17
Examination of witnesses
Lord McDonald of Salford and Sir Philip Barton.
Q37 The Chair: Welcome to this meeting of the House of Lords Constitution Committee. We are continuing our inquiry reviewing the UK‑overseas territories joint declaration. Today, we are hearing from Lord McDonald of Salford and Sir Philip Barton, former Permanent Under-Secretaries at the Foreign, Commonwealth and Development Office. Lord McDonald and Sir Philip are giving evidence in a personal capacity. You are both very welcome. Thank you for coming along, giving us your time and taking the trouble.
We have been carrying out this inquiry talking to Ministers. Next week, we talk to delegations of overseas territories whom we met informally just before Christmas. We are trying to get to the bottom of the relationship between government, or the department, and the overseas territories, and how that works in practice. Does it work? Is it a worthwhile relationship?
My question is about the strength of the UK’s relationship with the overseas territories. How has this changed over time? We can look back 10 years. Lord McDonald, I believe you became Permanent Under-Secretary in 2015, so we have a full 10-year span to see how things have changed, adjusted and improved, or indeed how they have got worse. I am very happy for both of you to answer, or just one of you, depending on how you feel.
Lord McDonald of Salford: You are correct, Chair. I became Permanent Secretary 10 and a half years ago, but I would like to start further back, because the point about the OTs is that they are the scraps of empire. I studied history as an undergraduate. One of the most interesting papers for my professional life was one we called “The West and the Rest”. This was about decolonisation, particularly in the 1960s and 1970s. Looking back, British policy at the end was basically “scuttle”. We tried to get out of everywhere as quickly as we could, but some places were just too small, or too obstreperous, so we kept them, not particularly willingly, as far as I could make out, but we kept them faute de mieux.
There were interesting examples along the way. One of my favourites is Anguilla. Our predecessors in the 1960s wanted Anguilla to throw in its lot with Saint Christopher and Nevis, but the Anguillians thought they would get the raw end of that deal because they were somewhat geographically removed. I think it was the only rebellion in history that involved a colony rebelling to remain part of the British Empire, and 22 policemen of the Metropolitan Police going out to calm things down. That was the picture half a century ago.
There was then a long period when head office did not pay much attention to these small territories. Of course, that ended spectacularly in 1982 with the Falklands War. Since then, we have paid very much more—but still rather patchy—attention. I would say it has been warming, but it still feels to me like an unstable and incomplete relationship. The territories are very different from one another, which is one complication. The territories want very much more out of us than we are able to give, which is another complication. Certainly, a great deal more attention is paid now than in the past. As this session goes on, I will explain why I think it rather misleads the overseas territories, but at this point I will hand over to Sir Philip.
Sir Philip Barton: I will not go quite that far back in history, but I will say a bit more than about my period as Permanent Under-Secretary. We had paternalistic attitudes. The turning point was in 1999, when we stopped calling them dependent territories, published a White Paper and started to talk about partnership. If you look at the 20 years since then, it has been about how you thicken up that partnership. You get to the White Paper in 2012: that was more about the substance of the relationship, because partnership was accepted as the basic premise and obviously introduced the whole-of-government approach, not just the then FCO being the department doing the work.
I agree with Simon that that is not perfect. I am not saying that everything is rosy in terms of the relationship, but it is strong and has improved over the past 10 to 15 years. I also think that the UK Government and Overseas Territories have learned how to disagree and work through differences, whereas perhaps in the past there were fewer options and a quicker move to more extreme actions and measures.
The Chair: That is a very good starting point.
Q38 Lord Waldegrave of North Hill: I was a Minister in the Foreign Office half way along, which is a long time ago for most people. Although we had an eye on the Falklands all the time, the only occasion on which the overseas territories came across the ministerial desk was in the sense of some embarrassment, normally about money laundering or financial regulation.
You were Deputy Governor of Gibraltar. Gibraltar signed up to everything, but I note that there are still lobbyists out there, including my former PPS, Sir Andrew Mitchell, and others, who campaign away saying there is still room for embarrassment for the United Kingdom about financial regulation. How near to a really good outcome are we on that, or is there still work to do?
Sir Philip Barton: There is work in progress. Gibraltar has cleaned up its act. It is true that what you experienced continued after you left the FCO. It is no longer true. Gibraltar was the first to have a publicly accessible register of beneficial ownership. Some of the others have those, more often than not ones without major financial services industries, or ones on which they are not so dependent for their future, but there has been progress. It is not as fast as the Government of the day, both this Government and the previous one, would have wanted, and the department carries on pushing. Progress is too slow, but the question is: are there alternatives to persuasion, capacity building and help with legislation? Should one go to more extreme measures? My own view on that question is that, in the end, it is much better to work with and through the territories and their political leaders to achieve the outcomes than to enact from the UK and have a crisis around that.
Lord McDonald of Salford: I disagree a little bit with my colleague. I think we can and should be tougher. I acknowledge that all these small territories are trying to make their way in the world and that financial services have, over generations, appealed to them. I acknowledge that Gibraltar has completely cleaned up its act, but as for the others, frankly, no. The Virgin Islands, Cayman, and Turks and Caicos are a vulnerability to the United Kingdom. In the end, they need us more than we need them. So, given the jeopardy to our reputation, we need to be a bit clearer about what we require.
The Chair: Do you sense that the Government are taking what you just said as seriously as I think you meant it?
Lord McDonald of Salford: No, I do not. I think the tail wags the dog too often.
Q39 Lord Beith: Let me put a related question particularly to Lord McDonald. We need to establish whether there are any underlying principles guiding the occasions when the UK Government use their powers to intervene in the legislative processes of the territories. The processes vary, but the opportunities are there to block legislation, or even to introduce it. One clear area is where we are subject to international agreements to which we think they should be subject. That is usually the reason advanced. The only other principle that I have been able to find is what I call brand protection; that is, “The UK Government do not want you to do this, or want you to do something different, because our reputation will suffer because of what you do”. That is rarely made explicit.
Lord McDonald of Salford: I agree with that, Lord Beith. All I would add is crisis. Crisis brings these issues into sharp focus from time to time. There was a banking crisis in Anguilla when I was Permanent Secretary and that suddenly had a lot of senior ministerial attention, but it took things getting pretty ropey for us to become properly engaged.
Lord Beith: There has to be some kind of borderline, does there not, between those cases where the UK Government—on the grounds of some principle such as international agreements—have to intervene and cannot allow the situation to continue, and those circumstances where the UK Government are saying, potentially, “We don’t do it the same way in the UK, so you should do what we do”? There is no obvious reason for that, if you are trying to create viable democracies.
Lord McDonald of Salford: Yes, and they are democracies. As Philip says, we have a very respectful relationship. We always try to persuade, but in my judgment they do not feel the disadvantages of not being persuaded quickly enough.
The Chair: If we are going to have this view of the overseas territories, it stands to reason that we need to engage with them. Do you think that that engagement is sufficient? In the end, we are discussing the joint declaration.
Lord McDonald of Salford: It has got better. Philip will be able to add to that because he was there more recently. One problem in the past was that Ministers changed every five minutes—they still do—but these relationships are deeply personal, so having someone who could not even meet the key players was very common. In my time, Lord Ahmad was there for a good long stretch, got dug in and made a real difference, because he was the longest-serving junior Minister in the Foreign Office since Lynda Chalker, but I do not know what has happened more recently.
Sir Philip Barton: I agree with Lord McDonald’s points. One point I was going to make is that continuity of UK ministerial engagement is important because of the relationships. I was going to flag two other points in answer to your question. One is that I think the joint ministerial council provides an effective apex body with UK Ministers on the UK Government side and obviously the leaders of the territories on the other. It is now a fully embedded, well-prepared set piece, including formal and informal interactions, and a shared agenda. The other important point is that, increasingly, I have seen really effective ministerial engagements where line departments of the UK Government have engaged directly with overseas territories in areas under their responsibilities. To cite just one example, Home Office Ministers engaged with the Turks and Caicos Islands on the security situation there. Those are the three things I would pick out where I think the ministerial relationship is good and it has strengthened.
Q40 Baroness Hamwee: Your mention of the Falklands took me straight back to what was happening in 1982 and the local UK political reaction to it. There was a political party campaigning in a jeep in my ward. Marrying that with the point about personal continuity, is there a particular vulnerability of which we should be aware? You mentioned the Turks and Caicos, and geographically one can see that. We have talked throughout this inquiry about financial regulation, but we have not really touched on security and how the UK would respond if there was a threat to one of them. I wondered whether you would like to say something about that.
Lord McDonald of Salford: I think we will both have a go at this. One thing they have in common is geographical isolation. That provides a level of protection, but, as we discovered in 1982, it is not complete protection. They were seized mostly by the East India Company as coaling stations on the way to India. That was how we got the territories down the mid‑Atlantic. They are vulnerable, but we have done something about it. The runway is open on Ascension Island—I hope—and there is a military presence there. There is a military presence in the Falklands. Diego Garcia is the subject of the hour. I think Pitcairn is just too isolated to excite anybody’s attention. It is an issue and on planners’ minds, but mostly I think the geographical isolation is so complete that we do not worry or we have done something about it.
Sir Philip Barton: The other security aspect, which I think is the one you are referring to, is the Turks and Caicos Islands being impacted by illegal migration. When I was Permanent Secretary, the department increased its support to security of borders and internal security. There was serious gang-related violence in places like Turks and Caicos and increasingly Anguilla as well. There was increased UK government support on wider security beyond the armed intervention to which Lord McDonald referred.
Q41 Lord Jones of Penybont: On the JMC, I allow myself a wry smile. The JMC, as far as the devolved Governments are concerned, is little more than a rolling argument rather than anything particularly useful. I confess that I was a willing participant. I will save my questions about the JMC perhaps for another committee.
Lord McDonald, you mentioned that the attention paid to the overseas territories was patchy. The impression I get is that it is essentially reactive. A problem has arisen and, therefore, we have to engage with this territory and deal with the problem, the Falklands being perhaps the most obvious one, as you mentioned. I am keen to understand where things stand now. How effective do you think official-level engagement is between the UK Government and the overseas territories?
Lord McDonald of Salford: I know that Philip will want to add something. My main point is that we learned a lot of lessons in the 1980s. One was that the person of the governor was crucial. In the Foreign Office at that time, part of showing that we were not caring was making the governors more junior. We have reversed that, so now they are senior management structure jobs. The No. 1 board, as it was in my time, looks at all these appointments and we send really good people who know they have a really important job to do. I think that in the past 20 years that has made a significant difference.
Sir Philip Barton: There was continuity of that approach when I was Permanent Secretary—I am sure it continues now—taking care about the individual who might become governor, including looking beyond the department for people with skill sets from wider government and the public sector. There are two other levels where officials interact. Government officials either from the FCDO or other parts of government work directly with overseas territories officials. That is quite common, particularly where departmental expertise is required to help territories craft legislation or policies. Then there is interaction with overseas territory representatives here in London. You have three layers. I think it is effective and broadly delivers for both sides, as it were. It delivers the constitutional responsibilities of the UK in the territories; it delivers, mostly, collaboration around prioritisation of activity and how you look ahead at problems, and work through disputes and prepare for major events. I think it is a functional, effective relationship. That would be my headline around official-level engagement.
Q42 Lord Bichard: Could you say a little bit about co‑ordination across government and how effective it is? Cross-departmental working is not a great strength of the British governmental system. Is it effective here? Does it matter? Is there room for confusion or embarrassment? Could we do it better?
Sir Philip Barton: I think the starting point was the 2012 White Paper, which says very clearly that each UK government department is responsible for support to the overseas territories in the area of its responsibility. The criticism I would make is that that has been patchy, to cheat and use Lord McDonald’s word, in how it has been implemented across departments. Looking at it today, with a ministerial board, with all relevant departments appointing a Minister to that board, chaired by the FCDO Minister and underpinned by a directors board chaired by the relevant FCDO director of the Overseas Territories and Polar directorate, I think it is good. If there are gaps, they will normally be around a department which is very big and has a lot of UK priorities. Then the overseas territories will inevitably be lower down the priority list. It is how you use those mechanisms to make sure that the UK really meets its obligations to the territories across the whole of government.
Lord Bichard: We often have impressive-looking structures which do not deliver what we would like from them. Do you think the structure is working effectively? Is it given sufficient priority, or do departments tend to want to go it alone?
Sir Philip Barton: It is not that they went it alone; it is because in their day-to-day lives inevitably there were higher UK domestic priorities, although you can point to successes. For example, Defra’s engagement on sustainability and environmental issues led to a step change in the way we have done that work and supported work in that area with the overseas territories, particularly around oceans and marine sustainability. There will be other areas. In some of them, perhaps, the UK Government has not been as strong as it might have been. On internal security, we were probably a bit slow to lean in to support the Turks and Caicos Islands, for example. That is one area on the other side of the argument.
Lord McDonald of Salford: Perhaps I may make two supplementary points. One is that, unlike, for example, China policy, the FCDO lead is acknowledged by the rest of Whitehall, so lots of other departments are not competing to be in charge. It is very clear where the lead is. Secondly, you put your finger on a critical issue with regard to the OTs. They are nobody’s priority, correctly so, because everybody dealing with them, including the FCDO, has a dozen or more other more urgent priorities. It is just the way of the world, so it is a matter of judging it and doing it as best we can, but a report that says we have to beef this up or it deserves extra attention needs to say, “What are we going to do less of? What have we decided, incorrectly, is given higher priority than the overseas territories?”
Lord Bellamy: Following this up with Sir Philip, you mentioned a moment ago that one problem was ministerial churn. In our evidence, we have had complaints from the overseas territories about official churn in dealing with them. I would like to give you the opportunity to comment on that. Following on from Lord McDonald’s last remark, maybe this is quite a low priority in the Foreign Office and there is not that much continuity at official level in dealing with these overseas territories.
Lord McDonald of Salford: For me, absolutely critical in dealing with lower-priority issues for the Government as a whole is having really good people doing it, because we have very good people in the Foreign Office. Therefore, if it is not to be on the Minister’s agenda all the time, having someone you absolutely trust in the key position is vital for how the thing works. Curiously, we have had some absolutely excellent directors and deputy directors. I would name Ben Merrick and Will Gelling in my time, and now we have one of my former private secretaries, Robbie Bulloch. The way you manage does not mean you have poor people dealing with these lesser priorities.
Lord Bellamy: But the central criticism is that they may not be there long enough.
Sir Philip Barton: For most of my tenure—nearly five years—there was a single, excellent director for the overseas territories, who had come from the Ministry of Justice and had experience of the Crown Dependencies, so brought wider expertise into the department. There was then a period with an acting director. It may be that the person who made this comment was referring to that interim period, but there was broad continuity for at least three years, building on the individuals that Lord McDonald mentioned. That was underpinned by broad continuity, deeply committed individuals with expertise who cared a lot about the overseas territories’ relationship underpinning the director as well. I am gently saying that I do not recognise that criticism.
Q43 Lord Burnett of Maldon: I just wonder whether I can bring together the questions we have just had from Lord Bellamy and Lord Bichard, and your observations about the governor. One is getting an impression that there are a lot of people engaged. You have the director, deputy director and no doubt one or two others in the Foreign Office who have specialist knowledge about the overseas territories. You have governors on the ground, many of whom but not all are Foreign Office, and you have engagement with other government departments on matters of particular interest to different overseas territories. One remembers that no two are identical, although one or two in the West Indies have common features.
What I am slightly struggling to understand is that if there is a problem identified in London—for example, concerning financial matters, as Lord Waldegrave identified—how does it actually work? What does the governor do? What is the governor’s role in all of this? What is the department’s role through its officials? What is the role, for example, of other departments? One would imagine that in financial affairs the Treasury and possibly the Bank of England might have quite a lot to say, and so forth. In other areas, there are environmental matters. We know that many of the overseas territories have very special environments and are working extremely hard on environmental matters. What does the governor do? What does the Foreign Office do? What would the relevant department do?
Lord McDonald of Salford: What you are describing is a lean machine in bureaucratic terms. The number of key people is actually small. It is clear that the governor and director are the main players. Together or separately, they can engage the rest of the system. You made, casually, a key point. Governors come from across Whitehall. Lots of governors are not FCDO. I mentioned the Anguillan banking crisis. It happened that our governor at the time was basically a Treasury person and that made a big difference to the deftness of our handling.
Sir Philip Barton: I would add that the governor has a position under the constitution of the territory and is responsible for the day-to-day relationship with the chief minister or premier, but is also joined at the hip with headquarters and the director in terms of overall approach. The director in the FCDO is responsible to FCDO Ministers for the overall relationship with the individual OT, in co‑ordination with other government departments. Obviously, if it was a banking issue it would bring in the Treasury. That is how I would describe the different roles. The Treasury, or whatever line department it is, brings in both expertise and its own perspective on the policy issue in question.
Lord Burnett of Maldon: Would it be the governor who is expected to understand best the local dynamics and possibly the difficulties that the local Governments face, both democratically and also in economic terms, when London is proposing ideas?
Sir Philip Barton: Yes, although backed up on the economic side. The FCDO will corral economic advice to support particularly those territories that receive development assistance. There will be an economic advisory capacity to help a small territory still receiving official development assistance with its budgetary planning and that sort of thing.
Lord Griffiths of Burry Port: Each of you, as well as the Minister on a previous occasion, have made mention of Gibraltar. As I understand it, the success of what has happened in Gibraltar depended on two factors: first, the involvement of the local people in finding a solution that they would then have to live with; and, secondly, the length of time. There did not seem to be much churn anywhere in a process that in five years, as I seem to remember, produced that result. We might apply those two factors elsewhere among the overseas territories—length of time and involvement of local people. I need to say that my interests are in the Caribbean. The bunch of overseas territories in the Caribbean are so unlike, and so different from, each other that it seems that a bilateral approach to problem-solving, support or policy-making, or whatever one wants to call it, is the only one that will work. I cannot see some territories feeling the same about whatever arrangements are made at a global level, through the joint council even, when their circumstances are so different.
Once again—members of the committee will be bored silly by my continuing to harp on about it—I have personal and quite a long experience of the Turks and Caicos Islands, not because I know it in itself but because I lived in Haiti for 10 years. I think 70% of the people of Turks and Caicos are immigrants from Haiti. I will be talking to somebody next week about precisely that point. This very day, while we sit here, the United States is revoking the protected status of Haitian immigrants, and there will be, if it goes through, in a raw sort of way, 370,000 Haitians repatriated. The Dominican Republic, meanwhile, has over its border—and it has built a long wall between the two countries now—ejected hundreds of thousands more. There will be a continuing flood of illegal refugees leaving Haiti in small boats. The first port of call will be the Turks and Caicos Islands, but the south Bahamas are in the same receiving end.
I do not know what kinds of conversations you could have with the people in Turks and Caicos that you might want to have with the Cayman Islands. They are so radically different from each other and the problems are so gigantic. The Donroe doctrine is being invoked more and more. I suppose that we have to take note of the fact that there are geopolitical problems as well as inherently local problems to contend with when looking at some of these places. Is this picture that I paint a doomsday scenario, or do you see factors in it that might affect the way the Foreign Office here deals with territories that are so disparate and different from each other that it might need different approaches and elements in the approaches for each one?
Lord McDonald of Salford: You have given me a big target there, Lord Griffiths. I will give three instant reactions. One is that you are absolutely right that the territories are very different from each other, which is why we still have them and why the Caribbean has so many very small countries. Even though they are very small and people in ministries in London and Paris might have thought collecting them together was logical, it would not work in the Caribbean. We have tiny political units, and that is the way they want to stay.
A second point is that some of the problems are too big for the locals and too remote from us. I went to the Turks and Caicos Islands, and the influx of Haitians was the only subject of conversation. Of course, with their own resources, they cannot really cope. Yet we are on the other side of the Atlantic. This is not a priority of the British Parliament. When I was there, the priority was involving the United States as much as possible, because the people are not really interested in making their lives in the Turks and Caicos Islands; they want to get to Florida. There was an American interest, so bringing the Americans in as much as possible was our policy response.
My third point is that for people like Sir Philip and me, going to the overseas territories was an important part of learning their importance and was simultaneously very controversial because they are in the Caribbean. “Why on earth are you swanning off to sunny climes?” That is ludicrous but a real factor. The only reasons I went were in the immediate aftermath of Hurricane Irma and Hurricane Maria, when Anguilla and the Virgin Islands had been devastated, so it was legitimate to go and see how they were getting back on their feet. I went to the Turks and Caicos Islands because I opened a high commission in the Bahamas, and the Turks and Caicos were a short flight away. Getting senior people to go, which they need to do, is weirdly problematic.
Lord Jones of Penybont: Coming back to the issue of the governors, you mentioned, if I can put it this way—these are not your words—that the calibre of governors has improved over the years. I am interested in the chain of command. To whom do governors report? Do they all report to the FCDO? If so, do they all report to one individual who is their point of contact?
Sir Philip Barton: Do they all report to the Director? I do not know. You would have to ask the department whether the line management—that is, who writes their annual appraisal—is all done by the director or whether it is spread out and some of that is done by some of the deputy directors. I imagine it is spread out, but I cannot give you a factual answer.
The Chair: Lord Cryer, you have been very patient.
Lord Cryer: Thanks, Chair. We sort of touched on this in previous questions. How do you think ministerial engagement with the overseas territories has changed? I always had the impression that it has lessened, but you seem to imply that it has got better. I am talking about actual ministerial engagement—or is that not particularly relevant because we have officials and governors of a high calibre, meaning that direct ministerial input is not that relevant?
Lord McDonald of Salford: I have a couple of points, Lord Cryer. One is that it is different for different territories. The Falkland Islands since 1982 has been an obvious priority for successive Administrations. It has good access, is well looked after, and gets a huge amount of money from the United Kingdom. Gibraltar also has traditionally had very close relations and very good access. Bermuda I would put in third place. The financial sector is probably key to that. Then the others trail behind, with the most remote getting least attention. I do not think anybody at ministerial level has been to South Georgia or the South Sandwich Islands for 50 years. It is different for different territories. Some of them do very well indeed and others not so, but there is usually an explanation in history or political interest.
Sir Philip Barton: It has improved because we are now more systematic in making sure that there is a designated Minister in line departments with overseas territories responsibility, and then there is the ministerial board I talked about, pulling together UK Ministers. It is vital for the reasons Lord McDonald set out that in at least some cases it is Ministers engaging with the elected leaders and politicians, therefore, of the territories. Officials get you only so far.
Lord Cryer: You mentioned the churn in Ministers. I think it has got worse. You mentioned Lord Ahmad. He was there for—
Lord McDonald of Salford: Seven years.
Lord Cryer: Seven years. We have already had churn since the last general election. It cannot be—
Lord McDonald of Salford: Now I can say that I think it is completely ludicrous. It is unnecessary. It is self-inflicted. It is rather indulgent of people around Prime Ministers who think that junior Ministers are not sufficient players in policy terms. It is about a stepping stone in a career. Maybe that is true, but certain Ministers have a vital job to do where continuity makes a huge difference.
Lord Cryer: Yes, I completely agree with that. Thank you.
Q44 Baroness Laing of Elderslie: You have been very thorough in answering all our questions. I wonder whether we could go in a slightly different direction. This occurred to me when you explained the way in which Permanent Under-Secretaries engage in these matters. How does your work fit in with the responsibilities of the FCDO for the Commonwealth? How do the overseas territories and the responsibilities that you have for the Commonwealth fit together?
Lord McDonald of Salford: The Commonwealth is woven through the departments. We generally have a Minister who is Minister for the Commonwealth. Lord Ahmad combined both Commonwealth and overseas territories—and, by the end of his time, most of the geography of the world, as I recall. The Commonwealth is not distinctive in the same way. The Africa director will deal with all African countries, Commonwealth and non-Commonwealth, and the same happens with Asia, Latin America and the Caribbean. The overseas territories are a more distinctive, coherent unit these days than the Commonwealth as far as the work of the FCDO is concerned, I would say.
Baroness Laing of Elderslie: While we are talking about the Commonwealth, that takes me back to your opening remarks, Lord McDonald. It was very interesting when you described the overseas territories as the “scraps of empire”. Would it be easier for successive UK Governments of all political persuasions if these faraway places were left to independently manage their own affairs?
Lord McDonald of Salford: This is an option, Lady Laing, that was considered. What they have in common is that between London and the territory concerned they recognised that they were not viable units to be independent countries. The alchemy of statehood is interesting. Some states are smaller than the small populations of the overseas territories, but because of geography, history and the co-operativeness of the neighbours, Tuvalu, for example, can be an independent country with about 11,000 people. They are vulnerable and need protection, and we have provided that protection.
Other models are available. The French decided to incorporate their overseas territories into metropolitan France. We chose not to do that. It is very much more expensive to do it that way. The Dutch give a high degree of autonomy but spend very much more money on their Caribbean territories than we do. There are different ways of approaching it, but they all have in common that, collectively, the international community, the UK and the territory populations in the lead decided that they were too vulnerable to become independent states.
Sir Philip Barton: I would add, Lord Chair, that obviously they are British citizens who wish to remain British.
Q45 Lord Bellamy: Coming on to the 2023 joint declaration, which is essentially where our inquiry starts, how valuable are statements such as the 2023 declaration? Are they ever followed up? Are they of practical use? How would you put it, Sir Philip?
Sir Philip Barton: The way I would describe it is that something like that mostly sets the climate. It describes the partnership approach, the shared values of the territories alongside the UK Government as part of a wider British family. It then sets out in headline terms a set of commitments and expectations on both sides. That coming together and positive climate setting help take forward the day-to-day work, whether that is contentious or uncontentious. It had a positive impact and set out a shared vision and ambition for the relationships and allowed those to be then taken forward in subsequent meetings of JMCs.
Lord Griffiths of Burry Port: Given the cannabis legislation in Bermuda, the corruption in the British Virgin Islands and Turks and Caicos, and the refusal to come forward quickly enough with the beneficial ownership schemes, our values are undermined by these variations from the norm, are they not?
Sir Philip Barton: There are issues; you are absolutely right. You cited three issues where, if you have a positive climate to try to resolve and make progress on them where that has been lacking, that is a better way of trying to achieve that progress. Alternative views and models, and more stick, are another way of thinking about it. The declaration was designed to set a positive climate to make progress both on collaboration and on the difficult issues that you have raised.
Lord Griffiths of Burry Port: When they sit round a table and some have fallen into these other ways of doing things or reached a different point, is there recrimination? Are these things brought to light? Are they part of the conversation? “We’ve got this agreement, but you haven’t and we haven’t, and this has happened”. Is it as frank as that?
Sir Philip Barton: Yes, the JMCs are very frank, as are the bilateral conversations between UK Ministers and officials and their overseas territories counterparts. In addition, the territories themselves talk to each other all the time, both individually and in caucusing, sometimes about the UK Government, sometimes about comparing notes. “We’re going to agree to this on beneficial ownership. What are you going to do?” All of that goes on. It is very frank and mostly open.
The Chair: Lord Bellamy, did you want to finish off?
Q46 Lord Bellamy: Sir Philip, you told us about the partnership approach. Right at the outset, you talked about progress by persuasion. Would you like to come back on Lord McDonald’s slightly different view, if I understood it, that the reputation of the United Kingdom is at stake here and sometimes one needs to put one’s foot down? There is a view that that has not been done enough in the past. I think that is the view Lord McDonald expressed.
Lord McDonald of Salford: Correct.
Lord Bellamy: If you would like to come back on that and tell us a little bit more about the strengths of persuasion, you are welcome to do so.
Sir Philip Barton: The first thing is that it is important that the UK retains the powers for use in extremis. The way I think about them is that they are in extremis powers, and their value is as much in having them as in using them. Then, on any individual issue, I would make a pretty clear-eyed calculation of cost and benefit against likelihood of achieving outcome. One big challenge is that the UK has the power to legislate by Order in Council, but unless you put your own people in you are dependent on local resource to implement effectively. I would always worry, where you get to a situation where you are legislating against the will of a chief minister or a premier and his or her elected Government, that you would not be able to secure civil servants of that territory to implement what you were doing. I am citing that perhaps in a slightly exaggerated way, but it is the sort of thing that you have to have in mind. You sometimes need to go—and the UK has done it in the past—to extreme measures, but there is a real cost and practicality consideration, which for me sets the bar pretty high before you go down that road.
Lord Bellamy: Which suggests or might come over as a confession of weakness that, when push comes to shove, we are really not prepared to make that shove.
Sir Philip Barton: There is a practicality issue and a cost that need to be factored into considerations of using the powers that the UK has.
Lord Beith: Are the potential outcomes in that situation not rather more serious than we have contemplated? If you have to send in your own police force or inspectors to bring about a change that is rejected in the territory, you could have rebellion there, with local law enforcement clashing with the people we sent in and all the rest of it.
Sir Philip Barton: I do not want to exaggerate this. I was not particularly suggesting insurrection. It was more the actual practicalities of delivering the administration on the ground.
Lord McDonald of Salford: We have had to step in. There have been premiers who have been corrupt and had to be removed from office. When push comes to shove, we do step in. It does not grab a great deal of attention in the UK, but it sure as hell does in the territory.
Lord Bichard: I am the last person who would want to pitch one former Permanent Secretary against another.
Lord McDonald of Salford: Really?
Lord Bichard: I understand the point that you are making about cost, but the cost to our reputation, in some respects, could be enormous. I think what Lord McDonald was saying is that they need us more than we need them, and therefore we are in a powerful position in terms of negotiation and implementation. The question that was being put to us, which I put back to you, is: are we sometimes too reluctant to take action, at a cost to our reputation internationally?
Sir Philip Barton: If I remember right, there are only four that we give development assistance to. In terms of the financial flow, some of them are wholly financially independent of the UK and successful, and, apart from the small costs around the governor and so on, there is no UK financial support at all in terms of actual dependence. Of course, they are British, as it were. I just wanted to make that point. It is not always the case that there is a dependence there that one could use as leverage.
It will depend on the issues. I am not saying you never use these powers. As I said earlier, you have to look at the costs and benefits against how you will achieve the outcome that you want, and whether the benefit that you are trying to secure, whether that is to avoid damage to the UK’s reputation or achieve something else, outweighs the costs that you will incur in going down a particular route. If I was giving advice to Ministers, I would put on the table, inviting them to take, in the end as the decision-maker, a view on whether the UK should use a particular power in a particular circumstance.
Lord McDonald of Salford: Yes, many of the territories have now made themselves financially independent of the UK, but the way they have done that gives me pause. Financial services are very important to many of the territories, and the way they are run in the territories seems not particularly transparent. There, we should get hot and heavy because it is the UK’s reputation on the line if things go wrong in the Virgin Islands, Cayman or Bermuda.
Q47 Lord Burnett of Maldon: I want to follow up, if I may, on the disagreement or difference of approach that you identified at the beginning, which seemed to me to be one diplomat suggesting that perhaps we should not be so diplomatic and the other suggesting that we should.
Without getting into the detail of the underlying issue, we have heard evidence that work is going on between the overseas territories and the UK Government to sort out the beneficial interest registers. In particular, two issues have been identified by a number of the overseas territories that they wish to work through: first, that those having access to any register should have a legitimate interest in having access; and, secondly, that some privacy issues arise that are being worked through. As I understood the evidence that we had from the Minister and in writing, these are precisely the issues that are being looked at carefully and considered with a view to getting consensus—in other words, Sir Philip’s approach—rather than simply one of the overseas territories being told, “Well, look, Gibraltar’s done it this way. You must do it this way, or else”. Have I understood that right, Sir Philip?
Sir Philip Barton: I think you broadly have. In fact, from memory, there was a European court judgment that raised the privacy argument and possibly the legitimate interest point. The headline objective, for now at least, while it is still a UK government ambition to go the whole hog, is focused on an interim step of, for those who do not already have them, legitimate interest registers rather than fully publicly accessible ones. That has been the focus of the attention and work. The territories look at other parts of the world and make comparisons with regimes, including in the Crown Dependencies and other parts of Europe, and what regimes are in place there.
Lord McDonald of Salford: As the Lord Chair pointed out, I became Permanent Secretary in the Foreign Office in September 2015. This was an issue then. It is an issue now. It is an issue in exactly the same terms. Even the Swiss have changed some of their rules in that time.
The Chair: Lady Hamwee, do you want a quick supplementary on that?
Baroness Hamwee: Yes, if I could. I do not get much sense that the OTs talk to one another about this. The way you are talking about the structure, it is very much up and down and not across. Is that right?
Sir Philip Barton: With respect, no, it is wrong. As I said earlier, they absolutely do talk to each other, both in groups where they have common interests, without the UK, including on this issue. They compare notes and, indeed, tactics.
Baroness Hamwee: Then they continue on their own separate ways.
Sir Philip Barton: They do what they think is in their interests in terms of achieving their objectives.
The Chair: Lord Griffiths has another question.
Q48 Lord Griffiths of Burry Port: I am being urged to be brief. What factors do you see affecting developments in future? There is all the oil in the south Caribbean, Guyana and Trinidad, climate change and all the rest of it. How much thinking about events of that sort, contingency planning or whatever, is part of the conversation?
Lord McDonald of Salford: One thing that has been mentioned briefly already, which is an increasing part of the relationship, is the environment. Marine protected areas are very important for the planet. As we discussed, they are mostly remote. They are in pristine parts of the globe, and pristine parts of the globe are increasingly rare. What we can do to protect the oceans around Pitcairn, the British Indian Ocean Territory and the middle of the Atlantic is very important. That was not part of the conversation 10 or 15 years ago, and it very much is now. Migration is also changing things. We have already discussed Turks and Caicos. Those are my top two nominations.
Sir Philip Barton: I agree with both of those. There is also something around the complexity of modern government: very small jurisdictions, small civil service, and inevitably limited capability. As government becomes more and more difficult in the world that we are in, that becomes more of a challenge in capacity terms.
Q49 The Chair: Our inquiry is about the 2023 joint declaration, how it is working and how the departments all gel together, and you have answered a lot of these questions. Lord McDonald, you introduced us to the concept that these are the “scraps of empire”, but at the same time you said that we have a duty of protection towards these entities, which we take very seriously. To what extent is that well understood, not just across government? What is your sense of how it is accepted by the people of this country? After all, there is a cost attached to looking after them, which I think is important. What value do they bring to us? We have had policy statements about what we are doing. I think 2012 was the last time that we had a White Paper that laid out a strategic overview. Do you think that it is now time to redo it, or will the 2012 one continue for some time longer, particularly given what you said about the problems that existed in 2015 existing now and no doubt doing so in future?
Lord McDonald of Salford: We could look again fundamentally at the relationships. It is now more than half a century since this model was launched, although it changed its label at the end of the 20th century. I have already said that we decided then that independence was not a viable option, but in the 21st century maybe this should be revisited. One or two governors have had that conversation with me in private. Given the reputational risk and the determination to do it the local way, let us explore taking that to the max—independence. It is a long time since we really looked at that.
It would apply particularly to the Caribbean because there are lots of small countries in the Caribbean. They would not stand out if they were to tread their own path. The relationship with the United States would be very important in those circumstances. Other actors would have to be involved, but I see no reason to exclude them. The smallest territory, Pitcairn, is the furthest from us and has a population that fluctuates between 50 and 100. I feel as though we need to talk to New Zealand about Pitcairn because it is certainly much closer and would be more easily able to operate such oversight function as necessary. Yes, half a century later, we could have a proper look at what the relationship should be.
Sir Philip Barton: You could do that, but you would have to be confident that there is a possibility of moving to a fundamentally different approach to the overseas territories for it to be worth embarking on that exercise. I am not convinced that there is a better model when you begin to look at the constraints that would apply. As the Minister said to you in his evidence—it is not for me to second-guess this—there is a resource element to it, and it takes you away from day-to-day delivery for the territories. The other thing worth having in your minds when you think about this is that, if we put our relationship with the overseas territories in the air and up for discussion, there are two territories subject to a sovereignty claim, and we may end up giving the wrong kinds of signals to those who have ambitions. It is worth thinking through some of the signals that would be sent around the UK’s commitment to the territories if there was a fundamental review of their status.
Lord Beith: Correct me if I am wrong, but did the Dutch not have a review of their system and end up with each of their territories choosing a different model for the relationship?
Lord McDonald of Salford: You know more than I do, Lord Beith.
Sir Philip Barton: It is true that they have two different models. One is more connected to the Netherlands than the other.
The Chair: All right. We will leave it at that. We have covered a lot of subjects and we have ranged far and wide. I take the point that you made latterly about the geopolitics and the role of the US. Just thinking about what has happened in Venezuela, the potential read-across on Cuba and how that impacts on the whole area, it is still very interesting. We were warned in 1982 not to take our eyes too far off the ball. Thank you very much indeed for coming along and taking the time and trouble. We can bring this public session to a close.
