Liam Byrne
MP for Birmingham Hodge Hill and Solihull North · Labour · United Kingdom
“The loss of 4,000 jobs at Jaguar Land Rover is a body blow for workers, families and communities across the west midlands, so I commend Richard Parker, the Mayor of the West Midlands, for moving quickly on Monday to put £500,000 on the table to help ensure that everybody gets back to work.”
“I wholeheartedly welcome this well-rounded statement from the Foreign Secretary, and put on record my thanks to the new Prime Minister for the hard yards that I know he has put in over recent days and weeks.”
“I am grateful to my hon. Friend for giving way, and I offer my warmest congratulations to her on her appointment to the role; she will be a brilliant Minister.”
“Let me start with a word of thanks to my hon. Friend the Member for Chester North and Neston (Samantha Dixon), who is not in her place, who said quite rightly that an awful lot has changed since the Bill was first introduced to this House. Indeed, a lot has been revealed over the course of the summer.”
“The effect of new clause 34 would be to ban off-ramping, ban new forms of digital currency transactions and ban memecoins, which are exactly the kind of measures that Ministers now need to bring forward. If we want to take the crypto system out of political finance, this is what we need to do.”
“No doubt we will learn that Mr Cottrell was in fact on the electoral register when that money was passed. No doubt we will discover that his mother, Fiona Cottrell, declared and did not disguise the fact that the money had ultimately come from her son.”
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“We have the highest budget deficit, pretty much, in the G7, but the reason why we have a high budget deficit is that we chose to act to protect jobs, to protect homes and to protect businesses over the course of the past year. As the International Monetary Fund has recognised, the reason why we had that flexibility to act was that we went into the recession with the lowest debt of any country in the G7 apart from Canada.”
“I thank the hon. Gentleman and my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) for the consistent way in which they have championed the need for a new hospital in their area. The hon. Gentleman knows that I am in close discussion with the Secretary of State for Health, and we hope to make an announcement on that matter shortly.”
“I am grateful to the hon. Gentleman, who is being very generous, for giving way. I wanted to clarify one point that comes from his answer to an earlier intervention. Is he proposing that the Government drop the John Chadwick process and revert to the process set out by the ombudsman?”
“I will address that point in my own contribution, if that is okay with the hon. Gentleman. Before he concludes, what policyholders will want to hear from him is a clear statement about whether he supports the John Chadwick process or whether he wants it to be stopped, and the Government of the day to revert to the approach proposed by the ombudsman. It is a very simple question—it is imperative that policyholders know the Opposition’s position.”
“I am grateful for some—not all—of the remarks that the hon. Member for Fareham (Mr. Hoban) made. In particular, I am grateful for his clarification that it is the position of the Opposition at this stage to support the Chadwick process. Perhaps later contributions will help me to reconcile that with the sentence in the motion that he moved, in which he seeks to set a clear timetable for implementing the ombudsman’s recommendations, rather than acknowledging support for the John Chadwick process. Perhaps we can return to the matter over the course of the afternoon.”
“I beg to move an amendment, to leave out from “House” to the end of the question and add: “recognises the vital role the Ombudsman plays in public life; reaffirms the duty of Parliament to support the office of the Ombudsman; notes that the High Court ruled that the Government’s response to the Ombudsman’s recommendations on Equitable Life, its establishment of an ex gratia payment scheme, and the terms of reference given to Sir John Chadwick were a rational response to the Ombudsman’s report; notes that Sir John expects to produce his final advice in May; welcomes the Government’s commitment to respond with details of a payment scheme within two weeks of receiving this advice; welcomes the Government’s determination to establish a scheme administratively quicker and simpler to deliver than that envisaged by the Ombudsman; further notes that to abandon the Chadwick process so close to completion would add delay and hardship for policyholders; welcomes the Government’s view that, while it cannot prejudge Sir John’s final advice, there is a strong case for policyholders who have passed away to be included in the scheme and that it is neither desirable nor administratively feasible to means-test every individual policyholder; and recognises the impact and significant distress that maladministration and injustice have caused in respect of Equitable Life.” I, too, welcome the chance to debate Equitable Life today.”
“Member for Shrewsbury and Atcham (Daniel Kawczynski) for organising such an excellent event. This afternoon, I want to set out the Government’s approach and put on the record in Hansard my response to some of the questions that have already been flagged up by right hon. and hon. Members.”
“The ombudsman’s report is pretty substantial. It involved four years of work, and it was right that the Government considered it carefully. I wanted to give a commitment to respond to Sir John Chadwick’s final report within a couple of weeks because of the sentiment that has been expressed in the House, which I have witnessed at close quarters since I became Chief Secretary. Since the debate last October, I have laid two written ministerial statements to keep hon. Members up to date with the progress of Sir John Chadwick’s work. Last month, Sir John Chadwick and I had the opportunity to discuss the issues, some of which I hope will be aired this afternoon, with the all-party group on Equitable Life Policy Holders. I should like to record my thanks to my hon. Friend the Member for Leeds, North-East (Mr. Hamilton) and the hon.”
“It is also fair to say that we did not wholly agree with the ombudsman’s conclusions, although on many things we did agree. In nine out of 10 of her findings we agreed wholly or in part with the charge of maladministration, and in five areas we said that we believed that injustice followed. So it was not to provide a compensation for regulatory failure, but to answer an ethical demand for help that the Government proposed an ex gratia scheme be set up.”
“I will come to that point directly slightly later in my remarks. First, I want to repeat the apology to policyholders for the delay. This was an apology first made by my predecessor, now the Secretary of State for Work and Pensions. I would also like to repeat what I put on the record in our first debate in October, which was a word of thanks to the parliamentary ombudsman for her work. It is right and appropriate for the Government to record our gratitude for her work. Her report was substantial, careful and sympathetic, and it contained a weight of analysis that reflects the complexity and scale of the issue. It took the ombudsman four years to put together, but it demonstrated a commitment to get to the heart of a difficult issue.”
“We therefore wanted Sir John Chadwick to look at a more expeditious and less risky way of setting up a payment scheme. Rather than a case-by-case analysis, Sir John has proposed that we look at different classes of policyholder—about 20 in total—and then, for each class, assess relative loss with a comparator on which he has gone out to consultation.”
“The ombudsman suggested a scheme that in her view could be up and running and complete its business within two and a half years, but her proposal relied on looking at regulatory returns. That has two consequences. First, it would entail a case-by-case review to understand who lost what and why. That would involve looking at 30 million investment decisions by 1.5 million people over 20 years. Secondly, and to my mind more problematically, individuals would have to prove that they relied on regulatory returns. As the ombudsman said: “I find that injustice was sustained by any policyholder who relied on information contained in the Society’s returns for 1990 to 1996”. The Government simply did not think that such an approach would work.”
“There is a principle, long accepted and indeed long debated in the House, that there is not an automatic right or an entitlement to compensation for regulatory failure. That was a characteristic of the compensation scheme that was put in place for failures as far back as Barlow Clowes. None the less there is an ethical demand to have a compensation scheme set up. I have sought to deliver a payment scheme that meets the imperative to act, to deliver it swiftly and to ensure that the right people are included. I want now to say a word or two about the approach that the Government have pursued and the rationale for it. All hon. Members agree that we need to establish a fair payment scheme as quickly as possible.”
“Members will be much more familiar than I am with compensation schemes that have been set up over the years, whether for Icelandic fishermen—a scheme that dates back two or three decades—or for injuries sustained in the coal mining industry. What characterises many of those schemes is that they take years and years—sometimes decades—to run all the way through to a conclusion, and that sometimes they cost billions of pounds to administer. I wanted to ensure that we had a payment scheme that was up and operating quickly, and got through its business as fast as possible.”
“I am not sure that I accept that there is confusion after an election, but the hon. and learned Gentleman will accept that Sir John’s approach must be faster and simpler than looking at 30 million different investment decisions. In my conversations with Sir John Chadwick, when we discussed his timetable and, indeed, the resources that he needed, I wanted to ensure that he had the time and space to do a thorough job, so that once a scheme was set up it could be completed as rapidly as possible. I do not think that I met Sir John without asking him whether he had all the resources that he needed. Some right hon. and hon.”
“I understand the hon. and learned Gentleman’s point. I have not approached the question with cynicism. I have approached the exercise, which has been one of the hardest I have had to confront since I have been at the Treasury, with only one concern: how we get a payment scheme up and running quickly, in a way that minimises risk and allows us to complete the exercise as rapidly as possible.”
“I think that Sir John’s approach will be better and faster, but his task is still difficult. He has to analyse about 2 million policies, to look at information dating back two decades on about 20 different types of policy and to review about 200 different financial products. None the less, his approach avoids some of the more difficult aspects of the ombudsman’s proposal and it will lead, I think, to a simpler and administratively quicker scheme.”
“Of course. Along with his third interim report, Sir John has published some detailed actuarial studies. In some quarters—EMAG in particular—there is concern that that is not enough detail. If there is a demand among right hon. and hon. Members for more information, I will discuss with Sir John how we should make that available. Obviously, he and I will be legally obliged to protect personal information, but I am sure that there is a way to accommodate the hon. Gentleman’s point. If we compare the two approaches that the ombudsman and Sir John Chadwick are taking, we understand why Sir John concluded that the approach suggested by the ombudsman was at best unsatisfactory and—more likely—impossible. On that basis, I am unable to agree with the ombudsman’s assessment that her scheme would take only two and a half years to deliver.”
“The answers to these two questions have important consequences for how delivery arrangements should be set up. A smaller scheme could probably be delivered quite quickly—through the Department for Work and Pensions, for example. A more complicated scheme that involved, for example, distributing financial services products to Equitable Life policyholders, could require the Government to secure a delivery partner in another financial services company. That is why the answer to my hon. Friend’s question is difficult.”
“Let me come directly to that point. I do not think that we can estimate when the first payments will begin to arrive, or when the process will be completed, until we have Sir John’s final report in May. I say that for a simple reason. Until we are able to estimate, and hear from Sir John about, the total bill and what the right kind of compensation looks like, it will be difficult for us to know or guess—and it would be wrong for us to attempt it—whether the right kind of compensation is cash or a different kind of financial services product. Equally, until we know who Sir John thinks it is appropriate to include in the final design of the scheme, we will not know whether the scheme that we are running will be paying out to hundreds of thousands of people or to millions.”
“As I promised, I asked Sir John Chadwick’s advice on interim payments following our October debate. The difficulty is that when a scheme is produced there will be a cap on it—to cap liabilities to the public purse more generally. The difficulty with making interim payments is that it is impossible to estimate, until the final scheme is designed, whether the person has too much, too little or about the right amount. I would not want to embark on an exercise where people were being overpaid, because it would be impossible, and quite wrong, to ask them for money back; that would be seen as reprehensible by all Members of this House. Sir John Chadwick therefore examines in his report a proposal for potentially expediting payments to particular groups once the scheme design is finalised, and suggests two such groups, as the hon.”
“That is an excellent point, and I will try to ensure that we respond to it over the course of the debate. Some preparatory work is ongoing—for example, discussions with the DWP about possible delivery options. I have also asked the Treasury to ensure that any clearing of the ground that is required for a procurement process is undertaken.”
“My assessment so far is that means-testing would be neither administratively feasible nor desirable. It would be an unwelcome complication that cannot, at this time, be seen in a positive light. Again, a final conclusion has to await Sir John’s final report, but I do not think that means-testing should be our direction of travel.”
“Let me seek to provide an answer over the course of the debate. I want to turn to two important points that hon. Members raised earlier. The first, which also came up in the all-party group, is whether payments should be made to the estates of policyholders who have passed away. As promised, we have reflected on this. Based on the evidence that I have seen to date, I feel strongly that they should be included in any scheme. I cannot see any rationale for treating their estates differently from those of any other policyholders. I think that is a view that the House will share. We cannot pronounce on this categorically until we see the final design of the scheme, but I thought it important for the House to know the direction of travel. Secondly, several hon. Members have asked about means-testing.”
“I am being a realist about it. Having contemplated what kind of administrative procedure would have to be put in place to go through means-testing, I cannot see how in the world we would do it. The third question, to return to the point raised by the hon. Member for Richmond Park (Susan Kramer), was about urgent payments. In the final scheme design, we should prioritise payments to those who have been particularly severely impacted by what has happened. In his latest report, Sir John Chadwick provisionally identified two groups: trapped annuitants and late joiners. That is all that I wanted to say by way of response to the hon. Member for Fareham.”
“The answer is yes—Sir John Chadwick has tried to compare the relative losses of different classes of policyholders. Let me conclude by saying that all Members of this House will have constituents who have been affected by the injustice of Equitable Life, which now stretches back almost two decades. We are committed to acting urgently and fairly, even in the current fiscal climate. That approach is reflected in the Government’s proposed amendment to the motion.”
“As I said a moment ago, I cannot this afternoon set out when payments will start, or when they will finish, but I can commit to ensuring that the Government’s response to the John Chadwick report, which will be published within two weeks of the report being handed in, will include a delivery timetable, which will answer that question. We have drafted the proposed amendment in a way that reflects the debt that we owe to the ombudsman and accepts the obligations of the Government, but that none the less reaffirms our commitment to an approach that we think will remedy this injustice as rapidly as possible.”
“Will the hon. Gentleman spell out for the House whether he is going to accept the Sir John Chadwick process or whether—as his motion suggests—he wants to replace the Chadwick process with the ombudsman process?”
“The attacks on London on 7 July 2005, for example, cost the perpetrators just £8,000, yet the price paid by the British people was immeasurably greater. For that reason, we seek to fight back with every appropriate weapon, which must include control of finance, assets and cash. Without resources, terror networks are unable to plan, organise or execute attacks, for which reason the United Nations requires that all states: “Freeze without delay…assets” and “resources of persons who commit, or attempt to commit, terrorist acts or participate in or facilitate the commission of terrorist acts”. Our tools therefore must include action against terrorist finance, which is now an important part of the UK’s counter-terrorism strategy.”
“I beg to move, That the Bill be now read a Second time. The whole House would wish that today’s provisions were not required, yet we are realists, and we know that the real world demands action of the kind proposed in the Bill. Terrorism continues to pose a threat to the United Kingdom. Indeed, the Home Secretary recently apprised the House of the fact that the terrorist threat is now judged as severe—in other words, highly likely at any time. As hon. Members know, terrorist organisations, including al-Qaeda, have executed or planned a succession of attacks with the aim of causing mass casualties. Many of our constituents have been affected or caught up or murdered. Yet the economics of that threat are frighteningly simple. The cost of a terrorist attack is low, yet its impact is devastating.”
“Before I give way to the right hon. and learned Gentleman, I should make clear that my remarks this afternoon will touch on the background to the Bill, its contents, and some of the safeguards that it is vital for the House and another place to debate.”
“That is a fair point, and I will talk about it later in my remarks. Suffice it to say, the United Nations Act 1946 was fairly clear, and it is probably worth reading the relevant clause for the benefit of the House: “If…the Security Council of the United Nations call upon His Majesty’s Government in the United Kingdom to apply any measures to give effect to any decision of that Council, His Majesty may by Order in Council make such provision as appears to Him necessary or expedient for enabling those measures to be effectively applied, including…provision for the apprehension, trial and punishment of persons offending against the Order.” In the eyes of the Government, that was an effective legal base on which to introduce terrorism legislation.”
“Parliament is the proper place to debate those safeguards. That is why, alongside this temporary Bill, we published a full Bill that will transpose the relevant orders into statutory legislation. We will debate that question a little later, but it is vital that the House is given a full opportunity to pressure-test the proposals in that second, main Bill.”
“Perhaps the hon. Gentleman will intervene again to clarify one point. When he refers to the “original test”, is he referring to the original test in Orders in Council or in the United Nations Act 1946?”
“The 1946 Act did not set out any such test; rather, it set out a broad power for the Government to introduce measures, including those for “the apprehension, trial and punishment of persons offending against the Order.” That was the legal basis that was tested by the Supreme Court. The Supreme Court’s judgment in taking away the foundation on which the Government had rested was reasonably narrow. The Supreme Court refused to read “expedient” as wide enough to cover reasonable suspicion—that is perhaps the point that the hon. Gentleman was making. Rather, it concluded that it would be wrong to give “expedient” such an expansive meaning where the result is such an interference with individuals’ rights.”
“The reason why I am here this afternoon is that we lost the case. The point that I was hoping to make is that under the terms of the United Nations Act 1946, which I have read out, it is quite easy to see how the Government proceeded in good faith, because that Act appeared to give quite generous provision for the Government to bring forward proposals giving effect to UN Security Council resolutions.”
“Today, around £375,000 in suspected terrorist assets is frozen. That includes around £150,000 frozen under the secondary legislation in the terrorism orders. A much smaller figure is frozen under the Terrorism Act 2006, on which the Supreme Court passed judgment. When, therefore, the Supreme Court struck down the legal basis on which we acted in good faith, we thought it imperative to act rapidly to present this Bill before the House. Our use of the United Nations Act 1946 was, as I have argued, logical because it says that the Government can make provisions through Orders in Council when “necessary or expedient”. As my hon. Friend the Exchequer Secretary has already pointed out, the Court of Appeal agreed with the judgment; the Supreme Court did not, which is why we find ourselves here this afternoon.”
“The asset-freezing regime introduced by the Security Council dates back only to 1999, when it was established as part of the fight against the Taliban. It was quickly extended to include Osama bin Laden and persons associated with al-Qaeda. In the weeks following 11 September 2001, the UN created a separate requirement on member states to freeze the assets involved in terrorism more generally, where individuals were identified by member states. The way in which the Government responded allowed us to act quickly. Using secondary legislation under the 1946 Act, we ensured that our freezing regime was in place by 10 October 2001, just 12 days after the United Nations made its resolution in New York. The United Kingdom was the first nation to be judged fully compliant with the international standards set by the Financial Action Task Force.”
“I will address that point slightly later, because it touches on the issue of designation, on which it is important to debate the test that the Government must meet. Just to clarify, the Supreme Court struck down the legal basis for the Terrorism (United Nations Measures) Order 2006. However, two further terrorism orders depend on the same provision in the 1946 Act, which is why they are the subject of the legislation before us today. There is a fourth order—the Al-Qaida and Taliban (United Nations Measures) Order 2006—of which the Supreme Court struck down article 3(1)(b), which concerns United Nations Security Council resolution 1267, and I will touch on that in more depth in a moment or two. The history of our fight on this front is not long.”
“We did not do so for the simple reason that that is not a sufficiently general defence. Indeed, the 2001 Act deals with threats emanating from outside the UK, whereas the terrorism order regime that we are seeking to legislate for today touches on threats that emanate from inside the UK, specifically from UK individuals.”
“I could not speculate on how many cases the security services are monitoring where the threat is entirely domestic, but let me be clear that the provision to which the hon. Gentleman is alluding would not cover UK persons unless we could demonstrate a link to external persons who pose a direct threat to the UK or to UK nationals. In the case of a UK plot, the link would, as the hon. Gentleman says, be absent. The point of the regime is that it is designed to enable preventive action. That is why, as is common in much national security legislation, the thresholds in question include reasonable suspicion.”
“Even for a period as short as eight weeks, such proposals, if transposed into legislation, should benefit from Select Committee pre-legislative scrutiny and be subject to a review by Joint Committees, which would take a considerable period. However, because the Supreme Court did not grant a stay in its judgment, about £16,500 linked to about 14 people could, under the Terrorism Act 2006, suddenly be made available. My view was that the best strategy was to put in place temporary legislation to help ensure that the banks kept those assets frozen while the House was able to take the time to put on the statute book a more substantive answer to the Supreme Court’s judgment.”
“I hope to touch on the question of judicial review later in my remarks, but there are three basic points to be made in response to the right hon. and learned Gentleman. First, the Government were relying on the United Nations Act 1946 in good faith. Before the Supreme Court passed judgment, it would not have helped our case to bring legislation forward that showed that we were worried about that or that we wanted to provide for a different legal basis. Secondly, that judgment having been passed, it is surely right for the Government to bring forward comprehensive legislation to deal with the problem that we are trying to solve. I personally do not think that such legislation should be whipped through the House.”
“There is the simple idea that eight weeks is not an ideal time in which to pass the legislation. The legislation could have gone through in eight weeks, but if it is possible to give the House more time to debate it, that is surely right. What changed last week was the Supreme Court’s decision not to grant a stay. It would have been unreasonable to ask the banks to keep the money frozen for the amount of time it would have taken the House to give the matter proper consideration.”
“The orders will continue to provide for licences to permit access to funds and to ameliorate the effect of the sanctions. The Treasury will remain open to the full range of legal challenge of its asset-freezing decisions. However, the Bill seeks retrospective provision for the legal authority for banks and any other institution to maintain existing freezes between the date of the Supreme Court judgment and Royal Assent.”
“I would like to outline briefly the Bill’s effects, before touching on some of the questions around safeguards. The Bill seeks to maintain the Treasury’s power under the Orders in Council to designate persons if they meet both required conditions of the legal test: first, reasonable suspicion that the person is involved in terrorist activity; and secondly, that the designation is necessary for public protection. The effect of a designation is: to forbid dealing with a designated person’s funds and economic resources; to forbid making funds or economic resources available to such persons; and to forbid funds or economic resources being made available to a person when the designated person will obtain significant financial benefit.”
“The answer to the hon. Gentleman is simple. The Supreme Court said that it was willing to consider a stay, but its judgment on Thursday was that it was unprepared to grant that stay. Therefore, the Government had to ensure that assets already frozen under the Terrorism Act—the orders that had effectively been quashed— remained frozen. That gives the House the opportunity to consider in more detail and depth the provisions of the orders that we will seek to put into primary legislation in a much longer period. That debate will produce a better piece of legislation at the end of it. If passed, the Bill will restore the UK’s terrorist asset-freezing regime in primary legislation, but only as a stop-gap. It will allow the House to scrutinise our proposals while eliminating any risk of a gap in our asset-freezing regime.”
“In determining whether a person constitutes a threat, it will consider the advice of the police and the security services.”
“The Treasury has a track record of actively reviewing designations and revoking them when they no longer meet the legal tests. Of the 51 United Kingdom designations made under orders to date, 18 have been revoked following a Treasury review—for example, when criminal charges have been dropped, or when an individual is no longer considered to pose a significant threat. The Treasury must be satisfied that there are reasonable grounds to suspect a person, and reasonable grounds for suspicion must always be based on fact. The facts are provided in a statement of case prepared by the police or the security services, and the basis for action is endorsed by the financial action taskforce. The Treasury does not casually make up a determination of what is in the interests of public protection and what is not.”
“I shall discuss judicial review in a little more detail shortly. The point that I am making is simply that this Bill does not give the Treasury any retrospective protection in relation to decisions made between the handing down of the Supreme Court judgment and Royal Assent. There are five safeguards that I wish to mention in order to provoke what I think is an important debate about the dimensions of the Bill. Let me begin by dealing with the question of who is included in its ambit. The orders that we propose to underpin ensure that—as I have said—individuals and organisations can be designated only if a reasonable suspicion test is met, and if a second test establishes that action is needed to protect the public. Freezes will be removed from those for whom the legal test fails.”