I thank my hon. Friend the Member for Southgate and Wood Green (Bambos Charalambous) for securing the debate, which is much needed. Also, it is not often that I thank an Everton supporter for anything, but thank you very much, Mr Dowd, for stepping into the breach.
A number of organisations have been working incredibly hard with me and other Members on a number of fronts relating to this issue for some time. I thank the Corporate Justice Coalition, which is a large coalition of organisations. I thank the TUC and my own union, Unison, for circulating briefings. I also thank Anti-Slavery International; ActionAid; Sarah Benn Gordon, who put together a range of information for me; and the wonderful House of Commons Library.
The report of the Joint Committee on Human Rights is an excellent piece of work, not surprisingly. My hon. Friend the Member for Bracknell (Peter Swallow) has gone, but he is a specialist in Aristotle, and we can see the logic in the report. I have read the Government’s response and want to make sure that I have it clear; the Minister can clarify later in the debate. First, the response says that the Government share the Committee’s concerns and accept that there are real worries about global supply chains and that we have to ensure that, as a country, we are not complicit. Secondly, it states that
“the Government is actively exploring options to strengthen protections.”
Thirdly, it states—as hon. Members have noted—that their response will be based on the trade strategy review that was launched some time ago, which aims to ensure that we have responsible business conduct in supply chains and companies operating in the UK.
I found it interesting that the Government’s response listed exactly the same concerns, about
“human rights, labour rights, the environment, and anti-corruption”
and said that there has to be due regard to the costs of implementation. It then listed the Departments engaged in the review as
“the Home Office, the Department for Business and Trade (DBT), the Foreign, Commonwealth and Development Office (FCDO) and Cabinet Office”.
There was no reference to the Treasury whatsoever—nor, seemingly, to the Financial Conduct Authority or the Bank of England.
The small point I want to make is that the finance sector seems to have been excluded from the whole debate. It is certainly not covered in any of the reports so far. We need to be concerned. It is not just about goods in; our concern is about finance out and the scale of investment by the City and by our finance sector, unfortunately, in abusive business practices around the globe. That investment is sometimes funded by money that has been laundered into the City and then laundered out. I remind people that only a few years ago the City of London was described as the “Russian laundromat” due to the Russian oligarchs’ money that was coming in and then invested in a whole range of schemes that abused human rights and brought about environmental degradation.
That is why I want to know whether the finance sector will be included in the overall review. At the moment, we largely rely on the EU’s corporate sustainability due diligence directive to cover the finance sector. The problem is that the omnibus proposed in 2025 watered down the role that would play and the requirements within it. There is also a finance exemption. A large section of the finance sector is completely exempt, so investment and lending are largely exempt in terms of the requirements on due diligence. It also excludes down- stream partners—the companies they invest in.
Additionally, there is no reference to shadow banking at all. Shadow banking is going on at the moment virtually unregulated. There is other legislation, such as the EU sustainable finance disclosure regulation, but there are various interpretations of how asset managers could comply with that. In addition, we have a situation where compliance is virtually voluntary. Certainly, it is unclear and unmonitored.
We then rely on treaties and memoranda of understanding, but the standards that relate to human rights abuse and labour rights abuse are not consistently applied in treaties. A report from the Public Administration and Constitutional Affairs Committee, which I served on at the time, found that treaties and memoranda of understanding are virtually devoid of parliamentary scrutiny. We never debate treaties on the Floor of the House. There is no central register of memoranda of understanding from which we could get some comprehension of what they cover and so on.
As a result of that, there are numerous examples of the implications of the unregulated nature of our finance sector with regard to human rights abuse and environmental degradation. My questions are: will any new supply chain regulation cover the finance sector; if it does, what consultations will take place to ensure the sector is included; who will be involved in those consultations; and as my hon. Friend the Member for Southgate and Wood Green asked, what will the timescale be? We are waiting—the “soon” we heard is becoming a long soon.
I do not want to take up too much of the debate so I will shut up at this point, but there is always this argument that finance regulation somehow restrains the animal spirits and as a result undermines growth. Actually, in the finance sector, my word is my bond, and nothing is more important that trust and confidence. As a result, proper regulation is required to maintain that trust.