Thursday 17 November 2022
Bank of England: Libor System
Question for Short Debate
My Lords, during the three weeks or so since I entered the ballot for this slot, I have continued to maintain close contact with practitioners in the Libor market, as I support the case for a final resolution of the Tom Hayes case and press the argument to confirm the cancellation of his conviction. At present, he appears to be the only person alive in the world who has ever been convicted of a Libor offence. Everybody else has been acquitted and had their convictions cancelled. Indeed, in the USA, Libor manipulation is no longer regarded as a convictable offence.
Having continuous access to current opinions within the Libor community, I am beginning to consider that I am perhaps wrong in submitting my Question at present. There are too many uncertain factors surrounding this whole issue. First, there is no available market indicator as to the extent to which new Libor initiatives may have to be undertaken in the near future. It is too soon to ascertain whether any new initiatives will be required, arising from the present troubles in the world.
Yet these queries, however speculative and counteractive they may be to undertake, confuse the whole current Libor market. It is massively overstaffed at every level, and nobody knows who is supposed to be in charge on any initiatives. The market needs to be undone, taken apart and restored again, but not as a continuity of what we have. My principle, in seeking to wipe out what we have and start again, is a sensible proposal to run with, but we need to go back to basics.
For example, consider how very little we know of the actual incidence and effect of Libor for all or any portion of the near-80 years since its inception. Consider that we do not know how many Libor initiatives have been authorised or undertaken with official sanction, presumably, but not certainly, from the Bank of England. How many of these remain current, have been resolved or remain unresolved—that is, short-term funding not yet fully repaid? How many failed, and for how many were the rescue attempts successful? If we are to carry on in any form, we need a full and definitive report on what has happened in those 80 years and what we are left with.
I suspect that a good many did not work, and we have never been told their story. What indemnity arrangements remain in place to be utilised, not least to help those who allowed their funds to be used in a rescue and, presumably, have lost them? That is a great question to which we have never heard the answer.
If, at some point, an attempt is launched to terminate Libor, what effect would that have on existing unresolved cases? I am particularly concerned that we need to have an answer about what we will do for the future. A strange organisation called the Federal Reserve Bank of New York, which is not federal, not reserve, not New York and is not a bank—otherwise there is nothing wrong with it—is making a plea to the Federal Reserve, seeking the backing of the American Government to take over the entire Libor operation worldwide. We do not want anything to do with it. That is one reason why we might want to think of winding up now, so that we can take our own initiative, new and fully minted, with the Bank of England onside.
All these matters require close debate with the official bodies concerned, such as the Bank of England and the CSA. I now believe that my initiative in tabling this Question was premature for the reasons I have given. I request permission to withdraw it, but with the very strong recommendation that we now make separate approaches to the Bank of England and the CSA, and ask them to do their own assessment of the current status of the Libor market—its effectiveness and the extent to which there are unresolved issues out there in Libor initiatives which have been taken but are not yet resolved, of which I suspect there a good many, where funds are irrecoverable or have been misplaced. We need a definitive picture of what the Libor market looks like at this time. Let us not proceed to start the wind-up now, but let us get a definitive position on what the market shape and state is. I suspect it is in an awful mess.
I urge that exploratory initiatives are launched with the key bodies. We need an inside track on these matters so that we can redesign a Libor market which works for us. We also need to be sure if we do this that we are not cutting across unresolved issues, such as winding-up arrangements for banks which fail to survive the initiative, of which I suspect there are quite a few; that any mergers which were created as a wider solution are not interfered with; and that any banks that have been repaired can continue in good order without any interference. This is a very complicated situation, and we need a proper fix on what we have to deal with.
I thank noble Lords for allowing me to share my interest in these matters with them. I am very concerned by what I have seen in the five years of close association I have had in pursuing the Tom Hayes case—the only person to have been convicted in this country. He got 12 years; he served five and a half years. He now has multiple sclerosis and is in a very poor way indeed. We need a final resolution of his case, and I am sure we will. We have a date for the Criminal Cases Review Commission to review it in November and that will be very welcome.
I thank noble Lords for letting me speak to them today. This is the first time I have spoken on any subject since my brain haemorrhage in August. I know that anxieties were expressed as to whether the stress of talking to noble Lords might have any further implications, but I am feeling fine. There is an issue here. It must not be dropped. It is urgent. We need to attend to it. Please let us proceed and I will give any help to anybody who asks for it.
My Lords, I am very glad that the noble Lord’s health is supporting him through this debate. He is absolutely right to draw our attention to the importance of a liquid and well-functioning interbank lending market.
My understanding—and I will leave it to the Minister to make sure that we are properly informed and updated—is that Libor is no longer a valid benchmark, not only in the UK but now in the United States; that even the period in which synthetic Libor existed has now come to a close; and that the translation of outstanding contracts which had embedded in them the Libor benchmark to the new benchmarks has been overwhelmingly successful. I think we were all afraid that there might be some orphans left out there, where you could not contact one party or the other and therefore it was very difficult to make the legal changes necessary for the contracts to remain in place but attached to new benchmarks. My understanding is that that process has gone very well; I am sure the Minister will update us. Of course, in the UK now we have all migrated to the sterling overnight index average, known as SONIA.
That has been a successful process, but I want to pick up another point to which the noble Lord, Lord James, was directing us. I am not going to describe the mechanisms for Libor because everybody in this Room understands how that process worked. There was a panel of banks which submitted every day to the British Bankers’ Association their assessment of what it would cost them to borrow from other banks, in five major currencies and over lending periods of different durations. What concerned me, and I think many of us, was that that system, which relied on trust and was not transparent, was corrupted. For at least 10 years, the major players on those panels adapted their submissions to the British Bankers’ Association to suit their own target profitability, the bonuses of the traders who were informing the submissions to the benchmark and, frankly, the bonuses of senior management.
Not only was this extensive practice but it was completely open. When I was on the Parliamentary Commission on Banking Standards, we heard from quite a number of people about how, on the trading floors, a trader would shout quite openly, “I need a Libor submission set at this level because it will let me close this deal” or “so I get across my bonus benchmark”, or, “We need to do it as a favour to so-and-so at bank X”, or whatever else.
It was standard that Libor was a manipulated number and not a genuine estimate of what it would cost one bank to borrow from another, to the extent that in 2007 and 2008, when we had the financial crisis, the Bank of England, not for any purposes of self-reward but to try to stabilise the economy, contacted the chief executives of the major panel players as they made their Libor submissions and asked them to lowball the number to try to minimise panic in the market. This corruption and manipulation of the process was exposed by American journalists, who passed information to the US supervisors, who turned around and put pressure on the regulators in the UK, which led finally to an FCA report and essentially to the public acknowledgement that this system had completely failed to operate with integrity, probably for a period of at least 10 years.
I have a question for the Minister. We never bottomed out how great the impact of that manipulation was. To give noble Lords an idea of why I am concerned about that number, I have done a back-of-an-envelope calculation. According to figures provided to us by the Library, outstanding loans where the interest rate was based on Libor on any one day approximated $400 trillion. That is the daily outstanding block of loans for which Libor established the interest rate. That would have been a combination of variable-rate loans, which would have been Libor plus a spread, depending on the risk of the borrower—Libor plus 10 basis points, or perhaps 125 basis points for a riskier company—but also fixed-rate loans, because they were a Libor loan with a derivative with an interest rate swap sitting on top. Even fixed-rate loans attached themselves to the number established as the Libor benchmark.
If every day for a year—banks work in 360-day years—Libor manipulation increased the cost of borrowing by one basis point, the collective cost to borrowers would have been an overpricing of $40 billion on any one day. If that is extrapolated to every day for 10 years, we are talking about $144 trillion. This is without question the largest financial scandal ever. If one looks at those funds as being stolen, because the loans were deliberately improperly priced, we are talking about a scandal well in excess of all financial corruption of all kinds over the same period. We have never bottomed out that number. I wonder whether the Minister has a number that would give us an idea of what the theft from borrowers, which is what it was, amounted to.
The noble Lord, Lord James, is right that when the various regulators and enforcement authorities looked to hold someone accountable, they decided that our laws on fraud did not encompass misinforming or deliberately manipulating a benchmark. Therefore, almost nobody ended up paying any price for having participated in these schemes, nor did they lose the bonuses they had gained on the basis of the artificial profits that resulted from using them. As the noble Lord said, just one or two people ended up as scapegoats, usually for a fairly narrowly based conviction.
The damage done to London was extraordinary. London always relied on its reputation for integrity; “My word is my bond” was meant to be an underlying principle. It underpinned the whole notion of light-touch regulation and the beginning, in a sense, of the loss of our standing in financial services is very much linked to the whole Libor-era scandal. I am glad that Libor is behind us but incredibly sad that it happened this way. I understand that there have also been market changes that make things such as Libor less relevant, because there really was not enough depth in the interbank market to make the system—even if you operated it fairly and truthfully—particularly efficient. The move in our case to SONIA makes a great sense, for example, so I am glad that period is behind us.
However, as we look at legislation coming through Parliament that moves to much greater financial regulation, it is now important that we understand why Libor went so wrong, why regulators did not act and how weakened regulation could encourage a repeat of similar behaviour. When we get to the Financial Services and Markets Bill, I will particularly draw the Minister’s attention to the changes in the rules that are being introduced for black pools, which are basically exactly like the Libor panel clubs and in which people exchange information and carry out transactions. At present, those black pools are transparent because pre-trade transparency is a requirement under the European directives. That is about to be removed in the Financial Services and Markets Bill, which returns us to a construct like a Libor panel—one to be manipulated by major institutions.
I am extremely concerned that the lesson of transparency which the whole Libor scandal underpinned is now, in effect, being discarded as we move towards deregulation. Part of that is because we have never bottomed out the size of the damage done to borrowers, and it is about time that we had that number.
My Lords, I congratulate the noble Lord, Lord James of Blackheath, on securing this short debate and hope that he has not taken the shortness of today’s speakers’ list to heart.
As I understand it, the sterling Libor benchmark was wound up at the end of 2021. The Financial Conduct Authority continues to require the ICE Benchmark Administration to publish synthetic one-month, three-month and six-month sterling and yen rates. The yen rates will end this year, while the one-month and six-month sterling rates will likely cease at the end of March 2023. In its announcement of those dates, the FCA said it considered exposure to those sterling settings to be low. A limited number of US dollar rates will also be available until mid-2023, with those figures calculated using panel bank submissions rather than involving the IBA.
While the transition away from Libor affected a significant number of businesses, and continues to affect some, its phasing out was well trailed. Guidance was available from organisations including the Association of Corporate Treasurers, the Confederation of British Industry, the Institute of Chartered Accountants in England and Wales, and UK Finance. This helped many to prepare for the switching-off of the formal Libor rates last year. Various alternatives to Libor are now widely used, including the sterling overnight index average, SONIA, maintained by the Bank of England. SONIA is by no means a new measure, having been introduced back in 1997, but it has been subject to reform in recent years. The New York Federal Reserve maintains its own measure, the secured overnight financing rate, while several other rates are available to financial institutions and businesses. These alternatives are collectively known as risk-free rates and have been described by the Bank as “robust”.
Of course, not everyone has successfully transitioned away from Libor and some entities with so-called tough legacy contracts have found the process especially difficult. We had several debates on the Government’s approach to these contracts during the passage of the last financial services Bill. The subject was also covered by the critical benchmarks Bill, which sought to provide greater certainty around legacy contracts. However, with so much having happened in domestic and global economic terms since those Bills made it on to the statute book, can the Minister update us on any additional steps taken by the Treasury and regulators to assist those who were unable to transition on time? I am not sure how easy it is to pull all this data together, but I presume somebody has responsibility for it.
At present, unless I have missed a subsequent update from the FCA, no determination has been made on the winding-up of the three-month synthetic sterling rate. Firms’ exposure to that rate is felt to be higher than the one-month and six-month equivalents, raising the prospect that the synthetic rate may be provided beyond March 2023. This is, of course, a decision for the regulator and it will be for the IBA to follow any directions given to it. However, is the Minister able to provide any updates on the FCA’s deliberations? When is a final decision likely and how much notice will be provided? The FCA’s current advice for firms with contracts referencing the three-month measure is merely to prepare for its cessation “in due course”. Given the complexity of the challenges faced with these legacy contracts, I am not sure that is particularly useful.
The transition away from Libor appears to have been largely successful. I echo the comments of the noble Baroness, Lady Kramer; we were both somewhat pessimistic at the time of the original legislation, but it seems to have been largely successful. However, the work is not quite over. I hope the Minister can instil confidence that unresolved issues are indeed being addressed, as a risk to financial stability remains.
My Lords, I thank my noble friend Lord James of Blackheath for securing this debate. I too wish him well with his recovery. I am grateful to other noble Lords for their contributions. I recognise the work my noble friend has done to raise the profile of issues relating to Libor. However, it would of course be inappropriate for me to comment on any specific cases.
As we have heard, Libor is a benchmark which seeks to reflect the rate at which banks lend to each other in wholesale markets. It has been important historically not just for how our financial services industry operates but for mortgage holders, borrowers and lenders in households and businesses across the country and internationally. At its height, approximately $400 trillion of financial contracts referenced Libor. It was published in all major currencies, including the dollar, sterling, yen, the euro and the Swiss franc, and for various time periods. As noble Lords have described, in 2012, it emerged that Libor was being manipulated for financial gain, in what became known as the Libor scandal.
To digress slightly, I want to reiterate the point that this Government’s position on financial market abuse is clear: it undermines the integrity of public markets, reduces public confidence in them and impairs the effectiveness of financial markets. Therefore, those found guilty of such an offence should be held to account.
The noble Baroness, Lady Kramer, asked whether we had a figure for the overall impact of Libor manipulation. I do not believe that we do, but the seriousness with which we took this issue and the response by the regulators and law enforcement show that, even without such a figure, we appreciate the scale of what was implied by the scandal.
I am sure we will have much more detailed debates on these issues in the forthcoming Financial Services and Markets Bill but I reassure the noble Baroness that it is a question not of deregulating the markets but of improving the regulation and having regulation that is better tailored to the UK. We have the opportunity to look at what works in this country rather than across 27 different jurisdictions. That is the spirit in which the Government are taking forward that Bill. I hope that provides some reassurance.
Following the subsequent government-commissioned Wheatley review and the establishment of the Parliamentary Commission on Banking Standards, Libor came under the regulatory jurisdiction of the FCA in 2013. This led to significant improvements to the regulation and governance of Libor. However, following the 2008 financial crisis, the ways in which banks raised short-term capital changed fundamentally. In particular, banks increasingly moved away from borrowing from other banks to fulfil funding needs. As a result, the unsecured interbank lending market, which Libor seeks to measure, became increasingly shallow.
Furthermore, in light of fundamental changes to bank capital-raising, in 2014 the G20’s Financial Stability Board declared that the continued use of Libor represented a
“serious source of … systemic risk”
and encouraged national authorities and financial institutions to move to alternative rates. In line with this transition plan, in 2017 the FCA announced that Libor would be published only until the end of 2021. Since then, the Government, the FCA and the Bank of England have worked together to support a market-led transition away from Libor.
As noble Lords in this Room will know, because the two noble Lords opposite me were here for the passage of the Financial Services Act 2021 and, unlike me, for the Critical Benchmarks (References and Administrators’ Liability) Act 2021, these gave the FCA the power to compel the production of synthetic Libor rates. I note that on the basis of the framework the wind-down of Libor is progressing well. Synthetic Libor provides for continuity of a Libor setting for up to 10 years. This is for the benefit of the contracts which have proved very difficult to transition—the tough legacy contracts; in other words, it is a safety net for tough legacy contracts.
The noble Baroness, Lady Kramer, said that synthetic Libor is no longer available. That is not quite correct. Since the end of 2021, we have seen a greater than anticipated reduction in the overall stock of Libor-referencing contracts, but synthetic Libor remains available where it is needed. The noble Lord, Lord Tunnicliffe, asked about additional steps the Treasury and regulators have taken to assist those who are unable to transition in time. The synthetic Libor rates for certain sterling and yen settings are there for the benefit of those who were unable to transition. The FCA will consider the data on remaining exposures when taking decisions on how long to continue its rates.
The noble Lord asked specifically about when a final decision on the winding-up of the synthetic three-month sterling Libor rate will be taken and how much notice will be provided. Over the summer the FCA published consultations on the future of the remaining Libor rates. In line with its requirement to consult on its decisions relating to synthetic Libor, the FCA will respond to the consultations in due course, but it understands and factors in the need to ensure that adequate notice is provided.
The synthetic rates for sterling and yen Libor seek to replicate as far as possible the economic outcomes that would have been achieved under Libor’s panel bank methodology. The FCA selected a methodology in line with the global consensus of firms and regulators, including extensive domestic consultation.
As many noble Lords will know, the synthetic sterling rate is calculated using the Bank of England’s sterling overnight index average—SONIA—which is administered by the Bank of England and, importantly, is based on approximately £60 billion worth of actual transactions of the interest rates that banks pay tomorrow, sterling overnight from other financial institutions and institutional investors each day. This means that SONIA is far more robust and resilient to any risks of manipulation, such as those seen before 2012. By imposing a synthetic methodology based on SONIA, the FCA can provide more time for certain legacy contracts to move to alternative benchmarks, thus reducing the risk of disruption.
The Libor benchmark has been globally important for many years, not just for those who work in financial services but for people across the country and around the globe. But, given the fundamental changes in global finance in the past 20 years, it has been appropriate to transition away from Libor safely and predictably. The UK is the home of Libor and has taken action to support the global, market-led transition away from it, reaffirming our commitment to being a trusted custodian of a global financial services sector.
The work of the UK authorities to encourage the transition away from Libor has been highly successful so far. For instance, of the estimated £30 trillion of sterling Libor exposures outstanding at the beginning of 2021, estimates show that less than 1% now remain on synthetic sterling Libor. I hope that that goes some way to answering the noble Lord’s question about the estimated number of unresolved cases. If we had not played the role that we did, the disorderly cessation of Libor could have presented a significant global financial stability risk because of the vast number and variety of contracts that reference it.
My noble friend Lord James asked what steps the Government are taking to ensure that the Libor system remains available. I hope that I have been clear about why the Government have taken the action they have to ensure a smooth and orderly wind-down of Libor. The Government continue to encourage transition away from Libor to more robust risk-free rates, such as the Bank of England’s SONIA. The Question also referred to the risk of the collapse of interbank lending. The interbank lending market that Libor seeks to measure is of course just one way that banks can fund themselves. Banks have a range of possible sources of funding available to them, including savers’ retail deposits and investors’ wholesale funding, as well as the banks’ capital base. As I said, the way in which banks fund themselves has fundamentally changed since 2008.
Of course, the other thing that has changed since 2008 is that the banking sector is substantially more resilient than before the financial crisis, with higher levels of capital and liquidity. This is because of reforms introduced after the financial crisis that require banks to hold more capital and reduce their reliance on short-term funding, such as interbank lending. For example, banks are now required to hold enough liquid assets to meet their projected outflows for at least the next 30 days, and to have enough funding with a maturity of greater than a year to fund their assets.
In addition, I reassure noble Lords that the Bank of England has a range of tools and facilities that can be called upon to support bank liquidity in the event of market stress, including liquidity insurance facilities, which are used to ensure that it achieves its financial stability objectives. These facilities can be called upon if banks stop lending to each other in the event of market stress.
To conclude, overall, the reforms introduced since 2008 have increased the financial stability of the system and will prevent the costs of banks failing from falling upon taxpayers. The sensible management of the wind-down of Libor is vital not only to the integrity of the UK’s markets but to the UK’s credibility internationally. We have worked closely with international partners in the approach that we have taken, and we received praise from them for that. The Government will continue to engage with regulators to ensure a smooth ultimate end to this transition and, in doing so, underline the UK’s reputation as a well-regulated and effective global financial centre.
Human Rights: India
Question for Short Debate
My Lords, I thank all noble Lords who are taking part in this debate. Human rights are universal, and Britain is known to be a champion of human rights around the world. As parliamentarians of this country, it is our moral duty to highlight abuses of these rights wherever they occur.
Today, I will speak on human rights in India and particularly in Indian-administered Kashmir. Amnesty International’s India 2021 report states:
“The authorities used repressive laws to silence critics by curbing freedom of expression both offline and online. Human rights defenders, including activists, journalists, students, lawyers and actors, continued to face intimidation and harassment. Independent investigations revealed a massive unlawful surveillance apparatus being used by the government against human rights defenders, violating their rights to privacy, non-discrimination and data protection. The foreign contribution law was misused to crack down on human rights NGOs. Police and security forces used excessive force against members of minority communities and farmers protesting peacefully against laws on farming. Courts undermined the right to a fair trial and delayed hearing crucial cases involving violations of human rights … Caste-based discrimination and violence against Dalits and Adivasis continued unabated. Vigilante cow protection groups attacked minority communities, adversely affecting their livelihoods.”
The report goes into detailed examples and is available online for everyone to read.
The human rights situation in India has also been highlighted by Gregory Stanton, the founder and director of Genocide Watch, an expert who predicted the massacre of the Tutsis in Rwanda years before it took place in 1994. During a US congressional briefing in January 2022, he said that there were early “signs and processes” of genocide in the Indian state of Assam and Indian-administered Kashmir.
Stanton said that genocide was not an event but a process and drew parallels between the policies pursued by Indian Prime Minister Narendra Modi and the discriminatory policies of Myanmar’s Government against Rohingya Muslims in 2017. Among the policies he cited were the revocation of the special autonomous status of Indian-administered Kashmir in 2019, which stripped Kashmiris of the special autonomy they had had for seven decades, and the Citizenship (Amendment) Act the same year, which granted citizenship to religious minorities but excluded Muslims.
I want now to focus on the situation in Indian-administered Kashmir. As many noble Lords know, I am perhaps the only Member of this House who was born in Azad Kashmir—the Pakistan-administered area—and I have family and friends living on both sides of the line of control that divides the state between India and Pakistan. What happens in Kashmir affects me, my family and approximately 1.2 million Britons of Kashmiri origin living in the UK.
Without going too much into the history or politics of the state, I want briefly to remind your Lordships that when the Indian army came to Kashmir in 1947, the Prime Minister of India at that time, Mr Nehru, is on record as saying that the Indian Army was there to protect the lives and property of the Kashmiri people. He took the matter to the United Nations and obtained UN resolutions promising Kashmiris the right of self-determination through a plebiscite. Mr Nehru promised the Kashmiris and the whole world that, as soon as peace was restored, his forces would withdraw, and Kashmiris would decide their own destiny. He further said:
“At the end, even if they decide to stay separate from India, we will swallow that bitter pill.”
In 75 years, India has deviated from the UN resolutions and increased its army deployed in Kashmir to nearly 900,000, with special powers granted under the Armed Forces (Special Powers) Act. In these 75 years, more than 100,000 Kashmiri civilians have been killed and many more detained and tortured. According to Amnesty International, Human Rights Watch, the UN Commission on Human Rights and many other credible organisations, Indian security forces are reported to be involved in illegal detentions, torture, extrajudicial killing, fake encounters, rape and murder with complete impunity under the Armed Forces (Special Powers) Act. An Amnesty International report called A ‘Lawless Law’ throws light on some chilling facts of rape and torture. The widely reported and documented case of the Kunan Poshpora gang rape is an example of brutality committed with complete impunity.
The New York-based human rights group Human Rights Watch, in its recent report, said:
“The authorities have invoked the Jammu and Kashmir Public Safety Act, as well as terrorism allegations, to conduct raids and arbitrarily detain journalists, activists, and political leaders without evidence and meaningful judicial review. The authorities have also barred several prominent Kashmiris from traveling abroad without providing reasons … In November 2021, the authorities arrested a prominent Kashmiri human rights activist, Khurram Parvez,”
who is 44 years old,
“on politically motivated charges under … the Unlawful Activities Prevention Act (UAPA) … He has documented cases of enforced disappearances and investigated unmarked graves in Kashmir,”
and as a result the Indian authorities have detained him. The report continues:
“Journalists in Kashmir face increasing harassment by security forces, including raids and arbitrary arrests on terrorism charges. Authorities in India have shut down the internet more often than anywhere else in the world. A majority of those shutdowns have been in Kashmir, where they are used to curb protests and access to information … In March 2021 … UN expert mandates wrote to the Indian government seeking information about the detention of a Kashmiri politician, Waheed Para; the alleged killing in custody of a shopkeeper, Irfan Ahmad Dar; and the enforced disappearance of Naseer Ahmad Wani, a resident of Shopian district. They raised concerns about ‘the repressive measures and broader pattern of systematic infringements of fundamental rights used against the local population, as well as of intimidations, searches, and confiscations committed by national security agents.’”
According to the UNHCR, thousands of mass graves have been discovered and need to be investigated. In its 2018 and 2019 reports, the UNHCR asked for free access to investigate these reports of human rights abuses, but India has refused to co-operate.
According to a Kashmiri NGO called the Legal Forum for Kashmir, 26 prominent Kashmiri political leaders and clerics are detained under the public safety Act, UAPA and similar draconian laws. They include Shabir Shah, detained for more than 32 years; Asiya Andrabi, in prison since 2018; and Masarat Alam Bhat, detained for more than 20 years. The Legal Forum for Kashmir has also produced a list containing names and details of 872 Kashmiri youths and political activists held in detention, most of them under the PSA or similar laws. I am willing to share these lists with the Minister and urge him to raise these cases with the Indian Government for their release.
Taking the above information into account, I ask the Minister the following questions. First, can he assure the Committee that our future free trade deal with India will be linked with human rights? If not, why not? Secondly, will he ensure that India is included in the FCDO’s annual list of countries with human rights concerns? Thirdly, considering the reports of Genocide Watch seriously, what steps are His Majesty’s Government taking to prevent a genocide in Kashmir? Finally, does he consider the UN resolutions on Kashmir of 1948 and 1949 to still be relevant? If so, what will our Government do to help implement them?
My Lords, I start by thanking the noble Lord, Lord Hussain, for initiating this debate. It will provide us with an opportunity to talk about the great diversity that is found in India, which is one of the most religiously and culturally diverse countries on the planet. I am a frequent visitor to India, encouraging greater partnership and collaboration between it and the UK. Both countries believe in the strength and importance of this relationship. Of course, as the noble Lord, Lord Hussain, alluded to, there will be a free trade deal between our two great nations. That trade deal will be based on a lot of issues. I will come to his point on human rights a little later.
In all my visits to India over many decades, I have seen an economic growth success story that many in the world would envy, as India stands as the fifth-largest economy in the world. There has not been a decline in minority populations in India. Every person is allowed to speak freely and in no fear of being persecuted, kidnapped or murdered. Incitement to hatred is a crime, whether here in the UK or in India, and any incitement that brings populations on to the streets to kill is dangerous.
Therefore, when I hear about the so-called atrocities and persecutions, I ask a number of questions. Where are the voices speaking on behalf of the thousands of Kashmiri Pandits and their families who were murdered or driven away from their homes in 1989? They were indigenous Kashmiris; 80% were driven out of their homes by mobs taking instructions from external powers. It would be really appreciated if the noble Lord and others would speak up and defend those people fleeing their homes.
Recently I spoke to the Chief Secretary of Jammu and Kashmir. He is very keen to see the state building on investment that is now beginning to appear as the state becomes safer and more stable. Some $7.5 billion has been invested in a range of sectors in recent years. The highest railway bridge in the world is being built in Kashmir. We are keen to be part of that growth and investment story and I encourage British companies to work towards building those closer ties and to work with our friends in Jammu and Kashmir.
On a wider point about India, I have been told that in Punjab there is going to be built one of the largest churches in the country, possibly the subcontinent. There has been no decline in minority populations. The Indian census shows that, decade on decade, the number of people from minority communities in India has increased. That cannot be said for India’s neighbouring countries, where temples and churches have been destroyed and minority communities have been persecuted and driven out.
I agree with the noble Lord, Lord Hussain, that as parliamentarians we have a duty to speak up where we find any form of abuse. But it has to be right that we highlight it wherever it occurs. I stand up often to defend women and girls and human rights in Iran. I stand up often to defend the rights of the tribal people in India, because I believe everybody has a right to be treated fairly by every state on the planet, but there seems to be silence when it comes to the countries that really do abuse minority communities. There may be reports by Amnesty and others, but I would like to see the evidence that is collected before I support any report, because I know, as a recent and keen visitor to India, the progress that is being made by every person there.
The noble Lord alluded to 2019. All central laws have now been extended to Jammu and Kashmir. That means that every single person has the same rights in any part of India. That must be right. It must be right that, if you are a homosexual, you have equal rights in Jammu and Kashmir, as you would across India, and that women have land inheritance rights, just like they do across India.
These discussions need be fair and informed when we have them, without one side believing that only one part of the community in India is persecuted, because I will stand up and fight for everyone’s human rights. That means that we have an honest debate.
My Lords, I have lived and worked in India, but I have never had the opportunity to visit Kashmir, which is my loss. It also explains why I am not qualified to speak about one of the most difficult questions in foreign policy. However, I have learned from what the noble Lord, Lord Hussain, said, and I hope he will forgive me if I focus on other issues concerning human rights. I take the noble Baroness’s point about balance.
One of the issues is, of course, the Citizenship (Amendment) Act 2019, which the noble Lord mentioned, which also affects Kashmiris. It led to violent communal riots in Delhi and Assam, costing many lives. It specifically excluded Muslim refugees from Indian citizenship and was condemned for that by the UN and human rights groups, as well as Indian Muslim leaders, as discriminatory. I have given examples of the treatment of minorities and castes in previous debates so I do not want to repeat them today, but I expect that the Minister will confirm that discrimination against Muslims, Christians, Sikhs, Dalits, Adivasis and others remains a major concern of the FCDO and that human rights come up in regular discussions with South Block.
The Minister will know that the 10th EU-India human rights dialogue was held on 15 July in New Delhi. According to the communiqué, India and the EU reiterated their commitment to protecting all human rights. Unfortunately, such a dialogue leads to some very bland statements. Has Brexit opened up any more meaningful dialogue than the one we had through the EU? It is true that we have a long association with India, but “full and frank exchanges” do not necessarily mean action, even between friends.
In this context, the new FTA with India provides another good opportunity to develop our friendship, which we have already debated in the Chamber. I declare my interest as a member of our International Agreements Select Committee. I am also concerned about civil society in India and in the UK, especially those concerned with development and the many NGOs in both countries that attempt to address human rights violations.
One of these is the Trade Justice Movement, which represents about 60 organisations and has studied the FTA in some detail. It argues that development and human rights should have a much higher priority in trade agreements. Many people believe that, including some in the Foreign Office. The Trade Justice Movement refers to disappearances, torture, arbitrary arrests, surveillance of citizens, and the listing of academics, journalists and lawyers as enemies of the state. It mentions the Scottish Sikh, Jagtar Singh Johal, who has been arbitrarily detained since 2017, tortured and held without charge.
The movement uses the interesting phrase of “aligning” development and the environment with trade, but the DIT is not so sure that any of these things belong with trade. The so-called Diwali deal is taking a long time to negotiate, not surprisingly, because of the range and depth of the issues. The aspirations expressed in various DIT showcasing documents contain many references to subjects such as climate change, labour rights and human rights—although the latter appears rather less—but these are unlikely to appear in the final version of the deal. Other possible overlaps with trade of much interest to India are mobility, temporary work visas and perhaps the use of aid funds for refugees, but these may not end up in the FTA either. The DIT scoping assessment says that the UK and India have already ratified most of the international human rights treaties and comments dryly:
“Recently it has become more common for FTAs to include provisions related to human rights, although it is not possible to assess the exact impact of an agreement on human rights prior to the conclusion of negotiations.”
Clearly, at this point the DIT is not concerned about human rights in India but only about the impact of the agreement.
The very sad case of Alaa Abd el-Fattah in Egypt shows that the FCDO can take up the case of victims of human rights abuses, including prisoners of conscience, where there is a direct UK connection. The Minister will be well aware that Alaa has been held for many years and his case has been widely publicised. World leaders, while negotiating climate issues, were challenging President al-Sisi’s appalling treatment of Alaa. India is arguably a much closer friend than Egypt and we should be able to discuss human rights issues much more openly, without jeopardising our trade deal.
My Lords, I am grateful to the noble Lord, Lord Hussain, for bringing the topic of human rights to the House’s attention again and again, and for giving us an opportunity to reflect on what is going on around India.
The noble Lord lives in a country where equality for all is guaranteed, regardless of race, religion or gender, yet he advocates for the majority population of Kashmir to be able to use religion to devalue their fellow Kashmiris of different faiths, as was done in Pakistan without a referendum. Sadly, minorities there are persecuted daily and do not enjoy equality even today. The noble Lord, Lord Hussain, knows that Hindus were the first settlers in Kashmir. Then, the rest came. If they have become a majority, that does not mean that those who were there before should now be dispelled.
Incidentally, I am a reject of Pakistan. I was born there, but was rejected on the basis of my religion. My father was killed for opposing the break-up of India on the basis of religion. We were made refugees in the country of our birth. We arrived on a refugee train to India as destitute people, because our property was taken by the majority.
The noble Lord, Lord Hussain, has conveniently forgotten the citizens of Bangladesh and how, in 1971, they won the election and were denied the result. Instead, they were massacred. Two million Bengalis were killed because of their race. Millions of women were raped because of their race. Where was the noble Lord then? Did he raise his voice to say that democracy had been abused and the rights of people had been—
I did not interrupt the noble Lord when he was speaking. I am so proud that our country, India, where I was raised, intervened and saved the future of the Bengali people. If India had not intervened, I shudder to think what would have been their plight today.
I have brought some statistics to show that religion does not keep people together. If religion had that force, the people of Bangladesh would not have suffered, and east Pakistan would still be part of Pakistan.
Kashmiri people are now benefiting from the development of the fifth-largest economy in the world. Every company in the world is investing in India; there are a lot of opportunities. We have just heard that the FTA between our two countries is in the offing. That will bring more benefit to the people of Kashmir. Kashmiris have a huge market of 1.3 billion people, and the standard of living is rising all the time. India is investing a record amount of money in Kashmir, opening universities, airports, hospitals, schools, colleges—you name it. The noble Lord, Lord Hussain, just has to see what is next door to Kashmir, and see the state between the two. He just has to fly to see the number of lights emitting from the ground below.
Finally, no religious country can progress while systematically discriminating against any section of its population because of their religion. Sadly, no scientific, technological or medical innovation has come out of such countries to benefit humanity; only scholars of religion spreading hatred. Look at this great country, where the noble Lord and I are sitting because the Christian majority population is not using religion to keep us down.
Using religion to divide humanity brings religion into disrepute. I hope that the noble Lord, Lord Hussain, will promote living in peace and harmony regardless of race, religion and gender. Let us learn from history and never encourage more religious hatred. Let us condemn cross-border terrorism, which has turned a paradise into what has just been described: people killed daily because a worthless terrorist can come and surprise everybody. Let us make Kashmir a real paradise by condemning terrorism of any shape and form. There can be no place for terrorists in the world.
Kashmiri people are free to form political parties and select their leaders and Government. What they cannot do is use religion to devalue their fellow Kashmiris. They have freedom in every other part of India. How would the noble Lord feel if other states did that against Muslim minorities? In fact, everywhere in India, equality is enshrined in its constitution. What will be the state of women in Kashmir? Can noble Lords imagine? I am the child of a single parent. If my mother was not educated or empowered, I would not be standing here and I would not have received eight Queen’s awards on merit, competing with the best in Britain.
Let us not use religion to put people in straitjackets. Let us allow people to breathe. In which religious country would the noble Lord, Lord Hussain, like to live? He lives in this country, so he should follow this principle.
My Lords, like the noble Baroness, Lady Verma, I have great respect for the people of India and its constitution. Resilience and joy can be found there, sometimes even in the harshest of conditions, and the constitution, which was the work of Dr Ambedkar, recognises the equality of every citizen. It is indeed a country of many diverse communities, with Muslims, Christians and Sikhs among the minorities, but all those minority groups, in one way or another, feel under pressure at the moment.
I will briefly focus on two areas, which are often interlinked. First, in recent years, those who raise their voices to protest against the direction the state is taking, or even to ask questions about it, are increasingly and systematically silenced and sometimes even imprisoned. For example, even academics in the course of their work are being put under pressure. If their work touches on a sensitive subject, they are forced to withdraw from speaking at conferences and seminars.
Unbelievably, this has happened to academics in this country. One was Lindsay Bremner, professor of architecture and cities at the University of Westminster, who recently arrived in India with a valid research visa but was told that she could not enter the country and was bundled on to an aeroplane hours later. Filippo Osella, professor of anthropology and south Asian studies at the University of Sussex, had a similar experience when he was turned away at the border in March despite having a valid research visa and having had no previous trouble in 30 years of travelling to Kerala for fieldwork.
India prides itself on being the world’s largest democracy, but there is no democracy without freedom of speech. As George Orwell put it, if it means anything at all, it means telling people what they do not want to hear. Freedom to follow and speak the truth is fundamental to all academic life.
In terms of balance, and I hope I am as balanced as anybody in this House, there are many countries—more than half the world—with human rights records far worse than India’s, and I am often among those who speak up against what is happening in other countries, but India should see that what is happening now is against its own highest standards. The great Amartya Sen, in his book The Argumentative Indian, maintained that serious discussion and disagreement had in the past been a fundamental part of Indian life. Against that standard, we have to ask: what is happening now when even academics are not being allowed to speak at conferences? Will the Government urge upon India the absolute necessity of allowing free debate, not least for academics?
The other area of particular concern at the moment is the justice system, which in some areas is deeply flawed; for example, political prisoners are being denied bail and imprisoned for long periods awaiting trial. Last year, Father Stan Swamy, a Catholic priest and tribal activist, who was 84 and suffering from Parkinson’s, was denied bail and died in prison. Similarly, there are prisoners in the Bhima Koregaon case who have been refused bail on health grounds and are still awaiting trial. They include trade unionists, human rights activists, lawyers and academics. Among them are Vernon Gonsalves, Gautam Navlakha and Dr GN Saibaba. These trials continue to be delayed by the Indian courts.
More long-standing is the case of Dr GN Saibaba, a Delhi University professor of English. Saibaba, a long-time activist for the rights of India’s vulnerable indigenous people and other oppressed communities, was arrested in 2014 and sentenced to life imprisonment in 2017. Professor Saibaba has post-polio syndrome, is wheelchair-bound and suffers from numerous health issues. Over the seven years of Professor Saibaba’s imprisonment, he has been denied adequate medical care on numerous occasions. There are others. There is Pandu Narote, an Adivasi person, who was convicted alongside him, who died in prison in August this year aged only 35 after contracting swine flu as a result of medical neglect. There is Prashant Rahi, a journalist and legal activist who is also suffering in prison and has health needs that are not being adequately attended to. All this is apart from the long-standing problem of Dalits getting recourse to justice when their village has been attacked.
Will the Government raise some of these issues, not least in connection with the trade deal? I agree with other noble Lords that we do not want to see a trade deal going through that does not take into account the absolute importance of the observance of human rights in India as elsewhere in the world.
My Lords, the noble Lord, Lord Collins, and I, along with the Minister of course, have been discussing human rights within Europe, including Ukraine. Later, we will do so on China and, in the context of the debate that my noble friend has brought to us today, it is right that we discuss human rights relations with our close partner, India. In debating all three areas, we understand the complexities that exist, as well as the power of history. But that should not blind us to what the noble and right reverend Lord, Lord Harries, and the noble Earl, Lord Sandwich, indicated or allow us to ignore what our contemporary relations are within our key trading relationships. I will come back to that before I close.
India is a much-valued ally of the UK, with enormously deep historical and contemporary ties in all parts of the UK—every single corner of our country. Our long-term future in the world as the UK is linked with the ongoing development of India itself in the global economy, in development support, in research and development and in education and skills. There is no part of the UK’s future on which India will not have an influence. Of course, that includes democratic development and the ever-advancing universality of human rights and freedoms, but it does not mean that we are silent within this partnership on those areas that have been brought to our attention today.
We strive continuously to share common values and I agree strongly with the noble Lord, Lord Hussain, about their universal nature. I also share the view of the noble Baroness, Lady Verma, who indicated that when it comes to LGBTQI+ and women’s rights, we should have common threads in our relationships with all partners. In that regard, for example, it has been regrettable that India has resumed executions and the death penalty over recent years. There are areas where we will signal that the UK has a different approach but we want to work with our allies and friends in development, not least in sharing areas of common values, such as openness, tolerance and, of course, human rights. The concerns raised today are therefore relevant in the current climate.
I will refer, as I have repeatedly in debates on human rights, to the Government’s Human Rights and Democracy Report. I commend officials in the FCO and FCDO who have put those reports together over recent years. The examples that I will relate are drawn from that FCDO report, and there is no question about the areas highlighted in it. I put on record at this point my support for the Minister’s work as Minister for Human Rights—he has taken responsibility in this region—and the work that he has done to advance the human rights agenda of the United Kingdom. But, as the Government themselves have indicated and reported, some of the areas where we see a trend in the wrong direction have resulted from the Covid crisis and the more repressive nature of some of the lockdowns that existed. The Government were right, in my view, to highlight some of those.
In the wider trading relationship, the Government have highlighted some of the challenges that exist on the lack of respect for ILO or labour rights in areas such as trafficking and garment production, as well as the lack of implementation of some international obligations on modern slavery and forced labour. I absolutely recognise that this is not unique to India and that therefore our work in those areas has been with regional partners in Pakistan and Bangladesh. However, the Government also highlighted some concerning areas with regard to the restriction on those who have highlighted human rights concerns, including the restrictions on Amnesty International and its categorisation under domestic legislation within India. There are also areas where NGOs have struggled to highlight some of their concerns.
Let me address the point that I referenced earlier with regard to our trade relations. The Committee will not be surprised to know that I hold the UK’s trading relations with India on a par with all other areas where I, along with the noble Lord, Lord Collins, and others—indeed, the whole House—have resolved that the Government should have a trade and human rights policy, which should be reflected in all our agreements.
When we debated the prospective UK-India free trade agreement, we raised human rights concerns, the lack of stakeholder consultation, the lack of a full review by the Government of human rights and trade, and the lack of clarity over whether the Government are seeking triggering mechanisms in chapters on human rights within the prospective trade agreement with India. It is fair to ask the Government for there to be more clarity in this area—on how a trade agreement with India could advance areas such as core UN and ILO human rights conventions, and how we will work with India on moving towards full ratification of the convention against torture, to which it is a signatory. When it comes to investment and trading relations, this should be seen as a positive, but human rights should be an integral part of it, not a secondary element.
My Lords, I too thank the noble Lord, Lord Hussain, for initiating this debate. Of course, it has reminded us that India is the world’s largest democracy and will always remain a close ally of the United Kingdom, underpinned, as we have heard, by the close social, economic and cultural ties that we enjoy. Perhaps it is because of that close relationship and shared ties that we should continue to stand up for human rights everywhere, and call out human rights violations wherever they exist, including in Kashmir. A peaceful dialogue and respect for human rights, with India and Pakistan working together, is the only way that a political solution can be achieved. All parties should refrain from unilateral decisions, which make the process of building a lasting peace more difficult.
The conflict in Kashmir is more than 70 years long and is the longest unresolved conflict on the agenda of the United Nations. We will continue to respect UN resolutions on this issue. As the Minister for the United Nations, can the Minister update the Committee on whether the UK mission is involved in any efforts to monitor resolutions relating to Kashmir?
Of course, we should look beyond Kashmir to wider human rights violations which persist elsewhere in India, including violence against religious minorities and other vulnerable communities. Can the Minister offer an assessment of recent levels of violence and the safety of religious minorities?
The United Kingdom—as all noble Lords, including the noble Baroness, Lady Verma, have stressed—must be a strong advocate for human rights wherever they are under threat, and that always means supporting a free press and a strong civil society. They, rather than politicians and Governments, are often the guarantors of human rights.
I have raised previously with the Minister the question of media freedom, particularly in Kashmir. I hope he can update us on the FCDO’s recent efforts to secure this and what protections we are able to offer. I echo the point made by the noble Earl, Lord Sandwich, about civil society and hope that the Minister can update us on the steps taken by the department to engage with civil society groups in India and Kashmir, including those representing workers, women’s groups and religious minorities.
My Lords, I thank all noble Lords for their contributions to what has been a very insightful debate. I will try to respond to most of the points raised and, in the usual manner, will extend courtesies on any specific questions that I am not able to answer in the time allocated. I join others in thanking the noble Lord, Lord Hussain, for tabling this debate.
Before I go any further into what is in front of me, I want to reflect on points made by my noble friends Lord Ranger and Lady Verma. A nation’s rich diversity reflects its strength—a point alluded to by the noble Lord, Lord Collins—and our country is reflective of exactly that quality. At a time when we celebrate our first Prime Minister of the Hindu faith, it is amusing for me—as someone of the Muslim faith whose heritage extends to India on my paternal and maternal sides—that in the case of our Prime Minister, who is Hindu by faith, his maternal and paternal sides extend to modern-day Pakistan, in Gujranwala. That shows the rich diversity but also the hope and opportunity that lie in the relationships and the importance of bridge building between communities, not just here in the United Kingdom but across the Indian subcontinent—an area I know well, both through my personal links and, importantly, as the Minister responsible for that region.
I agree totally with the noble Lord, Lord Collins, that here in the UK we pride ourselves on speaking out whenever we see a violation of human rights, anywhere in the world and on whatever issue. The greatest challenge we all face is when we stand up on human rights violations that are reflective not of our own values, personal beliefs or religion but those of others. That is the real test. I often say that being the Minister for Human Rights for the United Kingdom is the proudest part of my brief but also, arguably, the most challenging.
My noble friend Lady Verma talked of her strong advocacy for human rights. On a personal level, I have experienced that for well over 25 years. She has been a guardian of my personal human rights in all aspects of my life. Examples in all noble Lords’ contributions demonstrate how live we are to these important issues. I therefore align myself with the principles and values that have been a thread—a human rights golden thread, if I can put it that way—through every contribution.
As we have made clear time and again, including in our integrated review, open societies and human rights should and do remain a priority for the United Kingdom, as the noble Lords, Lord Purvis and Lord Collins, rightly pointed out. Our security and prosperity are best served by a world in which democratic societies flourish and fundamental human rights are protected and, indeed, strengthened.
I turn to India. Many are rightly proud of their country’s inclusive institutions, Governments, rich history and constitution. That is important. I have always said that when we approach the issue of human rights and seek to raise it, wherever that may be in the world, we must apply the lens of the challenges and where a country is on its human rights journey at that point in time. As we heard earlier from my noble friend Lord Ranger, who would have been in this Room 105 years ago? There would be no women and arguably no people of other faiths or people openly professing their sexuality. That shows that our own country has been on a journey when it comes to human rights. Therefore, it is right that we look at a country’s journey but also its institutions and constitutions and the protections it affords. Just as we are proud of our democracy and institutions here in the UK, I know from direct engagement with the Government of India, including on the issue of human rights, how proud they are of their constitutions and institutions as protectors and guardians of human rights.
Our values and our vibrant democracies sit at the heart of the UK-India comprehensive strategic partnership and our 2030 road map for future relations. The road map, which several noble Lords alluded to, guides our co-operation and covers all aspects of our multifaceted relationship. We set out our shared belief in the importance of democratic norms and principles, and respect for universal human rights. My right honourable friend the Foreign Secretary has underlined the importance of protecting human rights.
I assure the noble and right reverend Lord, Lord Harries, that we do raise human rights issues and the consular cases he referred to, including the case of Mr Johal. I know on how many occasions I raised that during my time as Minister for India. We need to ensure that we raise the rights of British citizens who are held. Equally, when we raise human rights we do so in a constructive and candid manner. The strength of our relationship with India allows us to do so.
We know that India is the world’s largest democracy and has long traditions, but we look to India to uphold all freedoms and rights guaranteed in its constitution, as with all democracies including ours. Indeed, that is the analysis and the point that I expect to be put about our own values and human rights here in the United Kingdom.
The United Kingdom engages with India on a range of human rights issues. Of course, we recognise the nature of the human rights situation across India. As my noble friend Lady Verma pointed out, India is not a homogenous country. It has so many religions and cultures. I will stand corrected if I am wrong, but I think there are still more Muslims in India than there are in either Pakistan or Bangladesh. That shows the rich diversity of the nation when it comes to religion. There are constitutional protections for places of worship. Indeed, the 1989 constitutional protection for places of worship stands very strongly. I assure the noble Lord, Lord Hussain, that we have a wide network through our high commission, Ministers and our network of deputy high commissions because of the nature and breadth of India. Indeed, we recently heard that India will become the most populous country in the world.
The noble Lord, Lord Collins, spoke about strengthening ties with civil society. The noble Lord, Lord Hussain, mentioned Amnesty International and other human rights groups. Only earlier this week I met with human rights groups as part of my regular engagement with them to ensure that their concerns, which are sometimes aired privately on specific issues, can be highlighted so that we can take them up constructively with Governments around the world, including the Indian Government. Recently I spoke with the high commissioner of India; human rights form a regular part of that dialogue.
As today’s debate has shown, it is clear that Kashmir is a topic close to the hearts of many. Indeed, the noble Lord, Lord Hussain, spoke very personally about his ties across the line of control. We are lucky to have 1.7 million British citizens of Indian heritage living here in the UK, and a similar number with Pakistani heritage. There is sometimes even an argument about who qualifies under which category, which perhaps shows the strong, binding nature of cultural ties between the two countries. India and Pakistan are long-standing and important friends of the United Kingdom, and we have significant links with both countries, particularly through the diaspora communities.
The Government take the situation, and the issues raised by the noble Lord, Lord Hussain, very seriously. He talked about resolutions, as did the noble Lord, Lord Collins. Our position remains exactly as before: it is for India and Pakistan to find a lasting political resolution, taking into account the wishes of the Kashmiri people. It is not for the United Kingdom to prescribe a solution or to act as a mediator. This position is not new; it has been the consistent position of successive British Governments.
We welcomed the renewal of the ceasefire along the line of control in February last year, and we encourage both sides to find lasting diplomatic solutions to maintain regional stability. At a time when people often talk about problems, I always look at the challenges we face and the role that the United Kingdom can play in terms of opportunity and hope. I know that my noble friend Lord Ranger has visited and knows this quite directly. The Kartarpur corridor provides a profound example of what can be achieved with the right intent between two Governments doing something for the right reasons.
Human rights concerns in India-administered Kashmir are raised with me, as they are about Pakistan-administered Kashmir. As I said, we raise these directly with the respective Governments of India and Pakistan. I assure noble Lords that these form part of our bilateral relationships as well.
The noble Earl, Lord Sandwich, the noble and right reverend Lord, Lord Harries, and the noble Lords, Lord Purvis and Lord Hussain, talked about human rights in negotiations and the trade agreement with India. The Government’s international obligations and commitments, including on human rights, will remain paramount when we make decisions on all trading relations. We are also clear that more trade will not come at the expense of workers or the environment.
While trade discussions continue, I assure noble Lords that as we discuss the importance of strengthening our road map, whether on trade, investment, technological co-operation or improving lives and livelihoods in India and the UK, the issue of lives and livelihoods is intrinsically tied to the whole concept of human rights. We continue to engage on an ambitious free trade agreement.
The noble and right reverend Lord, Lord Harries, talked about the Diwali agreement. There is good progress on many chapters and we will continue to discuss these issues directly. Indeed, my right honourable friend did so with External Affairs Minister Jaishankar during his recent visit to India.
There have been other areas of partnership with India over recent years, including co-operation over Covid-19 and the co-operation we have had on trade, education partnerships and climate change. Those areas will continue to be raised.
The noble Lord, Lord Hussain, raised some specific issues on the human rights report. I am proud that we produce reports on this issue. The noble Lord asked about other countries, including India. The decision on whether a country is designated in that report is based on the trajectory of change, the UK’s potential work on human rights and where we have influence. At this time, we judge that it is not appropriate to designate India in the human rights report. However, as I said—I emphasise this point—where we have concerns, we will raise them.
My noble friend Lord Ranger raised the issue of the Kashmiri Pandits. Of course, that is important. As we look at human rights issues, we need to be consistent across the piece. I assure my noble friend that those issues form part and parcel of our engagement.
This is extremely important. I am sure we will return to issues of human rights across the world—including very shortly in our next debate. I welcome our continued engagement on this issue. India matters to the United Kingdom and the United Kingdom matters to India. Our relationship with India, as democracies and friends, is built on important pillars, such as strengthening trade. We are two key democracies where the rule of law matters and we will continue to have candid, constructive exchanges on issues of human rights. That will remain an important pillar in our relationships. This matters to me and to all noble Lords who have expressed their views today. It matters to the United Kingdom and, from my engagement with our partners and friends in India, I can assure noble Lords that it matters to India as well.
As we have a minute or two in reserve, can I just ask a factual question? The Minister cannot answer for the Department for International Trade, clearly, but it would be interesting to know how often on the present trade deal the Foreign Office has intervened. Have there been formal occasions or is it just in chance meetings through the year?
I assure the noble Earl that on every FTA we have a very integrated approach with our colleagues in DIT. When we need to raise these issues directly, these are not chance meetings. We are quite structured in our approach, whether through diplomacy or trade.
Human Rights: China
Question for Short Debate
My Lords, I approach this debate with a great deal of reticence and, indeed, almost reluctance. I have long admired China and the Chinese people, although one should of course acknowledge that the population of China is made up of 56 different ethnic groups. I have long admired their ancient civilisation. Not only is China a country of great natural beauty; it is the nation that invented the compass, gunpowder, paper, moveable-type printing, kites, fireworks, silk, tea and porcelain, to name a few. I will perhaps omit noodles from my list of admirable inventions. My Chinese friends are among some of the most educated, industrious and cultured people I know. China is the fourth-largest country by land mass and has the largest population of any country in the world. Over many decades, we have developed extensive trade links with China, and it is in its interests and ours for us to share in commerce and seek to find common cause for the good of the world.
Yet I feel I cannot remain silent in the face of such a wide range of human rights abuses. Lying behind our profound differences is a vast cultural gulf that was laid bare most recently for me when I read President Xi’s speech at the 20th National Congress of the Chinese Communist Party last month. He said:
“We will … continue to take the correct and distinctively Chinese approach to handling ethnic affairs … We will remain committed to the principle that religions in China must be Chinese in orientation and provide active guidance to religions so that they can adapt to socialist society.”
He also said:
“We have effectively contained ethnic separatists, religious extremists, and violent terrorists”.
To those here who are familiar with China’s history of human rights abuses, these are worrying words.
We have seen the tragedies of the
“distinctively Chinese approach to handling ethnic affairs”
in Xinjiang province and, before that, in the sinicisation of Tibet. We have also seen the consequences of the Chinese Government’s direct influence on religion—I will focus most of my comments on this; I will say a few other things towards the end, but I know that others will range more widely—whether that be through the treatment of Uighur Muslims by forced imprisonment and, reportedly, sterilisation, of Falun Gong, or of Chinese Christians. Similarly, characterising religious adherents as “religious extremists” has become a common part of the Chinese Government’s authoritarian approach. The Chinese state has persecuted many Christian leaders, particularly those who exemplify the values underpinning the Christian faith, such as the affirmation of the dignity of human life, opposition to tyranny and a willingness to stand up for the persecuted.
We have seen China’s approach exemplified with the treatment of Joseph Zen, the 90 year-old cardinal who was arrested in May this year for acting as a trustee to a humanitarian relief fund which helped some pro-democracy protestors. He is currently on trial. Many commentators have described it as a show trial, where he will almost certainly be convicted. What discussions have His Majesty’s Government had with China regarding the release of Cardinal Zen?
The events in Hong Kong over recent years have led to large numbers of citizens leaving to come to the UK. Incidentally, I pay tribute to His Majesty’s Government for the way that that has been and is being handled. I am hugely grateful for that. I have met a good number of Hong Kongers who are now living in my diocese. Quite a number of them have joined our churches and many are already making a wonderful contribution to our national life.
Over the summer, a very old friend who had been working in Hong Kong for a number of years contacted me because he felt it so oppressive and restrictive, and he really had to get out of the country very quickly. He stayed with me for about four months while he was getting his affairs sorted out. He told me that Hong Kong had become so oppressive because of the high levels of surveillance. He told me how he could not even go to church without being filmed and recorded. It no longer felt safe.
This treatment is limited not just to Christians but to anyone who is not prepared to align their faith with the aims and objectives of the Communist Party of China. This has meant the detention of imams, the demolition of mosques and, in some cases, situations where people have been sent to psychiatric hospitals for challenging the Chinese Government’s decision to demolish their religious buildings. In Yunnan province in the south of China, the Chinese Government’s religious affairs bureau has banned children from attending churches with their parents, installed surveillance cameras outside churches to detect children during Sunday services, frozen churches’ bank accounts and removed crosses forcibly.
Article 300 of the Chinese criminal code prohibits the organisation of any religion deemed a “heterodox teaching”. This law has been used to restrict freedom of religion and belief across China. In 2015, this article was revised to include life imprisonment as one optional punishment for participating in any unsanctioned religious group. In the past few years, we have seen Chinese Christians and Falun Gong practitioners arrested, detained and persecuted for practicing their faith, sometimes when they were practising it only in their own homes.
Again, I reiterate that the words of President Xi Jinping last month are an explicit endorsement of measures against individuals and faith groups. Will the Minister tell us His Majesty’s Government’s assessment of these laws and what steps we can take to support people of faith who are being persecuted by the Chinese state?
Although I have chosen to address most of my comments to the subject of religious persecution in China, this is certainly only the tip of the iceberg, and I know other noble Lords will range more widely over other human rights abuses. We all know that China continues to use the death penalty, in some cases for non-violent or political offences, and fails to produce any official statistics about numbers. According to some groups, China has executed around 8,000 people a year since 2007, which, it is estimated, accounts for around 90% of the global total of executions.
Additionally, China has a well-catalogued history of using political psychiatric abuse against dissidents, sending critics of the regime to psychiatric hospitals under the pretence that they are mentally ill. In these institutions, individuals are subject to beatings, forced medication, electroconvulsive therapy and repeated incarceration.
I am not going to say too much more because others will be able to set out the problems. I end by asking the Minister to tell us his assessment of these allegations against the Chinese state and what representations His Majesty’s Government have made to the Chinese Government.
My Lords, the whole House is indebted to the right reverend Prelate the Bishop of St Albans for the—as always—exemplary way in which he spoke to the Committee and introduced today’s debate, and for focusing our attention again on the CCP’s human rights violations. I declare my non-financial interests in the register.
The International Relations and Defence Committee’s report on China, trade and security describes the UK’s China policy as lacking strategic coherence—confusion that was reinforced this week at the G20 summit. During the leadership election, Rishi Sunak said that “for too long” western leaders had
“rolled out the red carpet and turned a blind eye to China’s nefarious activity and ambitions.”
Liz Truss upgraded the UK’s recognition of China from “systemic competitor” to “threat”—as have our allies in the United States—and described China’s actions in Xinjiang as “genocide”.
However, on Tuesday, Mr Sunak was no longer citing the director-general of MI5, who said that that China represents
“the biggest long-term threat to Britain and the world’s economic and national security”,
preferring instead to describe the CCP regime as a “challenge.”
North Korea, Iran and Russia are all described by the FCDO as a threat. Why is China not to be described in the same way? Yesterday, Sir Iain Duncan Smith, a former leader of his party, warned the Prime Minister that
“it now looks like we’re drifting into appeasement with China.”
There is an old saying that when you want to understand something you should follow the money. We have been spending literally billions of pounds in China, ratcheting up a trade deficit of some £40 billion. We have seen British taxpayers’ money being spent on goods made in a state that uses slave labour to undercut its competitors and is credibly accused of genocide.
We have now added insult to injury. On 15 November, earlier this week, Will Quince MP confirmed in the House of Commons that the Government are spending £770,000 a day to store 120 million items of PPE in China. That is more than £280 million a year. Think of how that could be used to fund nurses’ salaries, patient care, any number of public services or the promotion of human rights. Perhaps the Minister will tell us how much has been spent in total so far, and explain how much longer we will go on paying these exorbitant sums to the CCP regime.
What does all this say about national resilience and dependency? Have we learned nothing from Germany’s dependency on Putin and the consequences of indebtedness? Drifting back to the Cameron-Osborne golden era would be a huge error. It would be a betrayal of all those who suffer at the hands of the CCP: persecuted religious minorities, journalists, human rights defenders, and those who have had the right to freedom of speech and freedom of assembly and association suppressed. It would be a betrayal of all those driven out of their homes in Hong Kong and welcomed to the United Kingdom in an exemplary way by His Majesty’s Government—I agree with the right reverend Prelate. Think of the betrayal of the 50 million victims of the CCP. The Italian scholar, Massimo Introvigne, says:
“No organization in human history killed more human beings than the CCP.”
My question to the Minister is: what has changed in the extremely short period between Liz Truss leaving and Rishi Sunak arriving at No. 10 that justifies this U-turn in relation to China? Have the atrocities against the Uighurs and other Turkic minorities stopped and been proven untrue? Has Hong Kong seen a restoration of democracy? Are Ben Wallace’s comments on Taiwan to the International Relations and Defence Committee part of this new rapprochement? In answer to a question from me, he said:
“It is in China’s plan to reunify Taiwan to mainland China … it is not a secret. Britain wants a peaceful process towards that.”
The 23 million people of Taiwan have never been part of the PRC. Why should we aid and abet that process? Why should we suggest that there is something inevitable about this? Since when has that been an object pursued by His Majesty’s Government?
On Monday I chaired a meeting, here in the House, addressed by Bill Browder and young Hong Kongers. Pleas were made for Magnitsky sanctions against those who have abused human rights, upended democracy, subverted institutions and corrupted the rule of law. Political show trials in Hong Kong have become the norm under the new national security regime, with the verdict in Jimmy Lai’s so-called fraud trial coming next week, as well as the verdict in the trial of the 90 year-old Cardinal Zen, referred to by the right reverend Prelate, and the other trustees of the 612 Humanitarian Relief Fund.
Given the growing number of political prisoners in Hong Kong and upcoming national security cases, including that of Jimmy Lai and Apple Daily journalists on 1 December, will the Minister tell the Committee what the Government are willing to do to stand by their legal, moral and historic commitments to Hong Kong and to Jimmy Lai, who is, after all, a United Kingdom citizen? How does the Minister respond to my noble and learned friend Lady Hale, former President of the Supreme Court, who has warned in the last 24 hours of Hong Kong’s “unacceptable laws” and said that British judges should search their consciences and vacate their seats in the Hong Kong courts?
What, too, of the CCP’s subversion of international jurisprudence and bodies? Only a few weeks ago, we saw how the CCP can silence the very UN body that was tasked with accommodating dialogue about human rights violations, the United Nations Human Rights Council, of which China is a member—rather like putting the fox in charge of the henhouse. On 6 October the Human Rights Council rejected a proposal, of which the UK was a co-sponsor, to even have a debate on Michelle Bachelet’s findings that “serious human rights violations”, potentially including crimes against humanity, of the Uighur and “other predominantly Muslim communities” may have been committed in Xinjiang. The proposal was defeated by 19 votes to 17, with China’s position supported by those other great champions of human rights: Eritrea, Pakistan, Sudan and Cameroon. Study the links and note that many of those opposing even a debate have a substantial belt-and-road indebtedness to the CCP. How do we intend to take this issue forward? Do we intend to table a resolution at the General Assembly of the UN?
Closer to home, when can we expect the Greater Manchester Police report on the assault of Bob Chan, whom I have met, and other protesters outside the city’s Chinese consulate? What is the Foreign Secretary doing to take action to protect the very rights now denied in Hong Kong, including reports that the CCP is establishing overseas police stations in the United Kingdom? At a meeting this morning, I learned of the harassment of Hong Kong students by mainlanders in Edinburgh and at other universities. What are we doing to protect the human rights of the Hong Kongers who have settled here?
Following the welcome decision yesterday, on security grounds, to prevent the takeover of our biggest producer of semiconductors at Newport Wafer Fab, what assessment have the Minister and the Security Minister, Tom Tugendhat, made of the ambitions to create a mega PRC embassy on the site of the Royal Mint? Will the Minister agree to talk to Mr Tugendhat and ask Michael Gove to consider calling in this application? The deal led to 200 British citizens having the freehold of their homes sold to the Chinese state, over their heads. After what happened in Manchester, and what happens throughout China, families are scared and angry but have been utterly ignored. Will the Minister write to me detailing who brokered the Royal Mint deal, how much money passed hands, and what was the independent valuation of the site?
If the Minister, who is always so kind and generous in dealing with the questions that I put to him, cannot undertake to answer them today, will he at least agree that they are legitimate questions which deserve to be answered and that he will write to me about them? I once again thank the right reverend Prelate for giving us the opportunity to say some of these things.
My Lords, I too congratulate the right reverend Prelate the Bishop of St Albans on securing this important and, indeed, most timely debate. I declare an interest as co-chair of the British-Taiwanese All-Party Parliamentary Group.
China has been back in the global spotlight this week, with the attendance of President Xi at the G20 summit in Indonesia. It had been hoped, at least by Downing Street, that this gathering would include a meeting between President Xi and our own Prime Minister, Rishi Sunak—the first encounter between a UK Prime Minister and a Chinese Head of State since 2018. Indeed, No. 10 briefed journalists that Mr Sunak would
“encourage China to use its place on the global stage responsibly to resolve geopolitical tensions, ensure regional stability and play its part in tackling the devastating global impact of the war in Ukraine.”
In the end, that meeting did not take place because of the terrible missile incident in Poland. That was unfortunate—as was the missile incident—because I would have welcomed Mr Sunak’s feedback after meeting his Chinese counterpart.
I cannot recall a United Kingdom Prime Minister ascending to power with so little known about his stance on so many foreign policy issues. His position on the Northern Ireland protocol falls into that category, given that the protocol came about as part of an international agreement. The Answer I received to a Written Parliamentary Question last week did not fill me with any great faith in his expertise on the protocol, since it advised that Mr Sunak failed to visit Northern Ireland even once during his tenure as Chancellor of the Exchequer. However, that subject is for another day.
In relation to China, your Lordships will be aware of my long-standing support for the Taiwanese people and my steadfast opposition to the aggressive stance the Chinese state continues to adopt towards them. Your Lordships will be equally conscious of my deep frustration with the weak positions held by a conveyor belt of UK Prime Ministers, who, with the exception of Liz Truss, as the noble Lord, Lord Alton, mentioned, have failed to truly stand up to the Beijing bully boys over Taiwan. Ms Truss can claim some kind of legacy on this issue at least.
It is not just our Prime Ministers who have provided wiggle room for Chinese aggression. As the noble Lord, Lord Alton, also mentioned, when giving evidence to the International Relations and Defence Committee of this House earlier this month, the United Kingdom Defence Secretary, Ben Wallace, a man for whom I generally have the utmost respect, said:
“It is in China’s plan to reunify Taiwan to mainland China. That has been in its 50-year plan, or whatever the plan is called, so it is not a secret. Britain wants a peaceful process towards that.”
That statement surely had President Xi and his coterie rubbing their hands with glee. In contrast, I have no doubt that these words had the good people of Taiwan holding their heads in despair—and, indeed, fear.
The topic of today’s debate is human rights abuses in China. The world is gaining greater awareness of the appalling crimes committed by the Chinese Communist Party regime against the Uighur Muslims, including killings, mass detentions, torture, forced mass sterilisation and cultural persecution.
The United States has accurately described China’s treatment of the Uighurs as genocide, with the Belgian, Canadian, Czech, Lithuanian and Dutch parliaments passing resolutions accusing the Chinese Government of committing genocide against them. So too has the UK Parliament, when a Motion approved in the other place last year resolved that
“Uyghurs and other ethnic and religious minorities … are suffering crimes against humanity and genocide”.
This is the opinion of our Parliament, but unfortunately it is not the formal view of His Majesty’s Government, who instead have held steadfastly to the position
“not to make determinations in relation to genocide”.
I warmly commend my friend, the noble Lord, Lord Alton of Liverpool, for bringing forward his Private Member’s Bill, which would enable the High Courts in England and Wales and Northern Ireland and the Court of Session in Scotland to make preliminary determinations as to what constitutes genocide, in accordance with the UK’s obligations under the genocide convention. I urge your Lordships to give the noble Lord’s Bill their full support. It will certainly have mine.
Failing to stand up to state-led aggression, sabre-rattling and worse has terrible consequences, as the brave people of Ukraine are experiencing each and every day. Russia invaded Ukraine because President Putin believed he could get away with it. I hold the same fears about President Xi’s attitude towards Taiwan.
I conclude my remarks by referring back to the Defence Secretary’s publicly stated view that His Majesty’s Government are seeking a “peaceful process” towards Taiwanese reunification with China. I put two direct questions to the Minister, for whom I have the highest regard and who has been handed the difficult task of responding to this debate.
First, knowing what we know about ongoing Chinese human rights abuses, in his view why would the Taiwanese people want to be part of a state that commits such heinous crimes against so many of its own people? They are freedom-loving people who would have no say in this.
Secondly, why would our country, the United Kingdom of Great Britain and Northern Ireland, wish to be in any way complicit in further crimes by assenting to what would effectively be a Chinese annexation of Taiwan? I would like to think that we as a nation are better than that. It is just a shame that the current UK Government appear not to agree. I look forward to the Minister’s reply.
My Lords, it is a pleasure to follow the noble Lord, Lord Rogan. I will touch on Taiwan in a moment, and I commend the work he does in the British-Taiwanese All-Party Parliamentary Group, of which I am a proud member. The noble Lord sought to give us a little detour away from Beijing, to Belfast. I admire him for squeezing that in. After four long days in Committee on the Northern Ireland Protocol Bill, the Minister will be relieved that I am not asking him about this—although I did ask on a number of occasions what the Prime Minister’s views on the Northern Ireland protocol were.
The right reverend Prelate is to be commended on bringing this debate. He should not have had any reluctance or reticence to bring it to the Grand Committee, because it is of profound importance for the future of our country. As the noble Lord, Lord Alton, indicated, on 20 October we debated in Grand Committee the International Relations and Defence Committee’s report on China. The noble Lord, Lord Alton, is an esteemed member of that committee, on which I served, and he was absolutely right to say that we were challenging the void in the Government’s strategy on China. Indeed, the terminology in the committee report highlighted a void.
When it comes to the serious issue of Taiwan, of significance are not simply the UK’s foreign relations with Taiwan but the UK’s strategic interests with Taiwan as a major trading partner. We are reliant on technological imports from Taiwan. It is also a significant export partner for some of our key export sectors. Therefore, the consequences of what will happen in the relationship between the PRC and Taiwan are of direct UK interest.
Not only that—there is also a soft power interest. I have been to Taiwan on a number of occasions. On one of my visits, I was there with our former colleague, my noble friend Lord Steel, and we met with President Tsai Ing-wen. She said that it was Lord Steel, as leader of the Liberal Party, who inspired her to be involved in politics in Taiwan; she was studying at LSE at the time. The fact that Taiwan and the UK both have strong, deep views on the principles of democracy and rights is of great importance. Therefore, it is an appropriate prism through which to look at UK relations with China, human rights and China’s increasingly aggressive posture.
I join the right reverend Prelate in saying that the relations between the people of the UK and the people of China are of deep and significant importance. You cannot go to a campus, speak to a business or go to a high street and not see that depth of relationship. But of course, as in our previous debate on our relations with India, that does not mean we should be blind to some of the serious challenges that exist.
In the context of having reviewed the Government’s integrated review and the Minister’s response to the Select Committee, I read the US Department of Defense’s recently published national defence strategy. It now refers to the PRC by highlighting its
“increasingly provocative rhetoric and coercive activity towards Taiwan”
along with the risk of destabilisation, risk miscalculation and threats to peace and stability. It also mentions China’s other abilities, including using cyber and digital technology. The US now considers the PRC as
“the pacing challenge for the Department”.
However the noble Lord, Lord Alton, is right that at the same time the UK’s posture is confusing, to say the least. In the debate in the committee, I asked about the status of the China strategy because the Government had said that it was held by the National Security Council. That council was then abolished; now it has apparently been recreated under the Prime Minister. It is interesting that the Government say they have recreated the National Security Council but the noble Lord, Lord Goldsmith, told me that it had not been abolished in the first place. That is a microcosm of the lack of clarity about where we are.
The seriousness of this is that in many of our key sectors, as highlighted by the director-general of MI5, and by me in many of our debates on trade policy and elsewhere, we in the UK are overreliant on imports from China. That dependency is a worry. This is in the absence of a strategic industrial strategy for the UK which would look at digital, ecommerce, privacy, intellectual property and supply chain resilience, as well as some of our key areas. One area we raised in the past is wafer technology. When the Government refused to call in a purchase, we were told repeatedly that there were no concerns. Then after parliamentary pressure, I think, the Government did call it in and the news this week is broadly welcome. That highlights how it does not seem as though BEIS, the Treasury and the FCDO are working in complete alignment.
Last year, I raised the fact that we had the biggest trade deficit on goods imports for any country in our nation’s history. It was more than £40.5 billion. That has declined slightly but by only £2 billion, so we now have a trade deficit with China of £39 billion on imports, which means that we need an industrial strategy and a resilience review across the key sectors. It also means that we should be looking at screening investments by UK firms in some of those key sectors in China. The recent reports that the German Government are operating this should be an indication that we need to do the same. I say this because the latest trade figures with China, published on 2 November, highlight a 20% increase in UK investment in China and Chinese enterprises, including state-owned enterprises. I simply do not know what the Government’s strategy is when we hear from the noble Lord, Lord Alton, what the new Prime Minister had said; now that is represented in the growth of investments in these enterprises.
The final thing I raise regarding Hong Kong and the UK is that the Government have not moved fast or far enough in reviewing what property assets party leaders and state-owned enterprises in Hong Kong have in London and the UK, which individuals have them, how transparent that is and how much they have invested in UK investment funds. I have repeatedly questioned whether any of the agreements signed by David Cameron and President Xi in 2015 have been reviewed, because they offer increased UK market access to Chinese enterprises, including investment in UK pension funds. I do not know whether state-owned enterprises, party leaders or those who have been either directly linked with or complicit in human rights abuses in China are increasing their purchases of British pension funds. Local authorities, individuals and investors need to know. It is the Government’s responsibility to tell us. We need a China strategy as well as resilience, because we cannot simply bemoan human rights abuses in China if we are silent at home.
My Lords, I thank the right reverend Prelate for initiating this debate, which I welcome. One thing I am certain of is that we will not be able to address all the issues we need to in a one-hour QSD. Nevertheless, this debate is a good agenda-setting point, where we can focus on the direction that we think we should go in. A point that the right reverend Prelate made in his introduction that I would emphasise is not only how important the people of China are, and how important their history, tradition and culture are to the world, but how without China’s engagement and co-operation we will not be able to address the global challenges that we face, particularly climate change and pandemics. Global health is a critical issue for us all.
As the noble Lord, Lord Alton, highlighted, the IRDC report on China set out clearly that the Government’s approach has too often reflected a strategic incoherence. As the chair of that committee, the noble Baroness, Lady Anelay, said in our recent debate, which the noble Lord, Lord Purvis, also highlighted, it is unclear how the Government intend to balance human rights issues with their economic relationship with China, and how they will prioritise when these considerations clash. In that debate, the noble Lord, Lord Purvis, and I raised where the strategy sits and who has responsibility. When the Minister replied to the committee’s chair he said that the strategy was being dealt with but through the National Security Council, et cetera. The simple fact is that what we need is not just about government policy, as that report highlighted that all sections of our society—business, civil society and trade unions—need to be aware of how to react to and deal with these things.
The Government have a good record on supply chain issues and modern slavery. I have raised with the Minister on previous occasions my concern that promises to strengthen that seem to be made, but there is no action. I want to know from him what his department is doing to engage with business and civil society on modern slavery and supply chains. That is a critical issue about how we trade with China. No one is suggesting that we can stop trade with China; apart from anything else, the noble Lord, Lord Alton, has highlighted how big that trade is. This is not about trade agreements or some of the clauses that we have managed to put into the legislation about trade agreements. It is about procurement and how we help businesses to deal with this issue.
As noble Lords have said, this is a cross-departmental issue. We have the FCDO making clear, positive statements and the Department for International Trade and other Westminster departments saying the complete opposite. That is why we need a coherent strategy. We have the pieces in place; they just need to be joined up.
I pay tribute to the noble Lord, Lord Alton. He has been consistent in raising these issues and has suffered because of it. The Chinese Communist Party has decided to sanction him, a parliamentarian, for raising these issues, and we should make note of that.
Our focus has been particularly on the Uighur Muslims in Xinjiang, who face a brutal campaign of oppression. The right reverend Prelate has raised other issues, particularly religious minorities, but I want to focus on Xinjiang. The UN has said that this may constitute crimes against humanity and, as we know, the House of Commons has voted to recognise this as genocide. It is very clear that we must have stronger action from the Government. Can the Minister highlight not only the actions we have taken at the UN but what we are doing in terms of imports from Xinjiang or a potential ban on cotton that we know is produced by slave labour? This is really important. Many of my noble friends have raised in the Chamber ways we can address that issue more effectively. It requires a firm, strong, consistent approach and, of course, it is not linked to just one region.
We have also raised with the Government and have had successes in pursuing the disgusting issue of human organ farming. We think we are in a civilised world, but this is going on and it is not restricted to China. The products are being exported all over the place and people are going to China to access these organs. We need a much stronger approach.
While sanctions have an important role to play in responding to the most serious instances of human rights abuses, we must also utilise our influence at the UN to raise these violations. The Minister is the Minister for the United Nations. The noble Lord, Lord Alton, raised the vote at the Human Rights Council which rejected a resolution to hold a debate on China’s violations in Xinjiang. I am of course pleased that the United Kingdom supported that resolution; let us acknowledge it. The Minister will no doubt come back and say that we pushed it, supported it and encouraged others to vote for it, but what are we going to do next? That is what I want to hear from the Minister. Can he say what our mission will do to secure a further debate on it, particularly at the General Assembly?
We often focus on the limitations of the UN, but I know the Minister agrees that we should also see that it is an opportunity to enter into discussions with a wide range of countries, particularly those that have been influenced by China. We should be building those alliances in a much stronger and more coherent way.
We must be alert to human rights abuses caused by China elsewhere. Noble Lords have raised Hong Kong, the attack on international agreements and commitments made to the people of Hong Kong, and our response to that. I hope the Minister can tell us what assessment the Government have made of those further attacks on civil liberties since the flawed election of John Lee. I know the response will be, “I’m not going to discuss future designations for sanctions”, but I think we want to hear that we are going to take those abuses seriously, use the powers we now have with the human rights sanctions and look at how they can be addressed effectively. I hope the Minister can respond to all the contributions and give us an assurance that we will be more consistent in standing up for human rights across China.
My Lords, I thank every noble Lord who has taken part in this debate, in particular the right reverend Prelate the Bishop of St Albans for tabling this very important debate. We have heard deep, expert insights on human rights in China.
As the UK Human Rights Minister, I welcome this amplification and continued spotlight on this issue. On a personal note, it certainly strengthens my hand in discussions I have with colleagues across government. It is important that we continue to raise these issues because, to put it simply, it matters. We have had two debates on this issue today, and it is right that we continue to focus and hold the Government to account on what more they can do in this respect.
The right reverend Prelate and the noble Lord, Lord Purvis, drew important focus to the people-to-people links between China and the United Kingdom. That is perhaps unique to the United Kingdom and, arguably, the United States—two countries that quite often, when we talk about international affairs, have reflective domestic insights as well. The Chinese culture, communities and, most importantly, people, as British citizens here, are vital to the vibrancy, diversity and strength of the United Kingdom.
I acknowledge and thank the right reverend Prelate and the noble Lord, Lord Alton, for their kind remarks on the BNO policy and the United Kingdom Government. I add, particularly to the right reverend Prelate and the noble Lord, that their advocacy is equally important because it brings that focus and attention to these issues. I recall those debates and discussions. At times I cannot answer fully because we are restricted by some of the sensitive discussions, but they acted as a real catalyst for ensuring the joined-up thinking and close working with our colleagues. I also pay tribute to the then Home Secretary for ensuring that the procedures and processes were put in place to offer that warm welcome to people who wanted to come to the United Kingdom for the right reasons. That continues to be the case with BNOs.
I turn to the important issue of human rights violations. I listened carefully on some of the trade issues. I say to the noble Lord, Lord Purvis, and others that I will consult my colleagues in the Department for International Trade and write in that respect, as I will on a couple of questions on the property and the site that the noble Lord, Lord Alton, raised.
I will go through some of the measures that I know we have taken which we can amplify. I subscribe to what the noble Lord, Lord Collins, said about supply chains. It is right that the Government have made these statements, but we also need to go into the detail to ensure what the impact is. We know that sanctions can be circumvented. It is important that when we act, as we have in the case of Xinjiang, we do so in concert with our key partners to ensure that there is a consistent approach in this respect.
I turn to the situation in China. China’s ongoing human rights violations include in Xinjiang—and let us not forget Tibet, which has not come up specifically—as well as the erosion of rights and freedoms in Hong Kong, as we have heard.
I will take Xinjiang first. Frankly, the evidence of the scale and severity of human rights violations being perpetrated against the Uighur Muslims paints—I state this quite deliberately—a harrowing picture in every sense. As noble Lords will know—I have certainly discussed this with the noble Lords, Lord Collins and Lord Alton—I held bilateral meetings with the then high commissioner, Michelle Bachelet, to ensure that her visit happened. We were long-standing advocates of that. Yes, it was a managed visit, but the report she produced was very telling in its detail. We welcomed the fact that the report happened. Noble Lords including the noble Lords, Lord Collins and Lord Purvis, pointed out the issue of the vote that happened, which was just on the procedural motion. In the end the tallied figures, after there was a small discrepancy, showed that the difference was just one vote, 20 to 19. Nevertheless, that shows the strength of Chinese influence, ironically, on members of the Human Rights Council.
This is not part of my formal script but I will say it because it needs to be on the record: it is an extreme disappointment that we do not see the Islamic world—the Muslim countries themselves—standing up against the biggest internment of the Muslim community anywhere in the world. When issues of Islamophobia are raised with me, because we do have challenges of anti-Semitism and Islamophobia in the United Kingdom, that immediately throws a spotlight back on the discrimination and total internment of Uighurs on which there is, frankly, a deafening silence. I assure noble Lords that the issue is very close to my heart and I continue to raise it bilaterally with a number of countries.
The report itself sets out a range of evidence, including first-hand accounts from victims, of arbitrary and discriminatory detention, torture, sexual and gender-based violence, violations of reproductive rights and the destruction of religious sites. Perhaps most notably, the report also states that the extent of arbitrary and discriminatory detentions of members of Uighur and other predominantly Muslim groups
“may constitute international crimes, in particular crimes against humanity.”
That is a very damning but factual assessment from what was a limited visit by the then human rights commissioner.
The report also corroborates the growing evidence we have of China’s human rights violations in the region. While the recent focus on Beijing’s violations has been about Xinjiang, there are of course a number of other long-standing human rights issues in China. In particular, I note the issues around the situation in Tibet—issues that noble Lords have mentioned about freedom of religion or belief, and the reports of Tibetan parents being coerced and intimidated into sending their children to state boarding schools.
I acknowledge fully the points made by the noble Lords, Lord Alton and Lord Rogan, the right reverend Prelate and all who raised the issue of persecutions, not just of the Uighur Muslims but of Christians, Buddhists, Falun Gong practitioners and others, simply on the grounds of their religion or belief. I was humbled yet honoured to host the freedom of religion or belief conference earlier this year, but a conference alone will not resolve the issues. Nor will this debate, but it is important that the focus remains.
Regrettably, we have also seen ongoing Chinese assaults on Hong Kong’s autonomy and freedoms. The national security law, which we have debated and had questions on in your Lordships’ House, continues to be systematically used to restrict rights and freedoms and silence dissenting voices. The authorities’ decision to target leading pro-democracy figures for prosecution in Hong Kong is unacceptable. Hong Kong’s way of life, prosperity and stability rely on respect for fundamental freedoms—rights and freedoms, let us be clear once again, that China itself undertook to uphold as a co-signatory of the Sino-British joint declaration. They are also protected in Hong Kong’s Basic Law. It is their law, something the Chinese Government and state signed up to, and it should be upheld. It was an internationally agreed statement lodged with the United Nations.
Noble Lords raised a number of points. First, on the issues around Cardinal Zen, Jimmy Lai and Andy Li, I assure the Committee that the United Kingdom has spoken repeatedly, and will continue to do so, about China’s arbitrary arrests and prosecutions in Hong Kong, including the names I have mentioned. Where trials are taking place, we also have consular attendance. I will of course keep noble Lords updated in this respect.
Before the Minister leaves that really important point about the way the judiciary has been subverted in Hong Kong, will he respond to the remarks of my noble and learned friend Baroness Hale, reported in today’s newspapers? Do the Government support her view that jurists should search their consciences before they participate in such proceedings?
Perhaps I will cover that specifically in the note but, as I said, I certainly agree with the principle of the importance of jurists, and of asking whether they are able to fulfil their obligations in the way that they are designed to within the construct that has been set up. Ultimately, it is the jurists’ decision, but it is important. Very able jurists will ask themselves that question.
On the Prime Minister’s position, which was raised several times, at the recent G20 meeting in Bali he set out the view that China is both a systematic competitor and
“the biggest state-based threat to our economic security”.
There have been different perspectives, but we have a long-standing commitment to Taiwan. As noble Lords will be aware, my right honourable friend the Trade Minister also visited Taiwan recently. The UK’s long-standing position on Taiwan has not changed. While we do not have diplomatic relations with Taiwan, we have a strong unofficial relationship based on growing ties in a wide range of areas, including trade, and we share the common values of democracy, which Taiwan also propagates. We do not support any unilateral attempts to change the status quo. I have often said in your Lordships’ House that it is for both sides of the Taiwan Strait to address these issues. I have noted a number of other points that were raised, such as statements made to committees by colleagues of mine in the Government. I have not seen the full details; it would be remiss of me not to respond, but I will do so once I have had time to review them.
I turn to what the noble Lord, Lord Collins, said about UK action. We continue to work within the context of the UN. I mentioned the Human Rights Council. At the UN Third Committee last month we also supported the latest joint statement on China’s human rights violations in Xinjiang. Following a concerted effort with our partners and the UK’s network of embassies and high commissions, a record 50 countries, representing six continents, supported that statement. We have taken opportunities to raise our wider concerns in international fora, including in relation to Tibet, and we remain active and resolute in calling China out on its actions to undermine Hong Kong’s way of life, as all noble Lords alluded to.
I am short of time. I have already committed to consulting with colleagues, particularly in the Department for International Trade, but I assure noble Lords that we have introduced new measures in the modern slavery Bill that require businesses and public sector bodies to report on specific areas in their modern slavery statements, including due diligence. We have improved the application of UK export controls.
To conclude, I assure noble Lords of our continued commitment to the primary importance of human rights for all communities within China and our continuing commitment to the relationships we have with key areas, including Hong Kong and Taiwan. December will mark the 75th anniversary of the adoption of the Universal Declaration of Human Rights. That affirms the universal character of human rights as inherent, inalienable and applicable to all human beings. That will remain our moral compass.
Question for Short Debate
My Lords, I welcome the opportunity to introduce this timely debate. First, I must declare that I have for some years been a government-appointed director of the Horserace Betting Levy Board, the body that collects the levy from betting operators on their profits from horserace betting and distributes it to the sport and its wider grass roots. It has seen its reputation grow because it has been skilfully chaired and managed by a most effective executive team.
The levy board operates at arm’s length from government. This allows it to respond flexibly to the demands of horseracing while having direct bookmaker representation on the board. Maintaining this independence and responsiveness is crucial. The levy board contributes some £19 million to the sport’s regulation per year, about 80% of the total, and around £2 million a year to equine veterinary research and education. Additionally, the Great British Bonus is 66% funded by the levy board and serves to encourage, with considerable success, the breeding and ownership of British-bred fillies, and in addition to this there is a commitment to give £66 million next year to prize money.
As a Member of Parliament for 18 years, I represented the town of Newmarket, the world’s leading racing and breeding centre. Today’s debate provides an opportunity for us to discuss how we can take this great British success story forward, and how the racing industry and government can support each another in their policy priorities.
I unreservedly applaud the considerable support which the Government provided during the Covid-19 pandemic. The shutdown of racing for 11 weeks and the subsequent continuation of racing behind closed doors for a year put considerable financial strain on the industry, with more than £400 million in lost revenues. Racing and government worked closely on protocols for safe resumption, then the Government supported racing with a critical £21.5 million loan to the levy board through the sports winter survival package and, indeed, £28 million in cash flow and hardship funding. This helped to continue funding critical prize money, the very lifeblood of the racing industry, and other important initiatives, including training and education, integrity and horse welfare.
Horseracing is the second biggest sport in the UK by several measures, second only to football. More than 5 million people attend some 1,400 fixtures annually across our 59 racecourses. Four of the top 10 highest-attended sports events held annually in the UK are major horseracing festivals. It is the most broadcast sport on free-to-air television in the UK through the excellent coverage provided by ITV Racing. Racing provides a substantial contribution to the UK economy. It generates more than £4.1 billion of economic activity, raising more than £300 million in taxation annually for the Exchequer.
The industry provides some 80,000 jobs directly or indirectly and sits at the heart of many rural communities. The Racing Together programme highlights that more than 130 organisations utilise horseracing to support fundraising, well-being and training in local communities, with more than 1,500 hours donated by the racing industry to support charitable causes annually.
British racing also demonstrates international leadership on a range of issues, including integrity monitoring to intercept, disrupt and prosecute corrupt activity, working closely with international counterparts; significant efforts to advance diversity in the industry; and equine welfare initiatives further to raise standards across the lifetime of the racehorse through the independently chaired Horse Welfare Board’s A Life Well Lived strategy. The industry has also proudly supported over £40 million in veterinary research and education funding since 2000.
Yet, I firmly believe that this is an asset which the Government can do so much more to cultivate—a source of continuing frustration. I urge the Government to go further than they have in harnessing horseracing as an asset for their diplomatic and trading objectives. Furthermore, they should capitalise on thoroughbred horseracing and breeding’s role as a rural employer as part of their levelling-up agenda. I know that this is something that the British Horseracing Authority and all in British racing are keen to support them on.
However, if British racing is to really survive it needs to maintain its position at the international pinnacle. I am afraid it is clear that this is coming under remorselessly increasing pressure. Owing to a range of factors, British racing faces gaping challenges in achieving competitive levels of prize money. Quite simply, prize money acts as the lifeblood of the industry. It not only helps to sustain owners’ critical investment in the industry but supports many hundreds of training businesses and the livelihoods of thousands.
On the measure of prize money per race, British racing is well behind other major competitor jurisdictions, including Ireland, France, Australia, the United States, Hong Kong and Japan. These competitor jurisdictions continue to really drive up prize money increases, offering significant incentives for British owners to relocate abroad. Such financial pressures, compounded by additional complexities around thoroughbred movement following Brexit, are starting to have an active impact on owner and high net worth investor decisions to invest in British racing. The decisions of only a few significant owners to relocate to other jurisdictions would permanently damage Britain’s racing leadership position. Although there was record turnover at the key Tattersalls October sales this year, there is increasing evidence that a growing proportion of the top lots are leaving the UK. This exodus of equine talent, driven by international funding disparities, sees British racing starting to fall in this global race.
I am pleased to say that the industry is trying to respond to these challenges. I am delighted that British racing leaders agreed on a new governance structure this week for the sport to deliver unity and focused strategic direction. The racing industry needs the Government to step up as a partner to realise its potential, as has happened in other jurisdictions.
I highlight the forthcoming gambling review White Paper, although it has been repeatedly delayed, as critical. Indeed, it is vital that gambling regulation protects people from experiencing gambling-related harm, yet it is also key that it recognises the unique relationship between racing and betting. Any blanket, disproportionate measures could have profound consequences for British racing. I therefore hope we will see a balanced White Paper in the coming weeks.
I also reference that the Government are required by statute to review the rate of the horserace betting levy, which is currently set at 10% of betting operators’ gross profit on British racing, by no later than 2024. It encapsulates the symbiotic relationship between the two industries. It would not be appropriate for me to comment further on this given my position at the levy board, but I know that this is a point on which the racing industry has made repeated representations, including for a levy based fully or in part on a percentage of turnover rather than profits. However, it is hugely valued that bookmakers contribute some 45% of racing income.
Continuing efforts are being led to reduce complexities around thoroughbred movement post Brexit. I would be interested in hearing from my noble friend the progress of these discussions between the industry and our Government, and whether the future imports system can recognise our high standards of animal health. I therefore conclude by urging the Government, across their various departments, to engage proactively with similar vigour as demonstrated in the Covid-19 pandemic to grasp the many opportunities which exist and set up British racing to thrive through the 21st century.
My Lords, what great timing the noble Lord, Lord Risby, has achieved in securing this debate, because this is the week when, to a fanfare of trumpets, the British Horseracing Authority announced its final agreement to replace the present tripartite and dysfunctional system with a reform designed to stop individual racing interests blocking change. That is a step forward which we can all welcome.
The noble Lord is, of course, a true expert on racing, as a member of the Horserace Betting Levy Board. He will not mind me reminding the Committee that that body exists today only because this House blocked a half-baked scheme cooked up by the Government and racing to hand the whole business of collecting taxes from punters over to a non-accountable body. After this debate, again by a lucky chance, I am off to the 50th birthday party of Alan Delmonte, the chief executive of the levy board—I suspect others here are going too. What a great job he, the noble Lord and their team have done.
I have a few interests to declare. I am member of the Starting Price Regulatory Commission, which oversees the SP, and a past director of the Tote and of the shadow Racing Trust. Much more interestingly, I own or part-own three horses: Lost Connections, who came fourth at Lingfield on Tuesday; Financial Outcome, who won his last two point-to-points; and a baby novice trotter who has not yet run. More significantly, I am also chair of Premier Greyhound Racing, a JV company formed by Arena Racing Company and Entain to supply coverage of the dogs to betting shops and homes. Of course, this afternoon I speak for myself and no one else.
As I say, this is the week of BHA reform and it would be churlish to cavil too much at this welcome change. However, I am afraid I am going to add an ounce of cavil to a pound of welcome. It is quite astonishing how long it has taken for this basic change to happen. I was on the Tote board with Peter Savill when he first started lobbying for change—not exactly this, but change that would have similar effect—20 years ago. Wearing my greyhound hat, I cannot help but compare this pace of change in governance with that in greyhound racing.
We had a big problem in greyhound racing. I was chair of the then British Greyhound Racing Board and the governance was in at least as much of a mess as that of horseracing. The Donoughue committee was appointed. It is sad that Bernard, my noble friend Lord Donoughue, is not here this afternoon to give us the benefit of his advice. He came up with a wonderful report proposing root-and-branch change, which went through in a couple of years. I can say with complete confidence that if he had not produced that report and if we had not had that change, I do not think we would have greyhound racing today, or certainly not on the same scale, with 20 tracks this side of the Irish Sea, three meetings every day for afficionados and punters—the noble Lord, Lord Foster, will forgive me for mentioning punters, about whom his views are well known—and still a position as Britain’s sixth-biggest spectator sport. That shows what you can do with the aid of good governance.
We do not need and do not have a compulsory levy. We have a voluntary levy. A few years ago, I was responsible for brokering an increase in that levy by which bookmakers voluntarily put their money into greyhound racing and in return got a say on how it is spent through the British Greyhound Racing Fund.
One of the things that the new BHA model will want to do is negotiate an increase in the levy. I will say two things about that. First, it would be very unwise to progress this—here I pick up a point from the noble Lord, Lord Risby—until we know the Government’s plans for gambling reform. If they introduce some of the changes that have been advocated—I do not say by the noble Lord, Lord Foster—then bookmakers will take a heavy hit, as will the Exchequer, incidentally. In the light of today’s events, that is something that we would not want to see. The less money that is collected from bookmakers, the less money there will be to go into racing too.
Secondly, I am a sort of economist, and I have my doubts about whether large amounts of the levy going into prize money solves this industry’s undoubted problems. Incidentally, I accept the point about overseas competition for buying racehorses, but it is perfectly clear to me, as an economist, that if you raise prize money people will pay more for horses when they go through the sales ring—and what would you have achieved? You would have lined the pockets of breeders. These unexpected side-effects of half-understood economics have to be borne in mind when we consider the right level for the levy.
That leads me to a proposal. Racing indeed needs a plan, but I am not wholly confident that, even with the new model of governance, it has all the knowledge and understanding that it needs for a robust plan. Of course it will consult, but there is a case for a wider input than consultation alone will bring. Therefore, in my view, racing would benefit from formalised outside help and advice. My proposal is a royal commission—the first one for more than 20 years—on horseracing, including representatives of racing but also outsiders with relevant expertise: an independent economist, a leisure industry expert and someone who understands the betting industry properly, all under a proper heavyweight neutral chair.
I am not soft-minded about royal commissions. The one I was on, on care of the elderly, was a complete shambles, and I signed a minority report to it—so the 20-year gap was probably welcome. But they have something to offer in this kind of circumstance. Give such a body a couple of years and there is every chance that it will come up with a plan worthy of that name to act as a starting point for radical reform of racing that the BHA, the Government and the oft-forgotten punter can get behind.
My Lords, I declare my interest as the chairman of Peers for Gambling Reform. I congratulate the noble Lord, Lord Risby, on securing this debate. I have only had the odd flutter on the Grand National and occasional visits to the wonderful racecourse in my former constituency of Bath, so I am conscious that some noble Lords are far better qualified to speak on this issue than me. Nevertheless, I have raised a couple of concerns in your Lordships’ House on a number of occasions relating to the sector and the industry on the issue of drones and gambling, and on wider gambling reform. I will concentrate on just those two, and I apologise for not picking up other issues raised by noble Lords.
One of the ongoing challenges for the racing industry is the use of drones to film races without the permission of the course. This is being undertaken by some in the betting community to beat the slight time lag from official TV feeds. This is very worrying for the integrity of betting markets. I believe that this desperately needs to be addressed, so I would very much welcome comments from the Minister on what the Government propose to do about it. In particular, I hope he would be willing to consider looking at broader sports rights to protect sporting events from the use of drones and to enable the organisers of sports, including horseracing of course, to have much greater control over the events that they are responsible for.
More generally on wider gambling reforms, some in the horseracing sector have argued that the proposals for reform advocated by me and other members of Peers for Gambling Reform will do great harm to the industry. Indeed, articles in the specialist media accuse me of being ignorant, economically daft and, on one occasion, even delusional. So, since I very much hope that the Government will adopt the proposals that we recommend, which stem from the proposals of your Lordships’ Select Committee on gambling, I hope I can reassure the Minister and the Committee that they will not have the impact that some believe they will.
We have to remember that well over one-third of a million people are deemed to be gambling addicts, including as many as 60,000 11 to 16 year-old children, impacting the lives of well over 2 million people in this country. Most tragically, we have hundreds of gambling-related suicides every single year, so reform of gambling is urgently needed. Since horseracing and gambling are inextricably intertwined, such reforms will clearly have an impact but, I argue, not to the degree that some have suggested. Despite what media reports have claimed, I am not a gambling prohibitionist and I do not want to ban the entire sport. Indeed, the opposite is the case: I hope it will flourish.
I cannot help but note in passing that while the amount of support for the horseracing industry that comes through the statutory horseracing betting levy has gone down, as the noble Lord, Lord Risby, has pointed out, it is still something like three times the amount of money that comes in from the voluntary levy to help research, education and treatment for gambling addiction. That is why I would like to see a statutory levy that brings in more money.
I turn briefly to the other recommendations and their relationship with the industry and, first, our recommendations to limit the links between sport and gambling advertising. I make it absolutely clear, as the Select Committee does, that we believe those proposals should exclude horseracing and greyhound racing. That is not an issue.
Secondly, we are calling for the introduction of affordability checks. Surely it is important that consumers can afford to bet in the way they do, yet some in the industry have argued that such checks will deter the vast majority of punters and even cause a huge surge in the use of black market gambling, with dire consequences for the horseracing industry. Of course, this ignores that fact that some checks involving the sharing of financial data are already required in relation to money laundering and the existing and recent requirements of the Gambling Commission.
The impact of our proposals on horseracing will be limited because, first, they are targeted at online gambling. No checks would take place at a racecourse under the proposals, so traditional gambling at the racetrack would not be affected. Secondly, for online gambling, where horseracing now also resides, we want them to be triggered at a level of £100 a month. Even one of the gambling industry’s own reports, authored for it by PwC, determined that high-spend gamblers are defined as anyone losing more than £75 a month. So a level of £100 as the trigger really will not affect any but the smallest proportion of online customers, those who are likely to be suffering or at risk of suffering a gambling disorder. Thirdly, it is perfectly possible to do the checks in an unintrusive manner. After all, the gambling industry already shares data with credit agencies so should not need to ask for additional evidence from customers in all but a few cases. Affordability checks should not be a threat to the industry.
There is one area where I acknowledge potential issues that need to be addressed. Traditional, on-course betting is very different from what takes place online. At a racetrack there is a long time gap between races and punters have time to reflect on their financial position before making the next bet. Online there are very few of the limits, whether on stakes and prizes or on speed of play, that apply to land-based gambling. I acknowledge that there may well be impacts there, but I think they could be limited.
The noble Lord, Lord Risby, agreed that the horseracing industry wants to protect people from gambling-related harm but without disproportionate measures. I genuinely believe that the proposals we are recommending achieve both the things he wants.
I add my congratulations to my noble friend Lord Risby on securing this debate. I bow in admiration to his knowledge of the industry and join him in recognising the contribution that horseracing plays throughout the UK today. My racing interest is largely as a member of the All-Party Parliamentary Racing and Bloodstock Industries Group. Also, as an MP for 18 years I was fortunate to have Thirsk racecourse in my constituency and York, Wetherby and Ripon nearby.
Horseracing makes a huge contribution to the local economy of rural North Yorkshire. There are many stables and trainers across North Yorkshire and a day at the races brings huge pleasure to many and fills the bars, cafes and restaurants of the county. Point-to-points bring enjoyment and help prepare horses and riders for the jump races. That is something we must not lose sight of. Whether there will be enough jockeys stepping forward is a worry.
I shall highlight the importance of one racecourse—York—locally. Last year was a particularly busy year as the first full year back after the pandemic. Attendance levels of 275,000 over an 18-day season were within 5% of the pre-Covid 2019 figures, in spite of the fact that national train strikes were called on three of the race days, which was not very helpful. There was a record number of horses racing at York—1,491—averaging 12 per race, which is the highest of any flat racecourse. According to a 2019 study by Sheffield Hallam University, the economic impact on the York economy is £60 million per annum through race day and non-race day activity.
The wider racing industry in Yorkshire, with nine racecourses, more than 100 training yards, the National Horseracing College at Doncaster and Doncaster bloodstock sales, contributes £200 million per annum to the county’s economy. Some £10 million was invested in prize money to attract the best horses and jockeys to York and to support the wider industry at a challenging time as it emerged from the pandemic.
A particular highlight for me was the June 2005 week-long Royal Ascot meet at York, which was sadly a one-off occasion. It opened up the splendours of the royal race meeting to many people who had never been able to experience it.
The welfare of horses and jockeys lies at the heart of racing’s future. Much work on improving animal welfare has taken place in recent years. I pay personal tribute to the work of the late Rose Paterson. As chairman of Aintree racecourse, Rose made great strides at making the famous jumps safer, albeit still challenging. I realise that that work continues.
I also pay tribute to the excellent work of Jack Berry House in Malton in supporting the recovery of injured jockeys. This facility is a tremendous asset to injured jockeys across Yorkshire and the north of England. Separately, the charity Racing Welfare has to date in 2022 provided more than 2,000 instances of support to 472 individuals working in or retired from the racing industry in Yorkshire alone, as well as providing more than £24,000 in grants. The charity organises very successful and popular open days in Middleham and Malton each year, enabling members of the public to go behind the scenes at some of the most prestigious training yards in the country.
However, as my noble friend and others have pointed out, challenges lie ahead. There is concern about falling average attendances, albeit that they are recovering from Covid, the impact of lower prize money levels on our ability to compete with other countries and the financial loss to the racing industry of the Covid-19 pandemic, with lost revenues to racecourses, trainers, breeders and jockeys of more than £100 million. There is concern about the future impact of reduced prize money and a general contraction of the industry and, as my noble friend pointed out, in the sale of horses at Tattersalls and elsewhere.
On the impact of the gambling reforms that were promised in December 2020, the proposals have yet to be published. I urge the Minister to recognise the significance of horseracing in all its aspects, particularly to the rural economy, in this White Paper and to work to enhance its impact on the rural economy, particularly through the levelling-up agenda.
I am concerned, and have been since Brexit was first raised, about its consequences for the movement and export of horses. That is something I will remain vigilant about.
I make a plea to the Minister that the gambling White Paper will be proportionate, evidence-led and responsible. British racing prize money is falling behind France, Ireland and other leading jurisdictions, as my noble friend Lord Risby pointed out. We are losing equine talent with horses being sold overseas, which is threatening our position as a leading global racing nation. Will the Minister ensure that bets made by British-based punters on overseas racing are covered in the Government’s review of the levy? That would recover the current losses of £20 million to £30 million a year.
Finally, will the Government recognise the contribution of horseracing to the local rural economy and as a significant soft power asset on a global scale? This is not just the sport of kings but the sport of every individual racegoer and should be recognised as such by the Government.
My Lords, I declare my interest as a veterinary surgeon as laid out in the register. I am very grateful, as others are, to the noble Lord, Lord Risby, for securing this debate. He and others have emphasised the considerable value of the equine industry to the UK economy. As noble Lords may expect from my interests, the points I wish to make are in respect of measures of support for equine health, disease prevention and veterinary education.
I hope it is self-evident that the whole horseracing industry is critically underpinned by maintaining the health of horses, which are imperilled by infectious disease and traumatic injury. The Horserace Betting Levy Board has historically provided, as determined by statute, substantial financial support for equine health and welfare in three main ways. The first is its important financial support for research into the epidemiology of infectious disease and into non-infectious trauma injuries, which has led, for example, to improvements in the preparation of racing surfaces and the design of fences to reduce injury from falls and lameness.
The second is the levy board’s support of disease surveillance, which is hugely important to help monitor and prevent the incursion of devastating infections, such as equine flu, which could paralyse not only the horseracing industry but the wider horse sport industry as a whole. The important issue of equine disease surveillance was formerly located at the Animal Health Trust, but, following its unfortunate closure, surveillance activities have fortunately managed to continue with help from the levy board. They have relocated to the University of Cambridge and a major veterinary practice in Newmarket. The third main support that the levy board has given is to veterinary education and for specialist postgraduate training in equine health and welfare to ensure that we have an unrivalled cohort of appropriate professional expertise.
Moreover, I should emphasise that assurance about the welfare of horses, including, of course, freedom from disease and injury, underpins the social contract between the industry and the British public, who accept and support the racing of horses. I need hardly stress that this cannot be taken for granted in a public who increasingly question and value animal welfare.
Therefore, funding for the issues I have mentioned is absolutely vital and the role of the HBLB is critical. Although a small proportion of its overall income is devoted to horse health and welfare, that is hugely important and has amounted to more than £40 million over the past 22 years. It currently amounts to about £1.5 million to £2 million per annum. I stress that this support is particularly important because alternative sources for funding equine health, welfare and research are relatively limited. The research councils and the Wellcome Trust, which are very important supporters of biomedical research in general, do not include funding for equine research. There are a few other charities and organisations which help—I should mention the Thoroughbred Breeders’ Association, the Racing Foundation and the Horse Welfare Board, among others—but the support flowing from the levy board is quantitively the most important in this respect.
It is thus of some concern that there has been continuing uncertainty about the future of the HBLB. Whether or why it might be replaced is not something for me to comment on, but I want to emphasise that any current or alternative mechanism helping to support the racing industry in general must surely take account of the fact that the whole industry, directly or indirectly, is totally reliant on maintaining the health and welfare of the horses on which it depends. Finally, will His Majesty’s Government ensure that any future changes to the statutory mechanisms which provide funding for the racing industry include adequate support for equine health and welfare?
My Lords, I, too, thank the noble Lord, Lord Risby, for bringing this debate forward and I thank all noble Lords for their interesting contributions, particularly my noble friend Lord Lipsey, who clearly has an enormous amount of knowledge about the industry—far more than I have. As has been said, this is a timely debate for a number of reasons, one of which is that the British racing industry has recently announced that it will undertake a new industry strategy aimed at building a sustainable model for racing and identifying areas for growth. We have discussed many areas today where this could be implemented. It has also agreed a new governance structure that better clarifies the role of the British Horseracing Authority as the governing body.
I should declare a former interest in this matter, as I was a member of the whip consultation steering group that recently brought forward recommendations on improving the use of the whip. From this, I have a particular interest in welfare, which was mentioned by the noble Baroness, Lady McIntosh of Pickering, and, of course, the noble Lord, Lord Trees, who rightly said that the industry needs to be underpinned by equine health and welfare. Being on that steering group drew my attention to the work that the Horse Welfare Board is carrying out to enhance equine welfare right across racing and to the importance of taking a global leadership role in this area. Its strategy, A Life Well Lived, which has been mentioned, was where the recommendation to review the use of the whip came from.
However, it also mentioned a number of other areas in which to improve animal welfare, for example, the use of equine fracture support kits for the treatment of injury and the roll-out of white-painted obstacles, moving them away from the traditional orange colour because there has been lots of interesting research about equine vision and how horses see things. It is a very interesting report. It also encouraged the formation of a working party to present recommendations on the jump-racing predictive risk model. There is lots of interesting work going on around welfare, which I strongly support.
However, we also need to make further progress on welfare issues. The noble Lord, Lord Trees, talked about this. When I was on the steering committee, for example, I was one of a minority who believed that the whip should not be used for encouragement but kept only for safety.
I come back to some of the issues discussed in the debate. There was quite a lot about the review of the Gambling Act, and Ministers obviously recognise that it needs updating. As discussed, particularly by the noble Lord, Lord Foster of Bath, we have a lot of online gambling. I know that the British Horseracing Authority also believes that this review needs to take place, and that the Act needs updating. If we do not update it, there are concerns that we threaten the integrity of sport. Importantly, we need to protect people from gambling-related harm. My understanding is that the review does not specifically target horseracing but, as we have heard, given the amount of money that it receives through the horserace betting levy, clearly it will be impacted. When we include media rights and sponsorship, we are talking about huge sums of money, so it is bound to have an impact on the wider equestrian world.
The new chairman of the British Horseracing Authority has said that the review needs to reflect the unique relationship between racing and betting. He was concerned that pre-emptive measures were already starting to impact on the sport, citing the delay of the White Paper, which has also been discussed in this debate. I would be very interested to hear whether the Minister can shed any light on when we are likely to see it. The Secretary of State, Michelle Donelan, has said that the White Paper is a priority but we do not yet have a publication date, so it would be helpful if the Minister could give a steer on this.
The noble Lord, Lord Foster of Bath, made an important contribution about the importance of reforming gambling, but also said that when any review takes place, we must always be aware of the harm that it can do. We heard quite a lot about the horserace betting levy. We on the Opposition Benches previously supported reforming the levy, when we secured an amendment to gambling legislation. My noble friend Lord Lipsey and others made some suggestions on this.
The British Horseracing Authority specifically asked whether the Government would consider—I would be interested in the Minister’s response—a few things, one of which the noble Baroness, Lady McIntosh of Pickering, mentioned: extending the levy to apply to all horseracing globally that is bet on by British customers. That is based on historic, international precedence, so we should be able to do it. Another is adjusting the levy rate so that it would be based on a percentage of turnover rather than profit, resulting in less volatile yields and reflecting overall activity levels.
If we are to move forward in the areas debated today, the Government really need to work with the industry to find solutions to support a high-health, high-wealth future for the industry, particularly on the movement of racehorses. The noble Baroness, Lady McIntosh, talked about the post-Brexit complications of this. Now that we have left the EU, there is quite an adjustment for the thoroughbred industry, which faces significant challenges in how this is managed. A rare benefit of Brexit is that it means we can go further and faster in raising animal health and welfare standards, through risk-based controls for equine movement. Again, I would be really interested to hear from the Minister about how he sees tackling the challenges while welcoming the positives that come from this. I see that I am about to run out of time, so I end there and look forward to the Minister’s response.
I thank my noble friend Lord Risby for initiating this debate, and all noble Lords who have taken part in it. His support for the racing industry goes back a long way, including of course to another place, where he ably represented the people and businesses of West Suffolk, including Newmarket Racecourse and the many horseracing interests in that constituency. As he mentioned, he has been a member of the Horserace Betting Levy Board since 2016, and I am glad to have the opportunity shortly to say a bit more about his and their excellent work on behalf of racing. I also echo my noble friend Lady McIntosh’s tribute to the work of the late Rose Paterson, who is much missed in Parliament and the horseracing sector.
The Government acknowledge the significant contribution that racing makes to our economy: it supports jobs and livelihoods from Perth to Newton Abbot, and it is particularly important to rural economies, in the way that my noble friends set out. Over 20,000 people are directly employed across 59 licensed racecourses, hundreds of training yards and thousands of breeding operations. Tens of thousands more jobs are supported in the rural economy supply chain, including in the farriery and veterinary sectors, highlighted by the noble Lord, Lord Trees, as well as many jobs in the betting industry. Indeed, horseracing is the second-biggest sport in the United Kingdom in terms of attendance, employment and annual revenue. According to its governing body, the British Horseracing Authority, racing is worth over £4 billion to the economy in direct, indirect and associated expenditure every year.
How much it is valued by the public is shown by the numbers returning to our flagship meetings as Covid restrictions were lifted, with a record aggregate attendance at the Cheltenham Festival this year. I was on a very busy train to Gloucester on Friday, on my way to visit some of the new recipients of Arts Council funding, so I can attest to the liveliness of the November meeting there as well.
The Government introduced the horserace betting levy in the 1960s, when there were fears that no one would go to racecourses once betting shops were permitted to open. We have continued to ensure that the levy keeps pace as the betting industry evolves with the times. In 2017, we extended the levy to online bookmakers and fixed the rate at 10% of bookmakers’ gross profits on British racing so that it no longer has to be negotiated each year.
The 2017 reforms almost doubled the amount of levy collected, to £95 million in 2018, exceeding expectations, and it has continued to perform well. The levy returned £97 million to racing in 2019-20, against a forecast of £90 million. Even in 2020-21, when racing was suspended for two months and betting shops were closed for much longer, it returned £82 million. Last financial year, it returned £97 million. But we are not complacent. The British Horseracing Authority has presented its case that there is a significant gap in its funding, which means that it is unable to compete with jurisdictions such as the Republic of Ireland and France, as my noble friend outlined. We have considered that case very carefully as we prepare to conduct the next review of the levy, which is due in 2024. In particular, racing has asked for international races to be brought within the scope of the levy—noble Lords highlighted this in their remarks. Although funding systems vary between jurisdictions, it is fair to say that racing in those countries benefits from bets on overseas races in a way that racing in Britain does not, which is something that merits careful consideration.
The noble Lord, Lord Trees, asked about and highlighted the importance of funding equine health. The money that is raised is applied to the advancement of veterinary science and education, as set out in the legislation. Indeed, it is one of the three key areas funded.
A number of noble Lords touched on the Government’s review of the Gambling Act 2005. In addition to its case for additional funding, which I mentioned earlier, racing representatives have discussed with officials at DCMS their concerns about the impacts of proposals being explored through our review, including the potential for so-called affordability checks, the opposite case to which was made by the noble Lord, Lord Foster of Bath. We have heard his representations and their concerns, and I assure my noble friend Lady McIntosh that we have been gathering evidence to make sure that the review is evidence-based, and we will continue to engage with the sector when the White Paper is published in the coming weeks.
The noble Lord, Lord Foster of Bath, raised the use of drones to beat the broadcasting lag. We are aware of the industry’s concerns about this use of drones and will keep the issue under close scrutiny, working with it.
Any consideration of amendments to the rate of the levy needs to be in the context of all the proposals in the White Paper which affect bookmakers. However, the levy is not the only source of funding for racing. Indeed, it represented just 6% of racing’s total income in 2022, compared with 17% from racegoers, 11% from media rights deals and 4% from sponsorship. Owners and breeders contributed 40% and 22% respectively. So while we review whether the levy provides an adequate level of funding for the industry, it is only right that we expect racing and betting to explore jointly how they can maximise other sources of income. Both sectors have a clear interest in making racing as attractive as possible to customers, and I encourage racing to engage and work closely with betting partners in its thinking on the levy.
I pay tribute to my noble friend Lord Risby and his fellow members of the Horserace Betting Levy Board for their stewardship of levy funds. As the levy is a percentage of profits, it varies from year to year, depending, for example, on how bookmakers fare at key race meetings. The levy board has reserves to help mitigate this variation and it used these to great effect to support the industry during the Covid-19 pandemic, to mitigate the absence of, first, racing and, subsequently, spectators.
The levy board and the Racing Foundation put together a £28 million cash-flow and hardship support package. Some £20 million of levy funds were aimed at supporting racecourses, with £8 million from the foundation going to supporting individuals in the sector. Since then, the levy board has made additional contributions to prize money to mitigate lower amounts made available by racecourses because of Covid.
The Government too provided support, with racing benefiting from our economy-wide support for jobs and rates relief. Racecourses have also been able to access support through the sport survival package, through which a £21.5 million loan has been made to the levy board to enable it to provide extra support. The levy board distributed £15 million of this via prize money in 2021 and £6.5 million in 2022.
The Government remain committed to supporting British horseracing and related businesses, which are vital to the lifeblood of the rural economy, as well as a source of great pleasure to many people. I thank my noble friend for initiating this debate and giving us this opportunity, and for the work he does on behalf of all those who have the interests of racing at heart. I look forward to debating these issues further in future.
Committee adjourned at 4.51 pm.