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British Overseas Territories

7.12 pm

Baroness Hooper asked Her Majesty’s Government what plans they have to act on the findings of the National Audit Office report on the overseas territories.

The noble Baroness said: My Lords, I tabled this Question for Short Debate in November when the National Audit Office report was due for publication. Time has gone by and this first possible slot came at rather short notice, so I am most grateful to all those who are participating and bringing forward their expertise and knowledge on individual overseas territories to enlighten our debate. Due to the early start of the debate I am not sure all the speakers are in your Lordships’ House at the moment.

I had not appreciated that this week the governors of the overseas territories are meeting in London and that the House of Commons Select Committee, which is preparing a report on the overseas territories, is also sitting today. It has been a busy week for the overseas territories department of the Foreign Office and I apologise for adding to their burden, but as yet they are not in the Box either.

Over the years, I have had the privilege of introducing a series of debates concerning the overseas territories and there has been much change and progress in that time. The last occasion was in 2004, which was before the constitutional review process had been completed but subsequent to the Government’s stated aim of building a modern and effective partnership with the overseas territories on the foundation of our shared past, with Britain guaranteeing security and defence to the territories on the one hand and on the other the territories developing further as well governed, small island economies, where the rule of law and internationally accepted standards are observed. This, of course, remains the Government’s broad objective as I understand it.

The National Audit Office report, which I find to be an extremely helpful and useful document, covers all 14 overseas territories, 11 of which are permanently populated. It assesses key risk areas and the Government’s ability to manage the risks and responsibilities in their evolving partnership with the territories. In terms of this debate, the report also gives us a peg on which to hang the broadest possible range of issues. I hope that noble Lords who are taking part will make the most of that.

At the outset I emphasise that, in talking about the overseas territories in general terms, I fully recognise the diversity and differences of each individual territory. As the report puts it, they range,

Each and every one of them is put under the spotlight in the report. I draw attention in particular to the table on page 27 with its illustrations of the UK’s risks and liabilities in the territories, from the unfunded pensions issue in Gibraltar to the risks of further volcanic eruption in Montserrat, and even to

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the decline of the stamp sales from the Pitcairn Islands which has destroyed the economic base of the tiny population.

However, because of time constraints I intend to focus on just a few of the main issues. The report recommends, in recommendation 1, a need for better understanding across all government departments and the establishing of a clear contact point within each department. The territories themselves welcome that and so do I. It is not just for the Foreign Office and DfID to be aware of the overseas territories and their status and to illustrate that in the area of education, but I remind your Lordships of the successful campaign that we carried out to exempt students from the overseas territories from paying overseas student fees. It was a case of first convincing the then Department for Education and Skills and then the Treasury. Happily, that is now operating.

Another illustration is biodiversity conservation. I have received some very useful briefing from the RSPB. The rich biological diversity of the territories far outweighs their diminutive size. They are home to more priority bird species than the whole of Europe, including 34 species at risk of global extinction. Many of the territories are important seabird breeding islands and, as a result, the UK has responsibility for a third of the world’s breeding pairs of albatrosses. We already know that over the past few hundred years more than 20 endemic birds have become extinct in the overseas territories, and because the livelihoods of many of the territories’ inhabitants are dependent on biodiversity conservation—for example, revenue from fisheries and tourism—the Department for Environment, Food and Rural Affairs has an important role to play there.

There are healthcare issues involving the Department of Health and pensions updating issues, but my final example is in relation to cultural heritage. St Helena, for example, needs funding to conserve and preserve its unique buildings and to build up its tourism potential. Currently, heritage lottery funding cannot be sought outside the United Kingdom. Therefore, I ask the Department for Culture, Media and Sport to make an exception here for the tiny territories involved, as we did in relation to the education issue.

The report states that measures to regulate financial services in the overseas territories have had variable success in keeping up with rising international standards. Some of the territories are of major importance in the global financial system: Bermuda, Turks and Caicos, Cayman, the BVI and—closer to home—Gibraltar are all well known names in that area. It is essential that they operate robust regulatory regimes. They recognise that and some have made great strides in protecting themselves from, for example, the risk of money-laundering. They all recognise the problems of anticompetitive tax practices and are working with the OECD to develop appropriate standards of transparency and exchange of tax information. That is a complex area and, when one considers that, for example, over 800,000 offshore companies are registered in the BVI alone, it is a huge task. I know that others participating

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in the debate will be talking on this subject, and look forward to hearing from them and hearing what the Minister has to say.

I just have time to raise one or two matters which the UK Overseas Territories Association has drawn to my attention and which fall outside the scope of the report. One relates to representation at ceremonies such as Remembrance Day. Some territories have impressive war records and now that they all have democratically elected Governments, maybe it would be opportune to enable them to participate with the Foreign Secretary in laying wreaths at the Cenotaph, which is their wish.

The second issue is perhaps more for the House authorities than the Minister: access to Parliament. Representatives currently have to queue with the general public or masquerade as research assistants. Would it not now be more appropriate to issue them with a pass in their own right?

Finally, having received the Foreign Secretary’s recent communication about the Foreign Office’s new strategic framework, I am sorry that the essential services, policy goals and priorities listed in the leaflet contain no reference either to the Commonwealth or the overseas territories. I hope that the Minster will be able to reassure me that they will not be forgotten.

7.21 pm

Lord Anderson of Swansea: My Lords, it is my pleasure to congratulate the noble Baroness on her choice of subject and the way in which she delivered her speech.

How could one explain the overseas territories to a Martian? They range from Bermuda, with the highest GDP per capita in the world; to the Cayman Islands, where 80 per cent of worldwide hedge funds are based; to Pitcairn, which used to depend on the sale of postage stamps; to areas such as BIOT—the British Indian Ocean Territory—and South Georgia, peopled only by soldiers and scientists. The only nexus appears to be the link to the Crown, and no policy fits all.

The Martian would also be puzzled by the paradox that this Parliament spends much time debating foreign countries over which we have no control and very little time debating the overseas territories for which we have sovereign responsibility. In passing, I should add that a way to remedy this in part would be an agreement that the system under which parliamentarians can visit EU and EEA capitals should be extended at least to Gibraltar, which is within the European Union.

Since the last report of the NAO in 1997, there have been some welcome developments. Obviously, Hong Kong, the most populous of the territories, has become a special administrative region of the People’s Republic of China. However, since 2006, there has been a much happier relationship between Gibraltar and Spain. There have been some dramatic changes. However geographically isolated, no territory is immune from the modern scourges of money laundering, drugs and terrorism, and they need help.

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The NAO report has one major omission: it stresses the importance of governance but fails to mention the valuable role of the Commonwealth Parliamentary Association in capacity building of legislators; that is, in assisting them to make the Executive accountable. This week and next, for example, delegates from the Cayman Islands, Montserrat and Turks and Caicos are attending the Westminster seminar in our Parliament.

On details, much is said about the improvement in the quality of governance. It is said that work within the overseas territories is not a mainstream career path. Yet the clearly limited number of posts in the UK administration poses some constraints. It is ambitious to expect specialism in UK departments. Against that, Appendix 4 of the report shows how few governors have any previous experience of overseas territories when they are appointed to their posts. Surely there is a vast difference between the role of a diplomat in a foreign country and that of a governor in an overseas territory. The scale and nature of training must be examined.

Much is said about joined-up government in the UK. A specific contact point in each relevant government department is a valuable suggestion. Perhaps more relevant, since the overseas territories themselves can provide expertise and experience for other overseas territories, is the possibility of examining secondments from one overseas territory to another. I know that, for example, Gibraltar, which has a high-quality administration, has volunteered to assist in this field.

On risk assessment, as the noble Baroness said, there is the potential £100 million on pensions for former Spanish workers in Gibraltar. There is the question of natural disasters such as volcanoes and hurricanes. There is a continuing liability if the appeal is successful for the Ilois to return to BIOT, from which they, the Chagossians, were so shamefully removed in the 1960s.

The Overseas Territories Association draws attention to the case for the uprating of UK state pensions in overseas territories. After all, they are sovereign British territories. The point has surely been recognised by the Government in respect of tuition fees for students from overseas territories. There is concern about the Department of Health’s questioning of the current quota system for secondary healthcare.

Finally, I have two points from the Falkland Islands Government. They acknowledge an excellent relationship with government departments and welcome the report. They also recognise that Her Majesty’s Government have a duty under the Ottawa convention to remove landmines but state that the landmined areas of the Falklands are safely fenced off. There is no call for an expensive demining programme from within the Falklands. Equally, the Falklands Government stress that the Government of Argentina still refuse to lift their unilateral ban on charter flights. However, the Falkland Islands Government will continue to assist the Argentine Families Commission to organise next-of-kin visits, including planning for a large-scale sea-borne visit.

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Overall, this has been a valuable report. I am only sad that there has been no report since 1997. Indeed, many of the recommendations made should have been tackled earlier. However, we look forward to a progress report rather earlier than 10 years from now.

7.28 pm

Lord Jones of Cheltenham: My Lords, I, too, congratulate the noble Baroness on securing this important debate on the overseas territories. I apologise to her for missing the first five minutes of her speech. I have a good excuse: I was at No. 10 Downing Street with delegates at the Commonwealth Parliamentary Association seminar and had to leave what was promising to become a rather good party.

I shall talk about three of the smaller overseas territories that I have visited in recent years. First, we have already heard something about the Turks and Caicos Islands. One of the delegates across the road whom I spoke to a few moments ago is the honourable Donhue Gardiner MP, who is a senior adviser to the Minister at the Ministry of Home Affairs and Public Safety of the Turks and Caicos Islands. The report mentions that the islands have received many Haitians fleeing economic and civil disorder. He says that this is true. Every month, around 300 Haitians are repatriated. Given the population figures mentioned in the report, this is about 1 per cent of the population of the Turks and Caicos Islands. It is quite a drain on their resources. It does not explain entirely the increase in their overseas debt, but we must keep an eye on it. The honourable Donhue Gardiner’s view is that he needs a bit of help from the UK Government. Perhaps the Minister can take that on board.

Secondly, I shall speak about the Falkland Islands, which were mentioned by the noble Lord, Lord Anderson. I returned from the Falkland Islands a fortnight ago. I went with the CPA delegation, so I hope that I can bring an up-to-date situation report. The report mentions that squid stocks are variable, particularly of the ilex squid. They spawn in Argentinian waters and then come down the coast. The mature squid enter the 200-mile Falklands zone and are an important part of the Falklands economy, but the stocks are variable—people cannot really tell from year to year what they will be—which causes peaks and troughs in revenue. That is something that we need to keep an eye on. Visits from cruise ships are increasing, but there is a lack of capacity to cope with the increasing number of passengers who come off just for half a day to have a look round the island. There is a need for more transport, more catering facilities and other tourist facilities in order to try to increase the average tourist spend. Land-based tourists stay longer and spend more. Both types are increasing, which is good news for the Falklands.

The report mentions oil exploration. There is some evidence that there will be new drilling in the Falklands in the next year or two. Seismic surveys seem to have indicated some areas where drilling might be fruitful, but unfortunately Argentina has sent threatening letters to potential investors warning them off getting involved in oil exploration in the

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Falklands. That could be tragic because the Falklands are financially well run. If they could find oil, they would be very well off financially. I know that the Prime Minister has invited the President of Argentina to London in April, I think, and it is important that he brings up these issues with her in order to make sure that we try to reach some kind of normal situation with Argentina. We were there for six days and, while we were there, there were three semi-incursions into the 200-mile zone, two by ships and one by a plane, and Tornados were scrambled to see them off. Argentina is not playing ball.

Thirdly, I want to talk briefly about St Helena. Its airport is vital; without it, the economy is unsustainable. St Helena costs the British taxpayer a lot of money at the moment—£14 million a year—and that will only increase. We need to get that airport. I do not know whether how far the airport has got is in the Minister’s brief, but the sooner it is started, the better, otherwise we will have a generation of Saints who have lived off the island and will probably not want to go back and it will be difficult to attract people back. There are 600 Saints—as they call themselves—on the Falklands, and they inquired whether, when there is an airport on St Helena, there will be a flight from the Falklands to St Helena so that they can get back to see their loved ones.

Can the Minister give us a report on Operation Zest in Tristan da Cunha? It relates to the wall of Calshot harbour, which needs urgent repair work. I think that a ship has arrived and that the Royal Engineers are due to start work soon. It would be interesting to get an update on that. Has the fire at the adjacent fish-processing factory had any impact on Operation Zest? The factory caught fire on 13 February; the Valentine’s night dinner had to be cancelled because it knocked out all the electricity. I understand that a new generator is now working properly, but I would like to know what plans the Government have to help to get that fishing industry back on track.

7.34 pm

Lord Luce: My Lords, the noble Baroness, Lady Hooper, deserves congratulations. She has been consistent in her support for overseas territories over many years. I could almost take the whole of my speech declaring my interests, but I shall confine myself to two points: first, I have been a governor of Gibraltar and, secondly, I resigned with the noble Lord, Lord Carrington, over the Falkland Islands after that foreign policy disaster in 1982. Having been an administrator in Kenya, rather a long time ago, I witnessed at first hand the transition from colonial empire to today’s remaining responsibilities in these 14 overseas territories. Each territory needs to be treated on its own merits, as the noble Baroness rightly said, because each has different characteristics and different problems to be dealt with.

I shall touch first on Gibraltar. History is a governing factor for Gibraltar. The Treaty of Utrecht constrains any aspirations that the people of Gibraltar may have for total independence. Notwithstanding that, Chief Minister Peter Caruana deserves warm congratulations on three major achievements: first, the Cordoba agreement

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in 2006, which has led to enhanced regional co-operation between Gibraltar and neighbouring Spain without prejudice to the sovereignty issue; secondly, the new constitution, which is non-colonial and reflects today’s reality; and, thirdly, the economy, which has been diversified and strengthened and has moved away from defence to areas such as tourism and financial services with a strong regulatory system. I believe that the chief minister and the people of Gibraltar deserve congratulations on those achievements.

As far as the NAO report is concerned, we need to bear in mind the need of HMG to provide for each territory a clear framework within which it can operate. In the summary, I was struck by the point that there needs to be a balance between the desire of the people of those territories to have maximum autonomy and the need to ensure that the United Kingdom can meet its responsibilities and minimise its exposure to potential liabilities. It therefore makes sense for these overseas territories to negotiate constitutions that provide maximum autonomy and reflect the non-colonial age, but at the same time, depending on their circumstances, it is important that adequate safeguards should be in place. The example has been given today of the growth of offshore financial services, on which there is a strong recommendation that there should be robust regulation. It is good to note that the OECD praised the United Kingdom overseas territories for the way in which they are co-operating in transparency and the exchange of information. There is no doubt that all the time we have to ensure that the regulatory framework is robust and strong.

The second area in the report that needs highlighting relates to law enforcement. My experience will be the experience of any governor. On the one hand, he is responsible for internal security and the police force but, on the other hand, the local government tends to pay for that security, so the relationship between the governor and the chief minister needs to be close. I agree with the report that there needs to be strong local participation and ownership in the security situation. For example, Gibraltar has now set up a statutory police authority.

The point that I shall end on was touched on by the noble Lord, Lord Anderson. It is the reference in the report to the appointment of governors and supporting staff. It is important to stress that there is a big cultural difference between going out to a country as an ambassador with a representational role and being a governor with responsibilities for the governance and administration of that territory in co-operation with the elected chief minister. They are two quite different things. There is always a danger that the Foreign Office will try to nanny its governors. It is not a wise thing to do—I can say that with clarity. It is striking that only 15 per cent of governors, deputy governors or desk officers have had experience of working in overseas territories in previous posts. Most of the governors have diplomatic backgrounds.

I welcome the idea that there should be a distinct specialism and career path, but it is limiting when you have a total population of only about 200,000 in those overseas territories. The Government should not be afraid to look for wider experience in governorship

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and in administrative support in those territories, not only from politics—dare I say?—because I have had the privilege of being a governor, but also from the Armed Forces, the Civil Service and local government. A lot of skills could be made available. We should not be looking purely to the Diplomatic Service for the support that we give to the overseas territories.

I end with the reflection that, although the Foreign Secretary has plenty of British interests to pursue, that must never be at the expense of our responsibilities for our overseas territories.

7.40 pm

Lord Hoyle: My Lords, I, too, thank the noble Baroness, Lady Hooper, for giving us this opportunity. I agree with my noble friend Lord Anderson that it has been long overdue—the last report was issued in 1997. I hope that it is not as long before we get another one.

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