Enforcement

Sanctions and Anti-Money Laundering Bill [Lords] – in a Public Bill Committee at 10:30 am on 27th February 2018.

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Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury 10:30 am, 27th February 2018

I beg to move amendment 4, in clause 17, page 16, line 12, at end insert—

“( ) Regulations—

(a) may create criminal offences for the purposes of the enforcement of prohibitions or requirements mentioned in subsection (2)(a) or (b) or for the purposes of preventing such prohibitions or requirements from being circumvented, and

(b) may include provision dealing with matters relating to any offences created for such purposes by regulations (including provision that creates defences).

( ) Regulations may not provide for an offence under regulations to be punishable with imprisonment for a period exceeding—

(a) in the case of conviction on indictment, 10 years;

(b) in the case of summary conviction—

(i) in relation to England and Wales, 12 months or, in relation to offences committed before section 154(1) of the Criminal Justice Act 2003 comes into force, 6 months;

(ii) in relation to Scotland, 12 months;

(iii) in relation to Northern Ireland, 6 months.”

This amendment enables sanctions imposed by regulations under Clause 1 to be enforced by criminal proceedings, and limits the terms of imprisonment that such regulations can allow to be imposed for breach of sanctions.

Photo of Steve McCabe Steve McCabe Labour, Birmingham, Selly Oak

With this it will be convenient to discuss amendment 21, in clause 17, page 16, line 36, at end insert—

“(8) An appropriate Minister must publish guidance from the Crown Prosecution Service on when it is in the public interest for a breach of a sanctions regulations to be prosecuted.”

This amendment would require the Government to publish guidance on when it is in the public interest for a breach of sanctions regulations to be prosecuted.

Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury

The offences provisions are perhaps the most important amendments that we need to debate today, following the Government’s defeat in the other place. Hon. Members should be aware that without the fullest set of enforcement measures available to deal with breaches of sanctions, the UK will not be able to ensure effective implementation and enforcement of sanctions. That would make what are currently key foreign policy and national security tools virtually toothless, and therefore redundant.

It is important to recognise right at the start that the concerns in the other place were not about whether there should be criminal offences for breaching sanctions; it was accepted that there was a need for these offences. What was at issue was the circumstances where Parliament could properly give to Ministers the power to create offences. The Government have listened to those concerns. We understand them and these amendments address them.

Currently, EU sanctions against countries such Russia and Syria are imposed through EU legal Acts. These require member states to put in place enforcement measures at national level. In line with that requirement, the UK routinely creates criminal offences for breaches of sanctions by way of statutory instruments made under powers in the European Communities Act 1972 as modified by the Policing and Crime Act 2017, as well as other legislation such as the Export Control Act 2002. The Government therefore want to maintain continuity in this area by reproducing the powers available under existing legal frameworks for enforcement across the various forms of sanctions in the Bill.

Since the defeat in the Lords, Government officials and lawyers have worked with Lord Judge and others to seek a legislative solution. That has been a deep and meaningful dialogue, and I must express my gratitude to Lord Judge for his engagement in seeking to find a way forward. We believe that can be found in amendment 4, the enhanced procedural requirements, which we will debate later, in new clause 3 and the corresponding offence provisions for money laundering. The Government believe that combination of measures is the best solution to meet the concerns expressed in the other place while being practical to implement, which I think was the intention of those who raised the concerns.

The amendment restores to clause 17 the provisions to create sanctions offences in regulations. It provides for the enforcement of any prohibitions and requirements, to provide for criminal consequences if they are contravened or circumvented. The clause also provides for maximum penalties for breaches of sanctions in regulations. The provision states that regulations may not include offences with maximum penalties greater than 10 years’ imprisonment, which is in line with the maximum penalty available through the 2002 Act, and for offences other than trade sanctions we do not intend to create penalties greater than seven years’ imprisonment, in line with current practice. The clause should be read alongside the safeguards in new clause 3, which I will discuss later.

Even with the safeguards that we plan to introduce in new clause 3, the Government remain very aware that creating criminal offences and setting penalties in regulations is a serious matter, not to be undertaken lightly. I am therefore happy to repeat assurances given in the other place. First, no Government would ever create criminal offences for trivial matters. The powers detailed in clause 17 would be used only to create offences within the categories of offences that already exist for breaches of sanctions, breaches of licences and breaches of disclosure or information requirements. Secondly, Ministers should not use these powers in a way that is incompatible with the basic and fundamental rights of people in the UK—section 6 of the Human Rights Act 1998 expressly forbids it. Thirdly, as I said before, regulations under the Bill cannot create offences for trade sanctions with maximum penalties greater than 10 years, and we do not intend to create offences for financial sanctions and other types of sanctions with maximum penalties greater than seven years.

We have listened to the concerns expressed in the other place, and we have tabled amendments to introduce controls on the use of this power. As I said, I will speak to those amendments later in our consideration in Committee. In conclusion, the amendment will restore our ability to enforce sanctions by reintroducing the provision to create criminal and civil offences and penalties that are proportionate to the scale and nature of sanctions breaches and still effective as a deterrent. It should be read together with the enhanced procedural safeguards in new clause 3, which directly addresses the concerns raised in the other place.

Photo of Helen Goodman Helen Goodman Shadow Minister (Foreign and Commonwealth Affairs)

I was very disappointed, but not surprised, when I saw that the Government had tabled this amendment before the weekend. I anticipated that they might seek to reverse one of their defeats in the Lords. I think it is striking that the Government are seeking to reverse amendment 45 from the other place, when they lost the vote on that amendment by 80 or 90 votes. It was not a narrow little thing. The amendment in the other place was moved not by some party hack, but by the former Lord Chief Justice of England and Wales. He made a number of speeches about the excessive use of Henry VIII powers.

The Economic Secretary says that he has listened, but I am not convinced. To be frank, if he had really wanted to persuade us this morning that Lord Judge was in agreement, he would have shared with the Committee the correspondence he has had with Lord Judge on this matter. Is there any correspondence on the table this morning? No, there is not.

I remind the Committee of what is at stake. Throughout the Bill, the Government are taking the power to make delegated legislation. Lord Judge spoke at length about Henry VIII and his sex life. I am not going to delay the Committee on the question of Henry VIII’s sex life, but it is rather unfair on Henry VIII to call these measures Henry VIII clauses, because they are worse than what Henry VIII did. I checked in my copy of Elton what happened in 1539 in the Statute of Proclamations. Elton said that it was an attempt not to replace statute or legislation with parliamentary covenant, but to legitimise proclamations. It stood on the statute book for only eight years, and it was repealed in 1547.

The concern here is that secondary legislation is being used to create criminal offences. In the Brexit referendum, people were promised that Parliament would take back control. The referendum was run in the name of parliamentary sovereignty, not an increase in Executive power. This is one of a number of occasions where we have seen that from the Government.

If we rely on delegated legislation, we will not give Parliament proper opportunities for debate, scrutiny or control. I remind hon. Members exactly how the processes work. A statutory instrument introduced under the negative resolution procedure can become law without debate or a vote. It can even become law before it has been published and laid before the House. It can be made law the moment the Minister signs it—privately, in his office in Whitehall, before anyone else knows anything about it. In 2016, a fifth of statutory instruments were in force three weeks after publication. If Ministers were given such a power, there would be nothing to stop them signing laws and seeing them on the statute book the same day.

Scrutiny by the affirmative and super-affirmative procedure is not much better. Such statutory instruments must be approved explicitly, but they must go to Committees upstairs. In September, the Government passed a resolution that enabled them to overturn the results of the general election by packing those Committees. Even when such statutory instruments are debated by the whole House, the debate is limited to 90 minutes and they cannot be amended. Not only has the Minister not shown us his correspondence with Lord Judge, but he has not shared any of the statutory instruments in draft—that would be normal practice—and he is not agreeing to offer any accompanying documents.

Fundamentally, there are three issues: the content of the statutory instruments, their form—negative or affirmative—and the institutional architecture. We see problems with all three. There are problems with the content, because criminal offences are being created by secondary legislation. There are problems with the form. It is not clear what is being done using the negative procedure and what is being done using the super-affirmative procedure, or the rationale for using either one. I raised that with the Minister on Second Reading. I accept that, in the case of sanctions, Ministers need to be able to move fast to implement regimes on designated persons and countries to prevent avoidance. Any intelligent person understands that. However, I do not understand why the Government do not use primary legislation for the enforcement and prohibition requirements. The Government seem to be proposing that for non-UN sanctions, they will use the main affirmative procedure; for others, they will use the draft affirmative procedure; and for UN regulations, they will use the negative procedure, as they do now. In Committee in the Lords, Baroness Northover proposed that the draft affirmative procedure should apply to all enforcement regulations. Lord Ahmad made an undertaking to look at that proposal, but Ministers do not seem to have done so, and I am not clear why. In the other place, the Constitution Committee and the Delegated Powers and Regulatory Reform Committee strongly criticised that, and it was one of the things that swayed the other House to amend the Bill on Report.

We will come back to institutional architecture when we come to clause 48. I tabled an amendment last night, and I hope that it is on the Order Paper—I think it must be, because the Clerks do such an excellent and efficient job. Let me point out to Ministers that, with this Bill, they are reducing the House’s scrutiny over statutory instruments that concern sanctions. At the moment, EU sanctions—not UN sanctions—go to the European Scrutiny Committee, which has scrutiny reserve. UN sanctions go to ad hoc delegated legislation Committees. In the new world, Ministers are suggesting that everything will go to ad hoc delegated legislation Committees. Everybody knows that they are the worst piece of process in this Parliament, and that they simply do not do the job that they are intended to do; they are pure rubber-stampism. The personnel on the Committees changes, and people do not bother to turn up. There was an example the other day of a Committee on Russian super-sanctions, at which my hon. Friend Peter Dowd and the Financial Secretary to the Treasury spoke. These people are doing their best, but they get the papers two days before and they build up no expertise. That is not the way to handle a really important piece of policy.

The Lords Committees have looked at all that. Our own Procedure Committee, of which I am a member, has also looked at Henry VIII powers post-Brexit, in the context of the European Union (Withdrawal) Bill. Our report said:

“The Bill as it stands makes no provision for amendment to the standard statutory procedures for control and approval of delegated legislation which have been in effect since 1947. There is considerable concern in the House and elsewhere about the scale and scope of the powers claimed to amend existing legislation.”

That happens here, too. The statutory instruments that the Minister wants would create criminal offences, but later in the Bill there are statutory instruments to amend primary legislation and even to amend the Bill. The Procedure Committee, in the context of the European Union (Withdrawal) Bill, recommended a sifting Committee with a scrutiny reserve and accompanying documents, and concessions were made by the Government. That was agreed in the context of the European Union (Withdrawal) Bill. As the Government are a learning organisation, why do we not have such concessions—a sifting Committee or similar—for this Bill?

I submit to the Committee that this Bill is worse than the European Union (Withdrawal) Bill, for two reasons. First, the criminal offences created under the European Union (Withdrawal) Bill were for offences that carried maximum penalties of three years. Here, Ministers are proposing that statutory instruments be used to create criminal offences with penalties of up to 10 years. Those are far more serious offences, which they propose to legislate for by the stroke of a Minister’s pen.

Secondly, this Bill is much worse and more serious than the European Union (Withdrawal) Bill, on which Ministers have already made concessions, because that Bill is a temporary Bill. It is designed for making delegated legislation for a two-year period during the transition phase to bring our statute book up to scratch. The powers that Ministers are taking in this Bill are permanent, and there is no sunset clause. I have heard the Minister, but we are thoroughly opposed to Government amendment 4.

Photo of Alison Thewliss Alison Thewliss Shadow SNP Spokesperson (Cities), Shadow SNP Spokesperson (Treasury) 10:45 am, 27th February 2018

I echo that. We are also very worried by this amendment, and by the return of something that was clearly and definitively rejected. As far as we are concerned, it is dangerous and an affront to democracy. The Government should accept that they were wrong, and withdraw the amendment. I point out that the Lords Constitution Committee said:

“We consider that such regulation-making powers are constitutionally unacceptable and should not remain part of the Bill.”

The Government should take heed.

Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury

I am grateful for the dialogue with hon. Members on the Front Bench, and I will respond to some of the points that have been made. On the question of whether there is some sort of secret plot to hide any conversations with Lord Judge, Government lawyers have had a number of meetings. No letters have been exchanged, so there is no material to share. The vote was lost by 192 votes to 209; I concede that it was lost, but the thrust of the remarks by the hon. Member for Bishop Auckland concerns the notion that behind the measure is some kind of power grab by the Government. I see it as the Government needing to be accountable for how these powers create new offences and how they are used. New clause 3 will require the Government to lay a report before Parliament, setting out what criminal offences are included in any new sanctions regulations.

The hon. Lady makes a number of points about the differences in the scrutiny process. I point out that the European Scrutiny Committee has never overturned an SI in this area. She talked about some of the areas in which the negative procedure is used. As my right hon. Friend the Member for Rutland and Melton said on Second Reading, it is used in those cases for legitimate reasons around stopping the flight of assets, where we necessarily have to move quickly. I believe that the Government have acknowledged Lord Judge’s concerns and have put appropriate restraining and safeguard mechanisms in place. Therefore, I respectfully submit that the Government’s position needs to be held to, and we will resist this amendment.

Question put, That the amendment be made.

The Committee divided:

Ayes 9, Noes 7.

Division number 2 Caledonian Pinewood Forest — Enforcement

Aye: 9 MPs

No: 7 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly agreed to.

Amendment 4 agreed to.

Ordered, That further consideration be now adjourned. —(Mike Freer.)

Adjourned till this day at Two o’clock.