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Written Statements

Thursday 20 November 2008

Crime: Money-laundering and Terrorist Finance

The Parliamentary Under-Secretary of State, Home Office (Lord West of Spithead): My honourable friend the Parliamentary Under-Secretary of State for Crime Reduction (Alan Campbell) has made the following Written Ministerial Statement.

I have placed in the Library of the House the second annual report to Home Office and HM Treasury Ministers on the suspicious activity reporting (SAR) regime to combat money-laundering and terrorist financing. The reporting system is a key element in the United Kingdom’s defences against money-laundering and terrorist financing.

The report has been prepared by a multi-agency committee, under the chairmanship of the Serious Organised Crime Agency (SOCA), which includes the financial services sector, police, other law enforcement agencies, and the Financial Services Authority. As the report notes, awareness of the value of financial intelligence in fighting crime and countering terrorism continues to rise across the international community.

The Government welcome the steady progress that SOCA and the other participants have made to ensure that the reporting system is operating so as to help deter, detect and disrupt those involved in these crimes and in holding them to account. It is important to build on this progress by further improvements, including in the use made of the reports by law enforcement agencies.

The overall goal is a SARs system that addresses the threats to the UK from crime and terrorism, contributes to the reduction of harm and the recovery of the proceeds of crime while minimising the costs of compliance to industry and others.

Data Loss

The Parliamentary Under-Secretary of State, Ministry of Justice (Lord Bach): My right honourable friend the Lord Chancellor and Secretary of State for Justice (Jack Straw), has made the following Written Ministerial Statement.

This Statement is to update the House on the loss of sensitive data on a hard drive by electronic data systems (EDS), which became known to Ministers on 6 September 2008. I have now received the results of the internal investigation into this matter, which was undertaken by a National Offender Management Service (NOMS) director with no prior involvement in the incident.

The investigation has confirmed that initial reports over-stated the volume of data involved. The hard drive contained 256 items of sensitive personal information that could potentially, if in the public domain, cause damage to that individual; namely, bank details, address details, and national insurance numbers coupled with dates of birth. There remains no indication that this information has entered the public domain.

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The investigation found that the data had been downloaded to the hard drive so it could be transferred to another site as part of a disaster recovery exercise carried out in July 2007. While no problems arose regarding the implementation of the exercise itself, the disk was not wiped before it was to be removed from the site and thereafter EDS failed to take adequate measures to track or record the location of the hard drive when it was transferred to another site. Although strictly the hard drive was not at that time being removed for other uses, it ought to have been treated as such and EDS’ company policy at that time, requiring a disk to be purged prior to release for any other purpose, ought to have been followed.

This did not comply with data protection principles, and also meant that the investigation could not identify precisely when or where the hard drive went missing. The possibility of theft has resulted in this matter being referred to the West Mercia Police. EDS is taking appropriate action, which will include disciplinary action if necessary, concerning the staff involved.

The inadequacy of EDS’ tracking systems meant that the data was not missed until 2 July 2008. On 3 July, EDS notified NOMS verbally of the data loss, the possible scope of which was made apparent in a written interim report to the NOMS IT security team on 4 July. There is no evidence of any other communication between EDS and NOMS on this issue until 6 September, when the matter was raised by the press, although EDS were preparing a final report to submit to NOMS.

The NOMS IT security team did not take sufficient action following receipt of the interim report, with the result that senior officials and Ministers were not aware of the loss until 6 September, when comprehensive and appropriate action was taken to identify and contact any staff involved and to investigate further the circumstances of the loss. NOMS is taking appropriate action, including disciplinary action, concerning the staff involved.

In the context of the Hannigan review and subsequent Cabinet Office guidelines, NOMS and EDS were both actively improving data protection processes before this matter arose. Since 6 September, EDS and NOMS have agreed an additional set of measures to be undertaken, at EDS’ cost, both to reimburse NOMS for its additional expenses arising from the incident and to further develop the security of NOMS’ information assets. These include an exercise to identify all uncontrolled copies of NOMS’ sensitive data and have such copies destroyed in a secure manner, as well as reviewing and strengthening the policies and process controls which govern the transfer of NOMS data. In addition, the number of transfers using removable media will be reduced, and encryption will be introduced on removable media. A further, detailed review will also be undertaken to identify and prioritise any additional security measures to be enhanced. Finally, EDS has committed to the design, development and delivery of appropriate classroom and computer-based training packages for both EDS and NOMS staff. An annual, independent audit of EDS’ compliance with security standards will be introduced with a requirement for EDS to rectify any areas of non-compliance.

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Education Maintenance Allowance

The Parliamentary Under-Secretary of State, Department for Children, Schools and Families (Baroness Morgan of Drefelin): My right honourable friend the Minister of State for Schools and Learners (Jim Knight) has made the following Written Ministerial Statement.

Ensuring that learners are able to access education and training post-16 is a key priority for this Government. I would like to update the House on the current situation in regard to the delivery of education maintenance allowances (EMA).

There have been processing and other related problems since Liberata won the contract to deliver helpline, assessment and payment functions for EMA and other learner support schemes in July 2007. The Learning and Skills Council (LSC) has been closely monitoring the situation and has been regularly providing me with updates, which I have shared with the Children, Schools and Families Select Committee.

As of Tuesday 18 November, 794,655 applications (237,826 more than 8 October, the date of my previous letter) have been processed. This has resulted in 485,396 young people (201,516 more than at that time) receiving notifications that they are entitled to EMAs, which means they can begin claiming the allowance. There are currently 12,016 applications in the process of being finalised (down from 111,000 on 8 October).

Despite this progress, the LSC’s view has been that in order to preserve the best interests of learners a change in contractor was necessary. The LSC has been in talks with Liberata about the future of the contract for over four weeks and yesterday informed me that it intends to discontinue the Liberata contract. I have been clear from the outset that these delays have been totally unacceptable and I therefore fully back the LSC’s decision to change contractor to Capita.

The transfer of the EMA helpline, processing and payment service from Liberata to Capita will take effect from Friday 28 November. With effect from that date, Capita will bring in a new senior management team to oversee the staff and operations in Coventry, Manchester and Darlington. The transfer will place us in a stronger position to fix the helpline and processing problems, enabling us to improve the future service for young people, colleges and learning providers.

The migration of the learner support service programme contract from Liberata will have resulted in Liberata losing future revenues of more than £60 million over the remaining term of the contract. In addition, in addressing the issues caused by the failure of their proposed IT system, Liberata rightly took the decision to employ significant numbers of additional temporary staff to deal with the backlog in applications. In doing so, it has incurred extraordinary additional costs and it has been judged inappropriate to impose further additional penalties.

In order to ensure a smooth and orderly transition to a new service, the LSC has secured the transfer of the interim payment service to the new service provider and the transfer of physical IT assets and applications software at a cost of £4 million. The cost of this is significantly lower than the extraordinary additional costs which Liberata has incurred.

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These arrangements are within parameters approved by the Permanent Secretary in his principal accounting officer role, and by HM Treasury. The Permanent Secretary, in his principal accounting officer role, has reassured me that this agreement represents value for money for the taxpayer and protects the interests of learners.

The payments being made to young people will continue, and during the transfer period outstanding applications will continue to be processed. As I have made clear before, all delayed payments will be backdated in full.

Throughout this period of unacceptable delays, our main priority has been to ensure that learners get their payments. I am confident that the new arrangements the LSC has put in place are the best way to improve EMA delivery.

I am placing in the House Library copies of correspondence from me to the chairman of the Children, Schools and Families Select Committee, to me from Mark Haysom, chief executive of the LSC, as well as the relevant statements from Liberata, the LSC and the department.

EU: Emissions Trading Scheme

The Financial Services Secretary to the Treasury (Lord Myners): My honourable friend the Exchequer Secretary to the Treasury (Angela Eagle) has made the following Written Ministerial Statement.

Yesterday morning, the Government successfully held the UK's first auction of carbon allowances as part of phase 2 of the EU's Emissions Trading Scheme (ETS). The auction was also the first of its kind to take place in Europe, demonstrating the UK's continuing leadership in the battle against dangerous climate change. Four million allowances were offered for sale and sold at a total value of £54 million, excluding VAT, or £13.60 per allowance. The auction was more than four times oversubscribed, demonstrating that the auction was competitive and that it attracted a significant amount of market interest.

The ETS puts a cap on emissions from around 12,000 installations throughout the EU—including in the energy and heavy industrial sectors, which are collectively responsible for close to half of the EU's emissions of carbon dioxide. Any of these installations that exceed its emissions cap will need to purchase the appropriate number of allowances.

Through auctions and the creation of a secondary market for allowances, the ETS is sending clear price signals. The carbon price will encourage Governments, businesses and individuals to factor the costs of emissions into their spending and investment decisions. A price for carbon creates an incentive to find products and processes that produce less carbon to achieve the same outcomes, which in turn encourages investment in the research and development of low carbon technologies.

Next month's international climate change negotiations in Poznan present an opportunity for Governments around the world to consider innovative approaches like the ETS as a means to counter the dangers of climate change. Norway, Liechtenstein and Iceland

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have already joined the ETS and work on other cap and trade schemes is under way in the USA, Australia, New Zealand, and Japan. The ETS is well positioned to form the basis of a global carbon market in the future.

During 2009, the Government plan to auction a further 25 million allowances. Dates for future auctions will be announced in due course.

EU: Justice and Home Affairs Council

The Parliamentary Under-Secretary of State, Ministry of Justice (Lord Bach): The Justice and Home Affairs Council is due to be held on 27 and 28 November 2008 in Brussels. My right honourable friend the Home Secretary (Jacqui Smith), the Scottish Cabinet Secretary for Justice (Kenny MacAskill) and I intend to attend on behalf of the United Kingdom. As the provisional agenda stands, the following items will be discussed.

The council will concentrate on interior and justice issues. The first day of the council will focus on interior items, starting with the Mixed Committee also attended by Norway, Iceland and Switzerland. During the Mixed Committee, Switzerland’s accession to Schengen will be discussed. The UK supports Swiss accession into the Schengen area. There will also be a presentation by the presidency on the second generation Schengen information system (SIS II) in order to update member states on progress.

At the council meeting, Gilles de Kerchove, the counterterrorism co-ordinator, will present his six-monthly report and discussion paper. The UK welcomes the report and de Kerchove's work, in particular his objectives on radicalisation and recruitment, communications, an EU strategy on data sharing, action on and funding for Pakistan, and efforts to work with Turkey on the PKK.

The council will be asked to approve council conclusions on a cybercrime strategy. These conclusions propose that the EU should work collectively to tackle cybercrime, and set out a number of actions that might be useful in achieving this. The proposals envisage that the EU member states should strengthen partnerships between government and private sectors, and between law enforcement agencies within the EU.

The council will be asked to approve the presidency’s report on progress with the EU PNR framework decision and provide a clear mandate for negotiations to continue under the Czech presidency. The UK will support this mandate and believes future negotiations should build on the successful work of the French presidency.

The presidency will ask the council to endorse draft conclusions aimed at strengthening law enforcement action against drugs trafficking in west Africa. We fully support this initiative and will aim to ensure UK objectives are reflected in the council conclusions.

On civil protection, the presidency will report on the work on European civil protection to be undertaken during the Czech and Swedish presidencies. Draft council conclusions on European disaster management training will be discussed, which include proposals for arrangements to link training centres in a network.

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The UK welcomes such a proposal, which could help to enhance co-operation and the exchange of good practice across all aspects of disaster management. Draft council conclusions on the strengthening of civil protection capabilities through a system of mutual assistance will also be discussed. These call for voluntary measures to improve co-operation in disaster response, which could enable more rapid and effective mutual assistance to be made available through the civil protection mechanism. The UK also welcomes this.

The presidency will report on the discussions held at the annual Western Balkans Ministerial Forum in Zagreb on 6 to 7 November. This forum aims to promote dialogue and regional co-operation in justice and home affairs matters, particularly combating organised crime and organised immigration crime. The UK sent two officials as observers.

Regarding migration, the presidency will brief on the outcomes of the second Euro-African conference on migration and development to be held in Paris on 25 November. The draft council conclusions on the comprehensive approach to migration will be discussed. The UK is pleased that the global approach to migration, initiated by the UK presidency in 2005, remains the basis for the EU’s work on migration with third countries. The UK believes that these conclusions also help ensure that we collectively understand and have put in place measures to tackle the challenges to delivery of improved partnerships with source and transit countries.

The council will be asked to endorse the final conclusions of the Vichy ministerial conference on integration held on 3 and 4 November. The UK can agree with the document as it stands.

The presidency will update the council on negotiations on a council directive that provides for a single application procedure for third-country nationals seeking to reside and work in a member state and for a common set of rights. The UK is not opting in to the proposed directive.

The presidency is looking to agree the proposal for amending council directive 2003/109/EC, which currently allows third-country nationals the right to long-term residence in a member state after five years of legal and continuous residence and permits them to have the same rights and duties as nationals. The Commission proposal would extend the scope of the directive to refugees and beneficiaries of subsidiary protection, known as humanitarian protection in the UK. The UK has chosen not to opt in to the proposed extension of the directive because, as with the original directive, the UK believes it is not in line with its frontiers protocol and would want to determine the status of third-country nationals via the Immigration Rules.

The council will discuss the proposal to amend the regulation on common consular instructions on visas which relates to the issuing of Schengen visas into a single code on visas. It aims to fill gaps in existing legislation and remove redundant provisions. The UK does not issue Schengen visas and therefore is not opted-in to this proposal. However, we welcome the efforts of Schengen member states to ensure that the Schengen external EU borders are as secure as possible.

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The proposal to amend council regulation No. 2252/2004, establishing common standards for security features and biometrics in passports and travel documents, will also be discussed. Member states wish to exclude children under the age of six and persons who are physically unable to give fingerprints for travel documents. The amendment also hopes to establish the principle of one person-one passport as a measure to prevent child trafficking. The UK is not opted-in but intends to keep abreast with any amendments. The UK does not support the exemption of persons under the age of six, but would prefer the bar to be set at 11: this would fit with our plans for synchronising the issuing of e-passports and ID cards. Children’s passports would have a five-year validity and all passport holders aged 16 and over will have their fingerprints recorded. The UK introduced the one person-one passport principle in 1998.

The European Commission will present the initial findings of the fact-finding mission to Syria and Jordan to investigate the Iraqi refugee situation.

The council will discuss issues relating to the application of the directive on free movement. The UK will call for a common approach to addressing false marriages, illegal immigration and expulsion of those who abuse free movement rights. This will build on the discussion on the European Court of Justice Metock judgment held at the JHA Council of 25 September, and will feed into preparation of the Commission’s review of the implementation of the directive on free movement, due to be published by the end of the year.

The presidency will seek a general approach to the proposed decision amending the existing arrangements for the European judicial network in civil and commercial matters. This proposal has been considerably modified in line with UK objectives and we can now support it.

It will also ask the council to agree to conclusions concerning the common frame of reference in contract law. The Government are broadly in favour of the council conclusions.

The council will be asked to agree a plan of action covering co-operation in the field of e-justice. We can support this initiative.

Agreement will also be sought to the setting up of a network for legislative co-operation among the Ministries of Justice of the member states. This modest, non-legislative measure is designed to facilitate contacts among justice ministries and promote exchange of information about initiatives in the different member states. The Government can support it.

The presidency will seek a general approach towards the proposed framework decision setting up a European supervision order, allowing, in effect, for the mutual recognition of bail conditions. This will allow for a person who is resident in one member state, but the subject of criminal proceedings in another, to have their bail conditions monitored in their member state of residence. No such system exists at present, with the effect some individuals are released pre-trial without supervision. The Government have been concerned to ensure that the proposal struck the right balance between public protection and the liberty of the individual, and provided the executing state with sufficient options to act in the public interest in the event of breach of

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bail conditions or the commission of further offences. The Government welcome the improvements to the text that have been achieved in the course of negotiations and, subject to any further changes to the text before the council, expect to be in a position to agree to the proposal.

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