ in content or scope from what proceeded it. The problem with this language is that it might appear to suggest that the EU’s unilateral legislative power to amend or replace existing EU law under Article 13(3) is broader than it needs to be. It is, of course, in the interest of the UK to defend a restrictive interpretation of Article 13(3). It is perfectly proper for the UK to do so as long as its interpretation is tenable.
It seems to me that one has to accept that an amendment or replacement would ordinarily introduce different content, but whether amendments or replacements that are significantly different in scope would be permissible under Article 13(3) is a different matter. So I hope that the Government will agree with me that in all their official pronouncements on the Stormont brake that it is necessary to maintain a consistent interpretation of the UK’s legal rights and obligations under the protocol as amended by the framework and, in particular as regards Article 13(3), to maintain an interpretation that states that those powers ought to be read quite narrowly.
In the little time available, there is only one further and more general comment that I would like to make. Table 1 of the report sets out a number of key dates in the implementation of the framework for the coming 12 to 24 months. The date by which the democratic consent vote under Article 18 is due to be held is 31 December 2024. There is another reason why that date is quite important. The Windsor Framework amendments to the text of the protocol, including Article 13(3a), to which I referred, were adopted with a decision of the joint committee, not with a formal new treaty.
The Deputy Chairman of Committees (Baroness Watkins of Tavistock) (CB)
My Lords, the Grand Committee now resumes its debate on the European Affairs Committee reports. Following the noble Lord, Lord Verdirame, three noble Lords will speak in the gap: the noble Baroness, Lady Foster of Aghadrumsee, the noble Lord, Lord Weir, and the noble Earl, Lord Kinnoull.
Lord Verdirame (Non-Afl)
I was explaining how the text of the treaty could be amended with a decision of the joint committee rather than a new treaty. The reason is Article 164(5)(d) of the withdrawal agreement, which empowered a joint committee to make amendments by decision to the text of the treaty, including the protocol,
“provided that such amendments are necessary to correct errors, to address omissions or other deficiencies, or to address situations unforeseen when this Agreement was signed, and provided that such decisions may not amend the essential elements of this Agreement”.
Using this pragmatic mechanism to achieve treaty change without going through the formal process of adopting a new treaty was a significant win for the Government in the Windsor Framework, but the mechanism it will expire on 31 December 2024—it can be used only until that date. Among the many windows of opportunity that have been discussed, this mechanism provides a further window of opportunity to consider changes to deal with problems arising from the implementation of the framework as they become apparent in the coming months. I hope that the Government and the joint committee will keep that possibility under consideration.
Baroness Foster of Aghadrumsee (Non-Afl)
My Lords, I, too, thank all members of the committee under the chairmanship of the noble Lord, Lord Jay, for the many hours of work which have brought us not just the initial report but all the previous work too.
When reading the report, it struck me again how the announcement of the Windsor Framework was so badly mishandled. There was something seriously wrong in government communication when they sold the Windsor Framework in the way they did. How much better would it have been if the Prime Minister had said, as this report says, “I believe this is an improvement on the protocol, but significant issues remain”? My assessment is that, if that had been the announcement, Ulster people would have said, “Fair enough. At least progress has been made”, but instead we were told that it was the best deal ever thought of.
As the noble Baroness, Lady O’Loan, said, Northern Ireland is a small-business economy, and that is not really dealt with under the Windsor Framework. The trusted trader scheme deals with large retailers, which is helpful, but it does not deal with small businesses. I agree with the noble Baroness’s point in relation to that and about the need for information, which is important. It did not have to be this way: the Alternative Arrangements Commission brought forward a range of ways in which all this could have been dealt with, but it was decided not to go down that road.
I also underscore what the noble Baroness, Lady Hoey, said about what has been going on recently. Advertisements have been taken out in Scottish newspapers from horticulture companies saying that they cannot send goods to Northern Ireland. There was also the shocking announcement advising customers to book in early for the passenger ferries from Cairnryan to Northern Ireland so that they can deal with border controls.
To ease the Minister’s response to the noble Lord, Lord Hain, on why the Secretary of State was listening to just one party—of course, I am no longer a member of the Democratic Unionist Party—it was because the other parties all wanted the protocol rigorously implemented and could see no difficulty with it, despite the obvious problems. My noble friend Lord Dodds made that point. We were also told that no party should have a veto. I was kept out of office as First Minister for three years, not 18 months, by Sinn Féin, and I have very little recollection of many voices from this place pointing out that it was a denial of democracy, as it very much was, or dealing with constitutional issues.
I have used up all my time. I commend this report and wish the Government well in the investment conference. We have young, bright, skilled people in Northern Ireland, and I hope that the conference is very successful.
Lord Weir of Ballyholme (DUP)
My Lords, I join others in commending the noble Lord and the committee for a thorough, fair and balanced report. Its conclusions do not surprise me. Along with the noble Baroness, Lady Foster, I served on the DUP panel examining the Windsor Framework and receiving a wide range of evidence from stakeholders, which is largely reflected in this report. Some highlighted that burdens had been eased and improvements made. I perfectly accept that, although as a unionist it sticks in the craw that, even when we see improvements, such as on family-to-family parcels or medicines, that is through the prism of what we are being granted, in Northern Ireland in particular and the UK in general, as effectively grace and favour from the European Union. We are told what we are permitted to do within the United Kingdom.
Leaving aside that major constitutional problem, the report strongly highlights a range of practical issues and concerns from businesses with real issues on the ground. They have highlighted a lack of clarity from government. In particular, the haulage industry is concerned that the Windsor Framework has made things worse than before. Sadly, the Government’s approach to this issue has too often been characterised by obfuscation, confusion, ambiguity and spin. Two key, telling themes of the report are that a number of recommendations seek clarity from the Government on what further steps need to happen and the somewhat divergent positions between what the UK Government and the EU say which creates a major problem.
I turn to what needs to happen for a way forward. In simple terms, we need to see the constitutional position of Northern Ireland restored and the effective removal of the sea border for Northern Ireland’s internal trade. That means strengthening the internal market to ensure that goods can flow well in both directions and addressing some of the very real concerns about the green lane, such that it is not prohibitive to small companies and does not become, as described by one witness, an express red lane. We also need to see a range of unresolved issues tackled, be they veterinary medicine or horticulture, and real democratic accountability. The Stormont brake falls well short of giving genuine say.
We need to see substance rather than spin. Had the Prime Minister delivered everything he said in February, we would probably not be that far off the mark, but, unfortunately, we have had platitudes rather than substance. We do not need a perishable product that looks very good and tastes brilliant on day one, is probably okay a week down the line, but is very quickly of no use. We need something durable and comprehensive. That is the real concern that needs to be addressed and met if we are to find a way forward.
The Earl of Kinnoull (CB)
My Lords, I will make three brief points. The first follows on from the point made by many other noble Lords about the noble Lord, Lord Jay, and his industry, expertise and skill. I say that from first-hand knowledge, because the European Affairs Committee and its sister committee, the Ireland/Northern Ireland protocol committee, had to be very closely co-ordinated throughout everything to ensure we were not tripping over each other. That took the form of a weekly meeting during pretty well the whole of the currency of these reports. I never left those meetings unimproved and without being amused. I pay tribute to the noble Lord.
The second point is to underline the issue of regulatory divergence and how it is proceeding apace. Another and different meeting that we regularly had between the committees was the sift meeting, which considered the EU documents being sent through to the committee family. We had to decide whether those documents would be dealt with by the Ireland/Northern Ireland protocol committee or by the European Affairs Committee. This gave us a great look into what was going on. Regulatory divergence is proceeding apace. This issue will add a lot of long-term complexity to the relationship between the UK and the EU and will throw up many issues. It will need to continue to be watched.
The final issue is the merits of an SPS agreement. This has been considered by the European Union Committee and the European Affairs Committee several times. The committee has reported several times and unanimously said that there should be one. In its very carefully nuanced paragraph 129 of the report on the Windsor Framework, the Ireland/Northern Ireland protocol committee asks the Government to come back to it on the merits of such an arrangement. Thanks to the noble Baroness, Lady O’Loan, I have been able to look at the Government’s response at great speed this afternoon. It would appear that the Government have not responded to that paragraph at all. I would be very grateful if the Minister could give some indication as to whether there will be a response to it.
Lord Bruce of Bennachie (LD)
My Lords, I echo all the congratulations to the noble Lord, Lord Jay, and the committee, not only on a very good piece of work and on bringing so many disparate voices together but on providing a very valuable service to the House in detail and—I say to the Minister—to the Government, if they are prepared to address what is in it in detail. That is what has been provided and what the Government need to do.
To go back to the beginning of Brexit, it has been mentioned that we were promised unfettered access between the markets of Great Britain and Northern Ireland and frictionless trade. That was a lie from the start; that was not possible once we had left the single market and the customs union. The people who said that knew it perfectly well. So it was inevitable that there would be a problem and it was equally inevitable that Northern Ireland would be the focus of that problem. Unfortunately, it became subsumed in the bigger debate about Brexit, and the details of what Northern Ireland needed got overlooked to some extent.
As has been said, we all know that there is a real political divide, but businesses operating in Northern Ireland simply want clarity and the minimum amount of red tape that they can get away with. If there is to be red tape, they want to know what it is and how—indeed, whether—they can deal with it. That is where we have to get to. We know that the Windsor agreement does not get them there, but at least it sets the framework to try to help to achieve that. That will be achieved only if relations between the UK and the EU, and to some extent the UK and Ireland, remain on the basis of constructive engagement and developing trust, and if the relationship between Northern Ireland and the other components is based on a genuine desire to try to meet, wherever possible, the needs—not the political needs, but the economic, social and practical needs—of the people of Northern Ireland. That seems to be where we need to get to, and this is a really helpful process.
The noble Lord, Lord Frost, in his speech, said that you never get a good deal if they know you want one. My question to him is: how are you going to get a deal if they know you do not want one? Where does that take you? That was how he seemed to approach it—as well as threatening to breach international law and bring the whole reputation of the country into disrepute. The reality is that trade is a bargain, and a bargain is achieved by negotiation and agreement. Every trade agreement requires concessions and give and take. We had that when we were inside the EU; we decided to leave, but we want to continue to engage, and if we want to continue to engage we will have to negotiate and compromise. We can tease each other about who got a better or a worse deal, but we will know nevertheless that it is a compromise and a deal and it cannot be perfect.
This debate has served a useful purpose to provide that degree of focus. Every speech has had real merit. I absolutely accept from the DUP Members, for example, that they can focus on all kinds of details—everybody can—that are not perfect or right and could have and should have been done better. However, I would plead with them not to use that as an excuse not to try to secure progress. Everybody here is making the point about the need to re-establish the Assembly and the Executive. I absolutely accept the situation in the past—the noble Baroness, Lady Foster, made the point that Sinn Féin kept the Assembly out of action for three years—and I can recall that I criticised that in this Chamber, because I did not think that it was justified, any more than I think what the DUP is doing is justified. Democracy requires people who are elected to participate in the process—and, my God, the people of Northern Ireland need it more than they have ever needed it, if these issues are going to be addressed.
I have a simple plea to the DUP: how long are you going to leave the people of Northern Ireland abandoned at a most critical time, economically, socially and politically, without leadership or engagement or the recognition that they depend on you? Indeed, the British Government are not going to engage properly if there is no one to engage with. It is a passionate plea and genuinely sincere. It does not mean that I do not recognise the difficulties, but they must know that they are getting towards the end of the road with regard to how long this process can continue.
To conclude on what I think has been a very good debate, the argument has been made that we all supported the protocol, but it was an improvement on nothing. Many of us knew that it was critical and said that it should be changed, but the Windsor Framework took it forward. It has not resolved it all, but this committee has identified where it has and has not and where it can be improved. That is a very practical piece of work; it is to be welcomed and the committee is to be highly commended.
Lord Ponsonby of Shulbrede (Lab)
My Lords, I, too, open by thanking the noble Lord, Lord Jay, and his committee for this second excellent report—nine chapters and five appendices, with detailed evidence gathering, conclusions and questions for the Government. I, too, have not read the letter that the Government provided today, but the noble Baroness, Lady O’Loan, described it as “gritty”. That bodes well that it is answering some of the detailed questions raised. I think that the noble Baroness said that it corrected some of the points—but, no, she is shaking her head on that. Nevertheless, it is a gritty answer to the report of the noble Lord, Lord Jay, which is a good thing. My noble friend Lord Hain described the committee as a “right handful”, and I noticed that nobody demurred from that assessment of the committee—but I suspect that that is a compliment to the noble Lord, Lord Jay, as well.
The report looked in turn at all the areas covered by the framework. In each case, it set out an overview of the UK’s and EU’s respective positions on how the framework’s arrangements will work, and the evidence that the committee received from business representatives, Northern Ireland experts and other stakeholders. Overall, the committee concluded that
“the Windsor Framework is an improvement on the Protocol on Ireland/Northern Ireland as originally negotiated”.
We in the Opposition agree wholeheartedly with this principal conclusion. Nevertheless, the committee goes on to say:
“Nevertheless, it is evident that the Windsor Framework does not resolve all the problems with the Protocol”.
For instance, while some witnesses highlighted the benefits of the new red and green lane arrangements, the committee heard that they would not be available to all businesses.
We hope that the red and green lane system will prove beneficial to eligible businesses and by extension to consumers, who will be able to buy products that were essentially banned under the unamended protocol. However, as the Library briefing note says, it does not cover all businesses and would require many businesses—SMEs in particular—to prepare for and implement yet another set of changes to how they operate on a day-to-day basis.
The committee heard concerns from witnesses about
“the technical and legal complexity of the Windsor Framework, and the multiple documents and legal texts that form part of it”.
Witnesses were also concerned about
“the lack of operational detail”
against
“the backdrop of tight deadlines for compliance”.
The committee said it would explore with stakeholders in the autumn whether the new guidance published by the Government from June 2023 onwards has answered these concerns. I had a brief chat with the noble Lord, Lord Jay, before this meeting, and I am pleased that the committee is continuing its work up until the general election.
The committee found that the solutions reached on VAT and excise were
“pragmatic compromises between the UK and EU positions”.
It believed the compromise on state aid
“gives rise to some uncertainty”.
While the pharmaceutical industry “strongly welcomed” the solution on human medicines, the committee said that an agreement on veterinary medicines
“remains elusive, and is urgently required”.
The committee will be aware that the Government have now agreed terms for the UK to return to the EU’s Horizon and Copernicus schemes, which the noble Lord, Lord Godson, referred to. Although these are not directly related to the protocol and Windsor Framework, which we are debating, this is an example of how the UK-EU relationship has changed for the better. In fact, we in the Opposition argued that returning to Horizon is the lowest hanging fruit post-Windsor, and yet it has still taken six to seven months for the Government to get it over the line. We continue to believe that the Brexit agreement can be improved. While we would not seek to renegotiate the protocol again, our talks with EU partners suggest that a more constructive approach would enable add-on deals that benefit both Northern Ireland and Great Britain.
The committee found that the new Stormont brake mechanism “divides opinion” between those who see it as an
“innovative attempt to give Northern Ireland politicians a voice over the application of EU law to Northern Ireland”
and those who believe it will have a “negligible impact” because of its “stringent conditions” and “limited scope”.
We are expecting five SIs to be debated in the coming weeks in order to implement various aspects of the Windsor Framework ahead of them going live. I would like to ask the Minister what engagement has been carried out with Northern Ireland colleagues, of all parties and none, prior to those SIs being drawn up and laid. The very presence of these SIs puts into sharp contrast the importance of getting Stormont back up and running, partly to facilitate potential use of the Stormont brake under the framework, but primarily to bring an end to the democratic deficit faced by Northern Ireland citizens.
In conclusion, in August this year, the Secretary of State Mr Heaton-Harris said that talks with the DUP were “half way there” to re-establishing an Executive and Assembly. There was further speculation in today’s Times about ongoing talks. I hope the Minister can say at least something about the intensity of those ongoing discussions and where they may lead.
The Minister of State, Foreign, Commonwealth and Development Office (Lord Ahmad of Wimbledon) (Con)
My Lords, I join with all noble Lords in recognising the strength of the report and the great diplomacy skills of the noble Lord, Lord Jay. However, that does not surprise me from what I have been informed of the noble Lord as a senior diplomat both in the network and as a former Permanent Under-Secretary to what was the Foreign and Commonwealth Office. It should be no surprise to anyone in your Lordships’ Committee that he has brought all these different strands of thinking together in a very constructive report, to which the Government responded today. I was very keen to ensure that the response preceded our debate when I was advised that I was responding to this particular debate, as it is always good to get up to speed with what the Government have responded to in a timely fashion.
From the outset, I would like to say that this debate again, as the noble Lords, Lord Ponsonby and Lord Bruce, demonstrated, shows that everyone cares. This is not about different positions. Of course, that is important, but the bottom line is that when people take a particular position—I refer to my noble friends from the DUP in particular—they do it with passion and principle, because they care, and it matters.
It may be that I am being slightly starry-eyed about this in general, but when we represent the interests of our people across our united United Kingdom, while we have differing opinions, we do it with the intent that we want to get the best outcome. As someone who has seen the various discussions and debates—indeed, I served alongside my noble friend Lord Frost when he was leading on this negotiation—I know that no negotiation is easy. Every negotiation is a challenge. What we sought to do under the current Prime Minister Rishi Sunak was to reach out to the European Union, as a number of noble Lords have said, to see how we can strengthen our relationship with the EU.
I was taken by the contributions of many noble Lords. The noble Lords, Lord Alderdice, Lord Bew, Lord Dodds, and others have over many years engaged in debates as has my noble friend Lady Foster—I thank her for her best wishes. I recognise the issue of trust and engagement, which the noble Lord, Lord Hain, mentioned, as did the noble Lord, Lord Bruce. The noble Lord, Lord Hain, will know as a former Northern Ireland Secretary that that trust is key. Of course, the United Kingdom is directly engaged with our EU partners, the Republic of Ireland and all parties in Northern Ireland on these issues. I am delighted that we are joined in the Moses Room by my noble friend Lord Caine, who, together with the Secretary of State for Northern Ireland, has been leading on these discussions.
In answer to the question about continuing engagement, that is central to ensuring that the Windsor Framework moves forward positively for all, particularly for those within Northern Ireland. As my noble friends Lord Hannan and Lord Frost and the noble Baroness, Lady Ritchie, recognise, we are now dealing with the Windsor Framework and we need to ensure that we put in all practical efforts to make it work. I am pleased to recall that the Government agreed the Windsor Framework with the EU in February 2023. This led to the second report that is the focus of today’s debate, which was so ably introduced by the noble Lord, Lord Jay.
The noble Lord, Lord Bew, talked of the gritty government response. I was scribbling notes about some of the specifics—my first sheet is evidence of that. I will go over the debate with colleagues from the Cabinet Office and the Northern Ireland Office to ensure that some of the specific questions that were raised by, for example, the noble Baroness, Lady Hoey, are specifically addressed, as I will perhaps not be able to do that in the time that I have today.
The noble Lord, Lord Jay, and the noble Baroness, Lady Ludford, asked about the publication of the consolidated Windsor Framework. I can confirm that the full set of framework legal texts has been online since the deal was announced. It is a series of instruments but they are collected into a single GOV.UK page. We do not plan to consolidate the text further.
The noble Lord, Lord Ponsonby, asked about specific engagement in the run-up to the instruments that will be discussed and debated. I know that the Northern Ireland Office is doing just that. The noble Baroness, Lady Ritchie, also asked about the engagement undertaken with the north-south bodies on the specifics of the framework and what evidence is being collated. I assure her that engagement is being undertaken by the specialist committee and the joint committee, and I am happy to confirm that the new joint UK/EU stakeholder arrangements have already begun operating in this respect, as the framework demonstrated. We expect a regular rhythm and an expanded set of participants, particularly through the specialised committee and the joint committee.
We should recall that the UK Government have long recognised that we need to take account of Northern Ireland’s unique circumstances and to protect all dimensions of the Belfast/Good Friday agreement. The noble Lord, Lord Dodds, underlined the seven tests. Without going into detail on each one, I assure him that they have directly been part and parcel of our engagement and discussions.
However, as the noble Lord, Lord Jay, noted, it became clear that the old protocol did not strike the right balance: Northern Ireland has experienced persistent social, political and economic difficulties arising from its impact. It disrupted the smooth flow of trade between Great Britain and Northern Ireland with unnecessary red tape and bureaucracy. It also threatened Northern Ireland’s place in the UK market, with practical impacts on the availability of goods from Great Britain. Importantly—I remember debating this during the progress of the Northern Ireland Protocol Bill—it contained a democratic deficit, with Northern Ireland’s elected representatives unable to have a proper say on the rules that apply there.
As successive Governments have made clear, the UK’s preference was to find a negotiated solution to these issues. Indeed, I know that anyone who negotiated with the EU did so in good faith to try to find and determine the right outcome and solution. I therefore welcome the committee’s recognition that the Windsor Framework has provided an agreed, consensual basis for progress in Northern Ireland. It is a set of joint UK-EU solutions to move past the difficulties that have arisen in operating the old protocol—more durable than grace periods or any other contingency measure.
If I may make a personal reflection, I sat in some of the early meetings with European Commissioner Šefčovič and the Foreign Secretary and, as I have often said at the Dispatch Box, the tone determined the substance. Anyone who has been involved in a negotiation will know how important it is not just to achieve the right substance but to strike the right tone in the engagement.
The Windsor Framework marked a new chapter in our positive, constructive relationship with the EU, as partners. Just last week, we announced a bespoke new agreement with the EU on Horizon Europe. The noble Earl, Lord Kinnoull, has been a strong advocate of that. It was good to have some really good news, waking up to Radio 4 hearing many people talking about the positives of what had been achieved in our discussions with our European partners.
The Windsor Framework also resolves the issues with the original protocol, by fundamentally amending its texts and provisions to restore the smooth flow of trade, uphold Northern Ireland’s integral place in the United Kingdom and address the democratic deficit. Although I have heard very clearly the concerns of my noble friends in the DUP, in the Government’s view, the framework addresses the underlying issues that contributed to the social, political and economic instability in Northern Ireland as a result of the old protocol. It provides a fundamentally different basis for critical internal UK trade, seeking to streamline processes, lift unnecessary prohibitions—although I note the specific concerns raised by the noble Baroness, Lady Hoey—and provide a durable, sustainable basis for the future.
The noble Baroness, Lady O’Loan, raised the issue of VAT and excise. The Windsor Framework provides the UK Government with significant new powers to set VAT and excise rates and structures in Northern Ireland. These powers have already been used to remove EU limits on zero and reduced VAT rates in Northern Ireland. This allowed us to introduce VAT reliefs on the installation of energy-saving materials on 1 May. In August this year, comprehensive reforms to alcohol duty were introduced for all venues across the UK, including new standardised rates of excise duty. They were unequivocally incompatible with the old protocol.
The Windsor Framework also establishes the enhanced co-ordination mechanism for VAT and excise. This is jointly led by UK and EU experts and is working to secure additional flexibilities in this respect. The issues of resources and expertise were raised. The Government will ensure that this is suitably and appropriately addressed and resourced.
We have been working intensively since the deal was agreed to give effect to all the changes and processes, but I fully accept that this engagement needs to continue. Our debate today will be an important element in informing some of the Government’s thinking. However, to deliver the full range of benefits, we need to see a Northern Ireland Executive and Assembly up and running, so that they can play their part in overseeing these new arrangements. The noble Lord, Lord Weir, and the noble Baroness, Lady O’Loan—indeed most, if not all, noble Lords—agree with the principle that the representatives of Northern Ireland need to be a part of this.
Many references were made to the Stormont brake. My personal view on this is simple: let us get the Executive up and running. If there are challenges which arise based on principle, we will see the effectiveness of the Stormont brake, if and when required, in its practice. Our priority now is to do exactly that and to get what the people of Northern Ireland want: a functioning Executive.
The noble Lord, Lord Jay, the noble Earl, Lord Kinnoull, and the noble Baroness, Lady O’Loan, also raised the issue of a database on regulatory divergence. As to monitoring and managing divergence, government departments will of course continue to work together to log and analyse information, identify issues and, where necessary, raise those directly with our EU partners in the joint fora. We will continue to focus on that as part of our policy decision-making in government. We will also continue to explore how to contextualise divergence matters as they arise. We note the good work being done in this space by various think tanks as well.
On the framework, there have been challenges—again, they have repeated in this debate. However, the 2023 report asserts some conclusions that I must disagree with, which are—as was noted by the noble Lord, Lord Bew, and as the Government have outlined in our response—factually incorrect. Most importantly, the Government do not agree with the assessment that the framework is more burdensome or divisive than the grace period arrangements that preceded it. The previous set of grace periods and fixes were no more than temporary arrangements that were the subject of dispute, including in legal proceedings initiated by the EU. They relied wholly on the application of EU standards and did not cover all aspects of trade. There were, for example, no substantive easements for customs trade. Moreover, comparison, if attempted, does not stand up. The Government’s written response provides a detailed account of this but if there are further questions from the noble Lord, Lord Jay, or indeed from other noble Lords, we will of course be pleased to answer them specifically. However, I will give a few brief examples of how the previous arrangements pale in comparison to the framework’s green lane arrangements.
Previously, even under the grace periods, full international customs processes applied for all truckloads, even where goods were staying in Northern Ireland. The Windsor Framework replaces those processes with a system based on the sharing of ordinary commercial information. Previously, all food moving into Northern Ireland had to meet EU standards, which had already led to supermarkets withdrawing some products. The Windsor Framework means that UK food and drink public health standards apply to products moving in the green lane. As I think the noble Lord, Lord Hain, said, the green lane also allows more trade to benefit than was the case under the grace periods. From 30 September 2023, the new UK internal market scheme will expand the range of businesses able to benefit from the new arrangements and will protect internal UK movements from burdensome customs processes. For example, and as identified in the report, the turnover threshold for businesses involved in commercial processing has quadrupled to £2 million. There are various other areas but, in the interests of the few other points that I would like to cover, I will cover the specifics of any outstanding questions in a letter to allow for a full response to be given.
As an aside, I note that the report rightly sets out the importance of the effective functioning of the UK’s internal market, which I know all noble Lords will value and which is imperative. However, the report also takes issue with the fact that retailers in Great Britain can access the green lane. In that respect, the Government make no apologies for the important benefits secured in the Windsor Framework, which allow for smoother trade from Great Britain to Northern Ireland.
Moreover, beyond the core green lane arrangements, the framework as a whole delivers a substantial improvement. Previously, all changes to EU rules on goods applied automatically in Northern Ireland, with no say at all for Stormont. The Windsor Framework provides the Stormont brake and, as I alluded to earlier, we feel that we now need the Assembly up and running to allow for that to be tested if necessary.
Previously, the European Medicines Agency had full control over all new UK cancer drugs and other innovative medicines in Northern Ireland. The Windsor Framework removes any role for that agency in this sphere and puts UK authorities in full control instead.
Previously, EU rules applied by the old protocol precluded UK-wide VAT changes. Under the framework, we have already introduced legislation to bring Northern Ireland into line with the rest of the UK on, for instance, second-hand cars, energy-saving materials, such as solar panels, and alcohol duty.
In addition, previously, the Government were bound to collect “equivalent information” to an export declaration for every single movement of goods from Northern Ireland to Great Britain. The Windsor Framework removes that onerous burden and confirms the Government’s commitment to ensuring unfettered access for Northern Ireland goods to the whole UK market.
For these reasons and more, the Government are unequivocal in their view, as has been noted by several noble Lords in their contributions, that the framework is the right way forward. The noble Baroness, Lady Hoey, raised some issues on tagging livestock, border checks and duty free. She is right to raise some of the practical questions in this respect. Again, in the interest of time, and with her permission, I will write to her and circulate that letter to all noble Lords.
The noble Lord, Lord Jay, the noble Baroness, Lady Hoey, and others raised veterinary medicines. The Windsor Framework agreement has safeguarded the supplies of such medicines from Great Britain to Northern Ireland to the end of 2025. During this extension to the grace period, there will be no changes to the existing requirements on the supply of such medicines to Northern Ireland, and businesses should continue operating as they have done to date. While the extension is welcome, the Government’s position remains clear: there needs to be a long-term and permanent solution which maintains the uninterrupted flow of such medicines into Northern Ireland from Great Britain on which so many people and businesses rely. I can share with noble Lords that the Government are currently engaging extensively with industry and welcome the potential solutions put forward by key stakeholders in this respect.
The noble Lord, Lord Dodds, mentioned the seven tests that have been set out. I assure him that we focus on these particularly. I know that my colleagues in the Northern Ireland Office, in particular my noble friend Lord Caine, are very much focused on discussions and ensuring that there is the right deal for Northern Ireland.
The noble Lord, Lord Verdirame, also raised important issues about specific aspects of the Stormont brake. I think he mentioned Article 13.3a. I will write to him on some of the technical issues that he raised.
The noble Baroness, Lady Ritchie, asked about the insufficient public guidance on apportioning the amount of trade due to travel to the Republic of Ireland. I know that she has been in pursuit of this issue for a long time. I am reassured that colleagues in HMRC will respond to her in the near future.
The noble Baroness, Lady Ludford, raised a number of issues, including one on which I suppose I should declare an interest: the movement of halal and kosher meat. These goods are eligible to benefit from the new Northern Ireland retail movement scheme, which scraps costly individual vet-signed certification. Basically, we will now have a single general certificate per consignment.
There are a number of other questions that, in the time I have, I have not been able to respond to, but I assure noble Lords that the Government’s focus is on effectively implementing this basic framework to ensure that Northern Ireland’s citizens and businesses can take full advantage of the benefits it offers. In a few short weeks, the first phase of the green lane arrangements will be switched on. Our new schemes will provide a greatly expanded range of Northern Ireland traders with access to the facilitations agreed under the framework. Burdens will be lifted and checks will be reduced. Of course, when this happens, practical points will surface that we will seek to address.
The Government will continue to engage with stakeholders directly and to produce further guidance to ensure that there is clarity on these improved arrangements and how they operate. In parallel, we will also make full use of the wider freedoms provided by the framework, some of which I have already listed, to support Northern Ireland stakeholders. We will continue to urge all Northern Ireland parties to restore the Northern Ireland Executive and Assembly. As noble Lords, including the noble Lord, Lord Bruce, have said, in our view—it is a shared view—it is crucial that we have a functioning Executive at the earliest opportunity. The Government stand ready to engage with all parties in support of this.
Lord Jay of Ewelme (CB)
My Lords, I am very grateful to the Minister for replying to the debate and to all those who took part. The debate has shown a wide and deeply held difference of views on the Windsor Framework, but I was also struck by the arguments for compromise, stability and substance. All three of those will be needed if we are to find a solution to current problems, which will be, as our report said, for the benefit of all the people of Northern Ireland.
Protocol on Ireland/Northern Ireland: The Windsor Framework (European Affairs Committee Report)
Lord Jay of Ewelme
That the Grand Committee takes note of the Report from the European Affairs Committee Report from the Sub-Committee on the Protocol on Ireland/Northern Ireland: The Windsor Framework (7th Report, HL Paper 237).
Citizens’ Rights (European Affairs Committee Report)
(8 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Earl of Kinnoull
That the Grand Committee takes note of the Report from the European Affairs Committee Citizens’ Rights (1st Report, Session 2021-22, HL Paper 46).
The Earl of Kinnoull (CB)
My Lords, I rise to move the Motion standing in my name and will introduce two pieces of work by the European Affairs Committee. Between May and June 2021, the committee conducted an inquiry into the rights of around 6 million EU citizens resident in the UK and around 1.2 million UK citizens resident in various EU countries. We published our report on 23 July 2021 and the Government responded on 19 November. Scheduling pressures meant that, by late 2022, we had still not been able to hold a debate on it. The committee therefore decided to undertake an updating process and contacted all the original witnesses to ask their views. They all responded and, in May 2023, the committee held an additional oral evidence session. It then sent a lengthy follow-up letter to the Government on 25 May 2023 and the Government responded on 2 August.
I pay warm tribute to the staff of the original report—Simon Pook, Dominic Walsh, Tim Mitchell, Sam Lomas and Louise Shewey—as well as to those on the more recent letter, Jarek Wisniewski, Jack Sheldon, Tabitha Brown and Elyssa Shea, with Tim Mitchell and Louise Shewey reprising their original roles. The skill and dedication of all concerned has produced two compelling documents.
At a high level, our July 2021 report applauded the Home Office’s achievement in processing more than 5.4 million settlement scheme applications of the 6 million received by 30 June 2021, the initial deadline for receipt. The report also praised the scheme’s principle of looking for reasons to grant new residence status for EU citizens rather than to refuse it. However, the report detailed various issues still to be resolved in both the settlement scheme and the systems operated by EU member states. Our update work looked at these areas again.
As of 30 June 2023, the settlement scheme had received 7.4 million applications. Thus, 1.4 million applications had been received since the 2021 deadline, showing just how live an issue this remains. It is therefore imperative that matters relating to these rights continue to receive the closest attention, being integral to the overall relationship between the UK and the EU.
Coming to the UK settlement scheme first, I start with the process of moving from pre-settled to settled status. Our original report foresaw the challenges ahead for the millions needing to apply to transfer from pre-settled status to settled status to secure their rights permanently. The committee noted that,
“although the Home Office planned to send individual reminders, the effectiveness of these would rely on holders of pre-settled status keeping their contact details up to date”.
In December 2022, following a judicial review brought by the IMA, the High Court ruled that the design of the settlement scheme was unlawful, particularly with regard to the Government’s approach to those granted pre-settled status.
The committee wrote to the Government in January, and again in our long letter in May, for clarification on the steps being taken to implement the High Court’s decision. The Home Secretary’s response on 2 August noted that the Government are
“working to implement the December 2022 High Court judgment as quickly as possible and in such a way that it will continue to be easy for EU citizens to evidence their WA rights in practice”.
The Home Office had in fact published some further details regarding the settlement scheme on its website a couple of weeks earlier, on 17 July, which was not referred to in the letter of 2 August to the committee. These July details stated that it would take steps to convert automatically
“as many eligible pre-settled status holders as possible to settled status … without them needing to make an application”.
In response to all of this, the IMA said that
“while we broadly welcome the commitment from the Home Office that no-one will lose their pre-settled status for failing to make a second application, we remain concerned about the lack of detail about how the plans will work in practice”.
Thus nine months or so on, there is still a woeful lack of clarity affecting an estimated 2 million people about how the Government intend to implement the High Court judgment of December 2022. Does the Minister accept that? When will the Government provide the vital clarity about how the automatic conversion of pre-settled to settled status will operate in practice?
The Earl of Kinnoull (CB)
Another problem area concerns backlogs and delays in the application of the settlement scheme. Since the 30 June 2021 deadline, there has continued to be a steady flow of fresh applications to the scheme. We are concerned that a backlog has developed in processing these applications and issuing certificates of application. From published data and the Home Secretary’s response, we know that in the period December 2022 to June 2023 the number of applications not concluded fell from an aggregate of 180,000 to an aggregate of 150,000 or so. We also know that between March and June 2023 the monthly number of new applications averaged just over 50,000. Broadly speaking, that would imply a pipeline of three months or so, with difficult cases no doubt taking far longer. Given these figures, can the Minister say by when the Government expect to clear the backlog in processing these applications?
The problem of digital status also persists. The committee and its predecessors have repeatedly and consistently raised concerns regarding the digital-only character of the EU settlement scheme. In our 2021 report, we noted that the absence of a physical document created the risk that many EU citizens, including the elderly and those who are digitally challenged, may struggle to prove their rights. We recommended that the Government offer holders of settled or pre-settled status the additional option of requesting and paying for physical documents, which would complement rather than replace their existing digital status. The evidence that we have considered in our follow-up research suggests that our concerns about this aspect of the design of the EU settlement scheme were well founded.
The quality of the digital system has also become an issue, which I now come to: the database error debacle. In January 2023, it was revealed that the incorrect status had been displayed online for approximately 146,000 people for an extended period. For settlement scheme applicants whose applications to the scheme were refused between June 2021 and April 2022, the online database displayed their application as “pending” instead of “refused” until 18 January 2023.
In her response letter of 2 August, the Home Secretary explained that these individuals received an email or postal notification of the decision when it was made, but that this was not reflected in an applicant’s digital status, which is used by some government departments when making decisions about access to benefits and services. She says that this
“was not due to a database error”,
but rather reflected that
“the digital status system did not have the capability to reflect that an administrative review or appeal was pending”,
and that it was necessary to ensure that such individuals
“continued to have temporary protection of their rights”.
I repeat all this hard to understand justification into Hansard so that others can form a view as I have. Systems that do not have necessary capabilities are by definition not good. Will the Minister say when the Government became aware that the online database reflected incorrect statuses?
The 146,000 concerned all had conflicting government news from two sources and, for at least some, one of the sources was not digital but a letter. There is an inconsistency between the Government’s defence of the digital systems for proof of status and their argument that users should not have relied on the information displayed on the digital system when accessing benefits or healthcare. For those who received a letter, which the Government maintain they should have relied on, this inconsistency is even worse. Can the Minister say why, given that the Government acknowledge that this situation arose out of system design problems and that it went on unstemmed for so long, the Secretary of State’s full powers of discretion to waive benefit debts has not been used, including in respect of universal credit?
Our 2021 report identified a mixed picture of how the rights of UK citizens were being upheld in EU member states. The evidence that we received in the follow-up indicates that this assessment still holds true. Although residence schemes appear to be operating relatively smoothly in the majority of EU member states, we have been aware of significant problems in others.
In her response letter, the Home Secretary informed the committee about
“regular discussions with the Commission … to raise and resolve issues”.
I welcome the Government’s engagement with the Commission on these matters and urge them to continue to raise such issues as they arise, including in relation to processes for upgrading to permanent residence. The key point is that there remain plenty of individual cases to be resolved. We are, however, very concerned to hear that resources to support UK citizens in the EU on citizens’ rights issues have been scaled back substantially since we conducted our 2021 inquiry. Several stakeholders were critical of the Government’s decision to close the UK nationals support fund, which provided funding to non-governmental organisations in some EU member states to support residence applications from UK citizens. Here, a little money has gone a long way in the past. Will the Minister provide an update on the resources available to UK embassies in EU member states to support UK citizens facing citizens’ rights issues? What government funding is currently available to non-governmental bodies that support EU-based UK nationals on citizens’ rights issues?
I have spoken for a long time and touched on only some of the key issues from this important work. I very much look forward to the debate ahead. I beg to move.
Baroness Anelay of St Johns (Con)
My Lords, I congratulate the noble Earl, Lord Kinnoull, on his opening speech and on his outstanding work as chair not only of the European Affairs Committee but of the EU Committee before that. I also thank the committee staff for their work drafting the 2021 report and assisting the committee in all its follow-up work, to which the noble Earl referred. We are also fortunate that the noble Lord, Lord Ricketts, has agreed to take on the role of chair of the committee; it is an important one, but it is onerous too.
What seems like a lifetime ago, pre-Brexit, I was a Minister in DExEU in 2017, where my portfolio included meeting UK citizens resident across the EU—for example, in Finland and Luxembourg. At that point, they felt cast aside, with no certainty about how a withdrawal agreement might affect them or when it might be agreed. They found themselves not knowing what their employment, health, residence or travel rights might be. The stress they felt was palpable. It is regrettable that so many of them still face some uncertainty about their status and access to services. Today, I will focus on the protection of their post-Brexit rights, some of which have been referred to by the noble Earl.
In the Home Secretary’s recent letter to the committee, she acknowledged that
“there is still much to do, and serious shortcomings remain in several Member States”,
particularly regarding
“the variable quality and availability of reasonable grounds guidance for late applications, and the uncertain status of UK nationals who are required to submit a second application”.
The Home Secretary stated that the Government intend to continue raising these matters at both bilateral and EU level. Like the noble Earl, I welcome that commitment. However, I note, for example, that the Specialised Committee on Citizens’ Rights met for just two hours on 23 May and it now meets only twice a year.
Subsequently, the UK and EU issued a joint statement. The EU raised several significant issues about its citizens in this country, but I shall mention just some of the UK’s concerns, which were raised by the Government. The first was how UK nationals who do not make an application for permanent residence may demonstrate their declaratory rights of permanent residence when accessing benefits and services. Secondly, there is a lack of publicly available guidance on reasonable grounds for making a late application in some states. Thirdly, there are property rights problems in some states. Finally, there are reports that UK nationals with special statuses were unable to access rights guaranteed to them under the withdrawal agreement.
I welcome the Government’s engagement with the Commission on these matters, but I would be grateful if my noble friend the Minister could indicate what progress has been made since the last meeting of the specialised committee and what preparations have been made for the next meeting. What bilateral discussions, to which the Home Secretary referred in her letter, are scheduled?
The committee’s recent letter to the Home Secretary indeed expressed concern that resources to support our citizens in the EU on citizens’ rights had been cut—indeed, the UK nationals support fund had been closed. As the noble Earl reminded us, we asked the Government for information about the resources available for embassies and NGOs. In looking at the response of the Home Secretary, I noted that she specifically said that resources included the
“Justice and Home Affairs Network of attaches”.
I would be grateful if my noble friend the Minister could give details of that network to the Grand Committee. I googled repeatedly for information but came up empty-handed. That may just be me, but I would be grateful for elucidation. How many of our embassies across the EU have an attaché whose work is dedicated to supporting UK citizens resident there? How accessible are they, and can my noble friend give examples of progress the network has made in assisting our citizens?
I appreciate that these matters are complex, but it is time that substantial progress should be made on removing the final obstacles that still face our citizens resident in the EU.
Lord Wood of Anfield (Lab)
My Lords, it is a pleasure to follow my noble friend Lady Anelay, and I am grateful to the noble Earl, Lord Kinnoull, for his excellent speech. I also want to say what a pleasure it was to serve under him on the EU Committee and the European Affairs Committee, which he chaired with distinction, good humour and balance for so long. However, I suppose that European affairs’ loss is the Cross-Benchers’ gain.
I was chair of the European Affairs Committee for six weeks. My tenure did not move markets in the way that someone else’s six-week tenure in charge in another place did. However, we managed to host witness sessions on developments regarding EU citizens’ rights since our July 2021 report, and sent the Home Secretary the 25 May letter that has been mentioned.
Brexit was always going to create difficulty and complexity for EU citizens in the UK and UK citizens in the EU, and many of the issues that have arisen have been addressed. However, far too many remain; some show no signs of improving after many years, and others are getting worse. In addition, as I will point out later, problems are still arising for UK citizens abroad and for EU citizens here in the UK as a result of new decisions that are being made, including some in the last few days, which I will talk about.
I want to touch on three legacy issues—the noble Earl, Lord Kinnoull, mentioned a couple of them. I will start with the backlog of cases. Estimates from the3million campaign group—I congratulate it on the excellent, persistent work it does on behalf of EU citizens in the UK—is that the backlog of applications for settled status will take three years to clear. Some 20,000 who applied before the original official deadline have been waiting over two years. This matters not simply for reasons of complexity and uncertainty. If your status is officially designated as “pending”, multiple rights are denied to you: you cannot replace your driving licence or get a new one, get a European health insurance card, apply for a national insurance number or sponsor family members, and multiple other problems arise if you want to prove your right to work or your ability to rent or to travel. Can the Minister please give us a sense of what is being done that has not already been done, say, a month ago to try to address this backlog?
With regard to the High Court’s decision of December 2022, I am afraid that the Government’s response is still inadequate. The court ruled that EU citizens can be required to make only one application for residence to secure their rights under the withdrawal agreement, so the Government’s requirement for a second application—from pre-settled to settled status—was contrary to that agreement. Furthermore, the court ruled that, once granted pre-settled status, EU citizens are automatically entitled to reside permanently here once they have lived continuously in the UK for five years.
As the noble Earl, Lord Kinnoull, said, nine months on from the judgment, we are still waiting for the Government to implement the requirement to automatically convert pre-settled status holders to settled status once they are eligible. When will that court-required change be introduced? Some people—not myself—suspect that the Government are deliberately treading water on the implementation of the terms of this judgment in the hope that they may not have to make any further remedial measures or changes before the election. I hope that the Minister can disavow that motive when he responds.
Secondly, applicants’ digital status still indicates that the rights of those with pre-settled status will expire after five years, when that is simply not true under the law. When will this be changed?
Thirdly, the Home Secretary’s response to our letter expressed a determination to continue with the policy of encouraging pre-settled status holders to apply for settled status, but the court made it clear that no rights can hang on such an application. Can the Minister explain why this is still government policy?
Looking to the future, there is the looming issue of the new ETIAS—electronic travel information and authorisation system—to be introduced in 2024. The Home Secretary’s reply to our letter states that,
“those with an existing UK immigration status, such as pre-settled or settled status, will not be required to obtain an ETA”.
That is good news, but they will still need to prove to airline and rail carriers that they have the formal status that means they are not required to have an ETA. Where does that proof exist? The answer is: in the advance passenger information system, which is not planned to be introduced until summer 2024, after ETAs have already begun to be introduced. Can the Minister explain how this circle will be squared?
Lastly, I want to ask the Minister about an issue that arose just a few days ago from an administrative policy change. The Immigration Minister issued a Statement announcing
“the removal of the right of administrative review”—[Official Report, Commons, 7/9/23; col. 23WS.]
for settled-status refusals and cancellation decisions made after 5 October this year. I understand the logic of this, as it brings it into line with other kinds of immigration law appeal processes, but campaign groups have said that it will penalise more vulnerable EU citizens and increase the workload on immigration tribunals. Will the Minister please respond to that?
Lord Hannay of Chiswick (CB)
My Lords, much water has flowed under many bridges since the report we are debating today was published some two and a half years ago. Some developments in the treaty-based handling of citizens’ rights on both sides of the channel following Brexit are, frankly, worthy of respect—particularly the granting of settled and pre-settled status to several more millions of EU citizens in this country than was originally anticipated. I would add in my praiseworthy list the work of my noble friend Lord Kinnoull and the noble Lord, Lord Wood, who did the refresh of our report.
Other events are, I fear, a bit less praiseworthy and I will come to those shortly, but we must not lose sight of the basics of the affair: in June 2016, the referendum vote—I am not contesting the outcome’s legitimacy—deprived millions of citizens on both sides of the channel of their existing citizens’ rights, without their having any say in the matter. That was a shameful way of proceeding—all the more so when the governing party promised in its 2015 election manifesto to give the vote to all UK citizens resident abroad and then failed to do so in time for them to exercise that vote on an occasion of such importance to them as the 2016 referendum.
As my noble friend Lord Kinnoull mentioned, your Lordships’ European Affairs Committee has urged the Government again and again to rectify their scheme for granting settled and pre-settled status to provide the option to recipients of receiving a hard copy registering their status—the sort of thing we all had the option to receive under the Covid-19 vaccination scheme—but again and again the Government have refused to do that, most recently in the Home Secretary’s much-belated reply to the committee’s letter of May this year. They plead security concerns of a rather unconvincing and unsubstantiated kind. I really hope the Minister will indicate today a willingness to look again at this matter and to cease ignoring the considerable body of evidence that many elderly and insecure EU citizens have expressed troubling anxieties as a result of not having paper or plastic evidence of their status. To refuse this is sheer digital fundamentalism. Of course, our own citizens in the rest of Europe have no such problem because they all get identity cards.
Then there was the lamentable attempt by the Government to subject late applications for pre-selected status to an arbitrary and subjective ruling on their acceptability. This scheme was struck down in a case lodged by the IMA as illegal—incompatible with the provisions of the withdrawal agreement with the EU which we had entered into and ratified. It is good that the Government accepted that ruling and did not appeal, but it has taken far too long to produce an alternative way of handling late applications—until just before the recent Summer Recess.
It remains to be seen whether these alternative arrangements are regarded as questionable by the IMA. I would, in any case, be grateful if the Minister could confirm that the new arrangements announced on 17 July, in so far as they apply to the handling of late applicants, will in no respect lead to arbitrary, unilateral or subjective rulings of the sort that were considered by the High Court to be incompatible with our withdrawal agreement. I hope the Minister will commit to handling any problems with greater flexibility than was displayed the last time, and will avoid any further recourse to the courts, which will result only in stress and anxiety for the individuals concerned and bad blood with our European partners. Meanwhile, the European Affairs Committee will itself be considering carefully the terms of the Home Secretary’s remarkably belated reply of late July to our earlier letter. That could lead to further correspondence.
Why does all this matter? Citizens’ rights and the way we handle them are at the heart of the issues of trust and confidence between the two parties to the withdrawal agreement, the UK and the EU, which have been so lamentably deficient in recent years, to the detriment of both parties. We shall be debating in the Chamber on 20 September the best way to restore that trust and confidence and to build a more fruitful and solid post-Brexit relationship. Citizens’ rights and our willingness to stick rigorously to what we signed up to will be an integral part of any such venture.
Viscount Trenchard (Con)
My Lords, I am most grateful to the noble Earl, Lord Kinnoull, for securing time for this debate today. I am also grateful to him for his excellent chairmanship of the European Affairs Committee and its predecessor committees. It has been a great pleasure to serve on them.
Of course, it would have been much better if your Lordships could have had an opportunity to discuss this report sooner than 25 months after its publication, but I am heartened to note that our much more recent report on the overall UK-EU relationship, published on 29 April this year, will be debated on 20 September, less than five months after publication. That is impressive progress. It is, however, perhaps fortuitous that the House only now has an opportunity to debate the Citizens’ Rights report, because two more years have elapsed and therefore there has been more time to assess the extent to which the arrangements established under the withdrawal agreement have worked well or not. In addition, the committee carried out some follow-up work in May this year.
My German daughter-in-law, who lives and works in London, was not at all unhappy about the settled status scheme and how it worked. I think the scheme has worked pretty well and has been reasonably well administered. The committee recommended that the Government should introduce a non-digital option for the scheme to assist those who have difficulties with digital technology. In any case, we are all familiar with the process of obtaining certified copies of physical documents, such as passports. So why can they not go to a post office—if they can still find one that does this—or to a solicitor’s or a notary public’s office, with a device to show the original digital document, and a printed copy of it, and obtain certification of that printed copy of the digital document? Would the Minister agree that such a certified copy should have the same status, and would effectively count as a physical form of the document?
Noble Lords have spoken about the High Court’s ruling that EU citizens should not have to apply separately to transfer from pre-settled to settled status. I believe the Government’s position on that subject should be acceptable and should not cause undue inconvenience. My right honourable friend the Home Secretary has accepted the High Court judgment of December 2022 and confirmed that any holder of pre-settled status who is eligible to change to settled status suffers no loss of rights if he or she fails to make a second application.
I am interested to note that the number of grants of settled and pre-settled status to EU citizens is now in excess of 6 million, although it is claimed by some that many EU citizens have returned home following Brexit. Does the Minister think that the statistics show that, contrary to expectations, there has been an increase in EU citizens resident in the UK since our withdrawal from the union? Can the Minister explain why the Government’s original upper estimate of likely applicants to the settled status scheme was only 4.1 million, whereas well in excess of 7 million have in the event applied?
There is much less consistency when one examines the question of the residence rights of UK nationals living in the EU. This matter is, of course, not wholly a union competence, and the EU’s member states operate a wide variety of systems. In particular, at our evidence session conducted on 16 May, British in Europe made us aware of high refusal rates for late applications by British citizens for permanent residence status in Sweden and Denmark. The Home Secretary assured us that she wishes to work collaboratively with the European Commission on this. We were also made aware of specific problems in Portugal involving payment for residence documents, and documents being issued for five years when they should be valid for 10 years. Can the Minister tell the committee what discussions the Government have held with the Portuguese Government on this matter, and how they propose to solve the problem?
Other noble Lords have raised further relevant points. I am particularly supportive of all the points made by the noble Earl, Lord Kinnoull, especially his comments concerning the reduction of support available for UK citizens seeking to establish or upgrade their residence rights in EU member states. I thank the noble Earl again for obtaining this debate today and look forward to the Minister’s reply.
Lord Balfe (Con)
My Lords, first, I add my thanks to the noble Earl, Lord Kinnoull, for this report. I am not a member of his committee, but I follow what it does. I am afraid I am still an unrepentant remainer—leaving the European Union was a disaster.
My first point is about paper documents. In this country, we sometimes overlook the fact that in most of Europe, paper documents and paper residence permits are extremely important. I do not know of any country in Europe, although Estonia may be one, that does not issue paper documents. The Government should look at some way around this.
I turn to the situation of people living in the European Union and ask the two other party representatives here to tell us what their views are. It seems to me that when we talk about people in Europe, we pretend they do not exist, but they very much exist now they have votes, and we are coming to an election. I would like to see at least one of the parties, preferably the Labour Party because it is more likely to form an alternative Government, come out very clearly and say that it will move as far as it possibly can towards restoring free movement in both directions. We benefited enormously from free movement both in Europe and from people coming from Europe. It seems there are 1.2 million people there and, thanks to our Government, many of them will now have a vote. This is not a small number. It could well swing one or two marginal constituencies, and all the parties need to have a very clear policy about what they are going to do to help our citizens in Europe get their rights, because this is quite fundamental and it is something that can appeal to them.
I have been to Spain to speak to some of our expatriates who live out there, and it is a very big issue. They feel somewhat ignored. I ask that the parties look at the way in which they can make life better for people in Europe, and appeal to them—in other words, put it in the manifestos, boost and bring back the UK national support fund and work with the various migrant groups. Most of the groups in Europe have UK associations, and most of them work and pull people together. They need a message from the political parties in this country that they are wanted and valued—and we are told that there are 1.2 million such people to appeal to.
That is the main reason why I spoke. The second reason, which I have already mentioned, is that I want to see a party committed to bringing back as many of the benefits of the European Union that we have lost as they can. Within the area of citizens’ rights and free movement, a lot can be done, and it will benefit Britain. This is not charity but sheer common sense.
Lord Ricketts (CB)
My Lords, I declare an interest as a non-executive director of the Channel Tunnel operator, Eurotunnel. I am honoured to take up the baton of chairmanship of your Lordships’ European Affairs Committee from the noble Earl. I pay tribute, like others, to his wise and calm leadership of the committee through four turbulent years. The House will have the opportunity to debate his swansong report—if I may put it like that—the landmark report on EU-UK relations, on 20 September. I apologise in advance that I shall not be in the House, as I am unavoidably involved in a state visit to France.
Today’s thoughtful and detailed debate is possible only because of the interest that the noble Earl, Lord Kinnoull, and the committee have taken over several years in citizens’ rights. I wanted to start, like others, by repeating that, although these issues are complex, they are not abstract: they have a direct impact on the life chances of people across the UK and in the EU.
I pay tribute to the Home Office for the success of the process that has led to 7 million applications for settled status being received and 6.2 million accepted. I want to underline the five important questions that I think have come out of this debate, and I look forward to the Minister’s response. After that, the committee will reflect on what further work we need to do.
First, how and when will the Home Office give effect to the High Court ruling in the IMA case on the automatic conversion of pre-settled to settled status? Secondly, on the issue of new restrictions on applications to the scheme, as other noble Lords have said, on 17 July the Government announced that having reasonable grounds for a delayed application will now become a requirement for it to be a valid application, even before eligibility is considered. That is no technical change. If, in the view of the Home Office, there are no reasonable grounds for delay, the application is automatically rejected as invalid, regardless of its merits. In that case, there is no administrative review or appeal: the only recourse for an individual is to judicial review, with all the costs and complexity of that.
The Government have also announced the closure of two routes for family reunification and the removal of the right for administrative review of a refusal of eligibility for all future EUSS applications. These changes taken together mean, in effect, that there is now a policy of progressive curtailment of access to the scheme.
Thirdly, on the backlog, which has been mentioned by several noble Lords, the analysis given by the3million, as others have said, suggested that it would take three years to clear the current backlog and that the numbers waiting over two years is growing and could now be up to 20,000. Given the real disadvantages for people of being in this limbo, would the Minister accept that efforts to clear the backlog need to be redoubled?
Fourthly, there is the issue of digital status. If the Government are not prepared to think again about the option of a physical document, surely there is an even greater obligation on them to ensure that the online “view and prove” system is accurate, user friendly and robust. We continue to hear of glitches and outages that undermine confidence as well as causing practical problems. When it comes to travel, as the noble Lord, Lord Wood, said, the fact that the system does not link up multiple applications made by the same person can lead to delay, and all the stress that that causes, at the border. This problem will become only more acute with the introduction of the electronic travel authorisation. When will the promised comprehensive solution to the issue of linking multiple applications be in effect?
Fifthly, there is the error on the database—or exercise, as the Home Secretary’s letter put it. Given that, whatever the reasons, a misleading digital status was displayed for almost a year for all refusals in that time, will the Minister review with his colleagues the case for Ministers to use to the full their powers of discretion in not recovering the benefits from that period?
Lastly, I will say a quick word for UK citizens in the EU, echoing the noble Baroness, Lady Anelay. Although almost all the residence deadlines have now passed, British people will still need assistance in exercising their rights. I know of cases in France, for example, of children of permanent residents who reach the age of 18 finding it difficult to establish their status. Can the Minister confirm that, in addition to working with the Commission in the specialised committee, our excellent embassy network, including the specialised justice and home affairs attachés, will have the resources they need to continue to help British citizens to exercise rights when they are needed?
Baroness Ludford (LD)
My Lords, I have been delighted to join the European Affairs Committee, serving briefly under the noble Earl, Lord Kinnoull, and now under the noble Lord, Lord Ricketts—we are very fortunate in our chairs.
It is a matter for celebration that over 6 million EU citizens have been granted settled status in the UK such that they can continue their enormous contribution from which our country has benefited so much. As Monique Hawkins of the3million—I share the tribute that the noble Lord, Lord Wood, paid to that organisation —told our committee in May:
“I would like to acknowledge the success of the EU settlement scheme and how the Home Office … got so many applications through in a relatively short time, but”—
she adds a little sting in the tail—
“if asked to characterise the current state I would call it somewhat stuck”.
I fear the gremlins need to be addressed. To a certain extent, I will repeat what has been said.
It is pretty shocking that it took a court case to resolve the problem of Home Office insistence on a new application from those originally granted only pre-settled status. I congratulate the Independent Monitoring Authority, which took the challenge to the High Court. It could teach other watchdogs a thing or two—one thinks of water and sewage—about being on the ball and on the case. However, as the noble Earl, Lord Kinnoull, said, there is a woeful lack of clarity affecting 2 million people about how the automatic conversion to settled status will operate in practice. I look forward to the Minister’s reply.
Can the Minister also explain how the department’s stance of encouraging further applications for settled status by individuals who have already applied for and received pre-settled status is consistent with the High Court judgment? The3million says that digital status continues to say that people’s rights expire, which is giving incorrect and unlawful information to prospective employers and landlords. Can he explain why a still valid EEA permanent residence document is no longer considered a reasonable ground for a late application? Surely any common-sense reading of a reasonable ground must include such situations.
Can the Minister explain delays in issuing certificates of application? What additional steps are being taken to ensure that in future all such certificates are issued without delay? Why does the Home Office refuse to accept the IMA recommendation of a service standard of five working days to issue such a certificate? As an example of the problems that arise, given that all NHS secondary care is chargeable at 150% for the time before someone can evidence their application for a certificate of application, delay can be very expensive as well as inconvenient.
The3million, as has been mentioned, worries that the axing of rights of administrative review, which was only announced in a written form last week, is likely to hugely increase the workload on immigration tribunals. Can the Minister amplify the reasons for withdrawing administrative review?
On the issuing of public documents, organisations representing EU citizens have told us that applicants to the settlement scheme face difficulties with the certificate of application, when accessing benefits and securing a national insurance numbers and documents such as the EHIC card and a driving license. I hope that the Committee will pursue this in further correspondence, if we do not get a good response today.
The noble Earl, Lord Kinnoull, mentioned how, given the Government’s stubborn insistence on reliance on a digital-only system for proof of status, it seems highly inconsistent for the Government to say that users should not have relied on their digital status when accessing benefits or healthcare during the database debacle, but rather an email or postal notification of decisions. I agree with the3million that their proposal for an app with a QR code has substantial merit and deserves to be considered and engaged with in good faith.
Baroness Ludford (LD)
I think I had just said that I urged that the3million’s proposal for a QR code should be considered and engaged with in good faith—at least, I hope I had said that.
I have two or three final points. The first is the concern about reduced funding to support vulnerable citizens in the light of the increased complexity of late applications. That would concern EU citizens in the UK and UK citizens in the EU. I hope the Minister can give us some assurances on that point.
What systems will be in place to ensure that EU citizens face no additional checks or disruption to travel when the ETA rollout begins, given that the advanced passenger information system might not be ready?
Finally, I assure the noble Lord, Lord Balfe, who addressed questions to the party spokesmen, that Liberal Democrat policy is to rejoin the single market and hence restore freedom of movement and, long term, the aspiration may be to rejoin the EU.
Lord Collins of Highbury (Lab)
My Lords, I thank everyone who has contributed to the debate. I particularly thank the committee and its chair for their excellent report and their ongoing work to scrutinise the Government’s efforts with regard to citizens’ rights. It is vital. I think a noble Lord said that this is not an abstract issue; it is about real people. I must declare an interest: my husband is a Spanish national. Immediately after Brexit, the one thing we both feared was that our rights to be citizens of two European countries and have the benefits of that, with families and homes in both countries, and our ability to live as EU citizens would be taken away.
I will not be tempted by the questions from the noble Lord, Lord Balfe. Brexit has happened; it is there. What we need to do is ensure that the rights that the Government promised after Brexit are properly maintained and implemented. I recall that, when we had those early debates, we estimated the number of people who might be affected. I certainly welcomed all the efforts of the3million. I do not think that any of us really thought that we would be talking about 7 million. It shows the huge personal impact that this can have.
However, I acknowledge—as does the committee—that the scheme launched has been relatively successful. The approach the Government say that they have had in terms of the response to the original committee report, a flexible and pragmatic approach, certainly helps us to persuade the EU to reciprocate and work in a collaborative way. Of course, as we have heard during the debate, changes that may impact that flexible approach will undoubtedly have a damaging effect on our citizens in the EU. I hope the Minister can give some very clear assurances on that, particularly in relation to the Home Secretary’s assurances that we will continue to make representations, as the noble Baroness, Lady Anelay, mentioned. It is vital.
I will repeat some of the ongoing issues, particularly, as the noble Baroness, Lady Anelay, said, on the resources UK citizens can rely on in dealing with citizens’ rights issues within the EU. These have obviously diminished, and the UK Nationals Support Fund has closed. We got vague terms in the response from the Government on embassy support, which is really insufficient. People need to know where they can go and what support they can expect. Certainly, that relies on consulates.
The other issue I want to raise is in relation to the Government disagreeing with the committee on the lack of physical documentation. Certainly, the3million has highlighted this, as have others. There are concerns that the digital-only nature of “view and prove” has caused issues for older people, those in Roma and Traveller communities and those with disabilities. I know this from experience; I helped my husband apply for settled status and I made a mistake. It took six months to put it right because you cannot easily pick up a phone and say “I didn’t mean to press that button. I meant to press another button”. It got resolved in the end, and it has certainly not been a problem since, but I want to add to the point.
The noble Lord, Lord Hannay, and other noble Lords raised that it is not simply about a technical issue. People who work and live in this country—people like my husband, who has lived in this country for 28 years, has paid tax and national insurance and shares a home with me—want to feel recognised as someone legitimately living in this country. However, my husband has to rely on some vague computer system. Every time we go through passport control, he does not feel that that has been recognised. That is the important point to bear in mind; it is about more than just simply a technological process. This is about rights people feel they are entitled to, and they feel vulnerable. We need to address that properly. The committee’s work has been brilliant in focusing on those issues.
My noble friend raised the question of the backlog. All noble Lords have raised the issue of people in limbo who have applications in, but the delay in dealing with them means that they will encounter problems in terms of the ETA and advanced passenger transport information which are coming in. These are practical issues that will hugely impact people’s lives. EU citizens are not people who stay in this country permanently; they need to visit their families, and they have bereavements and other issues where they need to respond. We need to hear a bit of empathy and understanding from the Government about what we are talking about here.
In conclusion, I seek reassurance from the Government that they are fully prepared, or preparing, for the influx of settled status applications over the coming years, ensuring that we have clear, simple systems in place that take into account the needs of those people needing most help to apply. It is that empathy that I would like to hear from the Minister. Also, there is the whole question of automatic conversion. We hear that it will take place in 2024—why? What is the delay? Will that cause even greater uncertainty for people? Can we be clear about who will be covered and who are digitally excluded or vulnerable? Will the digitally excluded or vulnerable be prioritised, and how will the Government make sure that those who may need to make applications know? I think these are fundamental questions that I hope the noble Lord will be able to answer this evening.
The Parliamentary Under-Secretary of State for Migration and Borders (Lord Murray of Blidworth) (Con)
My Lords, I am very grateful for the contributions of the Grand Committee, and in particular I congratulate the noble Earl, Lord Kinnoull, on securing the debate. Clearly, this is a topic that has long been of interest to him. On behalf of the department, I congratulate him on his distinguished term as chairman of the European Affairs Committee and its predecessor body. His scrutiny has of course been very powerful and helpful, and I thank him for that.
Turning to the EU settlement scheme, it will come as no surprise—and many members of the Committee have alluded to this—that the scheme has been a great success. We have gone above and beyond our obligations in the citizens’ rights agreements to protect the rights of European Economic Area and Swiss citizens and their family members to give them a route to settle in the UK. I also understand and fully support the interest in how UK nationals are treated in EU member and the EFTA states.
As we have heard, around 1 million UK nationals live in the European Union, with thousands more UK nationals living in Switzerland and the EEA and EFTA countries. The UK Government continue to work closely with the European Commission and national authorities to ensure the rights of UK nationals in Europe under the agreements are upheld. We also continue to press the European Union for clear communications to UK nationals in the European Union on how they can secure and access their rights.
The United Kingdom publishes more comprehensive statistics on the EU settlement scheme than any EU member state on their equivalent schemes. I want now to share some of these statistics with the Grand Committee. The EUSS is the UK’s largest ever immigration scheme. The latest data, to 30 June, shows there have been 7.4 million EUSS applications, of which 98% have been concluded, and more than 5.6 million people have been granted status. The Government are delighted that so many of our family, friends, colleagues and neighbours have obtained the status they need to remain in the United Kingdom. However, as the Home Secretary set out in her August letter, to which a number of noble Lords referred, it is right and proper that we take steps to maintain the integrity of the scheme, including measures to protect it from abuse.
Despite it being more than two years since the June 2021 application deadline for those resident before the end of the EU exit transition period, the volume of late applications has remained high. Many of the applications in the so-called backlog to which the noble Lord refers are in fact recently made applications. A number of these include applications made by late applicants, such as those joining family members, or from repeat applicants, such as those looking to move from pre-settled to settled status. We received nearly 337,000 such applications in the first six months of this year alone.
We do not publish data on pending applications, but internal figures for applications pending by 31 March indicate that 66% of EUSS applications had been waiting for 90 days or less. That rises to 76% when including applications pending for 180 days or less. The Home Office will make this analysis available in the next published statistics, but no doubt noble Lords who raised the question of whether there was a backlog will ponder them and see that this is a very efficient system. Applications which have been waiting for longer than 180 days are usually due to suitability concerns, such as pending prosecutions.
As noble Lords will be aware, the citizens’ rights agreements oblige us to accept late applications where the person has reasonable grounds for failure to respect the deadline. In the first two quarters of this year, there were on average 18,000 late applications made each month. While the overall refusal rate for the EUSS remains low, at 8%, this is not the case when looking specifically at late applications. For this case type, the refusal rate stands at 47% in the most recently published data. I suggest this reflects the increasing volumes of spurious applications being made to the scheme, with refusals on eligibility grounds in the majority of cases.
I will now set out the recent changes to the EUSS, most of which have been implemented through changes to the relevant Immigration Rules. The noble Baroness, Lady Ludford, in particular alluded to the change from 9 August of a person’s reasonable grounds for submitting a late application being assessed at the very first stage of the process, known as the validity stage, as the noble Earl, Lord Kinnoull, outlined. In practical terms, this means that an individual must show they had reasonable grounds for the delay in making their application as a pre-requisite for making a valid application to the scheme. Only once their application is confirmed as valid are they issued with the certificate of application. That is important because it gives those covered by it the benefits of the citizens’ rights agreements to access temporary protections, such as the right to work in the United Kingdom and claim benefits where eligible. This change in process reduces the scope for speculative applications to the scheme solely to benefit from the temporary protection available until an application is finally determined. It aligns with similar approaches that are already being applied to United Kingdom nationals in EU member states with constitutive systems.
We have also updated our published guidance to provide clear information on how reasonable grounds considerations are now being applied. This is in stark contrast to that adopted in EU member states, where we have been unable to identify equivalent guidance or publicly available information for United Kingdom nationals that matches the comprehensive approach that the United Kingdom has taken in respect of EU citizens. Indeed, the United Kingdom Government continue to urge the European Commission to ensure that member states publish flexible and pragmatic guidance as to what constitutes reasonable grounds for late residency applications so that UK nationals do not encounter difficulties.
As has been referred to by the noble Lord, Lord Hannay, we have separately closed two transitional routes which were not required under the citizens’ rights agreements. These are commonly referred to as the Zambrano primary carers and family members of a qualifying British citizen routes. They reflected routes required by European case law, for which provision was made under the EUSS on a transitional basis. After more than four years, it is both appropriate and fair that such individuals should now meet the same family Immigration Rules that apply to other dependants of British citizens.
In addition, we have made changes that prevent illegal entrants from being able to apply as a joining family member under the EUSS. This reinforces our approach to tackling illegal migration and helps to prevent spurious applications being made by individuals seeking to circumvent our standard immigration processes.
On an issue that has been raised by a number of noble Lords in respect of the removal of administrative review, on 7 September, we laid changes to the Immigration Rules to remove the ability for EUSS and EUSS family permit applicants to apply for an administrative review. A right of appeal will, of course, be maintained as the mechanism for individuals to challenge the decision, and to meet our obligations under the citizens’ rights agreements. The changes will apply to all relevant decisions made on or after 5 October this year. We have gone above and beyond our citizens’ rights obligations in offering both a right of appeal and administrative reviews for EUSS applicants. It is therefore now the right and fair course that we bring the EUSS in line with other immigration routes, where a dual right of redress does not exist.
On a question raised by many noble Lords on the issue of the implementation of the changes in the light of the judicial review brought by the IMA, in the statement of changes in Immigration Rules taking effect in August, we also introduced amendments to that effect. The High Court found that the withdrawal agreement residence right of a person with pre-settled status under the EUSS does not expire for failure to make a second application to the scheme. The changes to the Immigration Rules reflect the fact that pre-settled status holders will have this status automatically extended by two years, if they have not obtained settled status ahead of the date when their pre-settled status was due to expire.
The extension will be applied automatically. There will be no need for individuals to contact the Home Office and they will be notified once the extension has been applied. We have already completed the extensions for those whose pre-settled status was due to expire in September—this month—and future extensions will be applied at the start of each month, to those whose status expires the following month. This ensures that nobody with pre-settled status will lose their immigration status through the lack of a second application to the EUSS. Should the Home Office find that an individual no longer meets the eligibility criteria for pre-settled status, we will take steps to cancel or curtail it—but of course those decisions could carry with them a right of appeal.
Our objective is to encourage those eligible for settled status, as has been outlined, to obtain it as soon as possible. This is, of course, permitted by the judgment. Since March this year we have been sending reminders to apply to those who have held pre-settled status for almost five years, and we strongly encourage people to apply for settled status as soon as they are eligible. This ties back to the point so eloquently made by the noble Lord, Lord Collins, in respect of wanting to know with certainty what your status is.
I am extremely pleased to see thousands of people moving from pre-settled to settled status each month as a result of those communications. To 30 June this year, 608,380 people had made that conversion. Looking to the future, we intend to take steps automatically to switch as many eligible pre-settled status holders as possible to settled status, without them needing to make a further application. To do this, we plan to undertake automated checks of pre-settled status holders against government-held information—for example, in respect of their ongoing continuous residence in the UK. We aim to have this automated process in place during 2024.
The judicial review judgment also concluded that a pre-settled status holder acquires a right of permanent residence under the withdrawal agreement automatically, once the conditions for it are met. The planned process to automatically switch eligible pre-settled status holders to settled status, alongside encouraging applications for settled status by those eligible for it, will support the implementation of this aspect of the judgment.
I turn to the question posed by the noble Earl, Lord Kinnoull, in relation to the detail of that policy. We note that the automatic conversion of pre-settled to settled status is not a requirement of the judgment, just as EU member states are not required automatically to issue permanent residency cards to UK nationals. However, in response to the noble Earl’s question on our engagement with the independent monitoring authority, I stress that we have been engaging with it on matters of implementation. We would suggest that the method of the automatic conversion I have just described is not unclear in any way, and that our implementation of the judgment is abundant for any who wish to see it. We have sought feedback and views on our planning and will, of course, continue productive engagement with the IMA and other interested stakeholders as we take forward steps to operationalise the remaining aspects of the judgment.
I turn briefly to the issue concerning the refusals backfill, described by the noble Earl, Lord Kinnoull, as the database error debacle. I perhaps would not agree with that description, although I can understand his concerns. As set out in the Home Secretary’s letter to the noble Lord, Lord Wood of Anfield, all those affected were sent an email or postal notification of their refusal decision at the time the decision was made, using the contact details they had supplied. Individuals are able to update their contact details if they need to. The Home Secretary’s letter was quite clear that maintaining a certificate of application on those accounts, rather than showing a refusal decision, was not due to an error but to allow individuals to maintain temporary protection of rights during any administrative review or appeal. This is because, prior to 19 April 2022, the digital status system did not have the capability to reflect that an individual had an administrative review or appeal pending.
At the time the decision to pause uploading refusal decisions was made, the position of the UK Government was that late applications did not attract temporary protections under Article 18(3) of the withdrawal agreement. Therefore, the volume of individuals impacted by the decision was relatively small and finite, importantly. When the numbers affected subsequently grew following the Government’s decision to extend temporary protections to those applying after 30 June 2021, we maintain it was better to ensure that an individual could access their rights while an administrative review or appeal was ongoing, rather than deny those people access to their rights should they challenge the decision.
With respect to timings, on 19 April 2022, a systems change was implemented to allow accounts to maintain a certificate of application where a refusal decision was challenged. As changes to our systems are not implemented retrospectively, a separate exercise was required for cases decided between 27 June 2021 and 19 April 2022. The exercise was not run before 18 January due to the complexity of the work and other pressing departmental priorities, such as the work to implement the Ukraine family scheme and Homes for Ukraine scheme. I hope that level of detail answers the questions posed by the noble Earl, Lord Kinnoull.
Turning briefly to the question of the DWP overpayments, it has been suggested by a number of noble Lords and the noble Baroness, Lady Ludford, that a power should be exercised by the Secretary of State for the Department for Work and Pensions to waive overpayment debt for individuals affected by the refusals backfill exercise. I remind noble Lords that under legislation passed by Parliament, the Department for Work and Pensions has the legislative power to recover overpayments of universal credit under Section 71ZB of the Social Security Administration Act regardless of how the overpayment was caused. Of course, the Secretary of State has a duty to protect public funds and will seek to recover debt in all circumstances where it is reasonable.
I will touch very briefly on some further question asked by noble Lords, in particular the question about proof of status and whether that should be in documentary form. In response to that oft-expressed request in this debate for physical documents, I respectfully reiterate that we are working towards a border and immigration system that is digital by default. Immigration status in the form of an e-visa is part of this, as of course is the rolling out of the electronic travel authorisation programme. The citizens’ rights agreement explicitly allows for status to be provided in digital form.
I appreciate that I have covered some of the points raised by noble Lords; there are many others but I notice the time. I will, of course, write to noble Lords to update them on those detailed questions that I have had not had time to answer. Again, I thank the noble Earl for raising this very interesting debate.
Baroness Ludford (LD)
Before the Minister sits down, I am not sure that he clearly explained—it may be due to the heat in this room and my head—why the Government are encouraging people to apply again. That, I am afraid, did not come over clearly—I felt the Minister glided over that issue. If he did cover it, I will obviously check the report, but if he did not, could he possibly write to me?
Lord Murray of Blidworth (Con)
I think I covered it, but rather than explain it again now, given the hour, I will certainly put it in writing for the noble Baroness, for clarity.
The Earl of Kinnoull (CB)
My Lords, I am grateful to four sets of people. First, I am deeply grateful to the Minister for the richness of what he said—it was very interesting—and his promise to continue to write. As I think he will have seen, we are all extremely passionate here about doing the right thing for people who live in our community, and I felt that he went a long way to answering some of our questions. I am very grateful for that indeed, and for his kind words.
Secondly, I thank everyone who took part. It was a high-level and extremely interesting debate. Thirdly, I thank the noble Lord, Lord Wood of Anfield. Because of my change in role, he took over at a very difficult moment, when we were trying to draw the strands of this together and created an excellent letter with the committee which has been the foundation of our debate this afternoon. I am eternally grateful to him for doing that, because it is a jolly difficult job, and he is a very busy man. He did it with his usual good humour, and I owe him lots of drinks.
My final thanks go to my noble friend Lord Ricketts, who, I must say, arrived with tremendous energy and engagement on top of his great scholarship in this area. Looking now from the sidelines, I am deeply impressed with the way in which he is grappling with all the great complexities of European affairs.
I will not go through all the other points—lots of good ones were made—other than to say that the speech that in many ways I wish I had made was that of the noble Baroness, Lady Anelay. She focused on the situation for UK nationals in the European Union, and much of what we have been saying is about European Union nationals in the UK. The IMA serves the 6 million people here so well; it is very good indeed. We had lots of chats with it before it came for the evidence session. We do not really have an equivalent servicing our people in Europe. In probably a rather coded way, we are saying that a little bit of government money there could make a big difference. I hope that element will come out in the Minister’s letter to us all.
House of Lords
Clothing Sales: Sustainability
(8 months ago)
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Baroness Bennett of Manor Castle
To ask His Majesty’s Government what they assess to be a sustainable level of clothing sales by volume and material in the United Kingdom.
The Minister of State, Department for Environment, Food and Rural Affairs (Lord Benyon) (Con)
My Lords, the Government have not made an assessment of sustainable levels of clothing sales, but reducing textiles waste will be critical to hitting our net-zero goals. Our Maximising Resources, Minimising Waste paper, published in July, outlines our initial policy proposals for reducing textiles waste. We propose to ban textiles waste from landfill, require clothing retailers to provide in-store take-back of unwanted textiles and ask businesses to separate textiles waste for reuse and recycling.
Baroness Bennett of Manor Castle (GP)
I thank the Minister for his Answer and am pleased that he acknowledged the critical place of dealing with the fashion sector, given that 20% of the world’s water use and 10% of greenhouse gases are generated by this and that the level of waste has trebled in the last 20 years. However, in the EU they are actually making very strong rules compared with what the Minister offered: clothing must become more durable, more repairable and more recyclable, and they are demanding extended producer responsibility. When is the UK going to catch up with—or, if we are to be world leading, exceed—what the EU is doing now?
Lord Benyon (Con)
We have very demanding targets in our Environment Act commitments, which include reduction by 50% to 2019 levels. The noble Baroness is absolutely right about the impact of fashion and textiles in terms of both carbon and the use of embedded water, and we will be publishing details next year of how we are going to progress the producer responsibility for textiles. Our priority is packaging.
Baroness Jones of Whitchurch (Lab)
My Lords, there are some outrageous claims made by people in the fashion industry about the sustainability of their products. What are the Government going to do about greenwashing and about tackling those claims, some of which are fabricated claims? The EU, as we have heard, is taking action, and that is one of the things it is going to legislate on. Are the Government similarly going to take action on that?
Lord Benyon (Con)
What the Government can have the most control over is what happens to clothing when it has finished being used, so we are working with the industry on durability and then diverting it away from landfill. But the noble Baroness is absolutely right that the supply chain comes from right around the world. The amount of clothing produced doubled between 2015 and 2020. This was because of a higher number of middle-class people and their demand for clothing, and it has come at a great environmental cost. The clothing industry may not be the biggest emitter, in terms of carbon and its impact on water, but the Government are working internationally and domestically to tackle this very serious problem.
Baroness Meacher (CB)
My Lords, as the chair of a new commission on plastics and the environment, I am conscious of the contribution of clothing to the mass of plastics gradually killing off our oceans. Are the Government doing anything to reduce the amount of plastics used in clothing materials in order to begin to address that problem?
Lord Benyon (Con)
We are certainly having ongoing engagement with the industry to try to reduce the amount of plastics. Of course, there is sometimes a trade-off with plastics when you are trying to get more durable garments that are not disposed of so quickly, but the UK water industry research project, which was done by the UK Centre for Ecology and Hydrology, reported in April last year that wastewater treatment plants remove 99% of microplastics by number and 99.5% by mass. We are looking at what France is proposing, which is a mandatory filter in washing machines, and that may be a direction down which we will go.
Lord Rooker (Lab)
My Lords, the Minister talked of a variety of sources. Could he Minister tell us how much cotton has come to us in the last 18 months in products grown in Xinjiang? This cotton is grown by slave labour and can be checked out by the technical element analysis system pioneered by Oritain, rather than by paper trails. Cotton products can be checked to see where the cotton was grown, and the Government have consistently promised they will check on the sources of cotton. What have the Government actually done about it in the last 18 months?
Lord Benyon (Con)
Our anti-slavery legislation went a long way towards requiring companies to develop robust information on their supply chains. I cannot give the noble Lord a precise answer about the amount of cotton that has come from that area, or how many of the workers involved were or were not—by our standards—properly employed. However, it is a very serious issue. The consumer can create a great demand on retailers and retailers can have a great effect. The Government must play their part, though. Domestically, we have 62% of clothing retailers signed up to our voluntary agreement, which goes precisely to the point the noble Lord makes. That means there are still some that are not, but we will continue to make sure that we have full transparency within the supply chain.
Baroness Jenkin of Kennington (Con)
My Lords, we are now well into Second Hand September. Speaking as somebody who made a vow 12 years ago to never buy anything new for the rest of my life, might I encourage my noble friend to join this campaign? eBay, charity shops, Swishing and Vinted are all alternatives to us buying new clothes and creating more of a problem.
Lord Benyon (Con)
My noble friend is a living example that buying from thrift shops is what we should all be doing. This month in particular, we should be encouraging people to do that. Slow fashion is the way forward. We need to continue to make sure that we are requiring manufacturers and retailers to make and sell goods that last longer, are properly supplied and do not go landfill when they come to the end of their natural life. Recycling is an emerging technology, but the most important thing is that we all stop buying so many new things.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, an estimated 92 million tonnes of textile waste are created annually by the fashion industry. This is set to increase by 2030. Thinking of Marrakesh as an example, would the Minister agree that it would be better for this redundant clothing to go to parts of the world where people have lost their homes and possessions, instead of to landfill?
Lord Benyon (Con)
Like everyone in this House, I pay huge tribute to those charities and organisations that do precisely that. It is absolutely vital that support is given to people in vulnerable circumstances who have lost everything so that they can clothe themselves and their families. It also shows us the importance in our lives of trying to develop policies, both as a Government and societally, so that we use less, consume less and, where we can, support those in need.
The Earl of Clancarty (CB)
My Lords, with three-quarters of UK exports going to Europe, fashion is yet another creative industry detrimentally affected by Brexit. Has the Minister seen the new report produced for the industry by the University of the Arts London and the University of Leeds, detailing the many difficulties, which include concerns over sustainability and improving ethical practice?
Lord Benyon (Con)
I have not seen that document, but I know that the UK fashion industry directly generated an estimated £28.9 billion gross added value contribution to the UK economy. That is a factor. Of course, we want that to be a sustainable industry, but I hope we take great pride in the fact that this country has a leading role in the international fashion industry and we want that to continue.
Baroness Hayman of Ullock (Lab)
My Lords, textiles recycling varies significantly across different local authority areas. As we have heard, although some fashion retailers offer their own recycling schemes, both councils and retailers have the same problem: not everything is recyclable, so a proportion of material will always end up in landfill or being incinerated. This situation is not helped by fashion brands and retailers that purposefully destroy old stock rather than offering it at a discount. How do the Government plan to improve access to textiles recycling, while also ensuring that there is transparency about its limitations?
Lord Benyon (Con)
We have made some progress. The Textiles 2030 policy, promoted by WRAP, helps signatories to reduce their water and carbon footprints per tonne of clothing by 18.2% and 21% respectively. We want to help local authorities with the work that they are doing and they are being funded to bring forward changes to packaging recycling collections through the extended producer responsibility payments. Separate food waste collections will be funded via new burdens payments, and new collection requirements for consistency in recycling for households in England will come in shortly.
Lord Forsyth of Drumlean (Con)
My Lords, following on from the question from my noble friend Lady Jenkin, might we all be able to avoid buying new clothes if the authorities in this House did something about the moths?
Lord Benyon (Con)
I spoke earlier about consistency; it is always freezing in here and boiling out there, so you never know what to wear.
Russia: Sanctions
(8 months ago)
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The Lord Bishop of Leeds
To ask His Majesty’s Government what assessment they have made of the impact of sanctions against Russia in the wake of its invasion of Ukraine.
The Minister of State, Foreign, Commonwealth and Development Office (Lord Ahmad of Wimbledon) (Con)
My Lords, sanctions by the United Kingdom and its international partners have starved Russia of key western goods and technology, degrading Russia’s military and restricting its capacity to fight a 21st-century war. UK exports of machinery and transport equipment have decreased by 98%. Sanctions also limit Russia’s financial resources. The UK has sanctioned 29 Russian banks, accounting for over 90% of the Russian banking sector. We have also frozen over £18 billion-worth of Russian assets in the UK. Without sanctions, we estimate that Russia would have over $400 billion more to fund its war machine.
The Lord Bishop of Leeds
My Lords, I thank the Minister for his answer. The stated aim of sanctions is to
“encourage Russia to cease its destabilising actions in Ukraine”.
It seems to me that there is no evidence that sanctions have had any such impact. Russian GDP has dropped by a mere 2% and the country is skilled in circumventing sanctioned goods through third countries. Despite being subject to 13,000 different sanctions, which I think is more than any other country before, they have made no appreciable difference to Russia’s behaviour—we think of its links with North Korea, China, Iran and so on. Are the Government therefore prepared to move to more precisely targeted smart sanctions, the aims of which are clearly defined and the impact of which more measurable?
Lord Ahmad of Wimbledon (Con)
My Lords, the right reverend Prelate talked about the impact of sanctions. I can share with him that sanctions are having a direct impact. On revenues alone, they have left Russia’s budget in deficit, rather than the surplus that the Russian Government themselves predicted for 2022. Russia has suffered an annual deficit of £47 billion, the second highest of the post-Soviet era. Russia’s energy revenues fell 47% in the first half of this year. At the same time, global oil prices are lower. Less immediately visible, but more importantly in the long-term, more than 1,000 foreign businesses have left Russia, along with thousands of high-skilled workers. More continues to be done, as we co-ordinate and work with other countries. Particularly notable recently is that Armenia, Turkey and Kazakhstan have taken action on the issue of supply chains, which the right reverend Prelate raised. That kind of co-ordination is important if we are going to make these sanctions work across the piece.
Baroness Williams of Trafford (Con)
My Lords, we will let my noble friend ask his question and then we will go over to the noble Lord, Lord Sahota.
Lord Robathan (Con)
My Lords, on targeted sanctions, the oligarchs who make up the inner circle around Putin, and the huge number of people who have property here, have almost invariably made their money by nefarious means—they must have done, because 30 years ago there was no private capital in Russia. Could my noble friend the Minister give us an update on how many oligarchs are having their property—and whatever else—put into suspension so that we can confiscate and use it to rebuild Ukraine?
Lord Ahmad of Wimbledon (Con)
I agree with my noble friend that we all want—I think I speak for the whole House—to get Russia to pay for its war on Ukraine. At the time of the invasion, the UK sanctioned 129 oligarchs who have a combined net worth of around £145 billion. As I said earlier, we have frozen £18 billion-worth of Russian assets under the regime. The UK has also set up specialist agencies in the NCA and, as I said earlier, we are working with key partners. Legal hurdles need to be addressed, but we are not doing that alone—other partner countries are also looking to allow those assets, now that they are frozen, to be moved across. Ultimately, when the war ends, we can use the money from those assets in the reconstruction of Ukraine.
Lord Sahota (Lab)
My Lords, the Prime Minister signed a joint declaration at G20 which did not condemn the invasion of Ukraine by Russia. Is the Government going soft on Russia now?
Lord Ahmad of Wimbledon (Con)
I am sorry to say that I cannot disagree more with the noble Lord. We have not gone soft on Russia; this House has not gone soft on Russia; this country not gone soft on Russia. At meetings such as the G7 and the G20, there are a broad number of countries and alliances. I assure the noble Lord that I have sat in many meetings where we have had to agree a statement; the fact that Ukraine was mentioned in that statement, with Russia present in the room, indicates a way forward. We also have to address these issues with partners who still do not have the same view as us, and we do that through effective diplomacy and specific action, as we are taking with our key partners.
Lord Purvis of Tweed (LD)
My Lords, the Minister knows that Russia’s export in goods is now at pre-war levels, and the very friends the Minister referred to—in India and the Gulf—are offering financial services directly to Moscow. We are currently negotiating trade agreements with those areas, offering them preferential UK market access. Does the Minister share my concern that we are actively encouraging financial instruments who are supporting the Russian war machine to have preferential UK market access? Surely that cannot be right.
Lord Ahmad of Wimbledon (Con)
My Lords, many of those countries, including India specifically, have had historic and legacy relationships with Russia. As the noble Lord is aware, India has relied on Russian defence support for a long time over history. It is right that we talk directly, and raise those concerns, with key partners such as the UAE and India, while, at the same time, working constructively to ensure that there are alternatives. I assure the noble Lord that we are seized of that; it is why we are making progress in our discussions on the issue of circumvention with key countries such as the UAE. Turkey recently initiated certain procedures domestically to assist in this respect. Let us be very clear that, while Kazakhstan has a strong reliance on Russia, it is looking at its domestic legislation to see how it can curb the issue of circumvention.
Lord Hannay of Chiswick (CB)
My Lords, could the Minister explain to the House why we have a memorandum of understanding with the United States on co-operation over sanctions against Russia but we do not have one with the European Union? Could he also explain why the Foreign Secretary fended off the recommendation by the European Affairs Committee of this House that we need a properly structured framework for co-operation with the EU on sanctions so that, together, we could make them more effective?
Lord Ahmad of Wimbledon (Con)
My right honourable friend the Foreign Secretary has been very much leading on direct engagement with our partners in the European Union, not just on the issue of sanctions specific to this Question but on a broad range of issues. I know that we will shortly be looking in the Moses Room at various committee reports. I assure the noble Lord that we are working very much hand in glove with our key partners—that is, Canada, the United States, the European Union and others—to ensure that sanctions are co-ordinated. I look to the noble Lord, Lord Collins, specifically—this may have been his question—and say that we are working hand in glove with those partners, and the impact on Russia is beginning to tell.
Lord Collins of Highbury (Lab)
Let me ask that question, as the Minister provokes me into it. Last week, I asked him specifically about Ursula von der Leyen’s statement about freezing €200 billion-worth of assets. The EU has announced that publicly. He said last Thursday that we support this initiative. Let us have a clear statement from the Government today that we will act in concert with the EU and announce our intention to freeze assets so that they can be repurposed for rebuilding Ukraine.
Lord Ahmad of Wimbledon (Con)
I assure the noble Lord that, in many years across the Dispatch Box with him I have sought not to provoke him, and if I have done so, I have failed miserably on this occasion. However, I can give him that assurance. I totally agree with President von der Leyen’s statement, and we are working with our key partners on ensuring that the assets that have been frozen stay there. The important thing is the legal impact, and no country, including the various jurisdictions of the EU, has yet designed the system and structure to allow for those assets to be deployed for the reconstruction of Ukraine. We are working with the key countries, and, as the noble Lord knows from the Ukrainian Recovery Conference, with the private sector, on reconstruction.
Lord Leigh of Hurley (Con)
Given the assertion in the Washington Post last month that 6,000 drones have been supplied by Iran to Russia, will the Foreign Office reconsider its position on Iran, and in particular the IRGC?
Lord Ahmad of Wimbledon (Con)
My Lords, as my noble friend knows, we have taken a very firm line on Iran and sanctions. As the Minister responsible for Iran within the FCDO, I can say that we have taken a forward-leaning position on ensuring that Iran is held accountable for its actions. I agree with my noble friend that it is appalling that drones have been supplied directly by Iran. It is also interesting to note that Russia is now looking to the likes of Iran and the DPRK, both countries themselves subject to sanctions. I hear what the noble Lord, Lord Coaker, is saying from the Front Bench about the IRGC—that is why God has given us two ears: one for the questioner and one for the Labour Front Bench. Of course, I cannot speculate on future proscription, but I assure noble Lords that we keep all tools under review.
Lord West of Spithead (Lab)
Did our Prime Minister raise with Mr Modi the fact that India is still importing a large amount of Russian oil that is then being mixed with other oils, and so it is difficult to identify, and resold on the international markets? This is dangerous in a number of ways. First, it supports Russia, but, secondly, we are getting a plethora of very dangerous tankers—I got ships in—around the oceans of the world, which is a real problem.
Lord Ahmad of Wimbledon (Con)
Tankers—as I know from the definition at school—count as ships, so, again, awards must go to the noble Lord. The Prime Minister had wide-ranging discussions with all G20 partners and during his bilateral with Prime Minister Modi. As the noble Lord will be aware, Russia and its illegal war on Ukraine were among a number of points that the Prime Minister raised directly with Prime Minister Modi.
National Crime Agency: Fraud and Economic Crime
(8 months ago)
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Lord Browne of Ladyton
To ask His Majesty’s Government what is the total number of National Crime Agency staff dedicated to the prevention or investigation of (1) fraud, and (2) economic crime.
The Parliamentary Under-Secretary of State, Home Office (Lord Sharpe of Epsom) (Con)
My Lords, due to operational sensitivity and flexible deployment of resources in response to demand, it is not possible to provide a precise figure of staff allocated to a particular type of criminality. However, the NCA’s National Economic Crime Centre, the NECC, leads the response to economic crime, including fraud. As of 1 August 2023, the headcount for the NECC, which brings together law enforcement agencies, government departments, regulatory bodies and the private sector, was 123.5 full-time equivalent. Many other teams across the NCA also contribute to the investigation of economic crime, in addition to the NECC.
Lord Browne of Ladyton (Lab)
My Lords, the only way to assess the adequacy or otherwise of resources devoted to battling fraud, which was assessed last year to cost this country £219 billion, and economic crime—I understand that the Government’s own assessment is that this costs the country between £300 billion and £350 billion—is to look at the results. Will the Minister tell the House how many investigations the NCA has conducted in each of, or even one of, the last three years? How many cases of fraudsters targeting the UK from abroad have resulted in any criminal justice outcome and how many in any form of disruptive action? If he cannot do that, can he tell us how many investigations the Government expect it to conduct this year?
Lord Sharpe of Epsom (Con)
Significant resources are being allocated to the NECC to improve its investigatory capabilities. It will end up with an additional 400 new officers dedicated to tackling fraud; some of those will go to the NCA, some to the City of London Police and some to regional and organised crime units. They will be recruited by March 2025. There are also 475 new highly trained financial crime investigators, partly funded by the economic crime levy, who will also be spread across intelligence, enforcement and asset recovery at key agencies. I will not speculate as to their likely success, but I certainly hope they have some.
Lord Hogan-Howe (CB)
My Lords, has the time not come to simplify the investigation of fraud? As the noble Lord, Lord Browne, suggested, the crimes are massive and the response is weak, even with the investment the Government are about to make. The problem with local forces investigating is that violence always trumps theft, so resources are devoted more to violence. At the moment, the complex nature of the crime—crypto, cross-jurisdictional, online—is complicated further by a 43-force response, regional units, NCA, SFO; I could go on. Surely the time has come to have one force dedicated to prevention, detection and the recovery of assets.
Lord Sharpe of Epsom (Con)
My Lords, the noble Lord will be aware that the City of London Police partially fulfils that function. It prioritised investigators to the City of London as part of its recent increase in the numbers of police. Angela McLaren, the commissioner there, has a strong background in economic crime and its investigation, and the City of London Police runs an economic crime academy. The noble Lord makes an interesting point about having just one agency, but that agency is the National Economic Crime Centre, which co-ordinates all the various activities across the various police forces, including regional organised crime units.
Lord Clement-Jones (LD)
My Lords, given that the UK cyber industry plays a critical role in supporting law enforcement to tackle cyber-enabled fraud, when will the Government reform the Computer Misuse Act so that the cyber industry does not face legal jeopardy for protecting our citizens and businesses online? Is it not high time that the Home Office came to a conclusion on its review?
Lord Sharpe of Epsom (Con)
My Lords, I cannot speculate on that Act but the anti-fraud champion, Anthony Browne MP, has been having some close engagement with industry. An online sector charter—which I appreciate is not entirely the same thing but is certainly related—is due to be published in the autumn, so we should watch and wait for that.
Lord Hunt of Kings Heath (Lab)
My Lords, Hourglass, the charity particularly concerned with abuse of older people, has drawn attention to the problems of economic crime and financial abuse that affect many older people. Is this being taken forward by the agency as an area that it needs to give more attention to?
Lord Sharpe of Epsom (Con)
The noble Lord makes an extremely good point that we should not forget the victims of economic crime. I want to make two points here. First, the fraud strategy looks at three aspects of this crime: pursuing the individuals doing it, empowering people to avoid it—which takes in the victims the noble Lord describes—and preventing the scams and whatnot taking place in the first instance. Secondly, as the noble Lord will be aware, Action Fraud is being redesigned, which will help. Already, anybody who reports to Action Fraud where vulnerabilities are detected will receive a bespoke counselling service after they have engaged with it.
Lord Faulks (Non-Afl)
My Lords, the Minister will know well that one of the themes that emerged during our debates on the Economic Crime and Corporate Transparency Bill was the inequality of bargaining power that often existed between the agencies that have to pursue fraudsters and those fraudsters, who were often heavily lawyered-up to enable them to resist any applications. One of the initiatives brought forward by this Government under the Criminal Finances Act was unexplained wealth orders. Can the Minister explain why they have been used on so few occasions? Is it because of lack of resources? Is it because of the risk on costs? What other explanation is there for such a powerful potential weapon not being utilised?
Lord Sharpe of Epsom (Con)
The noble Lord will be aware, from other conversations that we have been having around the various aspects of the Bill that will go through the House this afternoon, that the agencies tell us they are appropriately resourced. I cannot account for the small number of UWOs that have been issued, but I will continue to keep it under review and report to the noble Lord.
Lord Coaker (Lab)
My Lords, my noble friend Lord Browne made a really good point about the number of people investigating fraud, because people generally feel that fraud is given a very low priority. The Government themselves have said that in recruiting people there is a particular need to understand that the type of person with the sorts of skills that need to be recruited may be different from the normal crime-fighting model that we have. They have also said that they are taking steps to address that, particularly in respect of cybercrime. Can the Minister update us on what the Government are doing to recruit people with the necessary skills in this area?
Lord Sharpe of Epsom (Con)
The noble Lord makes a good point, and I think he is aware of my opinions on this subject. Clearly, it is a difficult area for the entire economy—not just the agencies responsible for fighting crime but those who are involved in the online world where, of course, much of this crime takes place. I have referred to the large number of new officers being recruited; as far as I understand it, they are on track to be recruited according to the timescales that have been set out. I cannot really comment any more on the recruitment process itself, but I will certainly ask the question and come back to the noble Lord.
Baroness Ritchie of Downpatrick (Lab)
My Lords, what steps will the Government take to introduce a safer ageing strategy for older people to protect them against economic crime and fraud?
Lord Sharpe of Epsom (Con)
I just referred to the fraud strategy that was published in May this year, a sizeable part of which is about empowering people to avoid being defrauded in the first place. I recommend that the noble Baroness refers back to that; of course, I would be happy to discuss it further in future debates.
Lord Lexden (Con)
My Lords, would the National Crime Agency not be in a stronger position today had it not appointed as its director-general of operations Mr Steve Rodhouse, who is currently suspended from his normal duties while he is investigated for gross misconduct as head of the infamous Operation Midland, through which our former colleagues Lord Bramall, Lord Brittan and others were hounded mercilessly over allegations made by a fantasist? Is it not shocking that, so far, of all those found culpable by Sir Richard Henriques after his independent inquiry seven years ago, Mr Rodhouse alone has been the subject of a disciplinary process?
Lord Sharpe of Epsom (Con)
My noble friend asks a good question. It is one that I am unable to answer; I cannot speculate as to whether it would have had that much operational impact on the National Crime Agency. I go back to the point I made earlier: the NCA is well resourced and its budget has increased year on year since 2019. I do not believe that it should have had any impact, but my noble friend is entitled to his point of view.
Lord Sikka (Lab)
My Lords, can the Minister say something about why and how the Government protect those who engage in economic crime and fraud? Let me refer to an example. The Bank of Credit and Commerce International was closed in July 1991 after the biggest banking fraud of the 20th century. To this day, there has been no independent investigation. Through litigation against the Treasury, I obtained one document, codenamed the Sandstorm report, which shows that the Government are protecting al-Qaeda, arms and drug smugglers, murderers and others who committed fraud through that bank. I invite the Minister to place a copy of the Sandstorm report in the Library of the House and, if he will not, to explain what is so secret that it cannot be made public.
Lord Sharpe of Epsom (Con)
I will not place a copy of that report in the Library. I am afraid that I am not qualified to speak on events from 32 years ago.
Afghanistan: Aid for Women
(8 months ago)
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Lord Watson of Wyre Forest
To ask His Majesty’s Government what steps they have taken to aid and support the women of Afghanistan since the departure of United Kingdom armed forces.
The Minister of State, Foreign, Commonwealth and Development Office (Lord Ahmad of Wimbledon) (Con)
My Lords, we prioritise support for women and girls in response to the Taliban’s repression. We have repeatedly urged the Taliban to reverse harmful policies. I assure the noble Lord that we raise these issues internationally. I regularly meet Afghan women and leaders to hear their concerns directly. Since April 2021, the Government have disbursed more than £532 million to Afghanistan, giving 2.3 million women access to food, healthcare and other essential assistance. At least 50% of beneficiaries of UK aid are women and girls.
Lord Watson of Wyre Forest (Lab)
I thank the Minister for that Answer. However, the Taliban have targeted women and girls by using decrees which place severe restrictions on freedom of movement, expression and association, prohibitions on virtually all forms of employment and bans on secondary and higher education, as well as permitting arbitrary arrests and violations of the rights of liberty. Taken together, that is arguably a crime against humanity based on gender, so what further actions can the Government take to support women human rights defenders who seek safe passage to the UK because their lives are under grave threat?
Lord Ahmad of Wimbledon (Con)
My Lords, I believe that I speak for most noble Lords but I believe on a point of principle that the humanitarian support that we have given to the people of Afghanistan, supported by Pakistan, Uzbekistan and other near neighbours, has been the right approach. We cannot discard over 36 million people. We have also sought to provide support for those who are most vulnerable, those who work directly with the United Kingdom, through the various schemes that we have run—the ACRS pathway 3 and the ARAP. Those schemes support their access to the United Kingdom, particularly Chevening scholars working within the security firm GardaWorld but also those who worked within the British Council. That still is work in progress on year 1.
There is a lot more that we can do but we directly address the Taliban and say that what they are doing is not just against our assessment of human rights but against the assessment of the very faith that they claim to follow. Rights of women are human rights and the Taliban need to uphold them.
Baroness Hodgson of Abinger (Con)
My Lords, I thank the Government for the moral support that they have offered to the Afghan women so far, particularly my noble friend the Minister, who has consistently met them. However, can he please tell me how the UK Government will help those Afghan women to be part of any international talks and able to play a part in the future of their country?
Lord Ahmad of Wimbledon (Con)
My Lords, I thank my noble friend for her kind remarks. As I say, it is about doing your job, but I pay tribute to her and to all other noble Lords who have worked collectively on this important agenda. There is no easy solution, but I assure my noble friend that we are working directly with leaders from various representative groups of women in Afghanistan and more broadly too. We continue to engage with key personnel on the ground in Afghanistan who were previously involved within administration while it was still functioning, but equally we are working with key international partners, notably Indonesia and Qatar among others, to ensure that the issue of Afghanistan is kept on the front burner and that inclusivity—the restoration of women’s rights and all rights, including minority rights—is not forgotten.
Baroness D'Souza (CB)
My Lords, the Minister will be aware of the growth of cluster education, or cluster classes, whereby groups of secondary school girls gather in neighbourhood houses and qualified teachers visit them. The scheme with which I am involved is now educating upwards of 1,000 girls in three provinces in Afghanistan. In a very few cases, local Taliban commanders have asked whether their daughters can join those classes. Is this something that the UK Government would support, since it is often difficult for those international aid agencies operating in Afghanistan to do it as it runs right across the policy of the Taliban? Maybe the UK has got a channel for funding this kind of education.
Lord Ahmad of Wimbledon (Con)
My Lords, recognising the important work that the noble Baroness has done, of course we fully support such initiatives. As she will know all too well, we protect the agencies that we work with on the ground to allow them to continue their important work, particularly when it comes to girls’ education. In our general assessment, there are now six to eight regions within Afghanistan where, because of the fragmented structure of the Taliban, there are initiatives which allow health access but also allow women in certain respects to go to work and allow girls to be educated.
Baroness Hussein-Ece (LD)
My Lords, I also pay tribute to the Minister, who has personally worked tirelessly to help Afghan refugees fleeing the brutality of the Taliban. His commitment is well documented.
Do the Government accept that the deteriorating situation for Afghan women, as we have heard, amounts to gender persecution, which is a crime against humanity? This has happened in plain sight of the world over the last two years. What global support is taking place, such as we had in 2001 when the world rallied behind the cause of Afghan women? If Afghan women’s rights were important in 2001, surely they are just as important in 2023? What support is taking place globally to bring this gender apartheid, or gender persecution, to an end?
Lord Ahmad of Wimbledon (Con)
My Lords, recognising the important work the noble Baroness has done in this respect, I think I speak for everyone in saying that what is happening in respect of the rights of women and girls in Afghanistan is abhorrent. It is against the very traditions of the faith that the Taliban claim to follow; it is not right, it is simply wrong. That is why we are working with key partners within the Islamic world—for them to seize back the narrative on empowerment of women and girls’ rights and education. On our specific support, we are working with key agencies. I have already alluded to the figures but—just to share with the noble Baroness—we are supporting 4.2 million people with food assistance, of whom 2 million are women and girls. The issue of nutrition is high on our agenda, as well as empowering them through education.
Baroness Coussins (CB)
My Lords, can the Minister tell the House how many Afghan interpreters who have been relocated to the UK have wives still awaiting security clearance in Afghanistan so that they can join their husbands here, as they are entitled to do? They are very likely to be living in vulnerable situations while they wait; even living in hiding. Perhaps the Minister could write to me if he does not have this figure to hand today.
Lord Ahmad of Wimbledon (Con)
My Lords, I assure the noble Baroness that I keep abreast of figures on a weekly basis, but I do not go into specific details at the Dispatch Box for the sole reason of protecting those vulnerable individuals. We have seen a large number of interpreters arrive in the UK and there is an issue about supporting family members. Where I can, I will share the specifics with the noble Baroness.
Baroness Kennedy of The Shaws (Lab)
My Lords, perhaps by a slip of the tongue the expression “gender apartheid” was just used by a previous speaker. Increasingly, that terminology is used by Afghans who are here in exile, by the international community and by lawyers. A great deal of research has been done in support of it by South African lawyers, because apartheid means denial of participation in society—keeping apart. I wonder whether that is language that is accepted, and might be used by, the Foreign Office and whether the full force of the Foreign Office could be put behind amending the Rome statute so that it included gender apartheid as a crime against humanity.
Lord Ahmad of Wimbledon (Con)
My Lords, the noble Baroness with her legal background has far more insights into the technicalities and changes that she is proposing, but I can say to her that what is happening to women and girls in Afghanistan is nothing short of abhorrent and we need to do our utmost to ensure that we stand up for their rights and afford them the protections that we can. I assure the noble Baroness that we are working in a very focused manner on that objective.
Lord Swire (Con)
My Lords, regrettably but perhaps understandably, there are still a large number of women in neighbouring countries, not least Pakistan, waiting to find somewhere to start their lives again. Many are former high-ranking officials, human rights defenders, policewomen or women connected to the police and politicians. Can my noble friend the Minister, who I know takes an enormous interest in these matters and I congratulate him on so doing, reassure this House that none of those women will be forcibly repatriated to Afghanistan against their will? If they are, many of them will meet a bleak future.
Lord Ahmad of Wimbledon (Con)
My Lords, I thank my noble friend for his remarks and I assure him that we are working very closely with the neighbouring Governments to Afghanistan, particularly Pakistan. Notwithstanding the change of Administration in Pakistan, they have been very supportive of our efforts to sustain and retain the people who have sought refuge there while their immigration status is finalised. Vulnerable women and girls are at the forefront our work in that respect.
Offshore Wind
(8 months ago)
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Baroness Bennett of Manor Castle
To ask His Majesty’s Government what steps they plan to take to ensure the continued development of the offshore wind industry following the failure to attract bids in the latest Contracts for Difference round.
The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)
My Lords, the Government are disappointed that no offshore or floating offshore wind projects secured contracts for difference in the most recent allocation round. The results provide valuable learning for subsequent auctions. Work has already started on allocation round 6, incorporating the results of the recent round, and we look forward to a strong pipeline of technologies participating. The Government remain fully committed to our target of decarbonising the power system by 2035 and to our ambitions for 50 gigawatts of offshore wind, including up to 5 gigawatts of floating wind.
Baroness Bennett of Manor Castle (GP)
I thank the Minister for his Answer, but can we really wait? Look at what has happened in other countries: for example, Germany had a similar experience in December then, in the subsequent two quarters, lifted its price cap and increased its number of bids by several times. In the US, Massachusetts had a failure and New York is now considering petitions to offer a higher price. This is the low-cost, low-carbon alternative: the industry is now suggesting that there is a 24-gigawatt gap for the 2030 target. Surely the Government should be taking immediate action in the shorter term to fix this problem of their own creation, given that this was widely predicted to happen before the contracts closed.
Lord Callanan (Con)
I am happy to hear the noble Baroness be so cavalier with bill payers’ funds; she is, in effect, talking about increasing the strike price. It is always difficult for the Government to strike the right balance: we want to get the best value possible for bill payers, as opposed to providing sufficient revenue for the companies to build. I obviously know which side the noble Baroness is on but I want to be on the side of the bill payer. We have already secured the largest offshore wind sector in Europe by far; she quotes the example of Germany, which should be very jealous of the amount of offshore wind capacity that we have. We secured almost 7 gigawatts in the last allocation round and, in this round, secured 91 projects with other technologies. There is a viable long-term pipeline of about 77 gigawatts of wind available to this Government and we will take advantage of it, but we will make sure that we do it at the right price for consumers.
Lord Deben (Con)
My Lords, I am on the side of bill payers. The problem is that they will have to pay more, because we will not have the renewable energy that we would have had and will have to use more expensive gas instead. This was the Government’s fault; everybody warned that the reserve price was too low. But let us forget the past. Why can emergency legislation not pass through the House, which I am sure would be supported by all sides, so that we can replay this very quickly for the bill payer?
Lord Callanan (Con)
The bill payer will be very grateful that 7.5 gigawatts of construction is already under way, as we speak. We all want to see more, but at the right price. I understand why industry is urging us to pay more for this. That is understandable and in its commercial interests, but I would have expected most Members of this House to be on the side of bill payers as well. We can do both: we can get a good deal for the bill payer and take advantage of the many gigawatts of potential construction in there, which has either been consented or is under consent. Following a contract being let, it takes three to four years, on average, for the capacity to come on stream. Obviously, the capacity let in previous rounds is coming on stream gradually, as we speak. As I said, we consented to about 7.5 gigawatts in the last round. There will be another auction in about six months and it would take almost that long to pass new legislation.
Baroness Walmsley (LD)
My Lords, what assessment have the Government made of the increase in potential of both productivity and profitability for wind power companies to fit turbines to the base of their installations, where conditions allow, to take advantage of tidal energy, which provides a baseload. What support are the Government giving companies prepared to do that?
Lord Callanan (Con)
The noble Baroness asks a very good question. Eleven tidal stream projects were consented in this allocation round, totalling about 41 megawatts. The price for that is currently higher but we need to develop this technology. I hope, as has been the case with offshore wind, that if we continue to let more CfDs the price will continue to come down over time. That was one area of the round that was successful.
Lord Lennie (Lab)
My Lords, given the Government’s monumental failure—and they were warned about it, as has been said around this House—to attract any interest whatever from the energy sector in their recent CfD bidding process for offshore wind projects, can we assume there will not be any similar complacency when it comes to developing onshore wind projects, which, in light of the current failure, must now be the Government’s priority towards achieving net zero?
Lord Callanan (Con)
Again, there is no complacency. I understand that there are many projects wanting the go-ahead, but we must be careful in making sure that the consumer gets a fair deal. Lots were consented to last year; I am sure that lots will be consented to in the future. The noble Lord talks about onshore wind. I am pleased to tell him that 24 onshore wind projects were consented to and were successful in this round, totalling 888 megawatts.
Lord Naseby (Con)
Is my noble friend aware that a number of us have taken an interest in this market, recognising the enormous steps that His Majesty’s Government have taken on the development of offshore wind? At a time when it is stated that we are facing a possible bill of £65 billion to replace the internal grid to all our homes in the United Kingdom, is it not more appropriate that the resources we do have should be used for research such as that into the mix of hydrogen with LPG to see whether it can be used in the existing pipelines available to every house in the country?
Lord Callanan (Con)
The noble Lord asks a lot of different questions within what he said. I think his figure of £65 billion refers to the cost of upgrading property to EPC level C, which is a long-term aim. His separate question on hydrogen for heating is indeed a controversial subject. We will make a decision on whether to go ahead with a hydrogen village trial by the end of the year. Similarly, another issue facing us is whether to allow blending of hydrogen into the gas network; you can blend up to about 25% with the current network. Again, that is an issue where, frankly, there are a lot of pros and cons on both sides of the argument. We will make a decision on that by the end of the year as well.
Lord Harries of Pentregarth (CB)
The next round comes in six months’ time. Are the Government confident that the price will be set at the right level to attract a good number of significant bids?
Lord Callanan (Con)
Of course, that will be our aim. As I said, we want to see more projects consented to and we will try to get the balance right. We will certainly learn the lessons from this round. It is obviously disappointing that we did not attract bids this time, but the offshore wind industry has been a tremendous success for the UK. We have by far the largest capacity in Europe. We have the largest offshore wind farm in the world, the second largest, the third largest and the fourth largest. One reason that developers were unable to proceed this time was pressure in the supply chain. There is pressure in the supply chain because every other country in Europe wants to copy our example, because they can see the success we have made of the offshore wind allocation rounds through the contracts for difference price system. Most other European countries are trying to adopt the same model; they are a long way behind us but trying to adopt the same model now. Of course, that brings pressure in the supply chain, which, adding in the Covid pressures as well, contributes to the increase in costs that industry is experiencing.
Lord Trefgarne (Con)
My Lords, is it not the case that wind-generating facilities in the North Sea tend to cause mayhem with the wild bird population? Can anything be done about that?
Lord Callanan (Con)
My noble friend certainly highlights a concern, but lots of protections are built in and lots of environmental regulations need to be adhered to when these projects are consented to and all the matters are gone into fully, in both environmental and regulatory permitting. Every energy source has its drawbacks. Those who are against nuclear would point to its drawbacks; with coal-fired power stations, there are obviously drawbacks; gas-fired power stations have their drawbacks. There has been an increase in new solar farms being developed in the UK. I can assure noble Lords that, from my postbag, lots of people write in to complain about those as well. We have to get generation capacity and electricity supplies from somewhere. No system is absolutely perfect but offshore wind is certainly one of the best.
Baroness Sheehan (LD)
My Lords, it is unacceptable that last week’s offshore wind auction was a failure because of the Government’s insistence on an unrealistic strike price, yet we remain none the wiser about the cost of another source of electricity—nuclear energy. The cost of Sizewell C’s electricity remains shrouded in secrecy. The only thing we can be sure of is that it will be exceedingly expensive. The Commons Science, Innovation and Technology Committee has called for greater transparency on Sizewell’s cost. Will the Minister take this opportunity to give an updated cost estimate for Sizewell C? We need to be sure that we are on a level playing field.
Lord Callanan (Con)
I will be happy to supply those figures to the noble Baroness in writing if I can. Again, it is worth saying that, in a diversified energy system, it is important to have different sources of supply. I am very enthusiastic about solar and offshore wind; they are intermittent but they are cheap when they are generating. We also need baseload supply, so there will a role for nuclear and for gas-fired power stations, ideally with CCUS fitted as well. It is important that we have diversity of supply, including such things as tidal on a relatively small scale. Geothermal is another technology that was successful in getting contracts under this allocation round. Again, these are nascent technologies that are starting to build up. We need diversity of supply for our future generating mix.
Lord Cormack (Con)
My Lords, I agree with my noble friend that Britain is a world leader in offshore wind; he is right to boast gently about that. But he also said that lessons would be learned from what has just happened. Is my noble friend Lord Deben not right that we got it wrong—and that we must make absolutely sure that in six months’ time we get it right?
Lord Callanan (Con)
I have said that lessons will be learned. As I said, there is a healthy stream of projects wanting to come forward. Understandably, the developers want to be paid as much as possible. The unique thing about offshore wind is that it involves very high initial capital investment costs. Once the things are built, they are relatively cheap to operate, unlike some other sources of generation. It is all about providing long-term guarantees of revenue for those developers. There is always a process of negotiation; the CfD auction rounds have been successful in the past and I am sure that they will be in the future.
Baroness Hayman (CB)
My Lords, I declare my interest as chair of Peers for the Planet. The Minister recognises that the offshore wind industry raised these issues some time before this round of contracts for difference. The Government did not listen and we have the results with offshore wind, as we have seen. At this time, the onshore wind industry is saying to the Government that the, frankly, puny changes in the planning regime that they announced will not bring forward the large-scale increase in onshore wind production in this country. Will the Government listen in time this time and put the planning regime for onshore wind on a level playing field with other renewable infrastructure?
Lord Callanan (Con)
I know that the noble Baroness is passionate about onshore wind. I hope the changes that we announced will produce more capacity. As I said, we have just let 24 projects under the latest CfD round. She is right that the industry said in advance of this round that it wanted to be paid more. Across all the different areas of government for which I have been responsible, I have never met a private developer who want to be paid less for what they do. Let us be realistic: this is a negotiation process. Of course, industry will say, “We need to be paid more; we need to be given larger contracts”. That is entirely understandable. We have to bear in mind our responsibility to the bill payer who ends up paying these costs. We of course want to see more renewable capacity laid out—it is intermittent but it is cheap. We need to produce a strike price that is fair to the developers, so that they get a return, but also to the bill payers.
Lord West of Spithead (Lab)
My Lords, the Minister is right that we should praise ourselves for the offshore wind farms, which I must say are most impressive. However, the interconnectors and so on lie along the seabed. Like so many other aspects of our energy supply and other things, the seabed has certain vulnerabilities. We have seen Russian ships from the main directorate of undersea research regularly in the North Sea, going along areas where these lie. Is the Minister happy that we have put enough effort into monitoring and tracking where they are all the time and then using ships, aircraft and whatever else to go and make sure that those lines are still safe?
Lord Callanan (Con)
The noble Lord makes a good point. There are a number of such areas of critical national infrastructure, including gas-interlinking pipelines and electricity interconnector cables with other countries, as well as our interconnector cables with the offshore wind farms. These are all critical vulnerabilities and the noble Lord can be assured that we monitor these things closely. We are well aware of the possible threat presented to them.
Business of the House
(8 months ago)
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Northern Ireland (Ministerial Appointment Functions) Regulations 2023
(8 months ago)
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Lord Caine
That the Regulations laid before the House on 10 July be approved. Considered in Grand Committee on 7 September.
Economic Crime and Corporate Transparency Bill
Monday 11th September 2023
(8 months ago)
Lords ChamberRead Full debate Economic Crime and Corporate Transparency Act 2023 View all Economic Crime and Corporate Transparency Act 2023 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 166-I Marshalled list for Consideration of Commons Amendments and Reasons - (8 Sep 2023)
17:04 - Division on Motion E1 - Ayes: 211 / Noes: 185 - Motion E1 agreed.
17:16 - Division on Motion H1 - Ayes: 218 / Noes: 186 - Motion H1 agreed.
Lord Johnson of Lainston
That this House do disagree with the Commons in their Amendment 23A and do propose Amendments 23B and 23C in lieu—
“12B After section 790I insert—
“Power to impose further duties
790IA Power to impose further duties involving nominee shareholders
(1) The Secretary of State may by regulations make further provision for the purpose of enabling a company to which this Part applies to find out about anyone who has become or ceased to be a person who is—
(a) a registrable person in relation to the company by virtue of shares being held by a nominee, or
(b) a registrable relevant legal entity in relation to the company by virtue of shares being held by a nominee.
(2) The regulations may, in particular—
(a) impose obligations on a company with a view to obtaining—
(i) information about whether a person has become or ceased to be a nominee shareholder;
(ii) if they have, information about: (A) the shareholding; (B) the nominee; (C) the person for whom the nominee holds or held the shares;
(iii) any other information required by the regulations;
(b) impose obligations on others (including nominees or former nominees) with a view to providing the company with—
(i) information of a kind described in paragraph (a)(i)
or (ii);
(ii) any other information required by the regulations.
(3) The regulations may, in particular, make provision similar or corresponding to any of the preceding provisions of this Chapter.
(4) The provision that may be made by regulations under subsection (1) includes provision amending this Chapter.
(5) Regulations under this section are subject to affirmative resolution procedure.””
The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)
My Lords, I shall also speak to Motions B, C, D and D1. I thank noble Lords for their extraordinarily high level of constructive input over the last few days as we have come to this point. I believe that together, across the House, we have created a truly powerful piece of legislation that will have a meaningful impact on how Companies House operates, how we deal with financial crime and how we make our system safer and cleaner.
I should declare my interests. I have interests in limited companies and other companies, but I do not believe there is any conflict of interest in this process today.
Motion A relates to Lords Amendment 23, tabled on Report by the noble Lord, Lord Vaux of Harrowden, which would require members of all UK companies to declare whether they were holding shares on behalf of, or subject to the direction of, another person or persons as a nominee and, if so, to provide details of the person or persons. We have been in conversation over the last few days about that amendment. While we understand the intention to tackle what we perceive to be an industry of nominee service providers prone to acting unlawfully, I am afraid we do not believe that the amendment is the appropriate way to achieve that goal.
However, the Government, via Motion A, have therefore tabled Amendments 23B and 23C in lieu of Commons Amendment 23A. I hope that is making sense to the noble Lord. The new amendments allow the Secretary of State to make regulations to make further provision for the purpose of enabling a company to find out who its PSCs are—that is, people of significant control—in cases where shares are held by a nominee. That could include, among other things, imposing further obligations on companies to find out if they have nominee shareholders and, if so, for whom they are holding shares, or imposing further obligations on nominee shareholders to disclose their status and for whom they are holding shares.
It is important that we make it clear that the reason for tabling the new amendments rather than accepting the noble Lord’s revised amendment is that we are slightly wary of imposing disproportionate burdens on business. There are a vast variety of nominee types which we need to make sure we have taken into account when ensuring that we are getting the right information from the right types of nominees. As I have said to the noble lord—at this Dispatch Box, I believe—the commitment in principle to try better to understand the route between the nominee and the beneficiary is an important one. We want to do it in the right way, and these amendments would give the Secretary of State the powers to do that. I hope that the noble Lord can agree that that is the right approach to take and, assuming that is so, can support the Government in this new amendment and consider withdrawing his own.
I turn to Motion B.
Lord Agnew of Oulton (Con)
My Lords, I apologise to my noble friend the Minister. I had been told that I needed to address my Motion D1 while Motion A was under discussion. I am very happy to wait but those were the instructions I had from the Table. Would anyone like to clarify?
Lord Johnson of Lainston (Con)
I am told that I should continue, and we will hear from my noble friend at a later stage—which I welcome and look forward to greatly.
Motion B is a technical Motion that allows the power to modify who is able to file with Companies House on others’ behalf, to ensure it is consistent for all types of filings. I hope the House is assured that these amendments are minor but sensible modifications to the Bill.
Motion C relates to Lords Amendment 115, also tabled by the noble Lord, Lord Vaux, at Report. This will introduce two new duties for overseas entities, the first requiring event-driven updates on beneficial ownership information, and the second requiring overseas entities to update their records no more than 14 days before the completion of a land transaction. We believe that requiring event-driven updates for the Register of Overseas Entities will not work in principle. I would like to reassure noble Lords that we have done an enormous amount of highly collaborative work with the noble Lord, Lord Vaux, on this issue. We are concerned that this would create additional risk for purchasers of properties involved with overseas entities. However, as I hope I have made clear to noble Lords, we are extremely committed to working further on this subject. The Government commit to keeping under review the question of the update period for the Register of Overseas Entities. That is extremely important, and I personally commit to that on behalf of the Government. We will have more evidence at our disposal as the first set of annual updates comes through. If we felt it necessary to change the reporting requirements, and if there were not the risks that we feel may be presented by the noble Lord’s proposal, then we would look to consult on that. For that reason, we will not be supporting that amendment.
I turn to Motion D, which my noble friend Lord Agnew will then speak to. Again, I am very grateful to my noble friend for his extraordinarily high level of commitment to making sure that the Economic Crime and Corporate Transparency Bill is genuinely powerful legislation that will enable us to achieve the goals we wish to achieve. Ultimately, transparency is at the core of our ambition. However, we are concerned, in that his amendment would make information about trusts submitted to the Register of Overseas Entities publicly available by removing it from the list of material listed as unavailable for public inspection. I note that my noble friend has also tabled a further amendment.
However, it is important to come back to these points, because they are very relevant to our ambitions. We are resolute in saying that we will not unilaterally change the rules relating to these trusts, and I think Members of the House understand why. However, we have committed already to launching a full public consultation before the end of the year on how we can further improve the transparency of trust information. Following further discussion with my noble friend, I would like to make it clear that the public consultation to which we are committed is a separate exercise from the commitment to make regulations that I have discussed already. The consultation will look at the case for broader transparency regarding trusts. The Government’s ambition is to increase and improve transparency. We commit absolutely that we will undertake this consultation and that it will be launched before Christmas of this year and run for no more than 12 weeks. That is in line with discussions we had with my noble friend.
I reassure my noble friend that Ministers across departments are committed to meeting this deadline and acting swiftly on the consultation’s findings. I would be very happy to meet with my noble friend, and indeed any noble Lords, soon after the consultation closes to discuss how we can move forward at pace. We therefore oppose my noble friend’s amendment, but I hope he can take the commitments I have made today at the Dispatch Box as sufficient reassurance to persuade him to withdraw his amendment. I beg to move.
Lord Vaux of Harrowden
Moved by
Leave out from “House” to end and insert “do agree with the Commons in their Amendment 23A, and do propose Amendment 23D to Lords Amendment 23 in place of the words left out by Amendment 23A—
“113C Required information about members: nominees
If a member holds 5% or more of the share capital or voting rights of the company, the required information about a member includes a statement by the individual, or where the member is a body corporate, or a firm that is a legal person under the law by which it is governed, by an officer of that body corporate or firm, as to whether or not they are holding the shares on behalf of, or subject to the direction of, another person or persons, and if they are—
(a) where any such person is an individual, and the shares held on that person’s behalf or subject to their direction amount to 3% or more of the share capital or voting rights of the company, the information required by section 113A in relation to that individual;
(b) where any such person is a body corporate or firm that is a legal person under the law by which it is governed, and the shares held on that person’s behalf or subject to their direction amount to 3% or more of the share capital or voting rights of the company, the information required by section 113B in relation to that body corporate or firm; or
(c) a statement that the member is not holding shares on behalf of, or subject to the direction of, such person that amount to 3% or more of the share capital or voting rights of the company.””
Lord Vaux of Harrowden (CB)
My Lords, I hope that Motion A1 is clear. Before I start, I remind the House of my interest as a non-practising chartered accountant.
On Report, your Lordships agreed Amendment 23, which included a requirement that shareholders should have to state whether they are holding shares on someone else’s behalf and, if so, on whose behalf they are holding them. This requirement was rejected, as we have heard, by the other place. Motion A1 aims to reverse that, while trying to take on board some of the matters raised in debate in the other place. If I may, given that the debate we had in this House was now some months ago, I will briefly remind the House of the issue that that amendment was trying to resolve.
One of the easiest ways to hide the true identity of an owner of a company is to use a nominee—somebody whose name will appear on the register of members but who is in fact acting under the instruction of and for the benefit of the actual beneficial owner. A substantial industry has grown up to provide these nominee services. There are of course legitimate reasons for using a nominee, such as an asset manager holding and managing a range of shareholdings, but it is quite revealing to do a Google search of nominee shareholding services.
A near-endless list of such services appears, and these services are usually sold very clearly as being primarily about creating anonymity for the true shareholder. Let me quote from one of them:
“The beneficial owner may choose to appoint a Nominee Shareholder because they do not want to register the shares in their own name. A Nominee Shareholder is a great way to keep shareholder information away from public records”.
Another one states:
“In the United Kingdom, the purpose of using nominees is confidentiality. Because of the confidentiality requirements, owners are reluctant to associate themselves with beneficial ownership, and the practice of nominating shareholders will hide their association”.
Most nominee service providers market their services in the same vein. A few of them refer to the PSC—persons with significant control—rules or to anti-money laundering in the marketing literature, but they are very much in the minority. As I said, there are legitimate reasons for holding shares through a nominee, but not wanting to register the shares in their own name and keeping shareholder information away from public records are not legitimate reasons. In fact, that is precisely what this Bill is trying to stop.
The amendment originally passed by this House was intended to strengthen the Bill to prevent the misuse of nominees to hide the true ownership. I continue to believe that this is a very real issue and, as a result, I have tabled Motion Al, which tries to reintroduce the original amendment, but changed to reflect some of the reasons for rejecting it made in the other place—in particular, the question of undue burden that the Minister referred to a moment ago.
However, since I tabled my Motion A1, I am very pleased to say that the Government has tabled Amendment 23C within their Motion A. It shows that they now recognise that there is a genuine issue here and, in particular, that the enabling industry needs to be incentivised to clean up its act. I especially welcome the fact that proposed new subsection (2)(b) will specifically allow the Government to impose obligations directly on those who act as nominees. The real flaw in the current rules is that those enablers face no real risk at all when acting as they do. I hope that this specific mention in the Government’s Amendment 23C will cause the nominee industry to take note and clean up its act, in the knowledge that if it does not, it will face regulation.
While I would have preferred to have taken action now and introduced something in the Bill, the fact that the Government recognise the issue and are proposing a regulating power to deal with it is most welcome. I very much welcome the commitments made by the Minister a moment ago. I thank him and, given that and what he has just said, I will not press Motion A1. I thank him and his officials for their continuing very constructive engagement, which has been the case throughout the Bill. I look forward to seeing the proposed regulations before too long—he will know that I will not be dropping the issue until we see the regulations.
I shall also comment very briefly on Motion C, which moves an amendment passed in this House that aimed to fix an anomaly in the register of overseas entities, which is that it has to be updated only annually. First, I point out the reason given by the Commons:
“Because it would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason”.
That, frankly, is totally inadequate and nonsensical in this case. It has to be updated only annually. Other registers, such as the register of persons with significant control, have to be updated within 14 days of any change being identified. This anomaly means that the register of overseas entities can be up to a year out of date at any time. That introduces the risk that an innocent part might unknowingly find themselves entering into a transaction with a sanctioned person, for example.
Unfortunately, because of the way the register works in conjunction with the registration of property, this all becomes extremely complex. I thank the Law Society for its helpful and constructive engagement in many meetings over the Recess to try to find a solution to this. While we did find a possible way through, it was so convoluted as to be impractical—so I am not going to oppose the removal of this amendment, even if the issue it was trying to solve remains real.
The register of overseas entities is still in its early stage. While it has been successful up to a point, as I am sure we are going to hear from the noble Lord, Lord Agnew, there are still many properties the ownership of which is, at best, unclear. I am very pleased to hear the commitment the Minister made in his speech just now that they will keep this anomaly of annual updating under review. In the meantime, I caution any person who is buying or selling property from or to an overseas entity, or who is entering into a lease over a property with an overseas entity, to require it to be a condition of the transaction that the entity’s entry in the register is updated immediately prior to the transaction completing. Only by doing that can the innocent party know who they are actually transacting with. With that, I beg to move.
Lord Agnew of Oulton (Con)
My Lords, I shall speak in favour of my Motion D. I am grateful to my noble friend the Minister for his ongoing dialogue with me as we grind to the end of this Bill: he has been patient and courteous, as ever. My problem is that the Government continue to say one thing and then do something different. Just to remind noble Lords, the reason I pressed my original amendment was that a gaping hole had opened up in this newly created register of overseas interests. It is barely a year old and we have more than 50,000 properties owned by an entity whose beneficial owners are withheld from public view. That is approaching one-third of all entries. It is rapidly becoming the default advice from cute law firms to their overseas clients to use a trust structure that is opaque.
In rejecting my original Commons amendment, the Government claimed refuge behind the principle of financial privilege. This is bizarre, if not worse, but in a spirit of collaboration I will not use the word that I had planned to use. The costs to Companies House of publishing trust information are estimated on the back of an illusory envelope at between £600,000 and £2.8 million—a figure supported by absolutely no methodology—but under the Bill, Companies House funding is going to rise exponentially. The current filing fee of £13 will rise to anywhere between £60 and £90 if the guidance we have been given is followed. Taking the bottom-end number, £60 means an increase of £47 a year times 4 million companies, or £188 million a year, against this odd figure of £600,000 to £2.8 million. Even if the higher filing fees deterred some company creation or dissolution for non-viable entities, the additional cost, frankly, is a rounding error. Indeed, if the Government were to approach this logically and calculated that as a transparency cost, it would be around about 70p per registered company per year, or about 1.25%.
I give this example only because I continually worry that I get very clear assurances from the Minister but the actions taken by the Government are rather different. I accept through gritted teeth that we cannot debate that amendment as I was blocked from tabling it. This leaves us with a much watered-down proposal to try to hold the Government to account to get on with the consultation they say they need to ensure that there are no legal challenges. The Government have accepted that they need to start straightaway, in this calendar year, but they do not yet accept the principle of my proposed new subsection (2) that the consultation includes the principle of public access to protected data on a bulk basis.
This sounds arcane, but it is crucial because currently HMRC is not providing the information when requested, and it can be requested only on a case-by-case basis. As I have shown, there are already more than 50,000 hidden owners where the public are being denied the information, so doing it individually is simply not practical. I have consistently said that those with a bona fide need for confidentiality should have it, but this would be a very small proportion of the 50,000.
On the terms of the consultation, there are a couple of elephant traps that the Government should be aware of. A few years ago, when the consultation was issued to tighten up the non-dom loopholes, the lawyers’ excuse for not tightening them up was that anyone who declared non-dom status should have a reasonable expectation that it should last in perpetuity. That sounds pretty sinister to me, but apparently that argument has already been rolled out to civil servants on the issue of more transparency with trusts. I warn the Minister to be alert because, as I understand it, civil servants have already expressed their compliance with this idea. I hope that we as politicians are still running the country, not the civil servants.
We have heard from my noble friend the Minister and he has given commitments, which I very much appreciate. However, I hope he understands why I am extremely nervous: what he says and what the Government do are not always totally aligned. I will take his words exactly as he says them, though, and I ask him to keep a very careful eye on this process over the next few months. I think he has learned enough about me to know that, for all my many weaknesses, one thing I am is dogged. We will keep a careful eye on this. On that basis, I will withdraw my amendment.
Lord Eatwell (Lab)
My Lords, I strongly support the amendment from the noble Lord, Lord Agnew. I do this as a former chair of the Jersey Financial Services Commission. In Jersey we made a major effort to increase the transparency of trust information so that beneficial ownership could be accurately identified. One of the inhibitions for cleaning up, if you like, the register in Jersey was the behaviour of the Government in the United Kingdom, and their persistent obfuscation of the way in which trusts were to be treated.
The amendment from the noble Lord, Lord Agnew, contains exactly the process that needs to be dealt with in a consultation. I understand the assurances he may have received and that he may feel it appropriate to withdraw his amendment, but I hope he proves as dogged as we know him to be in pursuing this. I assure him of my continuing support.
Lord Faulks (Non-Afl)
My Lords, I also support what the noble Lord, Lord Agnew, has said and done. I am very sorry that the Government did not accept the amendment in relation to trusts. It was entirely in keeping with the purpose of the Bill, and more specifically with the purpose of the introduction of the register of overseas entities.
Some of us have been advancing the cause of this register—some would say banging on about it—for some considerable time. I had the privilege of chairing the Joint Committee on a draft Bill. We recommended legislation as soon as possible. Unfortunately, it took the invasion of Ukraine for the Government to incorporate the necessary legislation into the last economic crime Bill.
During the taking of evidence by the committee in 2019, the need to avoid trusts being used to avoid the identification of the true owner of property was specifically brought to our attention. It then became part of our recommendations that the legislation, when it came before your Lordships’ House, should cater for this obvious loophole. The Government ignored the recommendation then and have now resisted the amendment passed by your Lordships’ House.
If there is concern about minors and keeping them ignorant about their status as beneficiaries, this could have been catered for by an appropriate provision. Instead, the Government, against whom the former Lord Chancellor voted in the other place on this issue, have resorted to “financial privilege” as a means of blocking the amendment.
Trust lawyers are going to be very busy, as foreign owners will set about frustrating the purpose of the register and the aspirations that we all share for this and related legislation. I hope the Government bear that in mind.
Lord Garnier (Con)
My Lords, I had the privilege of being a member of the noble Lord’s committee. I agreed with what he had to say then, and I agree with what he has just said now.
Lord Fox (LD)
My Lords, in his opening dispatch the Minister praised those involved for the way in which the Bill has been modified and changed. The noble Lord, Lord Agnew, needs to take a lot of credit for how that modification has gone ahead, and the work that he has done and will have to continue to do in his role overseeing the Government’s response to this. I will not repeat anything that has already been said, other than to say that I agree.
The reason we are concerned about this issue is that the Government will rightfully say that they know who the names are in these trusts, but the issue we are talking about is the publication. It has been the role of civil society and journalists to uncover problems, and that has been very important in issues around this. If the Government can demonstrate that their commitment to enforcement, getting behind these trusts and exposing people who are using them to avoid issues is fully funded and fully backed by them, our relying on civil society—which we have had to do to date—would be less of an issue. That is why we support the quest by the noble Lord, Lord Agnew, on this, and will support him as he seeks to make sure that further steps are appropriate and that enforcement is at the heart of what we seek to achieve here.
Baroness Blake of Leeds (Lab)
My Lords, I start by thanking the Minister for the broader tidying up of the amendments in this group and by reflecting on the time, over several months, that we have been discussing these important issues. We must keep our eye on the scale of the issues that we are dealing with; they are immense, and they cost this country billions of pounds. We have a great deal to do to repair the UK’s reputation in the world, and I hope that we involved in this debate will all have our eyes on that prize.
I am pleased to say that we have seen some positive changes achieved through the passage of this Bill and a genuine appetite for change, as we experienced with our conversation with Companies House. We are going through an immense cultural change in the management of these affairs. As we know, it is the biggest shake-up for 170 years. I also pay tribute to everyone in the Chamber, and those who are not here today, for their diligence in the work that they have done, and to my colleagues in the other place, Dame Margaret Hodge and Seema Malhotra in particular. Months and months of work have gone into getting us to this place.
I am very grateful for the explanation that the noble Lord, Lord Vaux, gave. There is real recognition that there will be an ongoing need to scrutinise. I think we all accept the commitments in good faith, but we need to make it clear to Ministers and their officials that the interest is very live and that there will be close scrutiny as these matters roll up. Compromise has been reached on this—I accept that that is the reason we will not be taking the amendment to a vote—but we add our support to the ongoing scrutiny that will need to take place.
I also pay tribute to the noble Lord, Lord Agnew, for his persistence in this and his unique position having had experience in government, which has informed the approach he has taken and the concern that I think many would agree he has rightly raised. We are where we are—he has decided to accept the reassurances—but we also have an insight into those elephant traps that he referred to. I also reference the comments of my noble friend Lord Eatwell on the explicit need for vigilance.
With those comments, and thanking everyone for the spirit of compromise, I reassure everyone that we will look closely at this, and we very much hope that the measures being brought in today will be sufficient. We will look to those delegated powers that have been built in to make sure that, if change is necessary, it will indeed be made.
Lord Johnson of Lainston (Con)
I thank noble Lords for their contributions, including the noble Baroness, Lady Blake, for her extremely helpful and supportive comments about the overall debate. In her summation, she was right that we have, through a great degree of good faith among us all, come up with a very strong series of actions that will genuinely change the economic landscape in this country for the better.
I have had the privilege of working with my noble friend Lord Agnew for a number of months as we have come to today’s conclusion on these measures. I reiterate my personal commitment, and the commitment of this Government, to delivering on the thrust of his ambitions. On a process that came to light only recently—the issue of bulk data and its accessibility—I can commit that Companies House will do a review of how it can assess bulk data for the trusts’ information on the register of overseas entities once a consultation period has finished and it is deemed appropriate.
Ultimately, we are committed to greater transparency, and I am very grateful to my noble friend and noble Lords across the House for their understanding of our approach to how we can best achieve this without either endangering vulnerable minors or individuals or opening ourselves up to legal challenge which could derail many of the main principles of this part the Bill to which my noble friend is rightly keen to contribute.
Finally, I express my gratitude to the noble Lord, Lord Vaux, who, from the very beginning, has been a tireless collaborator in creating—with his input across the board in this section of the Bill—a truly powerful piece of legislation. It was my own personal pleasure and pride to work with him as we have come to this conclusion, and I am very grateful to him for his understanding, again, of how we believe that we can achieve our shared ambitions in what we think will be the right way.
We have made some clear further commitments today—to which I would be delighted to be held to account by my noble friend Lord Agnew and all noble Lords in the House today—to make the Economic Crime and Corporate Transparency Bill the most effective legislation it can be. I therefore invite the House to agree the government Motions in this group.
Lord Vaux of Harrowden (CB)
My Lords, I thank the Minister for his generous comments. I also thank noble Lords who have been so generous with their support throughout the passage of the Bill on these matters, which has allowed us to get to the point of achieving at least this compromise. With that, I beg leave to withdraw Motion A1.
Lord Johnson of Lainston
That this House do not insist on its Amendment 56 and do agree with the Commons in their Amendments 56A, 56B and 56C in lieu.
“Who may deliver documents to the registrar
1067A Delivery of documents: identity verification requirements etc
(1) An individual may not deliver a document to the registrar on their own behalf unless—
(a) their identity is verified (see section 1110A), and
(b) the document is accompanied by a statement to that effect.
(2) An individual (A) may not deliver a document to the registrar on behalf of another person (B) who is of a description specified in column 1 of the following table unless—
(a) the individual is of a description specified in the corresponding entry in column 2, and
(b) the document is accompanied by the statement specified in the corresponding entry in column 3.
1 | 2 | 3 | |
Description of person on whose behalf document delivered (B) | Description of individual who may deliver document on B’s behalf (A) | Accompanying statement | |
1 | Firm | Individual who is an officer or employee of the firm and whose identity is verified (see section 1110A). | Statement by A— (a) that A is an officer or employee of the firm, (b) that A is delivering the document on the firm’s behalf, and (c) that A’s identity is verified. |
2 | Firm | Individual who is an officer or employee of a corporate officer of the firm and whose identity is verified. | Statement by A— (a) that A is an officer or employee of a corporate officer of the firm, (b) that A is delivering the document on the firm’s behalf, and (c) that A’s identity is verified. |
1 | 2 | 3 | |
Description of person on whose behalf document delivered (B) | Description of individual who may deliver document on B’s behalf (A) | Accompanying statement | |
3 | Firm | Individual who is an authorised corporate service provider (see section 1098A). | Statement by A— (a) that A is an authorised corporate service provider, and (b) that A is delivering the document on the firm’s behalf. |
4 | Firm | Individual who is an officer or employee of an authorised corporate service provider. | Statement by A— (a) that A is an officer or employee of an authorised corporate service provider, and (b) that A is delivering the document on the firm’s behalf. |
5 | Individual | Individual whose identity is verified. | Statement by A— (a) that A is delivering the document on B’s behalf, and (b) that A’s identity is verified. |
6 | Individual | Individual who is an authorised corporate service provider. | Statement by A— (a) that A is an authorised corporate service provider, and (b) that A is delivering the document on B’s behalf. |
7 | Individual | Individual who is an officer or employee of an authorised corporate service provider. | Statement by A— (a) that A is an officer or employee of an authorised corporate service provider, and (b) that A is delivering the document on B’s behalf. |
(a) an individual who is an officer of one of those corporate officers, or
(b) if the officers of those corporate officers are all corporate officers, an individual who is an officer of any of the corporate officers’ corporate officers,
and so on until there is at least one individual who is an officer.
(4) The Secretary of State may by regulations—
(a) create exceptions to subsections (1) or (2) (which may be framed by reference to the person by whom or on whose behalf a document is delivered or by reference to descriptions of document or in any other way);
(b) amend this section for the purpose of changing the effect of the table in subsection (2).
(5) Regulations under subsection (4)(a)—
(a) may require any document delivered to the registrar in reliance on an exception to be accompanied by a statement; (b) may amend this section.
(6) The Secretary of State may by regulations make provision requiring a statement delivered to the registrar under subsection (2) to be accompanied by additional statements or additional information in connection with the subject-matter of the statement.
(7) Regulations under this section are subject to affirmative resolution procedure.
(8) In this section “corporate officer” means an officer that is not an individual.””
“(7) The Secretary of State may by regulations amend this section for the purposes of changing who may deliver a document to the registrar on behalf of a disqualified person.
(8) Regulations under subsection (7) are subject to the affirmative procedure.”
(a) amend this section for the purposes of changing who may deliver a document under a provision listed in subsection (4) to the registrar on behalf of another person;
(b) ”
Lord Johnson of Lainston
That this House do not insist on its Amendment 115, to which the Commons have disagreed for their Reason 115A.
Lord Johnson of Lainston
That this House do not insist on its Amendment 117, to which the Commons have disagreed for their Reason 117A.
Lord Sharpe of Epsom
That this House do agree with the Commons in their Amendment 151A.
The Parliamentary Under-Secretary of State, Home Office (Lord Sharpe of Epsom) (Con)
My Lords, I will speak also to Motions F, G, H and H1. We cannot agree to the proposed amendments for practical reasons, not least that the burdens they would place on business would not just be justified. It is for this reason, and not because of any intransigence or party-political reason, that we are unable to agree with the proposed Lords amendments. I will now talk specifically to the Motions in this group.
Motion E would reinsert the SME exemption for the failure to prevent fraud offence. I have of course noted Motion E1, tabled by my noble and learned friend Lord Garnier. I appreciate that he has moved closer to the Government’s position on this issue, creating his own threshold that would exclude microentities from the failure to prevent fraud offence. However, the Government remain extremely mindful of the pressures on companies of all sizes, including small and medium-sized enterprises, and therefore do not feel it is appropriate to place this new, unnecessary burden on more than 450,000 of them.
The analysis on this issue remains clear: even reducing the exemption threshold to only microentities would increase the one-off costs on businesses from around £500 million to £1.5 billion. Further, the annually recurrent costs would increase from £60 million to more than £192 million. Those costs would still be disproportionately shared by small business owners.
I know some noble Lords have expressed scepticism about the burdens, but the fact is that when a small business person hears that they may be liable to a new offence and significant fines if they are judged not to have taken action on something, they will worry. They will take time out of their business to scrutinise the guidance and, whatever it may say, there could be widespread overcompliance. Furthermore, they may well have to pay their accountant or lawyer to do it for them. While this burden is eye-watering in its own right, the issue cannot be taken in isolation. We must be aware of the cumulative compliance costs for SMEs across multiple government requirements or regulations. Furthermore, I can assure noble Lords that 50% of economic activity would be covered by the organisations in scope of this new offence with the Government’s threshold in place. It is of course already easier for law enforcement to attribute and prosecute fraud more easily in the smaller organisations that fall below the threshold.
I hope that noble Lords who feel strongly on this issue will be reassured that this is not the end of the debate. The Government have future-proofed the legislation by including a delegated power to allow them to raise, lower or remove the threshold altogether. Of course, as with all legislation, the Government will keep the threshold under review and will make changes if there is evidence to suggest that they are required. I therefore urge noble Lords to support government Motion E, rather than Motion E1.
I now turn to government Motion G, which disagrees with Lords Amendment 158. This was also tabled by my noble and learned friend Lord Garnier and seeks to introduce a failure to prevent money laundering offence. I am pleased that no amending Motions have been tabled for today, as I fear this amendment is entirely duplicative of existing regulations. Much like my noble and learned friend’s other amendment, it would therefore impose yet further unnecessary burdens on UK businesses. The UK already has a strong anti-money laundering regime in the form of the money laundering regulations, which require regulated sectors to implement a comprehensive set of measures to prevent money laundering. Corporations and individuals can face serious penalties, ranging from fines to cancellation of registration and criminal prosecution, if they fail to take those measures. What is more, those penalties will apply even if no actual money laundering has occurred. No knowledge of or intention to commit an offence has to be proved.
The money laundering regulations and the money laundering offences in the Proceeds of Crime Act are directly linked and can be seen as part of the same regime. A failure to prevent money laundering offence would therefore be highly duplicative of the existing regime. This is not just the view of the Government: in our conversations with industry, it has been very clear that duplication would create a serious level of confusion and unnecessary burdens on businesses. We should support legitimate businesses, rather than hamper them with overlapping regimes. I therefore hope that noble Lords will agree with the government Motion to disagree with the amendment from Report.
Lord Garnier
Leave out from leave out from “House” to end and insert “do disagree with the Commons in their Amendment 151A and do propose Amendments 151B and 151C in lieu—
“Section (Failure to prevent fraud): non-micro organisations
For the purposes of section (Failure to prevent fraud)(1) a relevant body is a “non-micro organisation” only if the body satisfied two or more of the following conditions in the financial year of the body (“year P”) that precedes the year of the fraud offence—
Turnover | More than £632,000 and less than £36 million |
Balance sheet total | More than £316,000 and less than £18 million |
Number of employees | More than 10 and less than 250. |
(3) In subsection (1) the “number of employees” means the average number of persons employed by the relevant body in year P, determined as follows—
(a) find for each month in year P the number of persons employed under contracts of service by the relevant body in that month
(whether throughout the month or not),
(b) add together the monthly totals, and (c) divide by the number of months in year P.
(4) In this section—
“balance sheet total”, in relation to a relevant body and a financial year—
(a) means the aggregate of the amounts shown as assets in its balance sheet at the end of the financial year, or
(b) where the body has no balance sheet for the financial year, has a corresponding meaning;
“turnover”—
(a) in relation to a UK company, has the same meaning as in Part 15 of the Companies Act 2006 (see section 474 of that Act);
(b) in relation to any other relevant body, has a corresponding meaning;
“year of the fraud offence” is to be interpreted in accordance with section (Failure to prevent fraud)(1).
(5) The Secretary of State may by regulations modify this section (other than this subsection and subsections (6) and (8)) for the purpose of altering the meaning of “non-micro organisation” in section (Failure to prevent fraud)(1).
(6) The Secretary of State may (whether or not the power in subsection (5) has been exercised) by regulations—
(a) omit the words “which is a non-micro organisation or” in section (Failure to prevent fraud)(1), and
(b) make any modifications of this section (other than this subsection) that the Secretary of State thinks appropriate in consequence of provision made under quotegraph (a).
(7) Before making regulations under subsection (5) or (6) the Secretary of State must consult—
(a) the Scottish Ministers, and
(b) the Department of Justice in Northern Ireland.
(8) Regulations under subsection (5) or (6) may make consequential amendments of section (Failure to prevent fraud: minor definitions).””
Lord Garnier (Con)
My Lords, I begin by referring to my interest as a barrister in private practice and informing the House that that practice includes economic and corporate crime.
I wish to acknowledge the genuine attempts of my noble friends on the Front Bench to understand my concerns, expressed over a good many years and, more particularly, during the passage of this Bill, not only in this Chamber and in Grand Committee but in meetings with them and their officials, most recently on Friday. My noble friend Lord Sharpe has had to bear the brunt of my concerns, but he has never dissembled nor lost his sense of humour, even when listening to my jokes. It is regrettable that he has not been permitted any discretion by Ministers in the other place and has had to stick to his instructions on a matter that has nothing to do with party politics or manifesto commitments.
I know that your Lordships are interested only in creating good, coherent and comprehensible criminal law that meets the needs of the modern economy and is in line with public opinion and morality. Thanks to the support of your Lordships’ House—I am grateful to noble Lords of all parties and none—the Bill we are dealing with was altered on Report to delete the SME exemption from the failure to prevent fraud offences regime, while money laundering was added to the failure to prevent regime introduced by the Government; by that, I mean the substantive money laundering offences under Part 7 of the Proceeds of Crime Act 2002, not to be confused with the due diligence requirements under the more recent money laundering regulations.
Last Monday, despite the powerful arguments of my right honourable and learned friends Sir Jeremy Wright and Sir Robert Buckland, the other place refused to extend the proposed new offence of failure to prevent fraud to 99.5% of the corporate economy and deleted money laundering from the failure to prevent regime. Having won the Division in the other place last week, the Government now seek to sustain that position in your Lordships’ House today. I accept that democratic politics is as much about arithmetic as it is about sound arguments; if a majority prefers to do something unsatisfactory, whether or not it has listened to the arguments and the evidence in support of them, that is what will happen. Even as they stand, these limited proposals are well overdue and have been in the making since 2010.
In the spirit of compromise, those of us who voted for the extension of failure to prevent to money laundering on Report have agreed not to press the money laundering extension today. We happen to think that it should be extended to money laundering—I happen to think also that there are other substantive offences, such as those listed in the deferred prosecution agreements schedule to the Crime and Courts Act 2013, that could be included—but, on the basis that the best is often the enemy of the good, and in an attempt to meet the Government a lot more than half way down the road, we will not take that matter further on this occasion. However, I invite the Government and the other place to reconsider the SME exemption, subject to a further concession to exempt micro-businesses; I hope that this will allay the fear, albeit unfounded, that extending the failure to prevent regime further than the Bill currently permits will stifle small businesses. Absent any agreement from my noble friend the Minister, I will seek leave to test the opinion of the House at the appropriate time.
On Report, I spoke in support of a number of amendments or proposed new clauses to the Bill—a Bill which has much to recommend it, even if it has been slow to arrive. The defects that I intended to correct related to the failure to prevent regime. No one needs reminding of this but that regime is not a new provision stealthily added to the criminal law in the past few months by an eccentric Back-Bench Peer. It was first introduced into our criminal law with cross-party support—indeed, without a vote—via the Bribery Act 2010, which began its passage through Parliament under Gordon Brown’s Labour Government and was enacted under David Cameron’s coalition Government. Failure to prevent bribery under Section 7 of the 2010 Act, supported by all three major parties, as well as the Cross Benches and others, is now a tried and tested criminal offence, with an easily understood and practical defence for companies and partnerships that I and many other practitioners have not found difficult to advise on or to apply in particular cases, whether we have been acting for the Serious Fraud Office or for defendant companies.
The objective of the 2010 Act was and is not to bring the full force of the criminal law to bear on well-run commercial organisations that experience an isolated incident of bribery on their behalf. Therefore, to achieve an appropriate balance, Section 7 provides a full defence. This is in recognition of the fact that no bribery prevention scheme will be capable of always preventing bribery. However, the defence was also included to encourage commercial organisations to put procedures in place to prevent bribery by persons associated with them. The failure to prevent bribery offence is in addition to, and does not displace, liability that might arise under Sections 1 and 6 of the Act for direct bribery here or of a foreign public official where the commercial organisation itself commits an offence.
That was well understood as the Act progressed through Parliament and I hope it is well understood now. So too are the special nature and parameters of the statutory defence of “adequate procedures”. Note that the defence requires “adequate procedures”, not perfect procedures. There is no practical difference between “adequate procedures” in the 2010 Act and “reasonable procedures” in the Criminal Finances Act 2017 and in this Bill. The law requires no more than a proportionate approach to the facts relevant to the company or partnership in question.
The alarmist suggestion that a failure to prevent fraud offences regime that does not include SMEs—that is, it does not exempt 99.5% of companies and partnerships—will impose unbearable cost burdens running into multiple billions of pounds on those organisations is absurd. There will be some cost but since the guidance under the 2010 Act has been available since 2011, it is well understood and can easily be adapted to the failure to prevent offences under this Bill. The Bribery Act guidance will easily translate to fraud offences and the sooner it is published, the better. The best estimates are that SME companies will need to spend between £2,000 and £4,000 to prepare themselves and some will need to spend nothing because of their low risk profile. These costs are a legitimate business expense but, to put this in proportion, Lesley O’Brien, a director of Freightlink Europe, said in June 2022 that it costs £20,000 per year to run one heavy-goods vehicle. No sensibly run business should be trading abroad without taking proportionate precautionary steps to avoid the risk of bribery or fraud committed by its associates.
In the guidance to the 2010 Act, published in 2011 by my noble friend Lord Clarke of Nottingham, the then Justice Secretary, he explained that “procedures” is used to embrace bribery prevention policies and the procedures that implement them. Policies articulate a commercial organisation’s anti-bribery stance, show how it will be maintained and help create an anti-bribery culture. They are therefore a necessary measure in the prevention of bribery but they will not achieve that objective unless they are properly implemented. Adequate bribery prevention procedures, I repeat, ought to be proportionate to the bribery risks that the organisation faces. The same applies to the prevention of fraud offences and, where the guidance refers to “bribery”, one could in the context of this Bill substitute “fraud”.
The guidance says:
“To a certain extent the level of risk will be linked to the size of the organisation and the nature and complexity of its business, but size will not be the only determining factor. Some small organisations can face quite significant risks, and will need more extensive procedures than their counterparts facing limited risks. However, small organisations are unlikely to need procedures that are as extensive as those of a large multi-national organisation. For example, a very small business may be able to rely heavily on periodic oral briefings to communicate its policies while a large one may need to rely on extensive written communication … The level of risk that organisations face will also vary with the type and nature of the persons associated with it. For example, a commercial organisation that properly assesses that there is no risk of bribery”—
substitute “fraud”—
“on the part of one of its associated persons will, accordingly, require nothing in the way of procedures to prevent bribery”—
substitute “fraud”—
“in the context of that relationship. By the same token the bribery”—
substitute “fraud”—
“risks associated with reliance on a third party agent representing a commercial organisation in negotiations with foreign public officials may be assessed as significant and accordingly require much more in the way of procedures to mitigate those risks. Organisations are likely to need to select procedures to cover a broad range of risks but any consideration by a court in an individual case of the adequacy or reasonableness of procedures is necessarily likely to focus on those procedures designed to prevent bribery or fraud on the part of the associated person committing the offence in question”.
Lord Faulks (Non-Afl)
My Lords, I will take this opportunity to speak to my Motion H1 in the same group, which proposes, as an amendment to Motion H, to
“leave out from ‘161’ to end and insert ‘, do disagree with the Commons in their Amendment 161A in lieu, and do propose”
the amendment listed at page 24 of the Marshalled List.
However, I should explain that there is a mistake in this amendment, which is no doubt my fault. There were various communications between me and the Public Bill Office on Friday afternoon, in order to get the amendment in the appropriate shape, and a “not” features in the wrong place. I will explain where the omission is and why I submit that it does not ultimately matter.
The intention behind this amendment, under “Civil recovery: costs of proceedings”, was to try to give some protection to the agencies in the case of adverse costs orders made against them. This amendment was passed by your Lordships’ House; it went back to the House of Commons last Monday and was rejected.
My amendment is a softening of the original amendment put down by the noble Lord, Lord Agnew, and me—softening because it had to be softened somewhat to comply with the rules. Proposed new subsection (2) should read:
“The court should not normally make an order that any costs of proceedings relating to a case to which this section applies … are payable by an enforcement authority to a respondent or a specified responsible officer in respect of the involvement of the respondent or the officer in those proceedings, unless it would be in the interests of justice”.
So the “not” should be inserted earlier and removed later on.
The amendment that was drawn to my attention today did not entirely reflect my intention. I have been in communication with the Public Bill Office as to whether it was possible to amend it. Although it is possible to table a manuscript amendment—see paragraph 8.172 of the Companion—it is inelegant and I am told that the better course is to explain the purpose of the amendment. Were the House to be in favour of the amendment, the matter can be amended at the House of Commons stage. That appears to be the position.
Now perhaps I can come on to the merits, as I see them, of the amendment. The Minister says that my amendment—which is really not much more than a nudge; it does not compel the court to do anything in relation to costs—is intended to prevent any disincentive being provided to the agencies, who may seek to recover the proceeds of crime, often against very well-resourced defendants. Unexplained wealth orders, brought in by the Criminal Finances Act, were to be a powerful weapon in seeking to obtain recovery, ultimately, from those whose wealth was not easily explicable. The agency tried on one occasion to do that and was unable to surmount the hurdle the court said was appropriate in these cases—and, indeed, which Parliament said was appropriate. The result was an order of £1.5 million-worth of costs against the agency.
Perhaps unsurprisingly, there has not been great enthusiasm to take up unexplained wealth orders on the part of the Serious Fraud Office. So your Lordships’ House, during the last economic crime Bill proceedings, very sensibly produced an amendment that, broadly speaking, reflected the amendment we are now discussing in relation to unexplained wealth orders, so as not to provide such a disincentive to the authorities seeking to obtain one of these orders. The rationale behind my amendment is precisely the same. The Minister says that this offends the “loser pays” principle. He is right that the starting point in most civil cases is that the loser pays—for very good reason. If A brings a claim against B that proves to be unjustified, and B has been put to expense thereby, why should B not recover his or her or its costs from A?
However, that rule is subject to many exceptions, as all those who are familiar with the law will know. For example, on some occasions the court orders each side to bear its own costs, having regard to the facts. Sometimes there will be no orders as to costs; sometimes there will be issue-based costs. There will be a variety of different orders to meet the justice of a particular case. Sometimes Parliament even specifically weights the cost in one particular direction. An egregious example is Section 40 of the Crime and Courts Act, which is a controversial issue but shows that Parliament is perfectly capable of deciding who should pay the costs in particular circumstances.
What will happen if this particular provision becomes part of our law? I suggest what will happen is that a judge looking at the end of a case will see that Parliament has decided that normally there should not be an order that the agency pays the costs. However, if the agency quite unreasonably, without proper evidence, seeks to pursue somebody for the proceeds of crime, there is of course the saving provision—“in the interests of justice”—which is part of our amendment. So a court is perfectly able, as it will always do, to look at the particular circumstances of the case and decide that, in this case, the agency has been inappropriately pursuing somebody, seeking a remedy when they should not have done. But this is a nudge towards the judge, and a very qualified exception to the “loser pays” principle.
It is, however, an important amendment. Those giving evidence towards the Bill Committee included Bill Browder, who may be well known to your Lordships for his particularly vigorous pursuit of justice in this particular area, and representatives of the Serious Fraud Office. I would be interested to know from the Minister what the approach of the agencies is to this. If he tells me firmly that they do not want this power, that is of course a powerful argument. It would be somewhat at odds with the evidence and the information I have, but I do not have a complete and total understanding of what their approach should be.
It seems to me that someone running the Serious Fraud Office or the NCA, when deciding whether or not to pursue somebody, would bear very much in mind their budget and the cost consequences of taking a particular course of action. If they knew that there was a degree of protection—and that is all this is, a degree of protection—provided in this, it would act as much less of a disincentive. If they thought that, should they fail to recover what they thought they were entitled to, there would be a very heavy hit on their budget, it might mean that they would not do so, which might be contrary to the interests of justice.
Lord Agnew of Oulton (Con)
My Lords, I rise briefly in support of my noble friend Lord Faulks on this amendment. I am particularly grateful to him; I was involved in the earlier amendments, but I realised that it needed a premier division lawyer rather than a second division entrepreneur to get this through.
In our discussion with Ministers, we were often told that the enforcement agencies did not want this; that seemed disingenuous to me. I now have some information. For example, law enforcement agents have shown a strong appetite for cost protection and civil recovery. The chief capability officer of the Serious Fraud Office told the economic crime Bill committee that the SFO would like to see this, while the head of the National Economic Crime Centre told the same committee that they found cost protection “an attractive proposal”. I do not think that is a searing insight. Spotlight on Corruption has identified 60 high-risk cases, with the potential of £1 billion of frozen assets, and the chilling effect is palpable among them.
I respectfully disagree with the Government on this. I am grateful to my noble friends the Ministers who have spoken several times to all of us, but I think they are on the wrong side of logic.
Baroness Noakes (Con)
My Lords, I have some very real concerns about the impacts of the new failure to prevent offence on small and medium-sized entities. If my noble and learned friend Lord Garnier’s Motion E1 is agreed to, I think it could be very significant. I believe that the other place was wise to restrict the offence to larger companies only. Setting the threshold at the micro-entity level would still leave very many small and medium-sized entities within the scope of the offence.
I did try to find out how many companies would be affected. My noble friend the Minister said 450,000 companies would be brought within the net of the offence. According to Companies House statistics, around 3.1 million active companies filed accounts last year. Of those, 1.6 million were for micro-entities, and would therefore be excluded, but 1.4 million were for small companies that took advantage of the audit exemption. That, very broadly, is the group of companies that would benefit from the changes made by the other place; it is obviously rather more than 450,000. Whatever the number, there will certainly be regulatory costs for those companies, whether 450,000 or 1.4 million. My noble friend the Minister has given his estimate of what those costs will be. I have never placed much faith in estimates made by Governments of the direct costs of regulatory burdens that Governments try to impose. I generally put a multiplier against them to arrive at a more realistic figure.
However, I believe the most important cost is the opportunity cost that is imposed by regulation. Every time a new regulation is imposed, the people who run small businesses have to spend time away from thinking about their core activities, which should be wealth-generating. Every moment spent thinking about whether they have reasonable prevention procedures in place, or implementing those procedures, is a moment spent not thinking about how to grow the business or how to make it more profitable. Large companies have specialists to cope with all this. Small businesses often have no one beyond the proprietor of the business itself, but they are the very people who are supposed to be spending their time growing their businesses, thereby helping the UK economy to grow—and my goodness me, do not we need growth in our economy?
The cumulative effect of incremental regulation on individual businesses is huge, as any small businessman will tell you, but the cumulative opportunity cost for those businesses of missing out on that growth, and the impact that will have on UK plc, simply cannot be ignored when we are looking at any form of legislation that imposes burdens on businesses. I urge noble Lords to accept the pragmatic solution that the other place has put forward.
Lord Hope of Craighead (CB)
My Lords, I am greatly assisted by the correction made by the noble Lord, Lord Faulks; I had great difficulty in understanding the amendment on first reading. Now that he has corrected it, I would like to say from the point of view of a Scots lawyer that there is nothing startling in the proposition that is made. We in Scotland are quite used to the normal routine that law enforcement agencies are not liable in costs for the proceedings that have been taken, probably for the reasons that the noble Lord has clearly expressed.
Lord Fox (LD)
My Lords, we have benefited from two extremely detailed and learned speeches proposing Motions E1 and H1. On Motion E1, I am exercised by the idea that there is an opportunity cost in checking whether you are preventing or causing fraud. That seems to be a strange discussion. The analogy made by the noble and learned Lord, Lord Garnier, with HSE and health and safety, is a good one: yes, it is a cost to make sure that you are doing something safely but it is a much wider benefit. The notion that 95% to 98% of the business community should be allowed not to consider their impact on fraud because that would get in the way of their growth is strange, because that growth would then be predicated on very shaky circumstances. I am not persuaded by the counterarguments, but I have been persuaded strongly by the noble and learned Lord.
Similarly, on the Motion from the noble Lord, Lord Faulks, causing agencies to be too tentative and restricted in how they go about prosecuting people is an important issue. It is clear from what we have heard from the outside world that this gets in the way of prosecutions. It also causes the prosecuting authorities to go for low-hanging fruit—that is, easier propositions—and avoid harder and often more severe prosecutions. That is a chilling effect which we should be worrying about when we look at this issue.
These two important amendments have been trimmed in the light of the rejection of the last set by the House of Commons. Noble Lords and Baronesses on these Benches will be happy to support them, if and when they are moved to a vote.
Lord Coaker (Lab)
My Lords, we have been pleased to support the legislation, which overall we think is very good, and we have said that to the noble Lord, Lord Sharpe. Indeed, the Government have listened, as have all the Ministers on the Bill, and made significant changes. Now we are left with just two amendments, put forward by the noble and learned Lord, Lord Garnier, and the noble Lord, Lord Faulks, which deal with two issues that remain outstanding but are of significant importance and deserve our support and consideration.
I want to reference one or two points made by the noble and learned Lord, Lord Garnier, because he made them particularly well. It is a proportionate and reasonable amendment to ask of the Government. There are all sorts of regulations and legislation—the noble and learned Lord referenced them—to which we say small businesses should be subject to, because we believe that it is the right thing to do and the right climate in which those businesses should operate. When it comes to the failure to prevent, the Government point out that 50% are covered by their legislation, which of course leaves 50% that are not.
Throughout the passage of the Bill, many of us have sought to ensure that the failure to prevent—which is a good step forward—applies, as far as possible, to as many businesses as it possibly can. The noble and learned Lord, Lord Garnier, asked why we would exclude many small businesses when they are not excluded from other legislation that may be seen as a burden. The argument is hollow and does not cut through. For that reason, and because the noble and learned Lord has put forward an amendment that takes into account what was said in the Commons, it deserves our support. Should he put it to a vote, as I think he suggested he would, we will support him.
Similarly, the noble Lord, Lord Faulks, notwithstanding the correction he made to the amendment, brings forward a very important point indeed. One of the great criticisms that is often made about dealing with fraud is that somehow law enforcement agencies are frightened of taking on the people who are committing fraud. I always thought it should be the other way around; the fraudster should be frightened of the law enforcement agency. Yet, for some bizarre reason, it is that way around—that cannot be right. It is not something that any of us want to be the case. Through his amendment, the noble Lord, Lord Faulks, has tried yet again to push the Government to do better and to do more than what is currently in the Bill. His amendment says to the Government, “Surely we should do better”. Indeed, the Treasury itself should be confident in the work of the law enforcement agencies. Some have suggested that those agencies should be indemnified against any costs they may incur.
I go back to two simple points. First is the point in the amendment from the noble and learned Lord, Lord Garnier: why should small businesses be excluded from this legislation, other than the micro-businesses to which he referred, when we do not exclude them from other legislation that we think is important? Small businesses adhere to that legislation in the same way as other businesses. Secondly, the amendment from the noble Lord, Lord Faulks, gives us an opportunity to turn the tables and ensure that, rather than the law enforcement agencies being frightened of costs they may incur in ensuring that fraudsters are brought to book, the fraudsters are frightened. That is why, if the noble and learned Lord, Lord Garnier, and the noble Lord, Lord Faulks, put their amendments to a vote, we will certainly support them.
Lord Sharpe of Epsom (Con)
My Lords, I thank all noble Lords who have spoken in this debate. I will respond relatively briefly; I think I have rehearsed the majority of the arguments widely and frequently, and there is not much point in saying more to some of them. However, the precise point I was trying to make in my opening remarks is, in essence, about proportionality. My noble friend Lady Noakes referred to that extremely eloquently.
My noble and learned friend Lord Garnier oftens points out that 99.5% of business is exempted, but I repeat that this is very much a judgment call because 50% of economic activity is captured. My noble friend Lady Noakes referred to the opportunity cost and the noble Lord, Lord Faulks, suggested that perhaps this is about businesses not checking whether they in some way have the right procedures in place to prevent fraud, but it is not about that. It is about many other factors that do not involve the business at hand, as my noble friend Lady Noakes referred to. Those other burdens are obviously partially financial, but not fully.
Lord Garnier (Con)
My Lords, I wish to press my Motion E1 and test the opinion of the House.
Lord Sharpe of Epsom
That this House do agree with the Commons in their Amendments 153A, 153B and 153C.
Lord Sharpe of Epsom
That this House do not insist on its Amendment 159, to which the Commons have disagreed for their Reason 159A.
Lord Sharpe of Epsom
That this House do not insist on its Amendment 161 and do agree with the Commons in their Amendment 161A in lieu—
“Report on costs orders for proceedings for civil recovery
Report on costs orders for proceedings for civil recovery
(1) The Secretary of State must assess whether it would be appropriate to restrict the court’s power to order that the costs of proceedings under Chapter 2 of Part 5 of the Proceeds of Crime Act 2002 are payable by an enforcement authority and, if so, how.
(2) In carrying out the assessment, the Secretary of State must consult such persons as the Secretary of State considers appropriate.
(3) The Secretary of State must publish and lay before Parliament a report on the outcome of the assessment by the end of the period of 12 months beginning with the day on which this Act is passed.
(4) In this section “the court” means the High Court in England and Wales.”
Lord Faulks
Leave out from “161” to end and insert “, do disagree with the Commons in their Amendment 161A in lieu, and do propose Amendment 161B in lieu—
“Civil recovery of proceeds of crime: costs of proceedings
Civil recovery: costs of proceedings
After section 313 of the Proceeds of Crime Act 2002 insert—
“313A Costs orders
(1) This section applies to proceedings brought by an enforcement authority under Part 5 of the Proceeds of Crime Act 2002 where the property in respect of which the proceedings have been brought has been obtained through economic crime.
(2) The court should normally make an order that any costs of proceedings relating to a case to which this section applies (including appeal proceedings) are payable by an enforcement authority to a respondent or a specified responsible officer in respect of the involvement of the respondent or the officer in those proceedings, unless it would not be in the interests of justice.”””
Procurement Bill [HL]
Monday 11th September 2023
(8 months ago)
Lords ChamberRead Full debate Procurement Act 2023 View all Procurement Act 2023 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 147-I Marshalled list for Consideration of Commons Amendments - (8 Sep 2023)
18:13 - Division on the amendment to the Motion - Ayes: 76 / Noes: 187 - Amendment to the Motion disagreed.
18:31 - Division on the Amendment to the Motion - Ayes: 173 / Noes: 187 - Amendment to the Motion disagreed.
19:25 - Division on Amendment to the Motion on Amendment 102 - Ayes: 156 / Noes: 151 - Amendment to the Motion on Amendment 102 agreed.
Baroness Neville-Rolfe
That the House do agree with the Commons in their Amendment 1.
The Minister of State, Cabinet Office (Baroness Neville-Rolfe) (Con)
My Lords, in moving this Motion I will speak to Amendments 1, 4, 5, 81 and 82. I am very pleased to bring this important Bill back to the House today for consideration of amendments made in the other place. It is, I believe, a key Brexit dividend, making it possible for us to develop and implement our own procurement regime, which will be simpler, more transparent, better for small businesses and better able to meet the UK’s needs. I thank noble Lords on all sides of the House who contributed to the lengthy discussion on the original Bill, first introduced to this House in May last year.
In the other place, we made a number of important changes to the Bill, including a debarment appeals process, clarification of the City of London’s status under the Bill, at its request, and provisions to address trade disputes relating to procurement. Importantly, we also took significant steps to strengthen national security provisions in the Bill, creating a new mechanism that will allow us to protect public procurement from risky suppliers. We also committed to removing Chinese surveillance equipment from government departments’ sensitive sites and dedicating additional resources within the Cabinet Office to scrutinise suppliers for potential national security threats. It is now crucial that we take the Bill through to Royal Assent, so that we can implement its many useful provisions.
This first group of amendments focuses on procurement rules for healthcare services and the national procurement policy statement. They overturn amendments made to the Bill on Report in this House. Amendments 1, 81 and 82 are necessary to ensure the proper functioning of the Bill and the regulation of healthcare procurements. Engagement with the NHS has identified the requirement for a bespoke regime for healthcare services to drive the integration of healthcare and the development of better, more joined-up patient pathways through healthcare systems. This responds to the idiosyncrasies of the health system, as identified by those who work in it.
The forthcoming provider selection regime is a free-standing regulatory scheme of procurement rules which commissioners of healthcare services in the NHS and local government will follow when arranging healthcare services in their area. Parliament accepted this when passing the Health and Care Act 2022, which was debated for many days in this House. The DHSC published the results of its latest consultation in July and aims to lay the regulations in Parliament this Autumn. It would be incredibly unhelpful at this critical stage for both schemes, when both the healthcare regulations and the Procurement Bill are on the cusp of delivery, to start attempting to unpick it all. Doing so would add unacceptable and entirely avoidable costs and delays to both programmes for no tangible benefit.
Amendment 1 removes from the definition of a public authority in Clause 2(2)(a) the words “including the NHS”. This addition is unnecessary because it clearly meets the test for a public authority set out at Clause 2(a), which is that it is publicly funded. This is backed up by the fact that the relevant NHS bodies to be covered by this Bill as central government authorities are identified in draft regulations to be made under the power at Schedule 1(5). These regulations were consulted on over the summer and have been welcomed in this regard. Setting out the list of central government authorities in regulations is appropriate, as updates are needed from time to time as organisations inevitably change. Moreover, the NHS is not a single legal entity and does not have a clear meaning in law, so the naming of the NHS as a public authority in Clause 2 would have reduced clarity.
I turn now to Amendments 81 and 82. The version of what was then Clause 116 inserted on Report in this House needed to be removed and replaced with a provision that enables the DHSC to proceed with the provider selection regime. This is crucial for the reasons I have already set out, and I emphasise that this House will have the opportunity to scrutinise the new affirmative regulations when they are laid. I hope that I have been able to provide the noble Baroness, Lady Brinton, whose Motions 1A and 81A deal with these matters, with sufficient reassurances and that she will not press her amendments today.
Amendments 4 and 5 removed two amendments from Report stage in the Lords relating to the national procurement policy statement. These required that, prior to publishing an NPPS, the Minister must give due regard to a number of specified principles and mandated the inclusion of a number of priorities in the NPPS itself. In respect of the first amendment, the noble Baroness, Lady Hayman of Ullock, has subsequently tabled a modified version of it—in Motions 4A and 4B in lieu—which, as before, would require the Minister drafting the NPPS to have regard to a set of principles. The modification suggests a set of principles more in line with those we have already established in Clause 12, and I am happy to set out the Government’s stance on this issue now.
The Government recognise that these principles are important to procurement, which is why they are already reflected throughout the Bill. For example, value for money, integrity and maximising public benefit are set out as procurement objectives in Clause 12, which I have already mentioned. Contracting authorities must have regard to these when carrying out procurements, and transparency requirements already run throughout the Bill.
Lord Lansley (Con)
Before we proceed further in relation to Clause 12, will my noble friend confirm that the procurement objectives in Clause 12 relate to covered procurement only—that is, procurements that are in excess of the threshold—and therefore does not include exempt contracts, whereas the national procurement policy statement applies to all procurement?
Baroness Neville-Rolfe (Con)
If I may, I will come back to that when I have finished presenting. I did ask that question today; I do not think there is that much difference, but I will come back to my noble friend.
There are other specific requirements in the Bill that place obligations on contracting authorities regarding the fair treatment of suppliers and non-discrimination in decision-making. On value for money, I know there is concern from across the House that it is often interpreted to mean lowest cost. We have sought to address this through the move from most economically advantageous tender to most advantageous tender at Clause 19, which stakeholders tell us is a powerful signal in this regard.
Including a similar set of principles in respect of the NPPS risks creating duplication and confusion when we are looking to simplify the regime. However, while the NPPS should focus on the priorities of the Government of the day, many of them are already reflected in the current non-statutory NPPS introduced by this Government, and we have consistently demonstrated our commitment to them through measures such as the strengthening of social value policy following the collapse of Carillion and the procurement policy on carbon reduction introduced in 2021. In addition, the Public Services (Social Value) Act 2012 will continue to exist alongside the new regime established by the Bill. I hope that this will satisfy the noble Baroness.
The second amendment made by this House added a sub-section which required the inclusion of specific priorities in the national procurement policy statement relating to achieving targets set under the Climate Change Act 2008 and the Environment Act 2021, meeting the requirements set out in the Public Services (Social Value) Act 2012, promoting innovation among potential suppliers and minimising the incidence of fraud. I believe that these issues are already addressed in the Bill—for example, in Clause 12—or elsewhere outside of this legislation. For example, the Public Services (Social Value) Act 2012 requires contracting authorities to consider the economic, social and environmental well-being of an area when planning specified procurement, and there are additional obligations imposed by the Environment Act 2021. From 1 November 2023, Ministers will be under a statutory duty to have due regard to the environmental principles policy statement when making policy and will be subject to this duty when preparing the NPPS.
Finally, the scope and extent of the NPPS needs to be flexible, and these things should not be set in stone. Noble Lords have highlighted net zero, social value and innovation, but new challenges arise, such as the security threat from the Russia-Ukraine war. The Government of the day need to be able to respond to each major new challenge in an appropriate manner, without needing to change primary legislation. I beg to move.
Amendment to the Motion on Amendment 1
Baroness Brinton (LD)
My Lords, I start by thanking the Minister for our meeting last week. I have listened carefully to what she has said today and during that meeting; I am afraid that she has not convinced me that the procurement rules for the NHS would be as strong, clear, transparent and accountable as we find in this Procurement Bill. My Amendments 1A and 81A would ensure that the NHS is included.
During the passage of the Health and Care Act 2022, the very short Clauses 79 and 80 gave the NHS exemption from this Bill, with procurement rules to be introduced in secondary legislation by the Health Secretary. Seventeen months on, this still has not happened. When she spoke just now, the Minister relied on government Amendment 82. However, in the consultation—it is, I believe, still open—the NHS provider selection scheme that she referred to sets out some general principles only. During an earlier stage of this Bill, in response to my earlier amendments, the noble Lord, Lord True, referred to clinical contracts being exempt. However, that is not so; in fact, I note that, today, the Minister has been referring to healthcare. Every single time I ask a Minister a question, the definition changes.
In the NHS provider selection scheme, the flexibility rests with NHS bodies to make their own decisions about which scheme they use. The consultation document says:
“This is intended to remove unnecessary levels of competitive tendering … the Provider Selection Regime is intended to make it straightforward to continue with existing arrangements for service provision where those arrangements are working well and there is no value for the patients, taxpayers, and population in seeking an alternative provider”.
Those phrases—“remove unnecessary levels of competitive tendering”, “working well” and “no value in seeking an alternative provider”—are worrying, frankly. The problem, as we have discussed at length in our debates on this Bill, is that poor practice creeps into a culture where people believe that things are working well. The rules that this Bill sets out are there to ensure that every public body putting out a tender has carefully thought through what is appropriate, not just working well.
There is evidence that the current practice in NHS procurement has a mixed record, whether at the highest level or right down at the level of local trusts and CCGs, which is often covered by the specialist press. Despite a blunt National Audit Office report in 2011 on value for money in NHS procurement, the experience during the pandemic showed that some of the deep-seated culture of things not being value for money and not being completely open and transparent continues. The NAO has commented on this and the NHS recognised it in its response paper, Raising Our Game, in which it said:
“Recent reports suggest NHS procurement is lagging behind industry procurement performance”.
Unlike Ministers, the Civil Service and staff at many other public bodies, who are constrained by conflict of interest rules, it is possible for NHS staff, including directors, to use a revolving door to move from the NHS and join a company that contracts with the NHS without a gap. Last year, a deputy director and the head of AI at NHS Digital both left and immediately joined the technology firm Palantir just as it was bidding for further contracts, some without open tendering; Palantir is known to be bidding currently for the federated digital platform contract, which is worth an estimated £360 million and is due to be awarded imminently. Only 10 days ago, the chief operating officer of the NHS left on a Friday and joined Doccla, the virtual ward company that is bidding for substantial NHS contracts, the following Monday. It was also reported in July this year that NHS Digital had spent £7 million on “irregular” payments to external contractors while, last year, the Treasury flagged “irregular” spending by the Department of Health and Social Care and the NHS worth £1.3 billion. Let me say that again: £1.3 billion. Last year, the Technology and Construction Court found that staff from three CCGs in the south-west had manipulated a £2 million contract knowing it to be improper.
Many of these incidents are not reported widely. I thank in particular the Health Service Journal and other technology and health reporters for shining a light on this poor practice, even if it is not regular, wherever it has happened. This is not about those individuals nor the contracting companies. It is about the culture of procurement in the NHS. My amendment would ensure that by including the NHS in this Procurement Bill it would share robust regulations with other bodies and would be accountable and transparent even if there is a need for some subsequent special arrangements for complex clinical contracts. Not doing this will not change the culture of NHS procurement but including it in this Bill will. I beg to move.
Baroness Hayman of Ullock (Lab)
My Lords, Amendment 4A in this group is in my name. My amendment in lieu would insert a number of priorities and principles into the Bill. I will be fairly brief because we discussed these issues at length both in Committee and on Report but we felt that they were important enough—and were considered important enough by noble Lords during those debates—to bring the amendment back once again.
My amendment asks that due regard be given to a number of priorities and principles. The first is “maximising public benefit”. Public benefit is mentioned in the Bill but we feel that it is too vague, which is why we want to pin it down more within another amendment. Maximising public benefit would include
“the achievement of social value, through the securing of environmental objectives”;
many noble Lords were concerned at the lack of environmental objectives in the Bill. It would also include
“promoting innovation amongst potential suppliers”.
We also think that it is important to have
“value for money, by having regard to the optimal whole-life blend of economy, efficiency and effectiveness that achieves the intended outcome of the business case”.
In our previous debates, the Minister spoke strongly about the importance of value for money, so I hope that she understands why the second part of our amendment is clearly important and would strengthen the Bill.
The next part of my amendment deals with transparency. We think that it is important that we act
“openly to underpin accountability for public money”,
tackle corruption and ensure that all procurement is fully effective in achieving this. We also think that good management should be in place in order to have proper integrity, prevent misconduct and exercise
“control in order to prevent fraud and corruption”.
Importantly, we have added in “fair treatment of suppliers”. I thank the Minister for her work on improving the Bill for small and medium-sized enterprises, but we feel that more could be done to ensure that
“decision-making is impartial and without conflict of interest”.
The final part of my amendment concerns non-discrimination—that is,
“ensuring that decision-making is not discriminatory”.
The reason why we have had such a debate about this matter is that the principles were originally in the Government’s Green Paper and were consulted on. Our concern is that those principles were then left out of the Bill even though the objectives were included. So, my amendment would bring those principles back into the Bill.
We believe that social and public value are important requirements for any contracting authority to consider in order, for example, to encourage anyone contracting to work with local suppliers; to encourage contractors to reduce their CO2 emissions; to encourage the hiring of more apprentices; and to encourage greater diversity. We believe that, if the Government are to deliver their ambitions of levelling up and net zero, it will be important to include these principles in the Bill. We know that social value is included in the national procurement policy statement—the Minister made much of the NPPS in our previous debates—but it is not referred to in the Bill. We also know that public benefit is mentioned in the Bill, but it is not clear to us how social value would sit within that framework. How will it all come together to ensure that it works for the public benefit? We know that the NPPS will include the Government’s strategic priorities but, again, we do not know clearly what those are. Further, the Bill does not mention innovation, which is why it is an important part of my amendment. As the noble Lord, Lord Lansley, said when we previously debated the Bill:
“When our current Prime Minister was Chancellor of the Exchequer, he put innovation at the forefront of his economic approach to improving productivity”.—[Official Report, 28/11/22; col. 1619.]
So why not include it in this Procurement Bill?
As the Minister said in her previous response to similar amendments, innovation and competition have an important part to play here. Procurement should be an enabler of innovation. It is important that there is clarity around these principles and objectives. How will innovation be part of it, for example? The Bill will shortly become legislation. We must revisit these concerns and we want to persuade the Minister to consider very carefully what we have been saying and why we are saying it. From her responses, we do not believe that at previous stages there was adequate explanation of how all this would operate. Good sentiment from the Government and the Minister, and promises around an NPPS we have not seen, are not sufficient to ensure that we have the best procurement legislation possible, which we all want to see. Our amendments would help achieve that end.
Sadly, the Minister has again disappointed me with her introduction on these issues, although I thank her for all the work she has done as we have progressed so far. It is my intention to move my amendment.
Lord Lansley (Con)
My Lords, I will contribute on Amendments 4A and 4B in particular. As noble Lords will recall, the structure of Amendment 4A, as an amendment in lieu of the Commons Amendment 4, incorporates to an extent some of the issues raised in the strategic priorities that your Lordships sent to the Commons to be included in the national procurement policy statement. I will explain how that works in a minute.
Like other noble Lords, I am grateful for the time and effort that my noble friend the Minister has given to listening to what we had to say. On Commons Amendment 5—which would get rid of the reference to “strategic priorities”—I was focused on innovation, as she knows. Innovation is essential to the quality and effectiveness of procurement. Also, public procurement is a substantial part of this country’s economic activity. If it promotes innovation, it can make a significant difference to our overall economic performance and to reconciling our productivity problems. The fact that, in the absence of Amendment 4, the Bill would make no reference to innovation is such an omission that, on those grounds alone, Amendment 4A should be added back to the Bill.
When we tabled our amendment, the noble Earl, Lord Devon, the noble Baroness, Lady Worthington, and I tried to ensure that the national procurement policy statement was clear about what we regarded as enduring strategic priorities. We have backed off from that. My noble friend and the Minister in the other place were clearly told that we must have maximum flexibility. I still do not understand why the Russian invasion of Ukraine might mean that public procurement in the United Kingdom should not have regard to social value; none the less, leaving that to one side for a moment, I accept that there is an ideological commitment in government to the idea that everything that government does must be so flexible that you cannot even predict some of the basic principles within it.
We have dropped the strategic priorities; we have made them principles. As the noble Baroness, Lady Hayman, rightly has it, we have moved from “must include” to “have regard to”. Therefore, Ministers are not constrained to include in the statement innovation, the achievement of social value, the achievement of environmental objectives or, for that matter, transparency, integrity, fair treatment, non-discrimination and value for money. However, the idea that any of these things would be left out of a national procurement policy statement is wholly unacceptable.
I come back to the essential question: what are we trying to do? We are trying to set the framework for contracting authorities to undertake public procurement. From our point of view, the statement should include whatever the Government think it should include but it should not exclude such basic central principles of public procurement. We have only to ask ourselves what conclusion we would draw if the Government were to send a draft of an NPPS to Parliament which left these things out. In my view, we would have to reject it. What is the benefit of that? Better to put it in the Bill now, make it clear to Ministers and, frankly, officials, that it should be in the statement so that, when the draft of the NPPS comes, we can tick the box, send it forward and approve it.
The noble Earl, Lord Devon, will add matters on social value. I just say that we may have left the EU public procurement regime but, when you look at the centrality of social value to public procurement in other jurisdictions across Europe, the idea that you would not seek social value through public procurement seems wholly unacceptable.
I was quite struck by the paucity of argument presented in Committee in the other place when our amendment to the Bill was deleted. In addition to:
“It needs to be as flexible as possible”,—[Official Report, Commons, 31/1/23; col. 54.]
which was predictable, what irritated me especially, as my noble friend on the Front Bench is now aware, was that references to integrity, transparency and value for money are already in the Bill, in Clause 12. The Committee in the other place clearly paid no attention to the Bill in front of it, since Clause 12 relates to covered procurement. As we noticed in our debates in Committee, the national procurement policy statement is not confined to covered procurement. It extends to all procurement by government, though not including the NHS, which for these purposes seems to be excluded from “public authorities”, which is a curious definition in itself.
We knew that the NPPS was wider. The Committee at the other end seemed somehow to imagine that covered procurement was enough, but it excludes everything under about £112,000 in value. Therefore, many small procurements would not be affected by it. It simply is not acceptable. We need to go back and ask the Commons to think again about the exclusion of such central principles from the national procurement policy statement. It has been a long time coming back. We are nine months on from the point at which we sent the Bill to the Commons. We took some time getting it to the point that we did. Noble Lords will recall that on the first day in Committee we received 50 government amendments, this clever idea of covered procurement arising only at that point and not in the original draft of the Bill.
To make a final, acerbic comment, I find it somewhat astonishing that during the passage of the Bill the Government have been able to make many hundreds of amendments that they chose to make. At this stage, we are asking for only a small handful that the Lords want to make. The Government at this point might just bend and accept those amendments.
The Earl of Devon (CB)
My Lords, I regret that due to professional commitments I was unable to contribute as much as I would have liked to earlier stages of the Bill. However, I added my name to two amendments on Report, both of which focused on the importance of recognising social value in the development of the national procurement policy statement. I am grateful to the noble Lords who led on those amendments with such success—the noble Baronesses, Lady Hayman and Lady Worthington, and the noble Lords, Lord Coaker, Lord Fox and Lord Lansley—a truly cross-party team.
The recognition of social value now returns for our consideration with Amendments 4A and 4B. I am again grateful to the noble Baroness, Lady Hayman, for taking the lead and so succinctly gathering in one place the essential priorities and principles to which regard should be given. Chief among them from my perspective is public benefit through the achievement of social value.
I should at this stage disclose my membership of the APPG for Social Enterprise and explain that I was privileged to chair its inquiry into the performance of social enterprise during the dark days of the pandemic. The conclusions of that report were compelling, revealing without doubt that social enterprises—that is, enterprises committed to the delivery of social value alongside more commercial ambitions—performed considerably better during the pandemic than their competitors, be they charities or strictly commercial enterprises. Social enterprises were more resilient, lighter on their feet and more diverse in their employment and service delivery. They delivered a lot more of the smaller contracts—which, as the noble Lord, Lord Lansley, identified, would not be covered by Clause 12—and they performed better economically.
Where they performed much worse than their competition was in their ability to secure support and funding from local and central government through public procurement. We noted that this was a particular issue in England, as compared with Wales and Scotland, because in those jurisdictions social enterprises and social value are identified as priorities within their public procurement strategies. With this amendment we will achieve the same and ensure that the delivery of social value is a priority for government. I urge that it is supported.
Baroness Noakes (Con)
My Lords, I have much sympathy with Motion 1A in this group, tabled by the noble Baroness, Lady Brinton, because I believe that treating the NHS as a special case in any area of public policy has the effect of insulating the NHS, which is a seriously underperforming organisation that desperately needs change.
Having said that, I am afraid I cannot support the noble Baroness’s amendments. Parliament has already decided, in the shape of the Health and Care Act 2022, that the NHS should be subject to a bespoke regime. In effect, the other place was asked to think about that again when this House sent the Procurement Bill there for consideration, and it has sent it back with its response—it wants to keep a bespoke regime for the NHS—so I think we have the answer to that. My noble friend the Minister has made clear that much work has already been done on the interface between the two regimes to make sure that nothing will fall through the cracks.
This boils down to a simple difference of view; the Government want to do it one way and the noble Baroness, Lady Brinton, wants to do it another way. I wonder whether this is really the kind of issue that should be the subject of a prolonged battle between the two Houses. I cannot see that there is a real point of principle here. Also, as my noble friend the Minister pointed out, implementation of that new system in the NHS is already quite a long way advanced and it would appear wasteful to try to undo all that.
I turn to Motion 4A in the name of the noble Baroness, Lady Hayman of Ullock. She has tabled a list of what she calls “priorities and principles” that Ministers must consider before publishing a national procurement policy statement. At first sight these look wholesome and unobjectionable, as one might expect. I have two main reasons for not supporting her amendment.
First, the amendment is unnecessary. Government Ministers and their officials are already focused on value for money, transparency, integrity and even, I say to my noble friend Lord Lansley, innovation. It is government policy to pursue innovation; it is already part of the day-to-day life of government. Many of these items are either implicitly or explicitly already in the law, either administrative law or general law. As has been pointed out, some already feature in the objectives for covered procurements. My noble friend the Minister explained all this in her introductory remarks. Thinking that the Government need a special list of things to think about, in statute, misunderstands the processes of government.
Secondly, the list of items always reflects today’s concerns and is not future-proofed. While some issues such as transparency seem like eternal issues, they were not always unambiguously so. Today’s obsessions with things such as environmental matters will, I predict, be overtaken by other issues of concern, whether Russia and Ukraine or something that we have not yet thought about. I am not clever enough to predict what those other things will be; I just know that the world changes and the orientation of government policy will change with it. The inclusion of a list runs a real risk of being overtaken by events, which is why it is not good legislative practice to put such lists in statute. I hope that both noble Baronesses will not feel it necessary to pursue their amendments and divide the House.
Baroness Neville-Rolfe (Con)
My Lords, I begin by sharing my appreciation for the number of incisive contributions we have heard in the course of this short debate. It is always a pleasure to debate these things here. Of course, they have now been reviewed in the other place, as my noble friend Lady Noakes said, and there was a long discussion, including a long Committee stage attended by my friend in the other place Alex Burghart. I particularly thank noble Lords for all the work that has gone into this across the House, including these important provisions.
My noble friend Lord Lansley is correct that the objective in Clause 12 applies to cover procurement. The NPPS clause allows an NPPS to cover all procurement, but in practice its scope will be determined by the contents of the statement. In my opening remarks I explained at some length the position on the coverage of the NHS. I will come back to one or two of the questions from the noble Baroness, Lady Brinton.
I particularly thank the noble Baroness, Lady Hayman, for all that she said. Concerning principles that need to be considered by Ministers in preparing the NPPS, these principles are already covered through other commitments and legislation, as I have already set out. The amendment is therefore not necessary, as my noble friend Lady Noakes said. In addition, our fundamental view is that the Government of the day should not be constrained by the Bill in their ability to prescribe something more specific. They are free to do so—and I think this is the charm of the Bill—through the NPPS rather than through primary legislation. The Bill is about clarity and simplicity, not layering rules on rules.
To understand how it works in practice, I refer my noble friend Lord Lansley—I think I have already discussed this with him—to the current non-statutory NPPS, which covers innovation and social value. Attempting to drive innovation, which I am as keen on as he is, in every single procurement will not always be relevant or proportionate. Our Bill drives innovation through, for example, our new competitive flexible procedure, pre-market engagement and our duty for contracting authorities to have regard to reducing barriers for SMEs—which will also benefit social enterprises, as the noble Earl, Lord Devon, referred to. Future NPPSs will also be subject to parliamentary scrutiny and consulted on as appropriate.
The consideration of environmental targets and objectives relating to social value in preparing the NPPS, and the other principles set out in this amendment, are duplicative and would render the Bill more complex and confusing for contracting authorities and suppliers. Singling out specific objectives for Ministers to consider will create the impression that they trump others, which could unduly constrain flexibility for a Government to set priorities in future, which they will do through the NPPS. This is a principle seen in other legislation, where you have framing legislation and then statutory guidance.
Finally, regarding environmental considerations—as highlighted in discussions during the REUL Bill debates, although perhaps I should not remind noble Lords of those as they took a long time—Ministers will now be under a legal duty to have due regard to the environmental principles policy statement when making policy, including the development of policies in accordance with the Bill.
On the NHS amendments championed by the noble Baroness, Lady Brinton, I am grateful for the meetings that we have had but I believe that they stem from a confusion. NHS bodies are contracting authorities and therefore already covered by the Bill; we had a good conversation about mixed contracts and so on, which I think was helpful to us both. It would be inappropriate to remove the power to make the provider selection regime regulations, especially given the benefits that they will bring to patients.
In response to a question about the definition of healthcare services, the scope of services in the PSR has been consulted on and will be further supported by reference to a list of common procurement vocabulary codes, set out clearly in the PSR regulations. An indicative list of those codes was included in DHSC’s recent consultation on the PSR.
The noble Baroness made a point about conflicts of interest. Our Bill strengthens existing legal duties on conflicts of interest and embeds greater transparency throughout the commercial life cycle. This has been welcomed and, I think, is important. Furthermore, the provider selection regime regulations will clearly set out provisions for the effective management of conflicts of interest. The PSR is designed to ensure transparency across all procurement decisions to which it applies, including how the decisions were made. This transparency will help ensure that there is proper scrutiny and accountability of decisions to award contracts for healthcare services.
Finally, an independently chaired panel will provide expert review and advice concerning decisions made under the PSR, helping to ensure that procurement processes are transparent, fair and proportionate. I very much hope that that additional information about our plans for the PSR will enable this debate about just how these two regimes, both of which have been discussed constructively and at length in this House, fit together, and that noble Lords feel able to support the government amendments and withdraw the amendments that they have put forward.
Baroness Brinton (LD)
My Lords, I thank everybody who has spoken in this brief debate. I particularly thank the noble Baroness, Lady Noakes, for at least agreeing with the principle, even if she cannot support me in the Division Lobby, because it is really important.
For all the reasons that the Minister outlined, we are where we are. When we were working on the Health and Care Bill, it was absolutely evident that the secondary legislation changes would be outlined quickly thereafter—I am looking at others who were in the Chamber at the same time—and agreed by last autumn. We are now 17 months on and there is no sight of them at all.
The Minister outlined the NHS provider selection scheme and all its arrangements. That it is not looking for a culture change worries me most. In my earlier speech I gave examples of the behaviour of three senior managers at three CCGs, which the public would not have known about if the losing company had not gone to the Technology and Construction Court. This revealed that it is all too easy, where the culture is poor, for people to believe that the rules are being followed when they are not.
I appreciate that we have a point of difference on this, but on our Benches we believe that there is much benefit in this Procurement Bill and do not understand why the NHS is excluded. It is perfectly possible to include some special arrangements for it, but nothing has happened since the Health and Care Act was enacted. At the moment, nothing we are hearing from the NHS is about that culture change. On that basis, I wish to test the opinion of the House.
Baroness Neville-Rolfe
That the House do agree with the Commons in their Amendments 2 and 3.
“(8A) In this Act, a reference to a public authority includes a reference to the
Common Council of the City of London.”
Baroness Neville-Rolfe (Con)
My Lords, in moving this Motion I will speak to the other amendments in the group.
Amendments 2, 3 and 99 ensure that the City of London is appropriately regulated by the Bill and that its private sector activities are not inappropriately captured.
Amendments 6 to 12 deal variously with abnormally low and unsuitable tenders, and the definition of disabled and disadvantaged people in contracts specifically directed to help them.
Amendment 10, which I know is of interest to the noble Lord, Lord Fox, who I thank for his co-operation on this large number of amendments, requires that any procedural breach that results in a tender being unsuitable must be material. This tightens the circumstances in which a switch to direct award can be made. The transparency notice will ensure that any awards under Clause 43 are publicised, and, if the provision is abused, there will be opportunity for suppliers to bring a challenge and for the procurement review unit to investigate.
Amendments 13 to 22, 48 to 56, and 61 to 64 deal with the publishing of KPIs, tendering timescales for utilities and non-central government contracting authorities, standards and accreditation, electronic communications, e-invoicing and payment compliance, and contract change notices.
Amendment 60 and the consequential amendments—Amendments 76, 85, 88, 90, 91 and 92—introduce an enabling power which gives the UK the ability to take retaliatory action as a result of a procurement-related dispute with a country with which we have a free trade agreement on procurement.
Amendments 65 and 66 strengthen the record-keeping obligations with the Bill, to reflect obligations under our international agreements.
Amendments 83, 87 and 89 relate to financial thresholds, ensuring that, where thresholds for the publication of KPIs need to be changed, the affirmative procedure will apply.
Amendments 95 and 96 clarify the reasonableness test in Schedule 2, following feedback from the Local Government Association.
Amendment 104 extends the new power that the Bill will insert into the Defence Reform Act by allowing regulations to ensure that, under specified circumstances, certain existing contracts, when amended, can be treated as new contracts and brought within the scope of the single-source regime. Amendment 104 relates to single-source defence contracts entered into after the Act came into force but which were below the regime threshold and are subsequently amended to a contract value above that threshold.
Amendments 23, 24, 26 to 28, 30, 32, 35, 36, 39, 43, 44 to 46, 68, 72, 73, 75, 84 and 103 strengthen and ensure that the debarment and exclusion regimes in the Bill function as intended by inserting a substantive debarment appeals regime to replace the enabling power. Noble Lords will remember that, in this House, we thought it was better to have that in the Bill rather than in regulations.
Finally, the Government introduced Amendments 58, 59, 69, 70, 71, 74, 77 to 80, 86 and 93 in the other place at the request of the devolved Administrations. These amend how the legislation applies in relation to devolved procurement in Wales or Scotland and ensure that the regime runs effectively. They reflect constructive discussions.
I apologise for the number of amendments but we have sent out a letter explaining exactly what these all entail. I beg to move.
Lord Fox (LD)
My Lords, when the noble Lord, Lord Lansley, was being uncharacteristically acerbic, he mentioned the number of amendments to which this legislation has been subjected. I believe that the Deputy Speaker was present in the Grand Committee when we were wading through some of the 450 or so amendments that were laid before us. It is therefore quite appropriate that, as we wave goodbye—probably—to this legislation from this House, your Lordships are confronted with another 85 amendments. However, in this particular case they have been well explained—for which I thank the Minister—and are non-controversial. In that respect, we can leave in perhaps a slightly less acerbic way than we arrived.
I expect His Majesty’s loyal Opposition to press the amendment of the noble Baroness, Lady Hayman. We on these Benches will support that, in the event that she so does.
Lord Aberdare (CB)
My Lords, I played a very small part in the Committee stage of this Bill, mostly seeking to protect and promote the interests of small and medium-sized enterprises, and I welcome its provisions in that regard.
I take this opportunity to welcome Amendments 8 and 9 from the Commons and to thank the Minister, her colleagues and her officials for getting them included in the Bill. The Bill as it originally stood had the unintended effect of reducing the scope of existing provision for reserving certain contracts for supported employment providers. These amendments ensure that no such reduction will occur. I am most grateful to the Minister for listening to the concerns raised by Aspire Community Works—itself a supported employment provider—to address and, indeed, resolve this issue.
Baroness Neville-Rolfe
That the House do agree with the Commons in their Amendment 4.
Baroness Hayman of Ullock
At end insert “and do propose Amendment 4B instead of the words so left out of the Bill—
“(b) have regard to the following priorities and principles—
(i) maximising public benefit, including by the achievement of social value, through the securing of environmental objectives and from economic benefits, including by promoting innovation amongst potential suppliers,
(ii) value for money, by having regard to the optimal whole-life blend of economy, efficiency and effectiveness that achieves the intended outcome of the business case,
(iii) transparency, by acting openly to underpin accountability for public money, anti-corruption and the effectiveness of procurements,
(iv) integrity, by providing good management, preventing misconduct, and exercising control in order to prevent fraud and corruption,
(v) fair treatment of suppliers, by ensuring that decision-making is impartial and without conflict of interest, and
(vi) non-discrimination, by ensuring that decision-making is not discriminatory,””
Baroness Neville-Rolfe
That the House do agree with the Commons in their Amendments 5 to 24.
“(ba) may disregard any tender that offers a price that the contracting authority considers to be abnormally low for performance of the contract;”
“(3A) Before disregarding a tender under subsection (3)(ba) (abnormally low price), a contracting authority must—
(a) notify the supplier that the authority considers the price to be abnormally low, and
(b) give the supplier reasonable opportunity to demonstrate that it will be able to perform the contract for the price offered.
(3B) If the supplier demonstrates to the contracting authority’s satisfaction that it will be able to perform the contract for the price offered, the authority may not disregard the tender under subsection (3)(ba) (abnormally low price).”
(a) disabled or disadvantaged individuals represent at least 30 per cent of the workforce of the organisation,
(b) if a particular part of the organisation is to perform the contract, disabled or disadvantaged individuals represent at least 30 per cent of the workforce of that part of the organisation, or
(c) if more than one organisation is to perform the contract, disabled or disadvantaged individuals represent at least 30 per cent of the combined workforce of— (i) those organisations,
(ii) where a particular part of each organisation is to perform the contract, those parts, or
(iii) where a combination of organisations and parts is to perform the contract, those organisations and parts.”
“(2A) A contracting authority must publish any key performance indicators set under subsection (1).”
“The contract— (a) being awarded is a utilities contract, or (b) is being awarded by a contracting authority that is not a central government authority, and is subject to a negotiated tendering period | No minimum period |
The contract— (a) being awarded is a utilities contract, or (b) is being awarded by a contracting authority that is not a central government authority, and tenders may be submitted only by preselected suppliers | 10 days” |
““central government authority” has the meaning given in paragraph 5 of Schedule 1 (threshold amounts);
“negotiated tendering period” means a tendering period agreed between a contracting authority and pre-selected suppliers in circumstances where tenders may be submitted only by those preselected suppliers;”
““pre-selected supplier” means a supplier that—
(a) has been assessed as satisfying conditions of participation before being invited to submit a tender as part of a competitive tendering procedure, or
(b) in the case of a contract that is being awarded by reference to suppliers’ membership of a dynamic market, is a member of that market;”
“(za) the standard adopts an internationally-recognised equivalent, or”
“(3A) If the procurement documents refer to a United Kingdom standard, they must provide that tenders, proposals or applications that the contracting authority considers satisfy an equivalent standard from another state, territory or organisation of states or territories will be treated as having satisfied the United Kingdom standard.
(3B) In considering whether a standard is equivalent to a United Kingdom standard for the purposes of subsection (3A), a contracting authority may have regard to the authority’s purpose in referring to the standard.
(3C) A contracting authority may require certification, or other evidence, for the purpose of satisfying itself that a standard is satisfied or equivalent.”
“(b) are primarily developed for use in the United Kingdom, or part of the United Kingdom.”
Baroness Neville-Rolfe
That the House do agree with the Commons in their Amendment 25.
“(2A) If a supplier is an excluded supplier on the basis of the supplier or an associated person being on the debarment list only by virtue of paragraph 34A of Schedule 6 (threat to national security), the supplier is to be treated as an excluded supplier only in relation to public contracts of a kind described in the relevant entry.
Baroness Neville-Rolfe (Con)
My Lords, with the leave of the House, I will also speak to Amendments 29, 33, 34, 37, 38, 40, 41, 42, 57, 100 and 101 in this group. These amendments significantly strengthen the exclusions and debarment provisions on national security grounds. I hope they will further assure noble Lords that the Government are taking the issue of national security seriously and are ready to take action. I thank particularly the noble Lord, Lord Alton, who I see in his seat and who has worked tirelessly to raise this issue in the House, for our constructive meetings.
The new amendments will enable a Minister of the Crown to take a stronger approach in response to a specific risk profile of a particular supplier and make targeted decisions about whether the debarment should be mandatory for particular types of contracts, depending on the nature of the risk. If the supplier poses an unacceptable risk in relation to selected goods—for example, networked communications equipment—the Minister will be able to enter on the debarment list that the supplier is an excluded supplier for contracts for the supply or support of that type of equipment.
The entry may also, or as an alternative, stipulate that the supplier is excluded from contracts relating to certain locations or sites, or from contracts let by certain contracting authorities. This removes discretion from contracting authorities regarding exclusions where a supplier poses a threat for particular contracts, thereby reducing the risk of a supplier being allowed to participate in those procurements. By allowing this type of targeted and proportionate approach, we can direct that suppliers must be excluded where the risks are unacceptable and allow contracting authorities to make appropriate choices where the risk is manageable—for example, for the provision of pencils or plastic furniture.
Amendment 31 commits a Minister of the Crown to keep suppliers under review for potential investigation for debarment on national security grounds. This amendment commits Ministers to proactively consider new debarment investigations where there is evidence of risk so that the Government can act effectively and on time. We believe this would be highly advantageous in minimising the risk of those who pose a threat to our national security being awarded public contracts.
Lord Alton of Liverpool (CB)
My Lords, I begin by thanking the Minister. I will come back to that in a few moments, because she has been extraordinarily helpful, and I know we have made significant progress from when the first amendment was moved on this issue.
In parenthesis, before I begin—and because I will not weary the House with a second speech later, even if the opportunity is there—I would like to say how much I support what the noble Lord, Lord Hunt of King’s Heath, is trying to achieve with Motion 102A and Amendment 102B. Again, I have spoken on those previously, along with the noble Baronesses, Lady Northover and Lady Brinton, the noble Lord, Lord Ribeiro, from the Conservative Benches, my noble friend Lady Finlay—who is unable to be with us this evening—and many others who want to support what the noble Lord is trying to achieve.
I turn to Clause 65 and Amendment 47B in Motion 47A in my name. As the Minister said, it would require a timeline for the removal of surveillance equipment that is connected to the internet and subject to the People’s Republic of China’s national intelligence law. I did say that I would like to start my remarks, and I do, by paying tribute to the Minister’s own efforts and those of her officials, who have met with me now on several occasions—most recently on Thursday last—to discuss the concerns of Members of both Houses when it comes to the presence of Chinese-made surveillance cameras in our public procurement chain.
As recently as yesterday, the Sunday Telegraph reported that the Co-op has decided to ban Chinese CCTV for “ethical and security reasons”. Given the Minister’s professional background in a previous life, she will know that, in doing this, it is following the example of Tesco. It would indeed be odd if supermarkets were ahead of public bodies in recognising the dangers posed by the CCP’s surveillance state. I was also very struck that the Deputy Prime Minister, the right honourable Oliver Dowden, speaking in another place this afternoon about allegations concerning espionage on the estate of your Lordships’ House and that of another place, made a point of saying that one of his first actions in Whitehall had been to have surveillance cameras linked to Hikvision removed from his department. This is something that Sajid Javid also said when he became Secretary of State for Health. I simply say that, if supermarkets and departments of state are not suitable places for these cameras, where is? It would indeed be odd if we did not think about the 60% of public bodies that are estimated to have Hikvision cameras in use.
This is not a new question that I am putting to your Lordships’ House; this is something I have raised on over 40 occasions in the House or in Grand Committee since 2020. Both the Minister and the Leader of the House, the noble Lord, Lord True, have taken this issue seriously. When the noble Lord was in charge of this Bill, in its earliest stages, we had a meeting to discuss Hikvision. Because I want to get on with seeing a resolution of this issue, I am able to welcome the clear commitment from the Minister, given at the Dispatch Box, for a timetable for the removal of this surveillance equipment and these cameras from sensitive sites. However, it is worth noting, as I have said, how we got here.
As the Government have recognised, there are at least a million Hikvision and Dahua cameras in the UK, installed across our high streets, job centres, schools, police forces, hospitals, universities, local government buildings and even government departments. I gently say to the Minister that, although she is right that military barracks or GCHQ are clearly far more sensitive sites than, say, hospitals or schools, some of this is about data collection. That involves every single citizen of this country, so it poses dangers for them too. I commend to her the recent Channel 4 documentary on Hikvision and the fantastic work of IPVM, Big Brother Watch, Hong Kong Watch—of which I am a patron—and other organisations that have outlined the security risk that these cameras pose, particularly in those sensitive public sector sites, but not exclusively so.
It is quite something to consider that, as a country, we have willingly handed over the majority of our surveillance infrastructure, which watches the often public and sometimes intimately private moments of our lives, not just to the police or local authorities but to an authoritarian Government that the House of Commons has found, on a resolution of the House, credibly accused of genocide. I declare a non-financial interest as vice chair of the All-Party Parliamentary Group on Uyghurs.
How ironic it is that we are debating this on the day we have learned that an alleged CCP spy has been operating across Parliament, based in the office of a Member of another place. We urgently need a bicameral group of senior parliamentarians to investigate this shocking lapse. The Intelligence and Security Committee of Parliament has warned against the infiltration of our universities and other institutions. Only last week, the University of Cambridge ended a partnership with a subsidiary company developing Chinese weapons and military hardware. The line between crass naivety and outright collaboration is a fine one. We recall the Cambridge spies and the Soviet Union, and some of the disastrous consequences. It should send a shiver down the spine of every freedom-loving person to see swathes of the public surveillance procurement supply chain handed over to Chinese companies that are blacklisted for complicity in gross human rights violations by the United States and which are legally compelled under the PRC national intelligence law to pass on data to the Chinese Communist Party state.
As we debate the timeline for their removal from our public procurement supply chain, the definition of what we should consider “sensitive sites” and the oversight that Members of this House and another place will have should be high on our agenda. Surely, for too long government policy towards China has favoured investment and trade at the expense of our national security, our values and human rights. We have underestimated the PRC, ignored the voices of those Uighurs, Hong Kongers, Tibetans and others who have been persecuted by the CCP and know it best, and failed to produce a coherent strategy to deal with the threat that the PRC poses. I am always struck by the phrase used by the noble Lord, Lord Patten of Barnes, who knows a thing or two about China. He describes it as cakeism—wanting to have your cake and eat it—to want trade deals on the one hand, but recognise the country as a threat to your national interest on the other.
Lord Hunt of Kings Heath (Lab)
My Lords, I will speak to my Amendments 102A and 102B. It is a great pleasure to follow the noble Lord, Lord Alton. I very much agree with the thrust of what he said and look forward to the results of his eagle eye, which I am sure will come to your Lordships’ House over the next months and years. Like him, I also thank the Minister for her stewardship of the Bill. It has taken so long that I recollect that on our first day in Committee, the noble Baroness herself had laid many amendments which she seemed to have to refute later on in proceedings on the Bill. At least she knows how it feels to have a government Minister reject so many well-argued points.
I thank the Minister also for what she said about the Government’s view of the appalling atrocities being committed in China, with the removal of organs from a living prisoner of conscience for the purpose of transplantation, killing the victim in the process. It is state sanctioned and widespread throughout China. The victims at the moment are known to be primarily Falun Gong practitioners, but most recent evidence suggests that Uighur Muslims are also being targeted on a massive scale, particularly in Xinjiang.
My amendment was supported by noble Lords all around the House on Report. Essentially, it gave a discretionary power to exclude suppliers from being awarded a public contract if they have participated in forced organ harvesting or unethical activities relating to human tissue, including where they are involved in providing a service or goods relating to such activities. The effect of the amendment would have been to prevent any service or goods that may have been involved in, or developed off the back of, the forced harvesting trade entering the UK. When it went back to the Commons, the Government took the provision out in Committee. This was challenged on Commons Report, led by my honourable friend Marie Rimmer. Despite support from MPs of all parties, that was not successful, so I am asking noble Lords to send it back to the Commons for further consideration.
My reasons, briefly, are threefold. First, the scale of the atrocities being carried out in China, specifically in Xinjiang, are becoming ever clearer and more horrific. Secondly, I believe that Ministers were wrong in dismissing the need for the amendment, both in the response they gave in the Commons to my colleagues and in the comments that the Minister has given tonight. Thirdly, I have to agree with the noble Lord, Lord Alton, that the context in which this is being debated is, frankly, that government policy towards China is completely inadequate to the threats that country poses to the interests of the United Kingdom.
On the scale of the atrocities, I can do no better than to quote what Sir Iain Duncan Smith said on Report in the Commons. He referred to the 2022 UN report, which found serious human rights violations in Xinjiang. He said:
“They seem to be about the most significant human rights abuses currently happening in the world,”—[Official Report, Commons, 13/6/23; col. 205.]
whether we use the term “genocide” or not.
What the Minister has essentially said is first that we do not need to do this because there is a discretionary power in the Bill already, and secondly that there is no evidence, as far as the Government are aware, that a supplier to the UK public sector has been involved in forced organ harvesting. On the first point, I believe that there is considerable merit in making explicit reference in the Bill to this matter, so that public authorities are in no doubt whatever that they can use a discretionary power to deal with companies that may be dealing, maybe inadvertently, in this abhorrent trade. Secondly, I think there is evidence of taxpayers’ money being spent on companies involved in forced organ harvesting. For example, pharmaceutical companies may be supplying immunosuppressant drugs to hospitals that have been reported to remove organs from prisoners of conscience.
As I have said, we cannot consider these matters without seeing them in the context of UK policy towards China. I am not going to repeat what the noble Lord, Lord Alton, said, nor to requote. We have now had our Lordships’ Select Committee, then chaired by the noble Baroness, Lady Anelay, the Intelligence and Security Committee and the Commons Foreign Affairs Select Committee, in its report only last month on the Indo-Pacific tilt policy. They all draw attention to the Government’s woefully inadequate response to the threat that China presents and to the very ambiguity there is in policy. We can see the obvious tension between our security, on one hand, and the willingness and wish of the Government to trade with China and to encourage Chinese investment, but I am afraid that, in trying to get a balance, we have ended up with a Government with a wholly inadequate and incoherent policy.
My amendment is very modest. All it does is give the decision-maker discretionary powers to exclude a supplier from a procurement contract if it
“or a connected person has been, or is, involved in … forced organ harvesting, or … dealing in any device or equipment or services relating to forced organ harvesting”.
It would be the first piece of UK legislation to include and define forced organ harvesting. It would be a huge step in preventing UK complicity in forced organ harvesting, and I urge the House to support it.
Baroness Northover (LD)
My Lords, I was a signatory to earlier amendments and we have just heard the noble Lord, Lord Hunt of Kings Heath, make a very cogent case for the Commons to think again about his amendments. I will be very brief, given the hour. The noble Lord built on what the noble Lord, Lord Alton, outlined just now, and his case is backed by international investigation and evidence. Thus, for example, the Office of the UN High Commissioner for Human Rights, not an institution that would say this lightly, concludes in relation to Xinjiang:
“Allegations of … torture … including forced medical treatment … are credible”.
The Minister in the Commons and now the Minister in the Lords have argued that current legislation covers the problem identified in this amendment, but noble Lords will have heard the noble Lord, Lord Hunt, make a very persuasive case that this is not so. My noble friend Lord Fox will comment further shortly but, if the noble Lord decides to put this to a vote, from these Benches we will support him.
Lord Fox (LD)
Very shortly, it seems.
I thank the noble Lords, Lord Alton and Lord Hunt, for bringing forward these two amendments. I shall address them sequentially. I do not share the surprise of the noble Lord, Lord Alton, about supermarkets being able to lead. I am sure the Minister will probably agree that supermarkets are in contact with their customers. They sense the morality and the feelings of their customers, so they do not just lead—they follow. Perhaps we are a bit slow in picking up the moral revulsion that people have out there, and also the fear of scrutiny from a totalitarian regime. I think both those issues play with the public, the public play those back to the supermarkets and the supermarkets have very good antennae for picking them up. We should share their sensitivity to these issues.
The noble Lord made an excellent speech for which he is to be congratulated because, working from here back to the Commons, we have seen significant progress. We have seen a great deal of progress, and I support him in not having to move his Motion this time. He mentioned en passant the role of the Intelligence and Security Committee, and I endorse what he said. The Cabinet Office is now responsible for the National Security and Investment Act—there is a team there working on that—and it now has a team working on this. It behoves those teams, if they are not the same people, certainly to be close to one another, close to the ISC and able to feed off the intelligence that the ISC can give them, which no other committees can. I hope the Minister is able to reinforce that.
Lord Fox (LD)
Eagle—thank goodness. I thought it was an evil eye. I was going to describe it as beady. I thought his “evil eye” was going to be upon the Minister and I was a little concerned for her safety. It is getting late.
Moving on, as my noble friend set out, we will support the amendment from the noble Lord, Lord Hunt. There can be no place in the UK supply chain for businesses that engage in this behaviour, and we have to be absolutely sure that there is no place, which is why the noble Lord is right to want to explicitly write this in. I regret that the fact that my noble friend Lady Brinton’s amendment was not accepted means that if the noble Lord is successful, his amendment will not apply to the National Health Service, which seems rather unfortunate as it would probably be the prime customer. None the less, getting it in writing and putting it in there is very important and will be enthusiastically supported.
Baroness Hayman of Ullock (Lab)
My Lords, I will be very brief. I thank both noble Lords for such excellent speeches on really important issues and important amendments that have been brought back for further discussion. The noble Lord, Lord Alton of Liverpool, again and again draws our attention to where we need to act on wrongs in this world. Clearly, we must do all we can to tackle modern slavery, genocide and crimes against humanity. He is right to draw our attention to the serious examples he gave us in his speech of where this is happening. We believe that procurement policy can and should contribute to that end where it can. I say to the Minister that the Government have listened to much of what the noble Lord has said; we have moved forward to some extent on this.
My noble friend Lord Hunt’s amendment clearly spells out why we need to be doing something about this. Reading his amendment, what struck me was the definition. I will read it, because I think it is at the crux of this:
“‘Forced organ harvesting’ means killing a person without their consent so that their organs may be removed and transplanted into another person”.
I cannot think of many things more appalling than that, so we fully support my noble friend. He deserves the thanks of the House for bringing this forward. He has our full support, but I wish the Government would consider amending the Bill in this way.
Baroness Neville-Rolfe (Con)
My Lords, I agree with the noble Baroness on the excellence of the two speeches we have had during this important debate. I thank the noble Lord, Lord Alton, again for his contribution. I am delighted that we have been able to agree on this matter so that the changes we have agreed can be moved forward. I thought his speech, ranging from what the Co-op and Tesco are doing, through the Cambridge spies, the absolute horror of what is being imposed on the Uighurs, and all the other things he said that I will not repeat, bears reading and reflecting on.
On the use of surveillance equipment—to respond to one point the noble Lord made—in the wider public sector, I should add that if the Government consider the risk to be intolerable, they are able to take action. That does not have to be enshrined in primary legislation. On the point about parliamentary scrutiny, the Government carefully consider and respond to all Select Committee recommendations. The annual written report on surveillance cameras, once laid in Parliament, will be available to all committees. I am sure it will receive appropriate scrutiny and a great deal of interest.
Turning to the remarks made by the noble Lord, Lord Hunt, and the noble Baronesses, Lady Northover and Lady Hayman, we all agree that organ harvesting is a horrific practice. However, given that we already have provisions in this Bill relating to professional misconduct—which will cover organ harvesting—it would seem inappropriate and odd to single out this particular, albeit horrific, practice in this Bill, and not others, especially given that the risk of this practice occurring in public contracts is low. While the issue is of key importance, the amendment itself largely duplicates the Government’s existing efforts. I cannot agree with the criticism of this given all we have done to try to improve this Bill and make the arrangements better. As I have said, there is a reference to organ harvesting in the NHS legislation. To pick up on the various security areas we have now in the Cabinet Office, they will work closely together. That is how you defeat the enemy on these things.
The Deputy Prime Minister has spoken in the other place on these issues today, and the Leader of the House will be repeating the Statement shortly when we finish this business. Obviously, that is some context. This Government have already taken steps to act on the risk from foreign influence and demonstrated that they are willing to act when the risk is intolerable. Our action on the risk of using certain surveillance equipment on government-sensitive sites was necessary and proportionate. This Bill will help us further, as the national security debarment provisions will enable us to act in public procurements where we see malign influence. This is a major change that has been made to this Bill. It is very encouraging that this House has influenced it and then welcomed it on its return from the other place. This is how good legislation is made, I hope.
It is crucial that we bring this most important Bill to Royal Assent as quickly as possible. I hope noble Lords will back us today, and I hope that in view of what I have said, the noble Lord will consider withdrawing his amendment. In any event, we need to move forward and get this Bill on the statute book.
Baroness Neville-Rolfe
That the House do agree with the Commons in their Amendments 26 to 46.
(i) under section 57(1)(a) or (2)(a) by virtue”
“(ii) on the basis of being on the debarment list by virtue of paragraph 34A of Schedule 6 (threat to national security).”
“(1A) A Minister of the Crown must—
(a) have regard to the fact that contracting authorities may be unknowingly awarding public contracts to suppliers that—
(i) could be excludable suppliers by virtue of paragraph 14 of Schedule 7 (threat to national security), or
(ii) are sub-contracting to suppliers that could be excludable suppliers by virtue of that paragraph, and
(b) in light of that fact, keep under review whether particular suppliers or sub-contractors should be investigated under this section.”
“whether the Minister is satisfied that the supplier is, by virtue of a relevant exclusion ground, an excluded or excludable supplier, and if the Minister is so satisfied—
(a) in respect of each applicable relevant exclusion ground— (i) whether it is a mandatory or discretionary ground,
(ii) the date on which the Minister expects the ground to cease to apply (see paragraph 43 of Schedule 6 and paragraph 16 of Schedule 7), and
(iii) whether the Minister intends to make an entry to the debarment list,
(b) in respect of the exclusion ground in paragraph 34A of Schedule 6 (if applicable), the description of contracts in relation to which the Minister—
(i) is satisfied the ground applies, and
(ii) intends to refer to in a relevant entry in the debarment list, and”
(3A) In this section, the “relevant debarment information” means—
(a) the exclusion ground to which the entry relates;
(b) whether the exclusion ground is mandatory or discretionary;
(c) in the case of an entry made on the basis of paragraph 34A of Schedule 6 (threat to national security), a description of the contracts in relation to which the supplier is to be an excluded supplier;
(d) the date on which the Minister expects the exclusion ground to cease to apply (see paragraph 43 of Schedule 6 and paragraph 15 of Schedule 7).”
“(5A) The Minister may not enter a supplier’s name on the debarment list before the end of the period of eight working days beginning with the day on which the Minister gives notice to the supplier in accordance with subsection (5) (the “debarment standstill period”).
(5B) The Minister may not enter a supplier’s name on the debarment list if—
(a) during the debarment standstill period—
(i) proceedings under section (Debarment decisions: interim relief)(1) (interim relief) are commenced, and
(ii) the Minister is notified of that fact, and
(b) the proceedings have not been determined, discontinued or otherwise disposed of.”
“(b) may remove an entry from the debarment list,
(c) in the case of an entry added on the basis of paragraph 34A of Schedule 6 (threat to national security), may revise an entry to remove a description of contracts, and
(d) may revise a date indicated under subsection (3A)(d).
(7) If a Minister of the Crown voluntarily removes or revises an entry in connection with proceedings under section (Debarment decisions: appeals), a Minister of the Crown may reinstate the entry only after the proceedings have been determined, discontinued or otherwise disposed of.
(7A) A Minister of the Crown must—
(a) remove an entry if the Minister is satisfied that the supplier is not an excluded or excludable supplier by virtue of the ground stated in the entry, and
(b) in the case of an entry added on the basis of paragraph 34A of Schedule 6 (threat to national security), revise the entry to remove a description of contracts if the Minister is satisfied the exclusion ground in that paragraph does not apply in relation to contracts of that description.”
“Debarment decisions: interim relief
(1) A supplier may apply to the court for suspension of the Minister’s decision to enter the supplier’s name on the debarment list.
(2) Proceedings under subsection (1) must be brought during the debarment standstill period.
(3) The court may make an order to—
(a) suspend the Minister’s decision to enter the supplier’s name on the debarment list until—
(i) the period referred to in subsection (3)(b) of section (Debarment decisions: appeals) ends without proceedings having been brought, or
(ii) proceedings under that section are determined, discontinued or otherwise disposed of, and
(b) if relevant, require that an entry in respect of the supplier be temporarily removed from the debarment list.
(4) In considering whether to make an order under subsection (3), the court must have regard to—
(a) the public interest in, among other things, ensuring that public contracts are not awarded to suppliers that pose a risk,
(b) the interest of the supplier, including in relation to the likely financial impact of not suspending the decision, and
(c) any other matters that the court considers appropriate.
(5) In this section—
“the court” means—
(a) in England and Wales, the High Court,
(b) in Northern Ireland, the High Court, and
(c) in Scotland, the Court of Session;
“debarment standstill period” has the meaning given in section 62
(debarment list).”
“(3) After considering an application under subsection (1), the Minister must—
(a) notify the supplier of the Minister’s decision, and
(b) give reasons for the decision.”
“Debarment decisions: appeals
(1) A supplier may appeal to the court against a decision of a Minister of the Crown—
(a) to enter the supplier’s name on the debarment list,
(b) to indicate contracts of a particular description as part of an entry made in respect of the supplier on the basis of paragraph 34A of Schedule 6 (threat to national security),
(c) to indicate a particular date as part of an entry in respect of the supplier under section 62(3A)(d), or
(d) not to remove or revise an entry made in respect of the supplier, following an application under section (63).
(2) Proceedings under subsection (1)—
(a) may only be brought by a United Kingdom supplier or a treaty state supplier,
(b) may only be brought on the grounds that, in making the decision, the Minister made a material mistake of law, and
(c) must be commenced before the end of the period of 30 days beginning with the day on which the supplier first knew, or ought to have known, about the Minister’s decision.
(3) Subsection (4) applies if, in proceedings under subsection (1)(a) or (b), the court is satisfied that—
(a) the Minister made a material mistake of law, and
(b) in consequence of the mistake, a contracting authority excluded the supplier from participating in a competitive tendering procedure, or other selection process, in reliance on section 57(1)(b) or (2)(b).
(4) The court may make one or more of the following orders—
(a) an order setting aside the Minister’s decision;
(b) an order to compensate the supplier for any costs incurred by the supplier in relation to participating in the procedure or process referred to in subsection (3)(b).
(5) Otherwise, if the court is satisfied that the Minister made a material mistake of law, the court may make an order setting aside the Minister’s decision.
(6) In this section—
“the court” has the meaning given in section (Debarment decisions: interim relief) (interim relief);
the reference to a supplier being excluded includes a reference to—
(a) the supplier’s tender being disregarded under section 26;
(b) the supplier becoming an excluded supplier for the purposes of section 41(1)(a), 43(1) or 45(6)(a).”
“Debarment proceedings and closed material procedure
Part 2 of the Justice and Security Act 2013 (disclosure of sensitive material) applies in relation to proceedings under sections (Debarment decisions: interim relief)(1) (interim relief) and 64 (appeals) as if, in each of the following provisions, each reference to the Secretary of State included a reference to the Minister for the Cabinet Office—
(a) section 6(2)(a), (7) and (9)(a) and (c);
(b) section 7(4)(a);
(c) section 8(1)(a);
(d) section 11(3);
(e) section 12(2)(a) and (b).”
Baroness Neville-Rolfe
That the House do agree with the Commons in their Amendment 47.
Baroness Neville-Rolfe
That the House do agree with the Commons in their Amendments 48 to 80.
“(5A) The implied term does not prevent a contracting authority—
(a) requiring the use of a particular system in relation to electronic invoices;
(b) in the case of a defence authority (as defined in section 7(5)), requiring the use of a system that requires the payment of fees by the supplier.”
“(za) “electronic invoice” and “required electronic form” have the meanings given in section 66(3);”
(d) in relation to a concession contract.”
(a) in respect of which the contracting authority is required to publish a contract change notice under section 74, and”
(1) A relevant contracting authority may not terminate a contract by reference to the implied term in section 77 on the basis of the mandatory exclusion ground in paragraph 34A of Schedule 6 (threat to national security) unless the authority has notified a Minister of the Crown of its intention.”
(1A) Regulations under subsection (1) may only include provision that is equivalent to provision in—
(a) subsection (1), (2), (5) or (6) of section 88 (treaty state suppliers),
(b) section 89 (treaty state suppliers: non-discrimination), or
(c) Schedule 9 (specified international agreements).
(1B) Regulations under subsection (1) may not be made unless a Minister of the Crown considers, or the Scottish Ministers consider, that the regulations are necessary in order to ratify or comply with an international agreement to which the United Kingdom is a signatory.
(1C) In subsection (1B), the reference to being a signatory to an international agreement includes a reference to having—
(a) exchanged instruments, where the exchange constitutes the agreement;
(b) acceded to the agreement.”
“(b) a reference to discrimination is a reference to discrimination as defined in section 89.”
“Trade disputes
(1) This section applies where there is, or has been, a dispute relating to procurement between the United Kingdom and another state, territory or organisation of states or territories in relation to an international agreement specified in Schedule 9.
(2) An appropriate authority or the Scottish Ministers may by regulations make such provision relating to procurement as the authority considers, or the Scottish Ministers consider, appropriate in consequence of the dispute.
(3) Any provision made by the Scottish Ministers under subsection (2) must relate to procurement—
(a) carried out by devolved Scottish authorities, or
(b) under devolved Scottish procurement arrangements.
(4) Regulations under this section may include provision modifying primary legislation, whenever passed (including this Act).
(5) In subsection (1), the reference to an international agreement specified in Schedule 9 does not include a reference to the Trade and Cooperation Agreement between the United Kingdom of Great Britain and Northern Ireland, of the one part, and the European Union and the European Atomic Energy Community, of the other part, signed at Brussels and London on 30 December 2020.”
“(2A) Subsection (2)(a) does not apply in relation to an electronic communications system used, or required to be used—
(a) after the award of the public contract, or
(b) in relation to a utilities dynamic market.”
“Record-keeping
(1) A contracting authority must keep such records as the authority considers sufficient to explain a material decision made for the purpose of awarding or entering into a public contract.
(2) For the purposes of subsection (1), a decision is “material” if, under this Act, a contracting authority is required—
(a) to publish or provide a notice, document or other information in relation to the decision, or
(b) to make the decision.
(3) A contracting authority must keep records of any communication between the authority and a supplier that is made—
(a) in relation to the award or entry into of a public contract, and
(b) before the contract is entered into.
(4) A record under this section must be kept until—
(a) the day on which the contracting authority gives notice of a decision not to award the contract (see section 55), or
(b) the end of the period of three years beginning with the day on which the contract is entered into or, if the contract is awarded but not entered into, awarded.
(5) This section does not apply in relation to defence and security contracts.
(6) This section does not affect any other obligation under any enactment or rule of law by virtue of which a contracting authority must retain documents or keep records, including for a longer period.”
“(6A) A supplier may not bring proceedings under this Part on the grounds that one or more of the following decisions of a Minister of the Crown was unlawful—
(a) a decision to enter a supplier’s name on the debarment list;
(b) a decision relating to the information included in an entry on the debarment list;
(c) a decision not to remove an entry from the debarment list, or revise information included in such an entry,
(see section (Debarment decisions: appeals)).”
“Part 9 proceedings and closed material procedure
Part 2 of the Justice and Security Act 2013 (disclosure of sensitive material) applies in relation to proceedings under this Part as if, in each of the following provisions, each reference to the Secretary of State included a reference to the Minister for the Cabinet Office—
(a) section 6(2)(a), (7) and (9)(a) and (c);
(b) section 7(4)(a);
(c) section 8(1)(a);
(d) section 11(3);
(e) section 12(2)(a) and (b).”
“(4A) Subsection (1) does not apply in relation to a power under sections 59 to 66 (Debarment proceedings and closed material procedure).”
“(5) Subsection (1) does not apply in relation to a power under sections 59 to 66 (Debarment proceedings and closed material procedure).”
“(za) sections 59 to 66 (Debarment proceedings and closed material procedure);”
“(ba) section (Trade disputes) (trade disputes);”
“(a) applying it in relation to procurement carried out by contracting authorities under devolved Scottish procurement arrangements;
(a) disapplying it in relation to procurement carried out by devolved Scottish authorities under—
(i) reserved procurement arrangements,
(ii) devolved Welsh procurement arrangements, or
(iii) transferred Northern Ireland procurement arrangements.”
“(za) the Procurement Reform (Scotland) Act 2014 (asp 12),”
Baroness Neville-Rolfe
That the House do agree with the Commons in their Amendment 81.
Baroness Neville-Rolfe
That the House do agree with the Commons in their Amendments 82 to 101.
“Power to disapply this Act in relation to procurement by NHS in England
(1) A Minister of the Crown may by regulations make provision for the purpose of disapplying any provision of this Act in relation to regulated health procurement.
(2) In this section—
“regulated health procurement” means the procurement of goods or services by a relevant authority that is subject to provision made under section 12ZB of the National Health Service Act 2006 (procurement of healthcare services etc for the health service in England), whether or not that provision is in force;
“relevant authority” has the meaning given in that section.”
(da) section 52 (key performance indicators);”
(la) section (Trade disputes) (trade disputes);”
“(ua) section 123(6) (exclusion of devolved Welsh authorities);”
“(ca) section 52 (key performance indicators);”
(ha) section (Trade disputes) (trade disputes);”
“(ca) section 52 (key performance indicators);”
“(da) section (Trade disputes) (trade disputes);”
“(a) section 90 (treaty state suppliers: non-discrimination);
(b) section (Trade disputes) (trade disputes);
(c) section 111 (powers relating to procurement arrangements).”
“(3) A Minister of the Crown may not make specified regulations under subsection (2) without the consent of the Welsh Ministers.
(4) In this section, “specified regulations” means regulations to bring into force provisions regulating procurement by a devolved Welsh authority other than procurement under—
(a) a reserved procurement arrangement, or
(b) a transferred Northern Ireland procurement arrangement, but “specified regulations” does not include regulations to bring into force provisions in Part 7 (implementation of international obligations).
(5) In this section, “devolved Welsh authority” has the meaning given in section 157A of the Government of Wales Act 2006.
(6) A Minister of the Crown may by regulations make such provision as the Minister considers appropriate for the purpose of ensuring that—
(a) Parts 1 to 6 and 8 to 13, or particular provisions in those Parts, so far as not already brought into force under subsection (2) do not regulate procurement by a devolved Welsh authority other than procurement under—
(i) a reserved procurement arrangement, or
(ii) a transferred Northern Ireland procurement arrangement;
(b) existing legislation continues to regulate procurement by devolved Welsh authorities and procurement under devolved Welsh procurement arrangements.
(7) Regulations under subsection (6) may modify this Act.
(8) In this section—
“existing legislation” means any enactment, other than this Act or regulations made under this Act, that is passed or made before section 11 (covered procurement only in accordance with this Act) comes into force;
a reference to a provision regulating procurement includes a reference to a provision conferring a function exercisable in relation to procurement.”
“PART 2
SUBJECT-MATTER EXEMPTED CONTRACTS
General
3A (1) A contract is an exempted contract if it is—
(a) a contract of a kind listed in this Part of this Schedule;
(b) a framework for the future award of contracts only of a kind listed in this Part of this Schedule.
(2) But a Part 2-only contract is not an exempted contract if, on award of the contract, a contracting authority considers that—
(a) the goods, services or works representing the main purpose of the contract could reasonably be supplied under a separate contract, and
(b) that contract would not be a contract of a kind listed in this Part of this Schedule.
(3) In considering whether goods, services or works could reasonably be supplied under a separate contract, a contracting authority may, for example, have regard to the practical and financial consequences of awarding more than one contract.
(4) In this paragraph “Part 2-only contract” means a contract of a kind listed in this Part of this Schedule that is not of a kind listed in Part 1 of this Schedule.”
“Commercial contracts of the City of London
37 A contract for the supply of goods, services or works to the Common Council of the City of London other than for the purposes of its functions as a local authority, police authority or port health authority.”
“National security
34A (1) A mandatory exclusion ground applies to a supplier in relation to contracts of a particular description if an appropriate authority determines that the supplier or a connected person—
(a) poses a threat to the national security of the United Kingdom, and
(b) would pose such a threat in relation to public contracts of that description.
(2) In sub-paragraph (1)—
(a) the reference to an appropriate authority is a reference to the appropriate authority that is considering whether the exclusion ground applies;
(b) the reference to a particular description includes, for example, a description by reference to—
(i) the goods, services or works being supplied;
(ii) the location of the supply;
(iii) the contracting authority concerned.
(3) Sub-paragraph (1) applies only for the purpose of an appropriate authority’s functions under sections 59 to 66 (debarment), and cannot otherwise be relied on by a contracting authority when considering whether a supplier is an excluded supplier under section 57(1)(a).”
“(d) paragraph 34A (threat to national security).”
Baroness Neville-Rolfe
That the House do agree with the Commons in their Amendment 102.
Lord Hunt of Kings Heath
At end insert “and do propose Amendment 102B instead of the words so left out of the Bill—
“Involvement in forced organ harvesting
14A (1) A discretionary exclusion ground applies to a supplier if a decisionmaker determines that the supplier or a connected person has been, or is, involved in—
(a) forced organ harvesting, or
(b) dealing in any device or equipment or services relating to forced organ harvesting.
(2) “Forced organ harvesting” means killing a person without their consent so that their organs may be removed and transplanted into another person.””
Baroness Neville-Rolfe
That the House do agree with the Commons in their Amendments 103 and 104.
““event” means a conviction, decision, ruling, failure or other event by virtue of which a discretionary exclusion ground would apply to a supplier;”
Lord Speaker’s Statement
The Lord Speaker (Lord McFall of Alcluith)
My Lords, before we begin the next item of business, I wish to make a brief statement on security. Noble Lords will have seen media reports yesterday about a security issue relating to the Chinese state and access to Parliament. I understand that the Metropolitan Police have now confirmed that two men were arrested in March on suspicion of offences relating to espionage, and that they are on police bail until early October.
As you know, we do not typically discuss the details of security issues on the Floor of the House, for reasons which are well understood. However, I wish to reassure noble Lords that Parliament follows the same vetting procedures as the Government, the issues raised in media stories are being addressed, and that the House administration is working closely and effectively with other relevant authorities. The extremely small number of people who needed to know about this issue were immediately briefed on a strictly confidential basis, given the national security sensitivity of this matter. Security arrangements are kept under review at all times, in order to deal with evolving threats.
Ahead of the statement repeat by the Lord Privy Seal, I remind all noble Lords of the importance of not discussing security issues on the Floor of the House. This is particularly important in this ongoing and sensitive case, where commenting on the identities of those alleged to be involved, engaging in speculation about the case, or discussing other details runs a serious risk of prejudicing any future prosecutions. If any noble Lords have security concerns, they are of course welcome to raise them outside of this Chamber with me or with the Parliamentary Security Department.
Security Update
(8 months ago)
Lords ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
The Lord Privy Seal (Lord True) (Con)
My Lords, with the leave of the House I shall now repeat a Statement made earlier in another place by my right honourable friend the Deputy Prime Minister. The Statement is as follows:
“With permission, Mr Speaker, I would like to make a Statement on claims relating to an ongoing counterterrorism police investigation that were reported in the Sunday Times yesterday, Sunday 10 September. The story alleged that two individuals, including a parliamentary researcher, had been arrested on charges of conducting espionage on behalf of China.
These are serious allegations, and it is right that they are being thoroughly investigated by the police and relevant agencies. We must not hamper their work or prejudice any future legal processes by what we say today—as I believe, Mr Speaker, you said at the beginning of today’s proceedings. As you would expect me to say, it would therefore be inappropriate for me to comment on any specific aspect of the active investigation itself. I would, however, point the House to what the Metropolitan police said in their own statement:
‘The investigation is being carried out by officers from the Met’s Counter Terrorism Command, which has responsibility for investigations relating to allegations of Official Secrets Act and espionage-related offences’.
Of course, any decision on whether to proceed with a prosecution under the Official Secrets Act, and related legislation, would be a matter for the Crown Prosecution Service.
It remains an absolute priority for the Government to take all necessary steps to protect the United Kingdom from any foreign state activity which seeks to undermine our national security, prosperity and democratic values. The Government have been clear that China represents a systemic challenge to the United Kingdom and to our values. That has been evidenced in China’s continued disregard for universal human rights and international commitments in Xinjiang, its erasure of dissenting voices and stifling of opposition under its new national security law in Hong Kong, and disturbing reports of Chinese coercion and intimidation in the South China Sea. We are clear-eyed about that challenge, and we must be able to look the Chinese in the eye and call out unacceptable behaviour directly, just as our Prime Minister was able to do this with Premier Li at the G20 summit in New Delhi this weekend—an approach that has also been taken consistently by our Five Eyes allies.
Actions speak louder than words, and that is why I took the decision to instruct departments to cease deployment of all surveillance equipment subject to China’s national intelligence law from sensitive government sites in November last year. It is one of the reasons why I banned TikTok from government devices; the Government investigated and called out the so-called Chinese overseas police service stations and, as my right honourable friend the Security Minister set out in a Statement to this House in June, instructed the Chinese embassy to close them; we significantly reduced Chinese involvement in the UK’s civil nuclear sector, including taking ownership of China’s stake in the Sizewell C nuclear power project; and, as Digital Secretary, I took the action to ban Huawei from our 5G networks.
This afternoon the Procurement Bill is being debated in the other place. The Bill will include national security debarment provisions that will enable us to act when we see malign influence in our public procurement. In taking this approach, we are aligned with our Five Eyes allies and other G7 partners—indeed, every single G7 partner.
The UK will deploy, again, an aircraft carrier to the Indo-Pacific in 2025; we have announced AUKUS, a new security partnership that will promote a free and open Indo-Pacific that is secure and stable; and we will work with Italy and Japan through the global combat air programme to adapt and respond to the security threats of the future, through an unprecedented international aerospace coalition.
These Houses of Parliament stand as a monument to the freedoms of expression and belief that underpin our values, but just as these institutions have provided the paradigm for so many modern democracies, there are still those who fear such freedoms, and who seek to undermine them and to interfere in our society. We maintain constant vigilance in our efforts to understand and root out that interference, and we will always take action to address it, whatever its source.
In 2022, the Government established the Defending Democracy Taskforce, a group that works to co-ordinate across Government to protect the integrity of our democracy from threats of foreign interference. It is engaging across government, with Parliament, the UK’s intelligence community, the devolved Administrations, local authorities, the private sector and civil society on the full range of threats facing our democratic institutions. Those threats include any foreign interference in the electoral process, disinformation, physical and cyber threats to democratic institutions and those who represent them, foreign interference in public offices, political parties and our universities, and transnational repression in the United Kingdom.
Earlier this year, Parliament passed the National Security Act, which has overhauled legislation applicable to espionage, sabotage and any persons acting for foreign powers against the safety and interest of the United Kingdom. The measures in the Act will enable our law enforcement and intelligence agencies to deter, detect and disrupt the full range of modern-day threats, including threats from China. New offences in the Act will enable the disruption of illegitimate influence conducted for, or on behalf of, foreign states, whether designed to advance their interests or to harm the United Kingdom. The United Kingdom Government will do whatever it takes to protect our national security and this nation’s democratic institutions, which have stood for centuries as a beacon of liberty—from wherever the threat may come.
I commend this Statement to the House.”
Baroness Smith of Basildon (Lab)
My Lords, I thank the Lord Privy Seal for repeating the Statement in a timely way on the same day as it was made in the other place. I have often said from this Dispatch Box that the first duty of any Government is to ensure the safety and security of its citizens, but, when you look at it, it is more than that. In doing so, we must ensure that we uphold the integrity of our democracy and values.
I am sure that everyone in your Lordships’ House can recall where they were when we heard the news of the attacks on the twin towers, 22 years ago today. It is an appropriate time to recognise and pay tribute to the work of the intelligence and security agencies, who work alongside the police and other public sector organisations. I thank them for their work to protect us, in which they face unprecedented challenges and risks. Those risks are evolving in size, volatility and complexity. Security threats now appear through threats to our economy and technological systems, at our borders and through interference in our democracy. It is a huge challenge, and our security response must evolve to ensure that it is cohesive, comprehensive and able to adjust to face the changing nature of those threats.
In the last week, we have heard of two serious security issues: the escape from prison of a man facing charges for terrorism and the serious allegations of espionage on behalf of China. The police, intelligence agencies and justice system have our support in carrying out their investigations and should be left to do so. That also means that we have to be honest about the challenges faced and mistakes made; we have to recognise where there are gaps and take action to address them.
The Lord Privy Seal will understand that there is some incredulity that a man suspected of terrorism was able to escape from a category B prison under a van. It is extraordinary that he was in a category B prison—HMP Wandsworth—in the first place, that he had access to an area from which he could escape, and that it was not immediately noticed that he had absconded. I doubt that the Lord Privy Seal will be able to answer questions on this matter today, but I am sure that he recognises the importance of those questions that need to be investigated. Can he say whether the review into the security status of national security prisoners has been completed?
In response to the arrests made for espionage, there are questions about the actions the Government are taking to combat the threats posed by other states which seek to interfere in our democracy. MI5 issued an alert about Chinese attempts to influence Parliament 20 months ago. Our security services have long warned about interference in our democracy and in our elections, and there have been previous alerts and warnings about foreign actors seeking to penetrate parliamentary security. Can the Lord Privy Seal say anything about the actions they are taking in response to those specific warnings, and are they observed across government by both Ministers and those in their departments?
The Lord Speaker mentioned it in his introduction, but I ask the Lord Privy Seal to clarify whether the two men who have been arrested, and, I understand, charged with espionage, have been released on bail.
MI5 has also warned about commercial espionage from China, cyber risks and the threat to supply chains. The Intelligence and Security Committee has noted the Government’s lack of a long-term strategy towards China and is currently waiting for a response to the report it published in July. Can the Lord Privy Seal say anything more today about the specific threat posed by China? Can he more specifically say when the Government’s response to the ISC report will be published?
We must be able to work with China on key issues, such as climate change, but at the same time we must protect our national security and oppose attempts to infiltrate our democracy. In your Lordships’ House, we on the Labour Benches introduced an amendment to the National Security Bill to create stronger checks on donations to political parties which would have closed a loophole that allows shell companies to be used to hide political donations. The Government opposed that amendment. Can the Lord Privy Seal explain why, and will the Government now reconsider their position?
We know that the threats are not limited to China. For example, we saw the attack from the Russians in Salisbury, and we know there have been further cyberattacks and misinformation campaigns. In response to the shocking and terrible attacks on 9/11, the then Labour Government created a comprehensive strategy in response to state threats to national security. The UK counterterrorism strategy Contest established new links between the counterterrorism police, intelligence agencies and our public services, with the Home Office and the Government at the centre at the helm. The scale of the response that is needed today is certainly no less than that which was needed 22 years ago.
We are committed to extending this approach, if we are fortunate enough to be in government, by creating an equivalent strategy today to deal with such state threats. I can assure the Lord Privy Seal that the Government would have our support if they were to commit to introducing such a strategy and response now. I am not asking him to answer that at the Dispatch Box today, but will he commit to take this back to his Cabinet colleagues and report back to your Lordships’ House?
I end where I started. Nothing is more important in government than ensuring the safety, security and well-being of citizens. To fulfil that obligation, we need the right policies, strategies and collaborations. If we are to protect our democracy, we need to have a strategy in place, but we also need our citizens to have confidence in our democracy if they are to properly and effectively participate in it. This should be a joint endeavour across all parties and both Houses, and I hope the Lord Privy Seal will be able today to reassure us on the actions the Government are taking, and commit to going forward on this in a way that protects our democracy and security and unites the country, rather than creating division.
Lord Newby (LD)
My Lords, there are two distinct but related aspects to this Statement. The first relates to the arrest of two people on charges of conducting espionage on behalf of China. The second relates more generally to our posture towards the security risks which China poses to the UK.
On the charges, I fully understand why it is inappropriate to comment at this stage. However, I confess to be bemused as to the nature of the spying which the parliamentary researcher might have undertaken. According to media reports, one of his crimes seems to be to have organised regular drinks sessions at a Westminster pub. This may not be a meritorious activity but it is hardly a serious offence. I think everybody will be fascinated to discover, if charges are pursued, exactly what kind of secrets the parliamentary researcher might have had access to. But for today, we must simply compose our souls in patience until further details of any charges emerge.
There is the more serious question of whether parliamentarians should have been told about the arrests at an earlier stage, so that they could take particular care in their dealings with China and Chinese entities. It is not clear when the Home Secretary and Prime Minister were aware of this case and why they decided to remain silent about it with parliamentary colleagues. Perhaps the noble Lord the Leader can enlighten us.
The broader issue which this case exemplifies relates to our overall posture towards China. The Statement says that the Government believe that China presents a systemic challenge to our values. It lists a number of actions which they have taken to counter these challenges, but it fails to convince. In July, Parliament’s Intelligence and Security Committee issued an excoriating report on China which said that the Government do not have a “clear strategy” on China and have not devoted sufficient resources to tackling the threat that it posed. The actions listed in today’s Statement do not constitute such a strategy. The Government should be making protecting our democracy a national security priority—something, incidentally, which they have already consistently failed to do in respect of Russia—and accept the recommendations of the ISC’s China report.
More generally, the Government’s record on standing up to China is weak. From the genocide against the Uighurs to Hong Kong, and from Taiwan to interference in our democracy, the Government have failed to take China seriously. The Prime Minister may have meetings in Delhi with his Chinese counterpart, but the suspicion is that he is more interested in trade, rather than these broader concerns.
Developing a clear overall approach to China should now be an urgent priority. One specific question which such a strategy must cover is the extent to which we designate China formally as a security threat. The Prime Minister originally claimed that China was such a threat during the Conservative leadership contest—and on this we agree—but since then, he has back-pedalled. The spying case illustrates the broad challenge which China now poses to the UK, yet the Government have failed to take Chinese interference seriously. They surely must now do so.
Lord True (Con)
My Lords, I am grateful for the general tone of the response. It is invidious to choose, but although I am grateful for the response of the noble Lord, Lord Newby, I am particularly grateful for the very statesmanlike tone of the noble Baroness. I of course underline her tribute to the work of the Security Service, and indeed all the law enforcement services. On the day of 9/11, I was occupying the office which is now that of the Lord Convener, and I remember vividly watching what was going on in a position of disbelief. We must support their work, which sometimes, of its very nature—often, perhaps normally—has to be done on a confidential and secret basis. I think all noble Lords understand that matters cannot be avowed and addressed in detail while cases are ongoing.
I heard what the noble Baroness said about the prison escape and, fortunately, the individual concerned was recaptured—after I had had a sleepless night as the police helicopters circled over Richmond Park. I did not resent that at all; it was essential that that man be retaken.
The Lord Chancellor certainly said that these matters would be looked into. I shall not expand on that; nor would I want to anticipate where the examination of those events might lead. I will make sure that the Lord Chancellor is made aware of her comments on that.
On the question of MI5’s alerts and concerns, of course we are concerned about China. I thought a disappointing aspect of the response from the noble Lord, Lord Newby, was that he rather belittled the range of action taken by this Government in relation to China. I repeated that in the Statement and do not wish to weary the House by repeating it again but a look at Hansard will see the significant actions we have taken, which, in addition to those in the Statement, include reducing Chinese involvement in the UK’s civil nuclear sector by taking control and ownership of China’s stake in the Sizewell C project. We have also passed the National Security Act, which I referred to in the Statement.
The director-general of MI5—since MI5 was referred to specifically—called this
“a game changing update to our powers”.
Those are his public words. He said:
“We now have a modern set of laws to tackle today’s threats”.
These will give law enforcement and intelligence agencies new and updated tools to deter, detect and disrupt foreign influence, including a foreign influence registration scheme that criminalises those acting covertly for states that pose the greatest threat to the UK.
There were various comments and I have to say that not everything said in this House derived from newspaper reports was entirely accurate. But I shall not be led to comment on what was or was not. I think all noble Lords will understand that this is an ongoing investigation and it is extremely important that we do not jeopardise any proceedings that may follow.
I was asked about the response to the ISC report. I think it may not be the first time I have been asked that very legitimate question. I was told that I was permitted to say “very shortly” in response. I am now telling everybody not to betray secrets but I did say that I could not say that again and was assured that “very shortly” really does mean “very shortly” in this case. My noble friend Lady Neville-Rolfe will have heard those comments.
Information to Members of Parliament is again a matter for the relevant authorities. I shall not go down that road or say who knew what when. Noble Lords will have heard the Lord Speaker assure the House that:
“The extremely small number of people who needed to know about this issue were immediately briefed on a strictly confidential basis”.
That was held to be the responsible approach.
The noble Lord, Lord Newby, said that our approach to China does not convince. The noble Baroness also said that we must have a serious response to China. I believe that was implicit in the Statement and explicit in the Statement made by my right honourable friend in the other place. I underline what he said and what the House feels: China is a country that—sadly—has fundamentally different values from us and therefore represents a systemic challenge to the world order.
I agree with the noble Lord, Lord Newby, that China’s behaviour is increasingly concerning. It is becoming more authoritarian at home and more assertive overseas. We are alert to that challenge and I would say, as I often say in this House, how much we feel fortified by the support across the Chamber. We must take the necessary steps to stand up for our values and protect our interests.
On the other hand, China is also a permanent member of the UN Security Council. It is the second largest economy in the world and has an impact on almost every global issue of importance to the UK. Our overall approach, therefore, must be rooted in our national interest and co-ordinated with like-minded partners, as I referred to with the AUKUS arrangements, the long-standing Five Eyes arrangements and the work on a new aerial provision with Italy and Japan. We will go on working with like-minded partners. We are sending the aircraft carrier presence to the East again to assure our allies there that we will go on working with them to maintain a stable international order. The integrated review refresh set out a new approach and measures to respond to the increasingly concerning actions of Chinese authorities.
I agree with the noble Lord, Lord Newby, that it is an epoch-defining challenge for our country and the world. We have been clear that China remains the biggest long-term question and threat to the UK’s economic security, but it is not smart foreign policy to reduce our entire approach to China to one word. Our approach should be measured in our actions rather than our words. We in the Government are confident that, with the support of the party opposite and others, we are taking the right actions to keep the United Kingdom safe and prosperous.
Lord Alton of Liverpool (CB)
My Lords, the noble Lord will be aware that I, along with the noble Baroness, Lady Kennedy of The Shaws, and our families, have been sanctioned by the Chinese Communist Party for, among other things, speaking out against the treatment of the Uighurs in Xinjiang, the atrocities committed in Tibet, the threats almost daily to Taiwan and the terrible destruction of democracy and incarceration of lawmakers and pro-democracy advocates in Hong Kong, including the British citizen, Jimmy Lai. Here at home, we have spoken—as many have today in the House in the preceding debates—about issues such as forced organ harvesting and the surveillance state that comes through the installation of cameras by companies such as Hikvision and Dahua, in which the noble Lord himself has taken such a keen interest.
In the light of all that, the Leader of the House will not be surprised to hear me reiterate a point made by the noble Lord, Lord Newby. In another place earlier today, my good friend Tim Loughton MP, who is also one of those who has been sanctioned, expressed surprise that those of us who had been put in this invidious position were not told anything about the activities that were said to be taking place across the Parliamentary Estate. Will the Leader look at that issue again and have some regard to those who obviously have a direct interest in this?
The foreign influence registration scheme contains a power to place a foreign power in the enhanced tier. That will require parliamentary approval. What is the proposed timetable? Can it be accelerated? Will the Chinese Communist Party regime be on that list? The Leader referred to the “very shortly” assurance that he was asked to give concerning the excellent report from the Intelligence and Security Committee, which says that China has penetrated
“every sector of the UK’s economy”.
This House’s Select Committee on International Relations and Defence has also said that China is not a strategic competitor but a threat. Although it cannot be reduced to one word, as the Leader of the House said, surely it is time for us to schedule a debate. I hope that, as soon as the response from the Government is forthcoming, we will have in government time the chance to discuss the Intelligence and Security Committee’s report, along with our own reports.
Finally, will the Leader urgently consider establishing a small Joint Committee of both Houses to review infiltration, espionage, the subversion of our democratic institutions, the effects on places such as our universities, and these attempts to silence those of us who have been sanctioned by the CCP and our families?
Lord True (Con)
My Lords, I pay tribute to the persistence and courage of the noble Lord—I will call him my noble friend—Lord Alton in his long-standing witness against the brutalities that he has described and the assault on democracy; for example, I refer to the oppression that we have seen in Hong Kong. I also deprecate, as the Government do, the absurd concept of people in your Lordships’ House and the other place being sanctioned—and by whom? The Chinese Communist Party. By what right do people who do not understand our freedoms in this place and our right to speak purport to sanction or threaten us?
We are very alert to some of the activities, which is why the so-called police service stations that perhaps should never have been allowed to grow in the first place have been closed down. We do not assume that they are being closed down; we are checking that they have been closed down.
The noble Lord asked specific questions about the FISA provisions, including timing and scale. If I may, I will be advised on that and write to the noble Lord, but I can say that those powers are there. I quoted the director-general of MI5 saying how welcome they are; I can assure your Lordships that we will pursue them.
Baroness Berridge (Con)
My Lords, this is an unusual situation. We are dealing with a matter of great sensitivity. There is a prosecution currently ongoing and there are national security issues; a review of parliamentary security is also ongoing, as the Lord Chancellor mentioned in the media yesterday.
I have given notice of my concern to the Lord Privy Seal and my noble friend the Cabinet Office Minister by way of email; I have also communicated previously with the Lord Speaker about it. I am talking about the current practice, which is well known to all noble Lords—this is not a personal point at all—of noble Lords’ spouses and partners being issued with security passes without any security vetting. Due to the overlap between these issues, which is a rare circumstance, I ask my noble friend the Minister whether this review gives us an opportunity to think about whether we need to reconsider that policy in light of the matters raised, particularly the safety of our staff and the fact that we are well aware of how clever and wily our enemy is. We need to make sure that any loophole or avenue is closed off.
Lord True (Con)
My Lords, I am grateful to my noble friend for giving advance notice. I am not sure how helpful that means I can be. Obviously, although I have the indescribable honour of being the Leader of your Lordships’ House, a review of security vetting in Parliament is a matter for Parliament and the authorities here. I am sure that they will have taken note of what my noble friend says, but the Parliamentary Security Department is responsible for the delivery of security vetting in Parliament. Like all security policies, we expect this to be kept under constant review; I hope that will be informed.
I did not answer the point from the noble Lord, Lord Alton, about people being informed about what had happened. I said that I had nothing to add to what was said in the Lord Speaker’s Statement about the extremely small number of people who needed to know being briefed immediately.
Viscount Stansgate (Lab)
My Lords, I thank the Leader of the House for repeating the Statement. I fully endorse all the comments made by my noble friend on the Opposition Front Bench. I declare an interest as a member of the Joint Committee on the National Security Strategy; it involves Members of both Houses, some of whom have been mentioned in the course of press reporting on the case that we are discussing—or not discussing. We are fully aware of the fact that certain countries, such as China, are engaged in what I have heard described as the hoovering up of as much information and intelligence as possible for purposes of their own that may be a threat to us.
The Statement refers to the Official Secrets Act and related legislation. Do I take it from the Leader of the House’s answers so far that the Government take the view that the National Security Act now provides a much more appropriate legal framework for considering a case of this kind? Secondly, we now know of events that took place as long ago as March, but that have only become widely known this week. Is there any connection between this and the fact that the Prime Minister chose to raise with Premier Li at the G20 summit the case that has given rise to this Statement?
Lord True (Con)
My Lords, the Prime Minister will have an opportunity to discuss the G20 Statement tomorrow, when I fear that your Lordships will suffer the pain of me answering again from this Dispatch Box. Perhaps I can then say a little more, if asked, about the engagement with Premier Li. However, I assure the House that the Prime Minister has certainly addressed the substance of Chinese activity and China’s efforts to undermine our democratic procedures so far as they are concerned.
On the question of the Official Secrets Act and the National Security Act, I would not wish to relate those to the ongoing investigation and was not seeking to do so. Obviously, I referred to the National Security Act, as did the director-general of MI5, as a further building block in the tools we have. That was in response to the question asked by the noble Lord, Lord Newby. So far as the current investigation is concerned, the Met has said that due to the active and ongoing nature of the investigation, it will not provide further details at this stage. It would not be right for me to comment on these reports. A statement was put out by the Metropolitan Police; I refer noble Lords to that statement.
Lord Campbell of Pittenweem (LD)
My Lords, I begin by declaring that I was previously a member of the Intelligence and Security Committee, although that is not a reason for urging the Minister to re-read the report, since it contains a lot of conclusions that are entirely relevant to our discussion this evening.
I direct his attention to paragraph 7, which carries the description “whole-of-state threat”. The committee concludes that the Government’s policy has enabled China
“to advance its commercial, science and technology, and industrial goals in order to gain a strategic advantage”.
Given what we know of China’s tactics, why are we so surprised that there are now allegations of spying? Indeed, there would be surprise had there been no such allegation, given China’s previous record. Respectfully, it seems that the Government should be not only responding to the contents of the Intelligence and Security Committee’s report but implementing the various opportunities it identifies for putting a proper control over the activities of China against the United Kingdom. It is not a matter of “as soon as we can”; it should be a matter for immediate implementation.
Lord True (Con)
My Lords, the committee’s report is obviously of great significance and importance, and the Government regard it in that way. I have nothing to add to what I have said about hoping that the government response will come very shortly. Some people suspect that I am part of the usual channels. but I am not going to say from this Dispatch Box whether there will be a debate on this subject. However, at some point Parliament will require that we have a chance to take stock.
The only thing I would say—this is a statement of fact rather than a political point—is that if one goes back to the coalition years, when we shared time in government, the rhetoric was very different. Some of the facts on the ground were different. The nature of the Chinese regime has evolved since those times and the nature of our response is evolving. It is often easy to be wise after the event, but as my right honourable friend said in the Statement, we are very open-eyed about this and clearly recognise the nature, scale and uniqueness of the position of China, led by the Chinese Communist Party, with its ambitions, not all of them potentially pacific. We recognise that reality in the modern world and I hope that Parliament and the country as a whole will rise to that. Certainly, the Government will play their part.
Baroness Bennett of Manor Castle (GP)
My Lords, I declare my position as co-chair of the All-Party Parliamentary Group on Hong Kong. The reports this weekend and the allegations that have emerged are of great concern to the large and growing community of refugees, exiles and students from Hong Kong in the UK. This follows a few months after a bounty of 1 million Hong Kong dollars was put on the heads of eight activists around the world, three of whom live in the UK. What reassurance, services and support are the UK Government planning to provide to ensure that people know where to go if they have had a concerning, dangerous or worrying experience on social media or in person? The many students, particularly post-graduates, who might be studying issues around China, may be approached, perhaps innocently or not so innocently, by someone who may be an agent of the Chinese state. Do the Government have advice for them on what steps they should take to make sure they are able to act appropriately in that situation to protect themselves and the rest of us?
Lord True (Con)
My Lords, I thank the noble Baroness for her question. I believe she will acknowledge that the action of Her Majesty’s Government, as it then was, in opening the door to so many people from Hong Kong, which was supported across the House, was the right and wise thing to do—I hope that she will recognise that. In that region we are seeking to be active to constrain China as it seeks to extend its malign influence, and I know from her background that she will welcome the AUKUS arrangement—I am very disappointed to see her shaking her head, because that is a reaction that might be shared in quarters that we are now discussing.
The Hong Kong bounties are intolerable and unacceptable. Anybody who receives any sort of threat should let that be known to the authorities; we take that extraordinarily seriously. We will not tolerate any attempts by China to intimidate and silence individuals in the UK or overseas. The UK will always defend the universal right to freedom of expression—why are we here in this Chamber?—and stand up for those who are targeted. We strongly object to the national security law that China imposed on Hong Kong, including its extraterritorial reach, which was in breach of the legally binding Sino-British joint declaration. We suspended the extradition agreement with Hong Kong on 20 July 2020 in response to the imposition of the national security law by Beijing. I assure your Lordships that we will give the most vigorous support to those intimidated by China who come from the remarkable territory of Hong Kong.
Viscount Waverley (CB)
My Lords, I have listened carefully to the Statement, with which I am obviously at one, as I did the Front Benches and the call for a renewed strategy. I propose that procedures of verification and enhanced vetting be considered. As a matter of course, and for the purpose of disclosure and information, is the Minister aware that the press have been referring to a spy
“at the heart of power”?
In doing so, they were referring to Parliament. I was concerned, and ask what explanation there is, that a Russian spy now expelled from the UK—and so presumably known about—was at a high-level reception, including ambassadors from a range of countries friendly to the UK, at which I was also present. That person was expelled shortly after the meeting to which I refer. I bring this to the attention of the Leader only so that all these matters be considered by the relevant authorities as we clean up what is going on.
Lord True (Con)
My Lords, I am not going to comment on press reports. It is unfortunate that I am not the most regular reader of the press—much to its annoyance. All I say in response to the noble Viscount is that this country is always vigilant against espionage threats from whatever quarter. Over many decades, there has been a record of incidents of bad actors being expelled from the United Kingdom, and I am sure there will be more in the future.