Financial Services Bill shelved - John McDonnell responds

John McDonnell MP, Labour’s Shadow Chancellor, responding to reports that the Financial Services Bill is being shelved, said: 

 

“More evidence that this government is incapable of getting its business through Parliament. People have just had enough of the Chancellor dragging his feet on tackling tax avoidance. We are demanding action now and no further delays and excuses. The government has been a friend to tax avoiders for too long.”

 

Notes to Editors

 

• ·       Since 2016, the UK has had a “beneficial ownership” register, making transparent the ultimate beneficiaries of companies owned in the UK.

i.            However, secrecy jurisdictions and tax havens for which the UK is responsible, and which enjoy the benefits of the English legal system, have no such register. This makes them a haven for money launderers and criminal activity, as well as tax avoidance.

ii.           Despite the Government’s acceptance of some opposition amendments during the Sanctions and Anti-Money Laundering Bill’s passage through parliament[1], they are fundamentally failing to take the needed steps to tackle economic crime. Commenting on the Government’s “acceptance” of some Labour amendments at the time Anneliese Dodds MP, Financial Secretary to the Treasury said:

“We welcome the Government climbing down and accepting the need for public registers of beneficial ownership in the overseas territories. But this is just a first step and the Tories shouldn't be allowed to just stop there. They should back all of Labour’s amendments to clamp down fully on money laundering. For example, the Government has excluded Crown dependencies including the Channel Islands and the Isle of Man, and refused to bring forward the introduction of a register of property owning overseas companies. They must also support further additional resources for Companies House to support them in investigations and enforcement."

Anneliese Dodds, Shadow Financial Secretary to the Treasury, 1st May 2018 [2]

 

• ·       There has be no reported progress since.

 

This is “deep concern about the lack of appropriate engagement by the Government in advancing the cause of tax transparency, which at rhetorical level they are committed to, but which time and again they seem sadly to have resiled from in practical terms. During debates on the Sanctions and Anti-Money Laundering Act 2018, the Opposition prepared an amendment requiring Crown dependencies to introduce public registers of beneficial ownership, but we were persuaded by Ministers that they were working with Crown dependencies to achieve transparency through other means. The amendment was therefore withdrawn.

What has happened in the intervening six months since the beginning of May? It looks as if even the Government’s responsibility to require overseas territories to introduce public registers of beneficial ownership has floundered. The Government are obliged to do that now by the will of this House, given that the amendment to that intent passed. I understand that there has been one conference call with the overseas territories, and that appears to have been in relation to what the Government are committed by this House to achieving regarding promoting beneficial ownership registers in the overseas territories.

When it comes to the Crown dependencies, the Government appear to be shutting the door on transparency with these treaties, which is unacceptable.”
Anneliese Dodds, Shadow Financial Secretary to the Treasury, 13th November 2018 [3] [4]

 

• ·       John McDonnell wrote the Prime Minister in July 2018, to express concerns as to the appointment of Geoffrey Cox as her Majesty's Attorney-General – the chief legal adviser of the Crown and its government  - in relation to the Government’s commitments to greater transparency in the overseas territories[5] given  the fact he has spoken repeatedly against this in the Chamber:

“To demand that the overseas territories all suddenly go public will give one hit—just like the WikiLeaks thing was a one-hit wonder—because no one will then trust those jurisdictions where the light of publicity has been shone. All it will mean is that the money goes to where it is darkest, as the right hon. Member for Birmingham, Hodge Hill (Liam Byrne) said. The surveillance and intelligence operations that have been so effective will no longer be applicable. I know the jurisdictions well, and that is what will happen. It is perfectly within our power—the Government have committed to do this—to institute a public register that requires the beneficial owners of any overseas entity wishing to own property in this country to be declared in public. We can do that as it is part of our jurisdiction. However, does the right hon. Gentleman not see that the step that is now is being taken goes much further than that and requires the overseas territories to make things public even in relation to property that is not owned in the UK?”[6]

 

• ·       Nick Thomas-Symonds raised this again in Attorney General Oral Question in September 2018.[7]

 

• ·       Lord Ahmad’s statement to the FCO Select Committee (Jan 2019) indicated that the timetable for implementing public registers of company ownership in BOTs is being pushed back to 2023 (flouting the instruction of the House in the Sanctions and Anti-Money Laundering Bill).[8]

 

• ·       In November 2019 Labour opposed the Double Taxation Agreements and Protocols with The Crown Dependencies (Guernsey, the Isle of Man and Jersey) that were signed on 2nd July 2018 in London:

“To conclude, sadly we do not feel that we can accept these treaties. They appear to go against commitments made to the Opposition that the Government would continue to work extensively with our Crown dependencies towards having public registers of beneficial ownership. For that reason, we will be voting against the orders today.”
Anneliese Dodds, Shadow Financial Secretary to the Treasury, 19th November 2018 [9] [10]

 

• ·       In February 2019, Jeremy Corbyn, Leader of the Labour Party, attended a meeting with the Party of European Socialists n Madrid today to discuss Labour’s alternative Brexit plan and how to clamp down on tax dodgers with European leaders.

“None of us can allow Britain’s exit from the European Union to be exploited by the whims of big business and the super-rich. Companies who shift their accounting operations back and forth across borders to minimise their tax bills are carrying out daylight robbery. By failing to crack down on aggressive tax avoidance, Theresa May is allowing the British public to be ripped off and exposing the kind of Brexit she and her party want to deliver.”
Jeremy Corbyn, Leader of the Labour Party, February 22, 2019[11]

 

• ·       Anneliese Dodds, Labour’s Shadow Treasury Minister, responding to the Foreign Affairs Committee report[12] in February 2019 on government delays in introducing public registers of beneficial ownership, said:

“I am deeply concerned that the Conservatives seem to be unwilling to create publicly available registers of beneficial share ownership in the UK’s Overseas Territories and Crown Dependencies. I have spent the last year, since the passage of the Sanctions and Anti-Money Laundering Act, pressuring the government to establish the registers as quickly as possible. Creating these registers is an essential step to clamping down on laundering, tax evasion, and corruption. It’s now clear Labour are the only party who really care about stopping money laundering.”
Anneliese Dodds, Shadow Financial Secretary to the Treasury, 21st February 2019[13]

 

• ·       Cross Party New Clause 3 (and Amendment 4) to the Financial Services Bill requires the government of any British Overseas Territory that has not introduced a publicly accessible register of the beneficial ownership of companies within its jurisdiction to do so no later than 31 December 2020.

 

• ·       Labour’s New Clause 5 to the Financial Services Bill would allow consideration of the application of EU financial services legislation to Crown Dependencies and Overseas Territories, where appropriate, and will allow the House as a whole to adjust that legislation if necessary (including in relation to public registers of beneficial share ownership).