House of Lords

Monday 14th March 2022 Lords Chamber

Monday 14 March 2022

14:30

Prayers—read by the Lord Bishop of Durham.

Broadcasting White Paper

Monday 14th March 2022 Lords Chamber

Question

14:36

Asked by

[Baroness Bonham-Carter of Yarnbury]

To ask Her Majesty’s Government whether the forthcoming broadcasting White Paper will make proposals about prominence in relation to (1) online radio services, and (2) smart speakers.

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)]

My Lords, the Government have committed to ensuring that listeners continue to have free-to-air access to UK radio services when listening via connected audio devices and that radio services are not discriminated against by large tech platforms which carry audio over internet protocols. The digital radio and audio review considered these issues in its report of last October. The Government’s response to that report will be published shortly and will set out our position in this area in more detail.

[Baroness Bonham-Carter of Yarnbury (LD)]

I thank the Minister for his positive reply. Prominence rules were put in place over 15 years ago for TV broadcasters and are set to be updated, I believe, but there are none at all for radio. The pandemic and now events in Ukraine have reinforced the importance of PSB radio, but as audiences increasingly access radio and audio services on demand, online and through new devices, this valuable service is at risk and at the mercy of the global tech companies which control distribution of content on these platforms. Reform is urgently required. I am glad that the Minister agrees—I think—that there is a pressing need to address this issue in the broadcasting White Paper and the media Bill. Can he tell us when that is likely to come?

[Lord Parkinson of Whitley Bay (Con)]

The noble Baroness is right that there has been rapid change in the last five years. Smart speakers have become widely available and are now owned or accessed by a third of all adults, so the Government recognise the urgency of the issue. We are very conscious that connected audio devices are starting to represent a significant and growing share of radio listening. They have opened new routes for listeners and new avenues for content creators, but they also carry a risk of listener access to radio services being disrupted or limited. We fully recognise those concerns and are committed to taking the necessary steps to ensure continued free-to-air and unintermediated access to UK radio. As for future legislation, that will be set out in the normal way.

[Viscount Colville of Culross (CB)]

My Lords, the withdrawing of funding for Creative Skillset in 2016 has left a gap in audio-only skills training. BBC Sounds Audio Lab and Global Radio’s academy have filled some of that gap, but does the Minister agree that there is a role for the Government to help develop and deliver high-quality audio skills training for a new generation of talent?

[Lord Parkinson of Whitley Bay (Con)]

Yes, I agree with the noble Viscount. As I say, as the review noted, these devices have opened up new avenues for content creators to reach audiences with podcasts and other audio output. There are very exciting job opportunities for people in this area and part of the work we are leading through DCMS is to make sure that people have the opportunity to work in our vastly expanding creative industries.

[Lord Clement-Jones (LD)]

My Lords, tech platforms and smart speakers have now become gatekeepers to the UK radio broadcasters, with access to all their valuable audience data. Will the Government ensure that the long-delayed new statutory competition framework for the Competition and Markets Authority’s Digital Markets Unit becomes a priority, levels the playing field between broadcasters and online platforms and addresses the significant current risk to media plurality and radio broadcasters?

[Lord Parkinson of Whitley Bay (Con)]

We recognise that good arguments have been made for taking action to protect radio’s long-term position and ensure the continuation of the huge public value which radio provides. However, that will not be straightforward; any significant intervention in this area will need to be considered in the wider context of other work we are carrying out, particularly in relation to digital markets and data protection reform.

[Baroness McIntosh of Hudnall (Lab)]

My Lords, the Minister referred a short while ago to what I think he called our “rapidly expanding creative industries”. Is he confident that his colleagues in the Department for Education are fully aware of the opportunities those industries offer and are constructing the national curriculum in a way that makes it possible for people to access them?

[Lord Parkinson of Whitley Bay (Con)]

Yes, I have regular meetings with colleagues in the Department for Education and across government. I have had them in the past and have more coming up imminently. We are discussing these issues across departments so that we can make sure that everybody, whatever their age—whether they are school leavers or people who are changing career—has the opportunity to move into these exciting areas.

[Lord Trefgarne (Con)]

My Lords, is it not the case that the old-fashioned shortwave transmission systems are much more difficult to interfere with than the more modern systems? Therefore, can the BBC be persuaded to concentrate on that system when broadcasting to Ukraine and thereabouts?

[Lord Parkinson of Whitley Bay (Con)]

As well as availing themselves of the opportunities which the new media and new technology allow, we recognise that many people still rely on analogue radio services. That is why we have said that it would be wrong to switch those off before 2030, at the earliest. Both the Foreign, Commonwealth & Development Office and DCMS are working with the BBC to maintain the very important work that the World Service is currently doing in Ukraine.

[Baroness Merron (Lab)]

My Lords, in the same way that the online safety Bill has been drafted to have a degree of flexibility as the internet develops, will the Minister look at making prominence regulations technology neutral in the same way? To avoid duplication of regulation for TV, radio and online, has an assessment been made of the potential for a one-stop shop for prominence rules?

[Lord Parkinson of Whitley Bay (Con)]

The review which I mentioned was commissioned by the Government as part of the wider look at the broadcasting sphere. We are conducting that strategic review of public service broadcasting and will set out our response to it in due course. I cannot anticipate what it will say but I can assure the noble Baroness that we are looking at all these issues in the round. As I say, this is an area where the technology is moving rapidly, so it is right to review it carefully.

[Lord Watts (Lab)]

My Lords, can the Minister explain why Russia Today was allowed to broadcast for as long as it did, sending out its propaganda on a daily basis? Surely there is a need for balance, and should not the regulator have taken action far beyond what it did before? It has cancelled it now but why did it have to wait for something like this to happen? Should it not have taken action before?

[Lord Parkinson of Whitley Bay (Con)]

My Lords, one of the things that sets us and the rest of the world apart from countries such as Russia is our commitment to free and fair broadcasting. We are very pleased that RT has been removed from Sky Freeview and Freesat in the UK, which means that Vladimir Putin cannot push out his propaganda on UK networks. My right honourable friend the Secretary of State wrote to the major platforms asking them to do everything they can to prevent access to RT online in the UK, as they have done in Europe, and we are very pleased that Meta and YouTube have taken action and removed RT from their platforms. Therefore we have acted in this area while recognising our commitment to free speech and broadcasting.

[Lord Harris of Haringey (Lab)]

Your Lordships have become very used to listening to answers from the Dispatch Box opposite which sound as though they are lobbing the question into the long grass. The Minister said that technology is moving very rapidly in these areas. Are the Government?

[Lord Parkinson of Whitley Bay (Con)]

This is an area in which only five years ago smart speakers were not available and now they are now widely available in people’s houses. The Government are keeping pace with that very rapid change, conducting thorough reviews with stakeholders and considering it carefully. A five-year timeframe for technology that did not previously exist shows that we are acting swiftly in this area.

[Lord Grocott (Lab)]

My Lords, I know that the Minister has to be careful with the language that he uses. He politely referred to President Putin’s propaganda. The right word is not “propaganda”, as that might contain an element of truth; surely it should be President Putin’s “lies”.

[Lord Parkinson of Whitley Bay (Con)]

Yes, I would be happy to say that lies are being disseminated from the Kremlin about what is going on in Ukraine. That is why we have taken action to stop the poisonous propaganda that RT has been propagating on Vladimir Putin’s behalf.

Building and Fire Safety: Leaseholders

Monday 14th March 2022 Lords Chamber

Question

14:45

Asked by

[Lord Kennedy of Southwark]

To ask Her Majesty’s Government what plans they have to ensure leaseholders and others who have building and fire safety issues for which they are not responsible are not excluded from any measures or funding intended to solve such issues.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper and in doing so I refer the House to my interests as set out in the register.

[The Minister of State, Home Office and Department for Levelling Up, Housing & Communities (Lord Greenhalgh) (Con)]

Leaseholders living in their own properties in buildings over 11 metres will be protected from all cladding remediation costs. The Building Safety Bill will require developers to pay to fix historical building safety defects in buildings they own above 11 metres. We will legislate to make sure that other building owners who can afford to pay cannot pass historical building safety defect costs on to leaseholders. Leaseholders who are liable to pay for some non-cladding costs will have those capped in a way similar to Florrie’s law.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I thank the noble Lord for his response and for the progress made, and I accept that good progress has been made. However, the situation remains that there are general building safety issues and some of these leaseholders are still left in appalling situations. Does the noble Lord accept the principle that if you are not responsible for the poor workmanship, you never signed it off as satisfactory and you did not insure it, you cannot be expected to pay for what is now deemed not fit for purpose? If he accepts that, he is the one person who can do something about it. He is the Minister responsible and has the ear of the Prime Minister, so what are we going to do?

[Lord Greenhalgh (Con)]

My Lords, I thank the noble Lord for putting me in the hot seat. We have done an awful lot. It is fair to say that through regulation we can ensure that we protect leaseholders, who are very much the victims, from bearing anything apart from, I hope, very minimal costs. Those have been capped at £15,000 over five years in London and £10,000 outside London. That is for the narrowest shoulders, particularly shared owners, who are protected as well. We can always do more, and I appreciate that that campaign reckons that we should take this down to zero. However, we continue to ensure that we protect leaseholders wherever we possibly can.

[Lord Young of Cookham (Con)]

My Lords, I welcome what my noble friend just said but I remind him of what the Secretary of State in another place said on 10 January:

“First, we will make sure that we provide leaseholders with statutory protection … and we will work with colleagues across the House to ensure that that statutory protection extends to all the work required to make buildings safe.”—[Official Report, Commons, 10/1/22; col. 291.]


I welcome the amendments that my noble friend has tabled in Committee but does he recognise that further substantial amendments will be necessary on Report if that commitment is to be honoured?

[Lord Greenhalgh (Con)]

I thank my noble friend for stepping in helpfully. Of course, as we approach Report, the Government will bring forward further amendments that will do more to protect leaseholders but will also ensure that the polluters must pay—my noble friend and I share that principle.

[The Lord Bishop of St Albans]

I join other noble Lords in thanking the Minister for the considerable progress he has made and his very collaborative approach as we work through the Building Safety Bill. He will be aware that the definition of a qualifying lease in the Bill is set to exclude many small private landlords. We are not talking about the big commercial set-ups but people who have one, two or possibly three flats which they bought simply to provide themselves with a pension. Do Her Majesty’s Government intend to look at that definition of a qualifying lease again? Many of those people are deeply worried at the moment.

[Lord Greenhalgh (Con)]

I thank the right reverend Prelate, who has also been a consistent campaigner. As a Government we are very much aware of the impact this has on, say, pensioners, where property is their primary pension asset and the annuity from those properties effectively pays for their pensions. As I say, I ask the right reverend Prelate please to wait until we bring forward further amendments on Report, but we are very alive to this issue.

[Lord Newby (LD)]

My Lords, the Minister reminds us that the Government propose that leaseholders should pay no more than £15,000—in London. Does he accept that, if you live in London and are facing very heavy costs, including rapidly rising energy bills, for many people who will be faced with a bill of £15,000, that is not nothing or little—it is a crippling amount? Does he accept that limiting it to £15,000 does not relieve the pressure on many people who simply cannot afford £15,000?

[Lord Greenhalgh (Con)]

My Lords, there is no doubt that £15,000, paid over five years, is a substantial sum, but the reality is that some poor leaseholders who are victims have paid far more than that on interim measures before a single bit of remediation has been done. Having a cap on leaseholder costs ensures that they are no longer fleeced through Section 20 notices to pay for mistakes for which they are not responsible. That is what that protection achieved and, through regulation, we can broaden the impact to protect those with the very narrowest of shoulders.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, we have a problem going forward, because cladding, if it is put in properly, can be an option to make older houses thermally efficient. Have the Government thought about reassurance measures so that cladding remains an option for, for example, all the thousands of pre-1930s buildings?

[Lord Greenhalgh (Con)]

That is a very good point: cladding per se is not necessarily a bad thing. What we cannot do is wrap our buildings up in cladding where the effect on the spread of fire is a bit as if it had been coated in petrol. Cladding provides the warm homes that many people enjoy. If you carry out remediation in an insensitive way, it removes the protection for leaseholders in the insulation required to make the home liveable. Therefore, remediation needs to be done in a sensible and thoughtful manner with people who are living in their homes. Of course, we need to ensure that we promote good cladding systems and remove the bad.

Covid-19: Restrictions

Monday 14th March 2022 Lords Chamber

Question

14:52

Asked by

[Baroness McIntosh of Pickering]

To ask Her Majesty’s Government what assessment they made of any available scientific advice when implementing or removing COVID-19 restrictions in England.

[Baroness McIntosh of Pickering (Con)]

My Lords, I beg to ask the Question standing in my name on the Order Paper, and I refer to my work with the Dispensing Doctors’ Association.

[The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord Kamall) (Con)]

Throughout the pandemic, the Government’s approach has been informed by a wide range of scientific and medical advice and the latest data, as well as by economic, social and deliverability considerations. Ministers have always had regard to the scientific advice when taking decisions to implement or remove restrictions, but have balanced them against other considerations.

[Baroness McIntosh of Pickering (Con)]

Given that the level of infections is now running at 220,000 new infections per day, and given the fact that the Government are planning to remove free testing from 1 April and have already removed the legal obligation to self-isolate, having already removed the support payments for self-isolation, how do the Government intend to protect the most vulnerable in society and NHS staff, given the Government’s new policy provisions of Living with Covid-19?

[Lord Kamall (Con)]

I thank my noble friend for those questions and will try to answer them as best I can. We are now transitioning to a stage where we are able to live with Covid, and we have just announced our living with Covid strategy. At the same time, we are looking at the best way to help those who are particularly vulnerable medically or economically, who should still be entitled to free tests, for example, and issues such as affordability. We continue to monitor the new variants, the BA2 and the deltacron, and we will also continue to have the ONS surveys.

[Lord Reid of Cardowan (Lab)]

My Lords, given the fact referred to by the noble Baroness, Lady McIntosh, about the reversal of what was a very welcome decline in numbers, has any advice been given to the Government by the bodies to which the Minister referred about a further, fourth jab—another booster jab—for the elderly population? I suppose I should declare an interest.

[Lord Kamall (Con)]

I thank the noble Lord for declaring an interest. We are reviewing all scientific advice and looking at the spread and potential of new variants. Advice has been given on an additional booster, particularly for those over 75. I will not ask the noble Lord his age, but I commit to write to him.

[The Earl of Clancarty (CB)]

My Lords, one thing that some of the most vulnerable have been able to do is make a risk assessment about going out. If testing is not happening and local scientific data on cases not available, that risk assessment cannot be made—isolating the vulnerable even more. Will the Government reflect on that?

[Lord Kamall (Con)]

The Government have reflected on that and, in line with the public sector equality duty, have considered the impact of those decisions on the wider population but also on those who were previously classified as extremely vulnerable or clinically extremely vulnerable. For example, we are looking at whether it is appropriate to continue to give them free tests, and how they can get in touch with clinicians and others to ensure that they are more protected.

[The Lord Speaker (Lord McFall of Alcluith)]

My Lords, we will have a virtual contribution from the noble Baroness, Lady Brinton.

[Baroness Brinton (LD) [V]]

My Lords, at the publicly streamed evidence session of the All-Party Coronavirus Group on 1 March, we asked some members of SAGE to outline SAGE modelling for the lifting of restrictions in the living with Covid plan. They replied to us that they had not been asked to model any such plans by Ministers. Given that cases, as the noble Baroness, Lady McIntosh, said, are now 221,000 a day, with active cases of more than 2 million and hospital admissions rising across England, exactly what modelling advice did the Prime Minister and Secretary of State for Health and Social Care take?

[Lord Kamall (Con)]

We constantly have meetings with the UKHSA and a number of different scientists join us for the calls when we have them, but we have always balanced things up. I shall give an example of a conversation I was having just before Christmas with some of the modellers. I asked them “What is your advice?”, and they said “Minister, before we give you the advice, you have to bear in mind that we are only considering the variant at the moment. It is for you to consider the wider medical balancing issues, and also the economic and social costs as well, and we recognise that you have to balance all those up.”

[Lord Cormack (Con)]

My Lords, further to the question asked by the noble Lord, Lord Reid, and declaring a similar interest, I ask my noble friend not just to write to the noble Lord, Lord Reid, but to make a general announcement, so that we know when these fourth jabs will be administered.

[Lord Kamall (Con)]

I can see that that may well be a reasonable request, so why do I not discuss what is relevant and perhaps write to all noble Lords?

[Lord Turnberg (Lab)]

Does the Minister agree that there is a link between the recent upsurge in cases and the decision to stop wearing masks on 1 March?

[Lord Kamall (Con)]

It is interesting that, when I was talking to some of the modellers and scientists about this, they said that whenever they look at models of changes in behaviour, they count in or consider that there will be some uptick because of people relaxing measures. Even though we are moving from a position where it was legal to where it is guidance, they reckon that number in, but they still felt that it was not significant enough not to go forward with the change in strategy.

[Lord Tugendhat (Con)]

My Lords, further to the question of my noble friend Lord Cormack, I have already received a summons for my fourth jab. My impression is that, in west London, the programme has been set up and will be working quite satisfactorily. I will be having my fourth jab tomorrow week.

[Lord Kamall (Con)]

Well, there we are: there is a result already—please never accuse me of working too slowly. In that case, it is quite clear that there is a programme, and I shall find out more details.

[Baroness Thornton (Lab)]

My Lords, three matters have emerged in the past few days: first, there is a new variant; secondly, as the noble Baroness, Lady McIntosh, said, Covid cases have risen by 55% in the past week; and, thirdly, the UK Health Security Agency intends to stop funding the fantastically successful and important ZOE COVID Study app. I appreciate that this Government have an aversion to counting in general, but this app has been vital in tracking and understanding Covid-19, so how will the Government maintain their capacity to monitor this virus, which has not gone away?

[Lord Kamall (Con)]

I thank the noble Baroness for reminding noble Lords that the virus has not gone away. That is one of the reasons why we laid out the Living with Covid-19 strategy. The UKHSA, the Office for National Statistics, and a number of academics, will continue to monitor it. Noble Lords who have read all the articles during the pandemic will be aware of how many scientists are also producing data. We continue to monitor all that data and balance it up when making decisions. We are also prepared to stand up rapidly should there be any variants of concern.

[Viscount Stansgate (Lab)]

My Lords, the Prime Minister has announced that at some stage there will be a major inquiry into Covid. Can the Minister assure the House that when it takes place, all scientific advice that has been received by the Government will be published? Can he also tell us whether he is aware of any scientific advice which has not yet been published?

[Lord Kamall (Con)]

If I was aware of any scientific advice that had not yet been published, I am not sure whether I would be unaware of it. I will try to find out. The Government have laid out the terms of the inquiry; only last week I sent the link to some people, which I am very happy to send to the noble Viscount, for the points that should be considered by the inquiry. During the pandemic, and even now, we continue to receive a wide range of scientific advice. The wonderful thing about scientists is that they continue to debate with and contest each other. Some say that we should never have had these measures, some that we lifted them too early, and some that you can never get the timing right, whatever you do.

[Lord Forsyth of Drumlean (Con)]

My Lords, as we enter an economic war, are the Government not absolutely right to balance the scientific advice with the economic consequences, and that by pursuing the policies which they have since before Christmas, they have put the economy in a strong position which guarantees that we can do as much as we can to help the most vulnerable people in our country?

[Lord Kamall (Con)]

I thank my noble friend for making that point. It is incredibly important, not only within the medical community, where we were asked, for example, to lift some restrictions so that we could start tackling the backlog. We were asked `by mental health experts to ensure that people were getting access to mental health care who had been unable to because of the pandemic. We have also balanced this against economic and social considerations—sometimes these things affect each other. Being unable to work and facing uncertainty can be one of the most destabilising things and can affect people’s mental health. My noble friend is right that we have had to balance a number of issues in the round.

Electric Vehicles: Charging Points

Monday 14th March 2022 Lords Chamber

Question

15:02

Asked by

[Lord Dubs]

To ask Her Majesty’s Government what plans they have to increase the number of charging points for electric vehicles.

[The Parliamentary Under-Secretary of State, Department for Transport (Baroness Vere of Norbiton) (Con)]

My Lords, the Government and industry have supported the installation of over 29,500 publicly available charging devices, including over 5,400 rapid devices. The Government have also supported the installation of over 300,000 charge points in homes and businesses and have announced over £1.3 billion to further accelerate the rollout of charging infrastructure.

[Lord Dubs (Lab)]

My Lords, I am grateful to the Minister for that information. However, do the Government accept that if the target of switching to electric cars is to be met, at least two things must happen? When an electrically powered car driver goes any long distance, he or she is nervous that they cannot charge to come back. Even more importantly, even in areas where there are plenty of charging points, they are nearly always taken up by cars that are not charging. That is a complaint from electric car drivers. The charging points are there in parts of London, but they cannot get to them because other people are using them as parking spaces. Can we do something about that?

[Baroness Vere of Norbiton (Con)]

I recognise the point raised by the noble Lord; there has been some media coverage about that recently and we are looking at what we can do. However, people are never more than 25 miles away from a rapid charger on the strategic road network, which is particularly good for long distance journeys. The Government have done an enormous amount of consultation over the past year on how we can mandate for new standards and for reliability, ensure that consumers can access support if they have trouble charging, make it easier for consumers to find the right charging point and its availability by publishing open data, and ensure that the costs are published as well, so that consumers can compare the costs of different chargers.

[Baroness Kramer (LD)]

My Lords, as we might be working late, I decided to drive in today. The first three public EV chargers were broken. I finally found a free and available fourth. Does the Minister understand that many people who have bought EV cars are now starting to regret it, and can she step away from this market-driven approach to rolling out infrastructure which at present is random, unreliable, and desperately inadequate?

[Baroness Vere of Norbiton (Con)]

I cannot agree that it is unreliable and desperately inadequate. We cannot control from Whitehall where EV chargers are—that would be utterly mad. We must work with the local delivery partners—the local authorities—and the private sector. At the end of the day, it will be the private sector which puts these charges in place. It will not be Whitehall, so we must ensure that the local authorities have the skills to figure out where their communities need their chargers. We are particularly concerned about those who do not have access to off-street parking, and we will be asking local authorities to focus on those people.

[Baroness Bull (CB)]

My Lords, as a Westminster resident I enjoy access to a fast-growing network of relatively inexpensive and efficient chargers fitted into existing lamp-posts, in a partnership between the city council and ubitricity. How many towns and cities benefit from this very practical approach? What can the Government do to incentivise these partnerships between local authorities and commercial providers?

[Baroness Vere of Norbiton (Con)]

The noble Baroness is right: there are some excellent interventions. That is why we must upskill the local authorities and increase their knowledge of what is going on. The Department for Transport has funded the Energy Saving Trust. It runs a local government support programme and provides free impartial advice. There are webinars on best practice, particularly in rural areas, and we are about to publish the EV infrastructure guide, a technical guide which will cover the sorts of things which the noble Baroness talks about. It will enable local authorities to find the right solution for their area.

[Lord Trefgarne (Con)]

My Lords, how many charging points are to be found within the Palace of Westminster and available to noble Lords and noble Baronesses?

[Baroness Vere of Norbiton (Con)]

Sadly there are not enough. I understand that there are some available in the car park for another place. As I have said previously, it is not for the Government to install charging points in the Palace of Westminster, although I encourage the authorities to do so.

[Lord Rosser (Lab)]

My Lords, about a third of households have no access to off-street parking or a personal garage and miss out on lower costs from charging cars using cheaper overnight electricity. While 76% of the richest households have access to off-street parking, the same is true for only just over half of the poorest fifth of households. Put another way, only 51% of private renters, 38% of housing association tenants, and 26% of local authority renters, have access to off-street parking, compared with 81% of homeowners. What do the Government intend to do, and by when, to address this charging divide which works against the less well off, and to reduce the disparity in prices across the charging network? We have heard a glowing picture from the Government just now about what is happening. They say that they have spent a lot of money. It seems to have been a lot of money that has created a charging divide, and from what the Minister has said, it is largely the fault of local authorities. I think that it is the fault of the Government.

[Baroness Vere of Norbiton (Con)]

My Lords, the Government have already taken action—

[Lord Rosser (Lab)]

What is it?

[Baroness Vere of Norbiton (Con)]

One moment; the EV home-charge scheme, which the noble Lord will know was previously focused on single-unit owner-occupied households, is now being closed to those households and is focusing entirely on those people who are in rented or leasehold accommodation, specifically without their own designated parking. We are switching that very important source of funding to ensure that those who do not have the luxury of off-street parking and home ownership can get a charger.

[Lord Flight (Con)]

My Lords, can the Minister please confirm that users of the new charging points will be paying for the electricity they consume? I was surprised to learn from one London borough that initially, the electricity was provided free when they installed charging points.

[Baroness Vere of Norbiton (Con)]

I would have thought that the users would be paying for the electricity that they consume, but if people want to offer electricity for free, they are perfectly at liberty to do so.

[Lord Walney (CB)]

My Lords, does the Minister recognise that the reliability of the charging points, particularly on the motorway network, is a real problem? Has she had a chance to consider the idea that I put forward a couple of months back about increasing the penalties on providers, so that they are properly punished and incentivised to provide a decent service to EV motorists?

[Baroness Vere of Norbiton (Con)]

This links into the measures that we announced in December 2021, when we said we were looking at a mandate for new standards for reliability. Obviously, if there are new standards for reliability, there will have to be penalties if companies do not meet those standards.

[Baroness Sheehan (LD)]

My Lords, the increasing number of charging points for electric vehicles and the demand for heating homes through heat pumps will add quite a lot of extra demand on the national grid, which is currently ill equipped to meet it. What urgent attention is being paid to managing demand—for example, by increasing insulation in homes and perhaps by reducing speed limits?

[Baroness Vere of Norbiton (Con)]

My Lords, we recognise that there will be an increased demand on energy infrastructure, both overall and particularly during peak periods. We are confident that the existing operators will be able to meet that demand, but of course we are working with the sector to ensure that it is efficient and sustainable. One of the things we are doing, for example, is looking at V2X technology, which is when you export energy from a vehicle back into the grid when it is not being used. Indeed, we have invested £30 million of funding in V2G projects—from the vehicle to the grid—and that is one of the ways in which we will ensure that our energy networks can cope.

[Lord Leigh of Hurley (Con)]

My Lords, the aforementioned electricity lamp post system is of course excellent when there is not another car parked there that is not charging. The reason it is excellent is that every model of car can use the lamp post. Are the Government considering legislation such that there is complete compatibility in the charging stations, so that every model of car can use every charging station, which is not the case at the moment?

[Baroness Vere of Norbiton (Con)]

The Government take the issue of interoperability of charging points very seriously. We are seeing the market moving towards a smaller number of varying charges, and we will consider how we take that forward.

[Lord Reid of Cardowan (Lab)]

My Lords, I am just old enough, as the House was reminded earlier, to remember us being told by my Government what a great idea it was to move to diesel. My question to the Minister is about electricity consumption. Given the commitment to all-electric cars by the middle of the 2030s, plus cryptocurrency, plus the exponential growth of smart technology, plus 5G—I could go on but I will not—can the Minister assure us that a very solid impact assessment has been made of the aggregate demand of these technological developments on the requirement for electricity generation in 15 years’ time? Can she tell us where it is going to come from?

[Baroness Vere of Norbiton (Con)]

Unfortunately, the noble Lord’s question goes a little bit beyond my brief today, and indeed beyond my department. However, I will be very happy to speak to my colleagues in BEIS, who have responsibility for energy demand in the future, and ask them to write to him to set out exactly how the forecasts are being made and how they will be met.

Saudi Arabia: Mass Execution

Monday 14th March 2022 Lords Chamber

Private Notice Question

15:13

Asked by

[Lord Collins of Highbury]

To ask Her Majesty’s Government what is their response to the mass execution of 81 people in Saudi Arabia on Saturday 12 March, and whether they will make representations over the planned execution of children.

[The Earl of Courtown (Con)]

My Lords, we are deeply concerned by the execution of 81 individuals on 12 March. The United Kingdom strongly opposes the death penalty in all countries and in all circumstances as a matter of principle. The UK ambassador has already raised the UK’s strong concerns with the Saudi national security adviser and its Deputy Foreign Minister. Her Majesty’s Government regularly raise concerns with Saudi authorities regarding juvenile death penalty applications. The British Embassy in Riyadh closely monitors all juvenile death penalty cases, and routinely attempts to attend trials.

[Lord Collins of Highbury (Lab)]

My Lords, Saturday’s massacre is the largest execution in Saudi Arabia’s history. The Ministry of Interior, in explaining, said that it

“will not hesitate to deter anyone who threatens security or disrupts public life”,

demonstrating just how low the bar is for execution in that country. Child defendants remain on death row, despite the Saudis’ promises to end the death penalty for minors. Abdullah al-Howaiti, a child defendant, is at particular risk. I understand that the public prosecutor continues to seek the death penalty for him. It is reported that the Prime Minister will meet Crown Prince Mohammed bin Salman this week. If that is the case, will the noble Earl confirm that the Prime Minister will put the United Kingdom’s commitment to human rights above any trade deal premised on acquiescence to bloodshed?

[The Earl of Courtown (Con)]

My Lords, the noble Lord, Lord Collins, raises the issue of the juvenile death penalty. As I said in my earlier Answer, the British embassy at Riyadh closely monitors all juvenile death penalty defendants and regularly attempts to attend their trials. In April 2020, the Saudi Human Rights Commission announced a moratorium on death penalty sentences for individuals who committed discretionary crimes of violence. The noble Lord also mentioned our engagement with the Saudi Arabian Government, and I can say that engagement carries on, at all levels and at every opportunity. At every opportunity in the future, we will continue to raise issues relating to the use of the death penalty in Saudi Arabia.

[Lord Purvis of Tweed (LD)]

My Lords, the Government’s last human rights report highlighted what they considered to be real progress by Saudi Arabia on the use of the death penalty, but that has now been horrifically reversed. Indeed, the Government’s own human rights report singled out that Saudi Arabia does not allow external witnesses to its trials. Last week, the noble Lord, Lord Grimstone, and officials were offering Saudi Arabia greater market access to our aerospace industry and now we are in negotiations to offer it preferential access to the City of London. Will the Government give an indication that they are not just concerned about this but will remove preferential market access for Saudi Arabia in the UK economy for grievous and horrific human rights abuses?

[The Earl of Courtown (Con)]

My Lords, the noble Lord is quite right in how he has described these abuses, and I was personally shocked to read the news over the weekend about the execution of 81 individuals. The noble Lord also mentioned human rights: yes, we are particularly concerned over a variety of human rights issues relating to arrest and the continued detention of individuals, and my noble friend Lord Ahmad raises this on all levels. All these issues are always under review. We have a very close relationship with Saudi Arabia and this enables us to have full and frank discussions over these issues.

[Baroness D'Souza (CB)]

My Lords, is the Minister able to say in which areas of concern the Government have been successful in exerting their influence?

[The Earl of Courtown (Con)]

My Lords, there are a number of areas where there has been successful engagement with Saudi Arabia—for example, in relation to women’s rights. The UK has consistently called for women in Saudi Arabia to be able to participate fully in society. Since 2018, women’s rights and empowerment have improved significantly.

[Lord Watts (Lab)]

My Lords, does the Minister share my concern that the Government seem to be running away from trade deals with our European partners, who share our love of democracy and freedom, and are rushing into trade deals with bloodthirsty dictators?

[The Earl of Courtown (Con)]

My Lords, it is important to have trade deals throughout the international community. At the moment, with the issues relating to insecure energy supplies, it is particularly important that we keep talking to our close allies across the world.

[Lord Cormack (Con)]

My Lords, I accept what my noble friend just said. He told us that the ambassador in Riyadh had seen Saudi Ministers, but has the Saudi ambassador in London been summoned to the Foreign Office?

[The Earl of Courtown (Con)]

My Lords, I am unsure about the answer to that question; I will get further information to my noble friend. The engagement that we continue to have with the Saudi Government is extensive. Over the last six months, my noble friend Lord Ahmad has visited Saudi and has also had a meeting with Saudi Ministers here in London. Those continual engagements enable us to have these serious conversations.

[Lord Alton of Liverpool (CB)]

My Lords, do not these executions—there were 67 in 2021, 27 in 2020 and now these 81—demonstrate a horrific and rather brutal pattern? Sometimes these executions are carried out using the sword, and crucifixion has even been used. The mortal remains of those who have been executed are put on public display. As we heard from the noble Lord, Lord Collins, even children have been involved. Will the noble Earl undertake to speak to his colleagues in the Foreign Office about engaging scholars at Al-Azhar Mosque in Cairo to see whether we can engage people who are academics and have a firm belief in civilised values, so that we can hear Muslim voices being raised against this barbarism?

[The Earl of Courtown (Con)]

My Lords, I thank the noble Lord for the point he makes. I will of course pass it on to my noble friend Lord Ahmad, and his office will no doubt investigate it further.

[Lord Liddle (Lab)]

My Lords, will the noble Earl give us a specific undertaking that the Prime Minister, if he sees Mohammad bin Salman in the coming days, will raise this topic and these concerns with him? We all recognise the importance of oil and energy in the present global crisis over Ukraine, but that cannot be a reason for failing to raise these very grave abuses with the man with the greatest authority in that country.

[The Earl of Courtown (Con)]

My Lords, the noble Lord makes an excellent point, as the whole issue of these executions is at the forefront of our minds, and we continually raise the use of the death penalty at any meetings that take place. We will certainly do so at any meetings in the near or immediate future.

[Lord McDonald of Salford (CB)]

My Lords, has the murder of Jamal Khashoggi in the Saudi consulate-general in Istanbul been explained, and have those responsible been held accountable to the satisfaction of Her Majesty’s Government?

[The Earl of Courtown (Con)]

My Lords, the United Kingdom has always been clear that Khashoggi’s murder was a terrible crime. We condemn his killing in the strongest possible terms, which is why we have sanctioned 20 Saudi nationals involved in the murder under the global human rights regime. The former Foreign Secretary raised the issue during his visit to Riyadh in March 2020. We have consistently set out our grave concerns, both publicly and privately.

[The Lord Bishop of Durham]

My Lords, on human rights in general, and the rights of children in Saudi Arabia, can the noble Earl assure us that the rights of children are being explored? I do not think that I am the only one in the House who feels that this was very cynically undertaken this weekend, as there was a hope that it would be hidden away.

[The Earl of Courtown (Con)]

I thank the right reverend Prelate for that question and bringing to our attention the issue of juveniles. However, I find it difficult to believe that, even with what is happening around the world, anybody would be able to hide what has happened over the weekend.

[Lord Dubs (Lab)]

My Lords, would it be totally inaccurate to characterise the Government’s attitude as, “These executions are unfortunate, but other considerations transcend them”? I am afraid the Minister has been very disappointing this afternoon. Surely we can be more effective; we can push the Government of Saudi a bit harder. Would we perhaps be more effective if we worked in conjunction with our European friends and had an agreed approach to Saudi? Are the Government thinking of doing that?

[The Earl of Courtown (Con)]

My Lords, I am afraid the noble Lord is inaccurate. If he had had only three-quarters of an hour to prepare for this, he might have the same difficulty with it. It is quite clear that we engage very strongly. I know that noble Lords will think, “Oh, he is repeating the same line again”, but the fact is that we do have very strong relationships with and are a strong ally of Saudi Arabia. The fact that we are in that position means that we can have these full and frank discussions.

[Baroness Kramer (LD)]

My Lords, will the Minister tell us whether his Government are considering sanctions against those who have been involved in the execution of children?

[The Earl of Courtown (Con)]

My Lords, as the noble Baroness knows, we always keep the issues relating to sanctions under review, and I would not want to pre-empt anything that could happen in the future.

[Lord Grocott (Lab)]

Does the Minister accept that it is not very reassuring to be told frequently, as we have been in his replies today, that there are ongoing and close discussions with the Saudis on these issues, and that it is the relationship we have with the Saudi Government that enables us to have these endless full and frank discussions on human rights issues? Is it not a disturbing fact that these full and frank discussions seem to have had no effect at all on the behaviour of the Saudi Government?

[The Earl of Courtown (Con)]

My Lords, all I can say to the noble Lord is that the situation is indeed dire, in so far as 81 people have been executed over the weekend—as I said, I was personally shocked—and it is a matter that we are following up at the highest level.

[Lord Harris of Haringey (Lab)]

My Lords, the noble Earl has twice failed to answer direct questions from my noble friends Lord Collins and Lord Liddle. Will the Prime Minister raise these issues in his discussions? If the noble Earl does not know the answer, will he say whether he would do so himself were he in the Prime Minister’s position?

[The Earl of Courtown (Con)]

Luckily, I am not in his position, but I think I did answer the question asked by the noble Lord, Lord Collins. I said to him that, if such meetings happen in the future—I am sure there will be some in the immediate future—these issues will be raised at the highest level.

[Baroness Bennett of Manor Castle (GP)]

My Lords, will the Government publish a full report on the judicial and security assistance that the UK provides to the Kingdom of Saudi Arabia, and can the Minister assure us now that none of that assistance played any role in the imposition or execution of these death penalties?

[The Earl of Courtown (Con)]

My Lords, the noble Baroness asks a very important question. I do not have any detail relating to that, so I will write to her.

[Baroness Armstrong of Hill Top (Lab)]

My Lords, it seems to me that the Government need to look for levers to reinforce to the Saudi Administration that this sort of activity and behaviour is simply unacceptable to this country. Maybe if in future we did not allow sports-washing to make a regime sound legitimate, helpful and interested in our culture, the Saudis would learn the lessons. What is happening at Chelsea might be brought home to them, so that they understand that there are consequences for how they behave that will be played out here so that our culture is not subverted in that way.

[The Earl of Courtown (Con)]

The noble Baroness makes some really good points as far as sport is concerned and how important it is. She might have been referring to the purchase of Newcastle United. As she is aware, the Saudi Arabian Public Investment Fund is a significant investor there; it operates across a wide sector. We welcome the PIF’s purchase of Newcastle United, but we never had a role at any point in the club’s prospective takeover. This has been a commercial matter for the Premier League, but the noble Baroness makes some good points relating to culture.

Social Security Benefits Up-Rating Order 2022

Monday 14th March 2022 Lords Chamber

Guaranteed Minimum Pensions Increase Order 2022

Motions to Approve

15:30

Moved by

[Baroness Scott of Bybrook]

That the draft Orders laid before the House on 17 January be approved. Considered in Grand Committee on 9 March.

[Baroness Scott of Bybrook (Con)]

My Lords, on behalf of my noble friend Lady Stedman-Scott, I beg to move the Motions standing in her name on the Order Paper en bloc.

Motions agreed.

Goods Vehicles (Licensing of Operators) (Amendment) Regulations 2022

Monday 14th March 2022 Lords Chamber

Motion to Approve

15:31

Moved by

[Baroness Vere of Norbiton]

That the draft Regulations laid before the House on 24 January be approved.

Relevant document: 29th Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 9 March.

Motion agreed.

Cumbria (Structural Changes) Order 2022

Monday 14th March 2022 Lords Chamber

North Yorkshire (Structural Changes) Order 2022

Somerset (Structural Changes) Order 2022

Motions to Approve

15:31

Moved by

[Lord Greenhalgh]

That the draft Orders laid before the House on 24 January be approved.

Relevant document: 29th Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 9 March.

[The Minister of State, Home Office and Department for Levelling Up, Housing & Communities (Lord Greenhalgh) (Con)]

My Lords, I beg to move the Motions standing in my name on the Order Paper en bloc.

[Lord Liddle (Lab)]

My Lords, I do not want to detain the House long on this matter. I should declare my interest as a member of Cumbria County Council. I would like to put on record a couple of points. First, I thank the noble Lord, Lord Greenhalgh, for the care and attention he paid in the debate we had in Grand Committee on these issues last week. I think that he listened.

Secondly, I put on record my view that the decision we are implementing today, which was taken last summer by Robert Jenrick—late lamented in his role as Secretary of State—to split Cumbria into two unitary authorities is unsustainable, possibly in the short term and certainly in the medium term. In the short term, it involves splitting services that are vital yet fragile, such as social care and child protection, in the space of 12 months. I fear the consequences for the most vulnerable in our society as a result. On longer-term sustainability, the Government are imposing unnatural communities on Cumbria. I cannot believe that these new authorities will sustain public support in the longer term.

[Lord Greenhalgh (Con)]

My Lords, we debated this at some length in Grand Committee. The noble Lord made those points very eloquently. Since then, I have agreed to meet with him and the current county council leader. In fact, I also disclosed and put on record that I have never been to Cumbria and I hope to put that right.

[Noble Lords]

Shame!

[Lord Greenhalgh (Con)]

It is a great shame; I am hearing “shame” from my own Benches. I want to make sure that I remedy that fact and get up to Cumbria. It is clearly a very nice place.

It does not need to be the case that councils split the commissioning of adult social care and social services. Even though they are split into two county councils, they can commission together. As a local authority leader I did that myself, as part of the late lamented tri-borough arrangements, whereby the commissioning of adult social care and elements of children’s social care happened collaboratively with neighbouring London boroughs. I am sure that could happen in Cumbria as well. So where there is a will, there is a way and I am sure the leaders of the two new local authorities will seek to build bridges rather than erect walls.

Motions agreed.

Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2022

Monday 14th March 2022 Lords Chamber

Motion to Approve

15:35

Moved by

[Baroness Bloomfield of Hinton Waldrist]

That the draft Order laid before the House on 6 January be approved. Considered in Grand Committee on 9 March.

Motion agreed.

Small Business, Enterprise and Employment Act 2015 and Pubs Code etc. (Amendment) Regulations 2021

Monday 14th March 2022 Lords Chamber

Motion to Approve

15:35

Moved by

[Baroness Bloomfield of Hinton Waldrist]

That the draft Regulations laid before the House on 30 November 2021 be approved. Considered in Grand Committee on 9 March.

Motion agreed.

Supply and Appropriation (Anticipation and Adjustments) Bill

Committee negatived & 3rd reading
Monday 14th March 2022 Lords Chamber

Second Reading (and remaining stages)

15:36

Moved by

[Baroness Penn]

That the Bill be now read a second time.

Bill read a second time. Committee negatived. Standing Order 44 having been dispensed with, the Bill was read a third time and passed.

Nationality and Borders Bill

3rd reading
Monday 14th March 2022 Lords Chamber

Third Reading

15:37

[The Minister of State, Home Office (Baroness Williams of Trafford) (Con)]

My Lords, before we move on, I will make some remarks about devolution and this Bill. I begin by placing on record my thanks to the devolved Administrations for their engagement at both official and ministerial level.

The majority of the Bill’s provisions apply across the UK. Some clauses extend only to England and Wales because the relevant policy areas relate to matters that are devolved in Scotland and Northern Ireland. These are: civil legal services; arrangements for prisoners who are liable to removal from the United Kingdom; and some specific measures relating to support for potential victims of modern slavery.

I want to be clear that, in the view of the UK Government, the provisions of the Bill that have UK-wide application relate strictly to reserved matters. This means that none of the Bill’s provisions engage the legislative consent process. We have therefore not sought legislative consent from the devolved legislatures.

I advise your Lordships’ House that the Scottish Parliament has approved a Motion, lodged by the Scottish Government, to withhold legislative consent in respect of specific measures relating to age assessment and modern slavery. But it is the view of the UK Government that these measures relate strictly to reserved matters and therefore did not engage the legislative consent Motion process and do not require legislative consent.

The Senedd Cymru has also approved a Motion, lodged by the Welsh Government, to withhold legislative consent in respect of specific measures relating to age assessment and to powers to make consequential provisions. Again, in the view of the UK Government, these measures relate to reserved matters and therefore did not engage the legislative consent Motion process and do not require legislative consent.

For the sake of completeness, I will say that the Northern Ireland Executive has not lodged a Motion relating to the Bill in the Northern Ireland Assembly.

We look forward to continued engagement with the devolved Administrations as we move to operationalise the Bill and the wider new plan for immigration.

Clause 44: Illegal entry and similar offences

Amendment 1

Moved by

[Lord Rosser]

1: Clause 44, page 41, line 37, leave out “, (E1)”
Member’s explanatory statement
This tidying-up amendment is consequential on Amendment 55 at report stage which removed an inserted subsection that would have created an offence for ‘arriving’ in the UK without entry clearance.

[Lord Rosser (Lab)]

I apologise—the House will have to put up with me rather than my noble friend Lord Coaker. I note what the Minister said about reserved matters and the approach and feelings of the devolved Administrations. One only hopes that these matters can be resolved in a satisfactory way acceptable to all parties.

I will speak to the amendments tabled by my noble friend Lord Coaker. All the amendments in this group are tidying-up amendments, and most are consequential on changes this House saw fit to make to the Bill on Report. We on these Benches are content with all the amendments proposed today.

Amendments 1 to 6 in the name of my noble friend Lord Coaker make minor, technical changes to what is now Clause 44 of the Bill. On Report this was Clause 39, and your Lordships’ House voted to remove a subsection that provided for a new offence of arrival into the UK. These amendments are consequential on that change.

Amendment 8, also in the name of my noble friend Lord Coaker, is consequential on the decision of this House to remove Clause 58 from the Bill on Report. Clause 58 would have provided for the credibility of trafficking victims to be damaged by late compliance with an appropriate trafficking notice. This tidying-up amendment removes a now-defunct reference to Clause 58, which is no longer part of the Bill.

Amendment 10, also in the name of my noble friend Lord Coaker, removes a subsection from Clause 70 on child victims of modern slavery. This clause was added to the Bill on Report as an amendment led by my noble friend Lord Coaker. The subsection being removed disapplied what was then Clause 64 to child victims. However, Clause 64 was then removed and replaced by a subsequent amendment. Amendment 10 removes the reference to Clause 64, which no longer exists in its original form.

I have also been asked to introduce Amendment 9 as the noble Lord, Lord McColl of Dulwich, is unable to be here; he sends his sincere apologies to the House. As a result of the number of votes on Part 5 of the Bill, the noble Lord has tabled this amendment to ensure that there is consistency across the Bill. Like other amendments, Amendment 9 is a tidying-up amendment and does not introduce new issues of principle. It simply removes the previous definition of “public order”, which is no longer used due to changes made to Clause 67 agreed by your Lordships on Report. The noble Lord, Lord McColl of Dulwich, has asked me to put on record his thanks to all those who last week supported his amendment to give support and leave to remain to confirmed victims of modern slavery. He also made the point, with which I and others strongly agree, that we regret Part 5 being included in the Bill at all, but the Bill still leaves this House with significant improvements, which we hope the other place will support.

Finally, I am grateful to the noble Baroness, Lady Stroud, for her amendments, which are consequential on amendments that these Benches supported on Report. I also welcome Amendment 11 from the Minister, which reflects the decision of this House to remove Clause 9 from the Bill. I beg to move.

15:45

[Lord Alton of Liverpool (CB)]

My Lords, I can be fairly brief. I support the amendments put forward to your Lordships’ House by the noble Lord, Lord Rosser. In particular, I refer to Amendment 9 in the name of the noble Lord, Lord McColl. I think we would all want to extend to him a speedy return to his place and thank him for all the work he does on behalf of victims of modern-day slavery. I mention my own interest as a trustee of a charity, the Arise Foundation, that deals with modern slavery and human trafficking.

It has been a pleasure to have co-signed amendments to Part 5 of the Bill in the noble Lord’s name but, like the noble Lord, Lord Rosser, I would have preferred that Part 5 was not here at all. I hope that the Minister, when she comes to reply, will be able to give us some indication about the cart-before-the-horse point that was made frequently during discussions on Part 5—in other words, when the new legislation on modern slavery will be laid before your Lordships’ House. I realise that she cannot give us an exact date, but is there some rough estimation of when we might expect to see that? After all, all these issues will be back on the table and open to amendment at that time.

I am sure that all noble Lords will join me in commending the noble Lord’s perseverance and persistence in the cause of improving the support and outcomes for victims of modern slavery over many years. I support his tidying up of Amendment 9 and trust that noble Lords will do the same. We have had the opportunity to improve the Bill for victims of modern slavery, and I am proud of what the House has done in undertaking that. There are still areas of concern, and the Government will know that the outcomes of the Bill will be monitored closely by those who work with victims of human trafficking.

In concluding, I ask the Minister whether the Government will publish the statutory guidance cited in Part 5, in Clause 64, before ping-pong is completed. If not, will it be published during the current Session of Parliament?

[Baroness Hamwee (LD)]

My Lords, on these Benches we support the amendments, but I ask the Minister to go back to the—to me quite worrying—announcement she made at the beginning of this debate, regarding the legislative consent Motions or otherwise. The fact that the Scottish and Welsh Governments do not support the Bill—I assume that is the political and, if you like, philosophical reality behind their stance—seems to raise not just political but practical and procedural issues and matters of enforcement.

I will refer to one issue in the Bill: the arrival or entry into the UK. If asylum seekers arrive at the coasts of Scotland or Wales rather than England, what is to happen? I understand that the Minister’s tone had to be quite neutral and not alarmist, but there are very serious issues related to this. I think the House would be grateful if the Minister were able to flesh out the position a little more.

[Lord Kerr of Kinlochard (CB)]

We have greatly improved Part 2 of the Bill, because it no longer flies in the face of the 1951 refugee convention as understood by our courts, all the other parties to the convention and UNHCR, the institution given the responsibility of overseeing the implementation of the convention. I really hope the Minister will ensure that her colleagues in the other place understand that many in this House feel very strongly about this and would be unlikely to change our view if we were again asked to consider the introduction, contrary to the convention, of a first safe country rule.

There is never a good time for a unilateral reinterpretation of international obligations, but there could not be a worse time than when there are 2.7 million refugees in continental Europe and the Russians are trampling on the 1949 Geneva conventions. We really need to hang on to our reputation for believing in a rules-based system and the rule of law.

[The Lord Bishop of Durham]

My Lords, I support all the amendments because they all seem to make complete sense in terms of tidying up, including those in the Government’s name. I too was disturbed by the announcement about the devolved legislatures—it expresses the deep unease about the Bill out in the country as a whole. I ask the Minister to take away from this House a real concern that this is not the right time to press ahead and that Ukraine has raised questions about the Bill and whether some kind of pause ought to be considered.

[Baroness Williams of Trafford (Con)]

My Lords, I thank the noble Lord, Lord Rosser, for outlining his points. I will start with the government amendments, which are two tidying-up amendments for consideration by your Lordships’ House. The first is a minor drafting amendment to Clause 47, which relates to working in United Kingdom waters. The amendment removes a definition of the term “United Kingdom waters” from the clause. This definition is superfluous as the term is not actually used in the Bill. The amendment therefore helps to clarify Clause 47, so I commend it to your Lordships’ House.

The second amendment is necessary to resolve a problem that has arisen in connection with Schedule 2 to the Bill. This schedule relates to deprivation of citizenship. Its inclusion in the Bill was agreed when noble Lords voted to accept amendments on this topic moved on Report by the noble Lord, Lord Anderson of Ipswich. The problem obviously arises because after agreeing the amendments from the noble Lord, Lord Anderson, your Lordships’ House then voted to remove the substantive deprivation of citizenship clause from the Bill. In consequence, the noble Lord’s amendments were also removed and the schedule was left as an orphan, with no clause to establish it as part of the Bill. I have therefore given notice of my intention to oppose the question that Schedule 2 be the second schedule to the Bill, to ensure that the Bill is consistent.

I also note the 11 tidying-up amendments tabled by the noble Lord, Lord Coaker, and my noble friends Lord McColl of Dulwich and Lady Stroud. The Government will not oppose these amendments, but we will doubtless return to consider both them and the substantive clauses they amend at ping-pong. May I just say something about my noble friend Lord McColl? I had noticed that he did not seem very well recently, and I am sure the whole House will join me in wishing him a speedy recovery.

[Noble Lords]

Hear, hear!

[Baroness Williams of Trafford (Con)]

On the question from the noble Lord, Lord Alton, about a modern slavery Bill, I say: as soon as parliamentary time allows. I cannot give an exact date to the noble Lord. As for guidance being available before ping-pong, I will certainly let him know the intended timetable for the guidance.

On the point about the LCM for Scotland, Wales and Northern Ireland, the provisions of the Bill that have Ukraine-wide application are strictly reserved matters but I say to noble Lords that officials will continue to engage on the specifics of operationalisation.

Amendment 1 agreed.

Amendments 2 to 6

Moved by

[Lord Rosser]

2: Clause 44, page 41, line 42, leave out paragraph (e)
Member’s explanatory statement
This tidying-up amendment is consequential on Amendment 55 at report stage which removed an inserted subsection that would have created an offence for ‘arriving’ in the UK without entry clearance.

3: Clause 44, page 42, line 8, leave out “, (E1)”
Member’s explanatory statement
This tidying-up amendment is consequential on Amendment 55 at report stage which removed an inserted subsection that would have created an offence for ‘arriving’ in the UK without entry clearance.

4: Clause 44, page 42, line 10, leave out “, (E1)”
Member’s explanatory statement
This tidying-up amendment is consequential on Amendment 55 at report stage which removed an inserted subsection that would have created an offence for ‘arriving’ in the UK without entry clearance.

5: Clause 44, page 42, line 18, leave out “, (E1)”
Member’s explanatory statement
This tidying-up amendment is consequential on Amendment 55 at report stage which removed an inserted subsection that would have created an offence for ‘arriving’ in the UK without entry clearance.

6: Clause 44, page 42, line 21, leave out “, (E1)”
Member’s explanatory statement
This tidying-up amendment is consequential on Amendment 55 at report stage which removed an inserted subsection that would have created an offence for ‘arriving’ in the UK without entry clearance.

Amendments 2 to 6 agreed.

Clause 47: Working in United Kingdom waters: arrival and entry

Amendment 7

Moved by

[Baroness Williams of Trafford]

7: Clause 47, page 47, line 2, leave out “and “United Kingdom waters” have” and insert “has”
Member’s explanatory statement
This is a minor drafting amendment to remove a definition of a term not used in inserted section 11B of the Immigration Act 1971.

Amendment 7 agreed.

Clause 63: Provision of information relating to being a victim of slavery or human trafficking

Amendment 8

Moved by

[Lord Rosser]

8: Clause 63, page 62, line 40, leave out from “date” to end of line 41
Member’s explanatory statement
This tidying-up amendment is consequential on Amendment 66 at report stage which left out a Clause.

Amendment 8 agreed.

Clause 69: Conclusive grounds: support and leave to remain for victims of slavery or human trafficking

Amendment 9

Moved by

[Lord Rosser]

9: Clause 69, page 68, leave out lines 4 to 7
Member’s explanatory statement
This is a tidying-up amendment.

Amendment 9 agreed.

Clause 70: Slavery and human trafficking: victims aged under 18 years

Amendment 10

Moved by

[Lord Rosser]

10: Clause 70, page 68, line 31, leave out subsection (6)
Member’s explanatory statement
This is a tidying up amendment. This subsection disapplied a Clause of the bill (Clause 64 at Lords Report Stage) to children. However that Clause was then removed and replaced by a subsequent amendment. This amendment corrects this Clause for the updated version of the bill.

Amendment 10 agreed.

Schedule 2: Deprivation of Citizenship without notice: judicial oversight

Amendment 11

Moved by

[Baroness Williams of Trafford]

11: Schedule 2, leave out Schedule 2
Member’s explanatory statement
Schedule 2 was inserted by amendment at Report Stage, but was introduced by what was then Clause 9, which was then removed from the Bill. The Schedule now has nothing in the Bill to introduce it, and the provisions in it are wholly dependent on the amendments to the British Nationality Act 1981 that were made by Clause 9: it does not make sense on its own.

Amendment 11 agreed.

Schedule 4: Removal of asylum seeker to safe country

Amendments 12 and 13

Moved by

[Baroness Stroud]

12: Schedule 4, page 93, line 23, leave out paragraphs 1 and 2
Member’s explanatory statement
This amendment leaves out paragraphs 1 and 2 of Schedule 4 to the Bill, which would amend section 77 of the Nationality, Immigration and Asylum Act 2002 (no removal while claim for asylum pending). It is consequential to Amendment 35 at Report Stage which was agreed on division.

13: Schedule 4, page 94, line 29, leave out paragraph 4
Member’s explanatory statement
This amendment is consequential to the amendment to leave out paragraphs 1 and 2 of Schedule 4. It is consequential to Amendment 35 at Report Stage which was agreed on division.

Amendments 12 and 13 agreed.

15:56

Motion

Moved by

[Baroness Williams of Trafford]

That the Bill do now pass.

[Baroness Williams of Trafford (Con)]

My Lords, if I may, I will just detain the House a little longer to mark the end of this Bill’s passage through your Lordships’ House. It has been very wide-ranging. It has had five thorough days in Committee and three days on Report. During this time, in response to the terrible situation in Ukraine, we have added important measures to the Bill which introduce new visa penalty provisions for countries posing a risk to international peace and security. I was very pleased to see support for these measures across the House.

I was not so pleased, though, by the removal of some important measures, the aim of which was to find a long-term solution to long-term problems in our asylum and illegal migration systems which successive Governments have faced over decades. Those amendments will now be considered in the other place and no doubt we will debate them soon.

Notwithstanding that, I want to take this opportunity to recognise the contributions of those who have supported me in steering the Bill through the House. In particular, I thank my noble and learned friend Lord Stewart of Dirleton, my noble friend Lord Wolfson of Tredegar and my commendable noble friend Lord Sharpe of Epsom for sharing the load from the Front Bench.

I also express my thanks to all noble Lords who stayed up very late on a number of occasions and thank Members on the Front Bench opposite for their engagement on the Bill, accepting that there have been some areas of disagreement between us. I thank in particular—because I cannot thank everyone—the noble Lords, Lord Coaker, Lord Rosser, Lord Paddick and Lord Anderson of Ipswich, and the noble Baroness, Lady Hamwee.

I also extend my thanks to officials at the Home Office and the Ministry of Justice, as well as lawyers and analysts, not only in those two departments but across government. On my behalf and my ministerial colleagues’, I extend our thanks and appreciation to all of them for their professionalism over the past months. I also thank the teams in our respective private offices.

There should be no doubt about the merits of the Bill’s ultimate objectives, namely to increase the fairness and efficacy of our system, to deter illegal entry into the UK and to remove more easily from the UK those with no right to be here. That is what the British people voted for, it is what the British people expect and it is what the Government are trying and determined to deliver. In view of the crises now confronting our world, it is surely now more important than ever that the Bill moves swiftly to become law. On that note, I beg to move that the Bill do now pass.

[Lord Rosser (Lab)]

I will not detain the House for long but I think that I ought to say a few words; first, to thank the Minister, in particular, for the number of meetings that I know she has held—I suspect that she has lost count—and her willingness to respond in writing and in some detail on issues that have been raised, which is certainly appreciated. I also thank the noble Lords, Lord Wolfson of Tredegar and Lord Sharpe of Epsom. I will not comment too much about people who stayed late since I probably fell rather short in that regard myself. Some of us made sure we left in time to get last trains, but not everybody did.

16:00

I take this opportunity to thank my Front-Bench colleagues, in particular my noble friends Lord Coaker and Lord Ponsonby of Shulbrede. I cannot possibly mention everybody involved but I want to thank the large number of contributors from the Back Benches, not least on my own side, including my noble friends Lady Lister of Burtersett and Lord Dubs—they are by no means the only ones—as well as those from the Government Back Benches, the Lords spiritual, the Cross Benches and, of course, the Liberal Democrats. I hope that noble Lords will forgive me for not going through and naming everybody; I would be here all night if I did. With apologies, of course, I must also thank the Greens; I am on the verge of getting into real trouble.

I thank members of the Government’s Bill team as well. I know that they have to work particularly hard and I am sure they must get frustrated at times with some of the contributions that are made, not least by myself, but they always deal with us in a good-natured way; we appreciate that very much indeed. I also thank the staff in our own office here in the Lords, not least Grace Wright, who covers Home Office matters and without whose support and backing on this Bill, frankly, I would have been in real difficulty. I appreciated that very much; I am sure that that applies to my noble friends Lord Coaker and Lord Ponsonby of Shulbrede too.

As the Minister said, a number of amendments have been passed. They have come not just from the Opposition Front Bench—indeed, a minority may have been led by us—but from all parts of the House. I think that sums up the frustration—that is probably understating it—that many people feel about some of the content of the Bill. I can only say that I hope that the Government, and the other place, will give full and careful consideration to the changes and amendments that have been made to this still-controversial Bill by your Lordships’ House.

As the Minister has mentioned, we spent five days in Committee and three on Report. I appreciate that the Minister, on behalf of the Government, will not be excited by the outcomes of all the votes but, bearing in mind that those amendments did come, and in many cases had support, from all parts of this House, the least we can expect from the Government and the other place is that they give them full and careful consideration.

[Lord Paddick (LD)]

My Lords, following the invasion of Ukraine, it has been interesting to note how the arguments of some noble Lords have acquired a hollow ring. We were implored to listen to public opinion to restrict immigration, but this Bill is not about restricting the over 90% of immigration to the UK that is nothing to do with refugees. This Bill is targeted at asylum seekers like those fleeing Ukraine, who, in recent years, accounted for about 4% of immigration to the UK, and it is aimed at victims of modern slavery: people being trafficked and exploited by ruthless people smugglers as well as many being exploited in this country who were born in the UK.

Public opinion shows that British people welcome refugees; this Bill shuns them. It is consistent with the Government making another grave mistake in using the new-found freedom from the European Union to place barriers in the way of Ukrainian refugees instead of waiving visas as the rest of the EU has done. To paraphrase the Irish Prime Minister yesterday, we can deal with any security issues once they are here—the priority is humanity.

I thank my noble friends Lady Hamwee and Lady Ludford, without whose support I would not have made it through this ordeal, as well as the Labour Front Bench and Back Benches, our respective support staff, Elizabeth Plummer and Grace Wright, and all those organisations and individuals who have supported us in opposing this truly dreadful Bill, including the noble Baronesses, Lady Jones of Moulsecoomb and Lady Bennett of Manor Castle.

I thank the tripod of Ministers—the noble Lords, Lord Wolfson of Tredegar and Lord Sharpe of Epsom, and the noble and learned Lord, Lord Stewart of Dirleton—for supporting the noble Baroness, Lady Williams of Trafford, who has striven uncomplainingly through unreasonably long sittings due to the mismanagement of the timetabling and the deliberately unco-operative attitude of the Government. This House should not have been debating issues of this gravity at 3 o’clock in the morning or voting on them after midnight.

The elected House passed this Bill and, therefore, sadly, so must we. Hopefully, we have taken some of the sting out of it. In the light of Ukraine, simply because it graphically illustrates the barbaric nature of this Bill, we now ask the other place to think again and to leave in place the improvements that we have made. We on these Benches earnestly hope that it will.

[Lord Alton of Liverpool (CB)]

My Lords, I place on record my thanks to the noble Baroness, Lady Williams of Trafford. She has heard a lot of complaints about the things that Members of your Lordships’ House disagree with, and I associate myself with some of those complaints, but this Bill has been something of an endurance test. At a quarter to one in the morning last week, as we debated citizenship fees, I thought that maybe this was not the way to conduct parliamentary business. However, I was particularly pleased that, during the course of our proceedings, the noble Baroness was specifically recognised and raised to the Privy Council; it was a just reward for the way in which she serves your Lordships’ House.

I notice that the noble Lord, Lord Patten of Barnes, has been listening in the Chamber this afternoon. He spoke in our debate last week about the position of young Hong Kongers. Along with the noble Lord, Lord Sharpe, the noble Baroness was incredibly helpful in incorporating into this Bill something that will really benefit young people in Hong Kong who, born after 1997, were not part of the BNO scheme that their parents had been part of. I have already seen emails from people in Hong Kong expressing their thanks to your Lordships’ House.

Finally, I extend my thanks to Members from all sides who supported my amendment on providing safe and secure routes out of genocide in various parts of the world. I hope that that will not be lost in the maelstrom as we now proceed to ping-pong but will be given serious thought, and that maybe further discussion can take place as this Bill now proceeds to another place.

[Baroness Stowell of Beeston (Con)]

My Lords, I join the noble Lord, Lord Alton of Liverpool, in his comments about my noble friend the Minister, on her effective stewardship of this Bill and the recognition that she has recently received in becoming a member of the Privy Council.

I would like to add a slightly different perspective from that of some noble Lords who have spoken in this stage of the legislation. I support this Bill. I have not contributed to a great extent during its passage, but noble Lords may have noticed that I have spent a lot of time listening to the debates during its period in your Lordships’ House. Although I support the Bill, I do not do so blindly. I am a great believer in the parliamentary process, and I have always taken the view that the process of scrutiny always improves legislation. The Bill leaves this House to return to the other place stronger than when it arrived. I commend many noble lords who have worked to achieve that, including my noble friend the Minister and her colleagues on the Front Bench.

However, I will make a couple of other observations. One of the things that I have found a bit concerning in listening to some of the debates during this Bill’s period with us is the way in which some noble Lords in bringing forward their amendments, or those who have supported their amendments, have sought to suggest that people who are kind are people who will support them—in a way, trying to define those who oppose the Bill as the only people who speak for those who are kind and generous when it comes to those who come to our country in their time of need. As the Minister said earlier, it is important for us to recognise that the need and desire for stronger immigration controls, and the generosity of spirit of the British people to refugees and to asylum seekers, are not mutually exclusive. Actually, a lot of people feel strongly that it is because of stronger controls that people feel able to be that much more generous in the way they feel they want to be to those in need.

So, whatever happens when the other place considers the amendments that have been made in your Lordships’ House and sends the Bill back to us, I hope that when we get to that stage in the passage of this legislation we will all refrain from trying to monopolise or reserve for ourselves a definition of kindness that is not embracing of those who also want to see stronger immigration controls.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, this has been an incredibly tough Bill, not only because of the stamina necessary to take us through the very long hours—and sometimes the very long speeches—but because it has sometimes been emotionally draining. It was almost worse than the policing Bill, which I really thought was the worst Bill. On the other hand, we have had some great speeches.

I thank everyone who has thanked us. We have put quite a lot of energy into this, and at the same time we are well aware that it is the whole House that has made a real difference.

16:12

Bill passed and returned to the Commons with amendments.

National Insurance Contributions Bill

Consideration of Commons amendments
Monday 14th March 2022 Lords Chamber

Commons Reasons

16:13

Motion A

Moved by

[Viscount Younger of Leckie]

That this House do not insist on its Amendment 2, to which the Commons have disagreed for their Reason 2A.

2A: Because it affects a charge on the public revenue, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

[Viscount Younger of Leckie (Con)]

My Lords, I welcome this small but important Bill that has returned to this House—I hope for the final time. I again thank the noble Lord, Lord Tunnicliffe, and the noble Baroness, Lady Kramer, who have previously contributed to an engaging debate on these important issues.

Two amendments have returned for our consideration today. Both relate to amendments previously narrowly passed in this House. They have returned to the House after being carefully considered by the other place and having been convincingly rejected, with financial privilege cited as the reason. I will summarise both.

The first amendment that the Commons have rejected would have added an additional condition to Clause 2 of the Bill whereby the freeport NICs relief would be available only if the freeport governance body maintained a public record of beneficial ownership of businesses operating in the freeport tax site. The House of Commons has considered the issue and decided that the amendment made in your Lordships’ House is subject to the financial privilege of the House of Commons and should not be accepted. However, I will mention what the Government are doing to ensure that firm and co-ordinated action is taken to crack down on economic crime, as I know that this House has kept the issue very much at the forefront of its mind, given the unfolding events in eastern Europe, and contributed vastly to furthering this particular debate.

16:15

For the record, following the commitments announced by the Prime Minister in February, the Government have brought forward the Economic Crime (Transparency and Enforcement) Bill to crack down further on illicit money and corrupt elites in the UK, and I look forward to following the discussions on that Bill very shortly. The Bill will introduce a register of overseas entities’ beneficial ownership of UK property to tackle foreign criminals using UK property to launder money; reform our unexplained wealth orders regime to remove key barriers faced by law enforcement and to help target more corrupt elites; and strengthen the Treasury’s ability to take action against financial sanctions breaches.

We have also published details of further upcoming legislation, including fundamental reform of Companies House, enhanced information-sharing powers and new powers to seize crypto assets, which are designed to clamp down on money laundering and illicit finance. The Prime Minister also confirmed that we will set up a new dedicated kleptocracy cell in the National Crime Agency to target sanctions evasion and corrupt Russian assets hidden in the UK, which means that oligarchs in London will have nowhere to hide. These measures are good news for the UK, enhancing our already strong reputation as an honest and trusted place to do business.

The Government have also taken steps to ensure that freeports are secure from money laundering, fraud and other illicit activities. First, to ensure that goods within the freeport customs site remain under customs control and the sites are robustly secured, both the freeport operators and businesses operating in the customs site will need to be authorised by HMRC and Border Force. Compliance checks on goods within the freeport will be carried out by HMRC and Border Force.

Secondly, to ensure sufficient security of the sites and prevent illicit activities, freeports will have to adhere to the OECD code of conduct for clean free trade zones and must maintain the current obligations on freeports set out in the UK’s Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.

Thirdly, the Government also require each freeport governance body to undertake reasonable efforts to verify the beneficial owner of businesses operating within the freeport tax site and to make the information available to HMRC, law enforcement agencies and other relevant public bodies. This is a condition of freeport status and is a proportionate approach; it means that the local area and law enforcement can take effective measures to ensure the security and propriety of operations within the freeport.

Moving on, the second amendment that the Commons overturned would have provided the Treasury with an additional power to amend the period in which an employer can apply a zero rate of secondary class 1 NICs to a veteran’s employment. The House of Commons has considered the issue and decided that this amendment is subject to the financial privilege of the House of Commons and should not be accepted. There are existing levers within the Bill, such as increasing the upper secondary threshold and extending the overall period of the relief. The proposed additional powers are therefore not necessary. In addition, the Government consulted widely on this measure and have received positive feedback from stakeholders, as the House will know.

In conclusion, the Commons rejected both amendments on the basis of financial privilege. I hope that this House will accept the will of the elected House for the reason of finance privilege and pass this important Bill. I beg to move.

[Baroness Kramer (LD)]

My Lords, I will be brief because we have a heavy agenda today, and we are going to be talking about the Economic Crime Bill, which is not unrelated to the issue I want to raise, which is that of freeports. The amendment this House introduced would have made that register of beneficial ownership of businesses in freeports public. There may have been a mistaken impression sometimes—I am sure the Minister did not intend this—that that information would be available to people, either through the properties register or through the revised Companies House register. But that is not the case except in the very rare circumstances where the business in the freeport would be a headquarters for the entity and therefore its legal address, or where the entity had sought to purchase property. Those are mistakes that no criminal organisation or kleptocrat would make. They would take advantage of the lack of disclosure that otherwise frames freeports.

I found the reasons the House of Commons gave quite extraordinary. It said this amendment was rejected:

“Because it affects a charge on the public revenue.”


If there is to be a register of beneficial ownership of businesses in a freeport, uploading that to a public website rather than the internal site essentially has no cost difference. So, public revenue cannot possibly be the reason that this is an issue. So, where could public revenue come in? It is because the additional transparency that allows civil groups, activists, journalists and others to look at what is happening in the freeports would, in effect, deny to criminals, money launderers, kleptocrats and others of similar ilk the ability to claim exemptions in national insurance contributions. In other words, it would have reduced the demand on the public purse; it would have reduced the demand for public spending. Yet that seems to be the reason being given for overturning this particular arrangement. So I would just be curious to know, if the Minister speaks again—but we can deal with this in relation to other cases—why denying to criminals and money launderers various tax exemptions and reductions in national insurance payments is considered to be an issue of public revenue and therefore a reason for not including this particular measure. I am exceedingly confused.

On other matters, I supported the issues raised by the noble Lord, Lord Tunnicliffe, and I am sure he will speak to them. But I do regret that both these measures have been overturned.

[Lord Tunnicliffe (Lab)]

My Lords, we need to move quickly to today’s main business, so I will be brief. During Prime Minister’s Questions on 9 February, the Conservative MP Stuart Anderson asked

“whether veterans will always be at the heart of this Government’s strategy and whether everything will be done to see that they always get what they need.”

The Prime Minister responded that

“we ensure that veterans receive particular support and encouragement in employment, and we encourage employers to take on veterans as well.”—[Official Report, Commons, 9/2/22; col. 940.]

The Minister knows that we welcome the new NICs relief for employers of veterans. Our amendment did not compel the Government to do anything. It merely gave Ministers the option of extending the 12-month relief, if that would have had a beneficial impact on veterans’ employment and retention. I struggle to understand why both the Prime Minister and Mr Anderson voted against that proposition, given their stated support for veterans. However, in a phrase I have heard throughout my career, we are where we are. Your Lordships’ House has fulfilled its role and, having done so, should now let this Bill pass.

[Viscount Younger of Leckie (Con)]

My Lords, I have some very brief return remarks to thank the noble Baroness and the noble Lord for their remarks. Of course, I listened carefully to the disappointment expressed by them both in terms of the outcome. However, perhaps I can give a little chink of light: I think we can look forward to continuing to debate some of the themes raised, perhaps more appropriately, as I mentioned earlier, during the course of the economic crime Bill. But with that, I beg to move.

Motion A agreed.

Motion B

Moved by

[Viscount Younger of Leckie]

That this House do not insist on its Amendment 4, to which the Commons have disagreed for their Reason 4A.

4A: Because it affects a charge on the public revenue, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

[Viscount Younger of Leckie (Con)]

My Lords, I have already spoken to Motion B, and I beg to move.

Motion B agreed.

Arrangement of Business

Monday 14th March 2022 Lords Chamber

Announcement

16:25

[Lord Ashton of Hyde (Con)]

My Lords, the next business is Committee on the Economic Crime Bill, and it might be helpful for the House if I outline the plan for the rest of the day. As the House decided last Wednesday, the House will, we hope, complete all the remaining stages of the Bill today. To allow this to happen, at the end of Committee, if the Bill is unamended, Members will have 30 minutes to table any amendments they wish the House to consider on Report. The deadline will be displayed on the annunciator. Amendments are tabled with the Public Bill Office in the normal way. The Public Bill Office will be happy to advise on amendments before the conclusion of Committee. Depending on the progress of the Bill, I will make further announcements during the course of the day about arrangements for further stages of the Bill.

Economic Crime (Transparency and Enforcement) Bill

Committee stage
Monday 14th March 2022 Lords Chamber

Committee

Relevant documents: 22nd Report from the Delegated Powers Committee, 14th Report from the Constitution Committee

16:26

Clauses 1 to 3 agreed.

Clause 4: Application for registration

Amendment 1

Moved by

[Lord Callanan]

1: Clause 4, page 2, line 19, at end insert “and, where applicable, the statement and information mentioned in subsection (2A)”
Member’s explanatory statement
This amendment requires an application for registration as an overseas entity to include the information and statement required by subsection (2A) (information about trusts).

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, we start with a group of government amendments to collect more information about trusts and overseas trust-like arrangements. These amendments address both the concerns raised in the other place by noble Lords on Second Reading in this House. I pay particular tribute to my noble and learned friend Lord Garnier, the noble Lords, Lord Vaux of Harrowden, Lord Faulks and Lord Fox, and the noble Baroness, Lady Jones of Moulsecoomb, all of whom drew attention to this important issue in their speeches.

As highlighted by those noble Lords, there is a particular difficulty with the availability of information about some trusts, including so-called discretionary trusts. This is where the assets are held in trusts to be used at the discretion of the trustees, because the beneficiaries can change. So we need to have some further information captured on trusts in this register, over and above what Her Majesty’s Revenue & Customs already captures on the TRS—trust registration service.

Both Houses can rest assured that this issue was not overlooked by the Government. Officials had already been working on amendments to the Bill, but it was important to table amendments only when we were sure that proposals were workable in practice and that the drafting fully achieved the policy intent. I have had a number of discussions with noble Lords, so I think everybody appreciates this is a complicated technical area.

These amendments set out that where a trustee of a trust—or of an equivalent arrangement that under the law of a country or territory outside the United Kingdom is of a similar character to a trust—is a registrable beneficial owner, the overseas entity must give them an information notice. That notice requires the recipient to provide information about the settlor, beneficiaries and other persons who have rights to appoint or remove trustees or rights over the exercise of the trustees’ functions—sometimes referred to as protectors.

16:30

The trustee must also provide other information about the trust—for example, the date of creation and about other trustees. It is an offence for the trustees to fail to comply with the notice without a reasonable excuse. The entity must then disclose this information to the registrar. Although this information will be unavailable for inspection on the public register, it may be disclosed to Her Majesty’s Revenue & Customs, law enforcement agencies and other specified persons with a public function for use in the execution of their functions. HMRC will also be able to disclose information to allow the registrar and the Secretary of State to take action in connection with offences.

While the abuse of trusts to prevent disclosure of beneficial ownership for high-end money laundering and tax crime has been well documented, it is important to remember when considering these amendments that trusts can be established for legitimate and highly personal reasons, such as protecting assets for children or vulnerable adults. So let me reassure noble Lords—the noble Lord, Lord Coaker, in particular, has raised with me directly—that this is the intention behind Amendments 45 and 46. I reiterate once again that this information will be available to law enforcement and other agencies.

Amendments 6 and 10 require overseas entities to disclose to the registrar where an individual or an entity which is a registerable beneficial owner of the overseas entity is a trustee. Amendments 1 and 2 require the overseas entity to provide to the registrar, on application under Clause 4, information about trusts where a trustee is a registerable beneficial owner. Amendments 21, 22, 25, 28, 29 and 30 provide for the same when overseas entities comply with their updating duty or apply for removal from the register under Clauses 7 and 9. Amendment 4 is an insertion of clause cross-references in part consequential on changes to Clauses 4, 7 and 9, which brings the trust information that I have just described within scope.

Amendment 15 sets out the required information about trusts within Schedule 1. This includes the name or, if it does not have a name, a description, the date of the trust’s creation, further information about trustees and information about the beneficiaries, settlors and other interested persons who have rights in respect of the appointment or removal of trustees or the exercise by the trustees of their functions.

Amendment 89 extends the provisions of Part 1 of the Bill in relation to trusts so that they apply to arrangements of a similar character outside the United Kingdom. It also allows the Secretary of State to specify descriptions of arrangements outside the UK that are, or are not, to be treated as of a similar character to a trust.

Amendment 16 allows for the Secretary of State to make further provisions about the required information about trusts. Amendments 38 and 39 provide that overseas entities must take reasonable steps to obtain information about trusts, including sending trustees information notices requiring them to confirm, correct or provide the required information. This will, of course, mean that Clause 15 will make it an offence for a trustee to fail to comply with the information notice without a reasonable excuse.

Amendments 45 and 46 provide that the required information about trusts will be unavailable on the public register. Amendment 46 removes protection of date of birth and residential address information because Amendment 47 creates different provisions governing the disclosure of information about trusts. Amendment 47 generally prevents the registrar from disclosing the required information about trusts. It also includes a new power to disclose information about trusts to HMRC or other specified persons with public functions. Amendment 48 is consequential on Amendment 47, ensuring that the new power to disclose information about trusts cannot be used in a way that would contravene data protection legislation.

Amendment 85 permits HMRC to disclose information to allow the registrar and the Secretary of State to take action in connection with offences.

Amendments 16, 26, 27, 31 and 32 are consequential on other amendments to ensure that the new amendments are consistent. I hope that is helpful to noble Lords. I beg to move.

[Lord Clement-Jones (LD)]

My Lords, I rise to speak to Amendment 17. I am delighted that it has also been signed by the noble Lord, Lord Agnew. This would extend the definition of a registerable beneficial owner of an overseas entity to include anyone who is the beneficial owner of land or property held by the entity.

Why does this matter? Let me give an example. Mr X wants to buy a house in London and sets up an overseas company to own the land. In this scenario, he meets the conditions for being a beneficial owner of a company; the Bill works as intended. However, assume our Mr X rather likes his anonymity, so he approaches a Panama law firm which, after a payment, buys the house for him using its general nominee company which holds legal title to many such properties all beneficially owned by different people. The nominee company issues a declaration to Mr X that it is holding the land as his nominee and that he is the beneficial owner of the property.

In this scenario, the nominee company is the overseas entity owning the property and its beneficial owner is the law firm which set it up. Depending on its ownership structure, the partners at the law firm may or may not appear on the register. However, that is not the point. They may be the beneficial owners of the nominee company but are not the beneficial owners of any of the properties owned by the company. Mr X and the other beneficial owners of the properties held by the nominee company do not tick any of the boxes for being a beneficial owner of that company. The declaration issued by the nominee company is private, so in this scenario they remain anonymous.

Is this what the Government intend? Opening the Second Reading debate last week, the Minister, the noble Baroness, Lady Williams of Trafford, said that the Bill would

“require anonymous foreign owners of UK property to reveal their real identity, ensuring that they can no longer hide behind secretive chains of shell companies.”—[Official Report, 9/3/22; col. 1484.]

That suggests that this is not what the Government intended, and this is where Amendment 17 comes in. By extending the definition of a beneficial owner of an overseas entity holding UK property to include anyone who is the beneficial owner of land or property held by the entity, we would be giving this Bill the scope the Government appear to intend for it.

Responding to last week’s debate in the other House, the Minister there said that if nominee companies were “directed by someone else”—the beneficial owner of the land—then the person doing the directing would be “caught by condition 4” in the definition of a beneficial owner: significant influence or control. But that would only be the case if a separate nominee company is set up for the particular beneficial owner. If a general nominee company is used and this acts for hundreds of different clients, then it is difficult to see that any one of them exercises significant influence or control over the nominee company. That is why Amendment 17 is needed.

[Lord Eatwell (Lab)]

My Lords, I support the theme of what the noble Lord, Lord Clement-Jones, just said, which is the general weakness of the definition of beneficial ownership in this Bill. It is very striking that in other jurisdictions within the British Isles that hold registers of beneficial ownership and have done for some years, the beneficial owner is always defined as an individual and never as a firm or a trust. An individual who ultimately owns or controls the entity must be identified. The Bill as currently constructed has significant weaknesses, which will prevent the identification of individual beneficial owners in the way that the Government apparently intend but have not as yet achieved.

[Lord Vaux of Harrowden (CB)]

My Lords, we find ourselves in an unusual position. Normally, this House is trying to knock the edges off overzealous legislation and limit the powers the Government have a tendency to give themselves. In this Bill, we are trying to achieve the exact opposite: to strengthen the powers and close the loopholes so that the powers are as effective as possible.

We are trying to move quickly because of the awful situation in Ukraine. As the Minister said at the outset, the overseas entity register is not an emergency measure—although it will be useful in this situation. In normal times, it would be subject to much more detailed scrutiny, and we would not normally debate such wide groups as we are today. At Second Reading, I asked the Minister to confirm that the follow-up economic crime Bill would be sufficiently wide in scope to allow the matters we are covering now to be considered further, if necessary, as part of that Bill. While the Minister nodded vigorously at the time, he did not give that confirmation in his response. The House clearly accepts the need to move fast, and matters which would normally be voted on will not be pushed to a vote. I hope that the Government will reciprocate that flexibility. Speaking for myself, it would be much easier to accept the flaws and gaps in this Bill, if it were clear that there will be the opportunity to give the more detailed scrutiny which these important issues deserve in due course. Will the Minister please provide that confirmation today?

We all welcome the additional clauses that the Government are proposing on trusts, one of the more common methods to obscure ultimate ownership. Of course, trusts can be—and, as the Minister said, they usually are—perfectly legitimate. However, they can be misused. As such, I commend the Government for introducing these new clauses. That said, and in addition to the points made by the noble Lord, Lord Clement-Jones, there is still one area where an important gap remains: the classic way of camouflaging the identity of the ultimate beneficial owner is by the use of discretionary trusts. These will often have a stated beneficiary, such as a charity, but, because they are discretionary, the benefit can be passed to others who are not identified. That might be under a formal agreement, but it is often something less formal or traceable. In such situations, it can be difficult to ascertain who the real beneficiary is. The identity of “the settlor or guarantor” is one clue— government Amendment 15 rightly requires those to be identified.

The Minister kindly wrote to me yesterday afternoon—I apologise for spoiling his weekend. He said that HMRC already has access to information about beneficiaries through new data-sharing gateways and existing exchange of notes mechanisms. However, this is true only for UK resident taxpayers and for situations where money actually flows. It does not cover all jurisdictions, so the gap remains. Many of the ultimate property owners are not UK residents, and value can pass in different ways—for example, the simple right to use the property rent-free would not be picked-up by HMRC.

One other way of trying to see through such discretionary trusts is to identify who has benefited in the past, including those who have had the use of the underlying property at less than market rent. It would be relatively easy to add a subsection to the Government’s Amendment 15 to cover that, and it would not be difficult information for innocent parties to provide. Is this something which the Government could consider, even if it is in later regulation?

As a general theme, we should not be allowing overseas entities to register unless they are fully transparent. To be honest, the Government’s apparent reluctance to accept clauses which would improve that transparency is somewhat concerning. On that theme, I also wholeheartedly support Amendment 17. It seems rather pointless to have information on the overseas entity, if that still fails to show us who owns the property. I urge the Minister to look at that seriously.

[Lord Agnew of Oulton (Con)]

My Lords, I shall speak in support of the noble Lord, Lord Clement-Jones, and his Amendment 17. I recognise that the Government have made big strides in the last few days to listen to the concerns which are so widely held. However, given all this effort, and given that the Bill has sat almost ready for four or five years, I feel that we could go further today and do the job properly.

There is no point in legislating for a Bill that leaves huge gaps for more anonymity. I am really sceptical about the need for endless anonymity. The people who strive to have anonymity do not always have it for the right motives. We need to recognise that. I said to the Minister before we came to the Chamber that we spend our lives being entirely reasonable in this country while trying to deal with very unreasonable people. Of course, we must stick to the law, but we need to have the levers in the law which enable us to tackle these bad actors. This is why, in my own slightly layman attempt with Amendment 23, I have tried to bring more focus on the promoters of these organisations. This is to ensure that there is much more responsibility taken by directors who promote organisations, and that they help to provide proper due diligence when working with the sorts of people they are busily defending anonymity for.

16:45

[Lord Coaker (Lab)]

I thank the Minister for the way in which he has engaged with his officials to try to address some of the concerns which have been raised.

I will also pick up the point made by the noble Lord, Lord Vaux, about something which concerns all noble Lords about this Bill: it is going through on an emergency process because we face an emergency, yet not all of it concerns emergency legislation. Of course, the sanctions part is, but many of the other parts of the Bill about overseas entities have been on the stocks for years—as the noble Lord, Lord Agnew, said. Yet the Government have failed to act before now and it is only in the face of this emergency that they have done so. While that is to be welcomed, in some respects, it affects many of the things on which we would want to vote and would want to discuss in great detail, and many of the amendments which your Lordships have quite rightly brought forward which would improve the Bill. On the basis of not tying up this House or preventing this legislation from passing, in the face of the current national emergency, the Bill will go forward in a way which is not as good as it could be. I think that this is a feeling which is generally held across the House. It is certainly how we feel. Of course, we will support the Government in putting this legislation through—but that is not to say that we do not have very serious concerns about aspects of it.

Many noble Lords on Labour Benches and other Benches have raised these issues. Therefore, I very much agree with the noble Lord, Lord Vaux, that the Government need to recognise that the amendments being put forward—even though most, if not all, of them will be withdrawn—seek to do so from a position of needing to strengthen this Bill; it is about time we got hold of a problem which has been identified by many different reports over a number of years. As the noble Lords, Lord Agnew and Lord Clement-Jones, pointed out, transparency is everything. As we go through parts of this legislation and we see exemptions, and parts of the Bill where full disclosure is not to be statutory or guaranteed, one wonders whether it goes as far as it could.

The amendments tabled by the noble Lords, Lord Agnew of Oulton and Lord Clement-Jones, deal with related issues around nominees. We hope that the Minister can offer a full response to the points made by both noble Lords, because they are really important. A lay person reading this would be concerned about the fact that it provides a way to circumvent the regulations.

I thank the Minister for the clarification he made around government Amendments 45 and 47. I am sorry to detain noble Lords, but I briefly remind the House that this is a public document. What if you are not an accountant or someone trained in financial matters? This is the Government’s explanatory statement on government Amendment 45. The Minister has clarified it for me, but many people would think that there is something concerning about the amendment when it says:

“This amendment means that the required information about trusts will be unavailable for inspection on the public register.”


That is the Government’s only explanation of an amendment which they are passing. The Minister has just outlined this.

Similarly, government Amendment 46 states:

“This amendment excludes information about trusts from the definition of ‘protected’ date of birth and residential address information.”


I am sure that there are proper explanations for that. However, sometimes Governments need to be careful. I know the amendment was drafted in haste, but there must have been a better way of doing it.

I accept that there will be many valid reasons for excluding certain trusts from the public register—for example, if one has been established to benefit a child later in life. However, if we had proper time to debate this, an amendment surely could have been brought forward—I would have brought one forward—saying that the exemption could be tied to a specific criterion, rather than being drawn in such a general nature, as it has been. This is another example of the sorts of ways many of us would wish to see this legislation tightened.

We will not stand in the way of these amendments but, as we go forward, I hope that the Minister can give further thought to the very real concerns which have been raised by noble Lords.

[Lord Cromwell (CB)]

I will just underline one point that the noble Lord, Lord Coaker, made. At Second Reading we got the impression that there was quite a limited list of items that were going to go into the second economic crime Bill. Can we have an assurance at this opening stage from the Minister that he will remain open-minded as to the shopping list of items—if I may use the phrase—which will need to be included, some of which may be revisiting what we have done today but others of which will be entirely new? Can he assure us that it is not a short shopping list?

[Lord Cormack (Con)]

I just make a very brief point to my noble friend. Because of migraine, I was unable to take part in Second Reading; I had to go home. I was going to make the point then that, if ever a Bill needed continuous post-legislative scrutiny, it is this one. Can my noble friend give an assurance that he will try to set up a special sort of post-legislative scrutiny to look continuously at how the Bill comes into force, what effect it has and where it fails?

[Lord Callanan (Con)]

First, I thank noble Lords for their comments. I do not disagree with the sentiments of a lot of what has been said. I say to the noble Lord, Lord Coaker, that I absolutely appreciate the points that he has made. This is a very complicated and technical area of law, and I assure noble Lords that we have gone into it in great detail. This morning, I met my noble friend Lord Wolfson, who is a trusts expert, to go through the provisions, and I have examined them closely with Treasury and BEIS officials.

We are doing this to close potential loopholes in trusts; the Government have no other agenda here. This is a difficult area. HMRC has recently established a trusts register for UK trusts, and we want to try to make sure that the same visibility exists for overseas trusts. If an overseas trust buys UK property, its interest is clearly covered and will need to be declared, but there is a potential problem with an overseas entity holding a property, and then that being owned by a trust. It is an attempt to control and close those particular loopholes in this complicated area of law, and what I totally accept are complicated amendments have been worked on at great pace to try to do that. So there is no difficulty and no difference between any of us in what we are trying to achieve with this legislation.

I also happily concede that we may not have got every last dot and comma absolutely accurate and right. One point that my noble friend made to me this morning was that we are if not the first then possibly the second in the world to attempt to do something like this, and it will be an iterative process—it is fair to accept that. A lot of international lawyers and others will be carefully studying this legislation and trying to find ways around it. I can certainly say that, if there are loopholes and if something is presented that we think needs closing, we will absolutely do that, if necessary, in the next Bill—although the full extent of the legislation may not be visible at that stage. But we are committed to doing this, providing that information and giving law enforcement the opportunity carefully to scrutinise many of these arrangements.

In particular, I give the assurance that the noble Lord, Lord Vaux, and possibly my noble friend Lord Cormack, were looking for: the further economic crime Bill, which the Government intend to introduce in the next Session, will be broad. We will, of course, carefully examine and consider any amendments proposed in either House that serve to strengthen our framework for tackling economic crime. I know from my long experience in this House that noble Lords will not be shy in coming forward where they can see improvements that could be made to legislation and where they identify any potential loopholes. There are some fine minds in this House and I am sure that they, along with some of our excellent officials, will turn their attention to doing just that.

I agree with the sentiments; there is no difference between us and what we want to try to achieve, and I am grateful in particular to the opposition parties’ Front Benches, with whom I have had extensive discussions, for their forbearance. I will happily concede that this is not necessarily emergency legislation; we have been trying to introduce this register for a while but until now it has not managed to get the prominence in the public sphere and sufficient priority in the legislative programme to allow it to be brought before this House. As the Minister responsible for it in the House and in my department, I am grateful that we have now managed finally to bring it forward. It will be a useful tool of transparency and of benefit to, first of all, the public, and then to the law enforcement community in attempting to target the small minority of overseas entities that hold property in the UK. Something like 59,000 overseas entities hold property, and the vast majority do so for perfectly legitimate, lawful and legal reasons—but within that there is, of course, a tiny minority we all want to target, and this is our transparency contribution to an attempt to do just that.

I move on to look at the amendments in detail. I thank the noble Lords, Lord Clement-Jones and Lord Fox, and my noble friend Lord Agnew, for their Amendment 17. I am grateful for the meeting that I was able to have with my noble friend Lord Agnew earlier to talk about this issue. As I said, I can see the good intent behind this amendment, but it would be ineffective as tabled—and I shall explain why.

It does not fit within the legislative scheme of the Bill. For example, the Bill provides five conditions for “beneficial owner” in Part 2 of Schedule 2. These five conditions, in general terms, relate to shareholdings, rights or control over legal entities, or other arrangements. Amendment 17 seeks to apply the term “beneficial owner” in the context of a qualifying estate—that is, the land itself—which would not work. Further, the amendment fails to empower overseas entities to obtain the information required which, for the most part, remains undefined.

To be clear, this Bill was designed specifically to capture the beneficial owners of overseas entities. This is because, if the land is held in the name of an overseas entity registered in a jurisdiction with poor levels of corporate transparency, law enforcement agencies here may struggle when investigating the affairs of someone of interest. If they cannot obtain information about the entity itself, they will almost certainly never be able to identify any ultimate economic beneficiary of the land. This register aims to ensure that investigators can find out about the overseas entity to further their investigations. There may be a wider policy debate to be had about capturing ultimate economic beneficiaries of land, but this register, focused as it is on overseas entities and not on land held by individuals or UK companies, would not be the appropriate vehicle.

The government amendments provide robust provisions to ensure that overseas entities provide information about beneficiaries, settlors and other persons who can appoint or remove trustees or have rights over the exercise of trustees’ functions, which some may refer to as protectors, where there is a trustee who is a registrable beneficial owner. These amendments go one step further and also apply where there are overseas arrangements with similar characteristics to a trust and those arrangements’ trustee equivalents are registrable beneficial owners.

The noble Lord, Lord Clement-Jones, suggested that nominees will be used to hide true beneficial owners of property. I point out to the noble Lord that there are regulation-making powers within the Bill allowing for amendments to prevent such abuse, if that is needed. I therefore hope that, with the information that I have provided, the noble Lord and his supporters will feel able not to press Amendment 17.

I turn to Amendments 1A, 22A and 29A, which seek to require a director who is acting as a nominee to provide a statement that they are satisfied by the legitimacy of the financial affairs of the beneficial owner and that the nominee will cease to act if information validating legitimacy is not forthcoming on a timely basis. I appreciate the intent of my noble friend Lord Agnew in tabling these amendments, and I understand that his intention is to further verify the legitimacy of the beneficial owner, to create an obligation for a nominee director to have regard to the financial affairs of those they are acting for, and to validate this legitimacy on a timely basis.

17:00

However, it must be noted that it will already be necessary for overseas entities to provide evidence of the verification of any information provided on beneficial owners before an application for registration, an update or an application for removal from the register is in fact made. The requirement for this is in Clause 16, which obliges the Secretary of State to make regulations to this effect. Additionally, it will be an offence to deliver, or cause to be delivered, any document to the registrar that is false, misleading or deceptive, or to make any statement that is misleading, false or deceptive. Any nominee director of an overseas entity acting on behalf of a beneficial owner would be obliged, on pain of criminal sanction, to file accurate information.

There are also safeguards set out in the legislation that make it clear that, if a nominee is being directed by someone else, such as the real beneficial owner, the person doing the directing is caught by Part 2 of Schedule 2—condition 4 under paragraph 6—and is, therefore, a registrable beneficial owner because they have significant influence and control over the entity. That is an important point.

Under this legislation, consistent with existing rules for UK companies, the person required to be registered is the one actually exercising a right, rather than the person who legally owns the right to exercise significant influence or control. That is an important catch-all legal phrase that we have inserted into the Bill.

Again, with the information and, hopefully, reassurances that I have been able to provide to the House, I hope that noble Lords will feel able not to press their amendments.

[Lord Empey (UUP)]

My Lords, I think that everybody in this House, as was the case last week, is on the same page, and we do not want to be seen to be arguing amongst ourselves until the early hours of the morning about something that is so significant. But can I ask the Minister if he and his colleagues in his department will keep a rolling review of this going, even if the gap between this legislation and the next piece of legislation is comparatively short? The last thing we would want is to see some oligarch on the front page of a national newspaper smirking that he or she had circumvented and found some way of actually getting around the will of Parliament and humiliating us. It would be seen, I think, as a failure of policy. I am sure that the Minister is very conscious of that, but it would be helpful if he could tell us that his department will monitor this on an ongoing basis, and not deal with this as a one-off and just leave it to the next piece of legislation.

[Lord Clement-Jones (LD)]

My Lords, perhaps I could just add to what the noble Lord has just said. The Minister mentioned the regulations which are possible post the passing of the Bill. Will he undertake to review some of the points made during the passage of this Bill and consider whether or not regulations might be needed to fill certain gaps?

[Lord Callanan (Con)]

Indeed, I am happy to provide the reassurances that both noble Lords have asked for—in the case of the noble Lord, Lord Clement-Jones, in terms of the regulations, and in the case of the noble Lord, Lord Empey, that we see this as an iterative process. As I mentioned, this is fairly unique legislation in the world; we are aware of only one other country, possibly, that has attempted to do something similar. When we introduced the provisions on PSCs—persons with significant control—in relation to UK companies, we had to make some iterative changes to that, as it became evident over time that aspects were not working as effectively as we had hoped. I hope that we have thought of everything on this one, and I hope that we have all of the details correct, but a lot of it—some of it anyway—has been drafted in haste and it is possible that we will have missed one or two complicated international devices. But, the noble Lord can be assured that we will keep it regularly under review, and if there are—I hesitate to use the word “loopholes”, although it is probably appropriate—devices that clever lawyers, of which there are several in this House, find to get around the provisions, we will not hesitate to close them if we need to.

Amendment 1 withdrawn.

Amendment 1A not moved.

Amendment 2 not moved.

Amendment 3

Moved by

[Lord Agnew of Oulton]

3: Clause 4, page 3, line 21, at end insert—
“(3A) The registrar may request further information to be provided in a timely manner where there appear to be material omissions or suspected false statements.(3B) An application may not be accepted unless the registrar is satisfied that any request for further information has been adequately addressed.”

[Lord Agnew of Oulton (Con)]

I really want to carry on in a similar vein to earlier comments, and what my Amendment 3 is trying to do is to give more levers to government and enforcement agencies to force out information when we are worried that the information is not clear. My noble friend made the point that the Explanatory Notes say that this will be subject to regulations, but those regulations will be subject to a negative resolution. Could my noble friend confirm that we could be involved in the drafting of those regulations, rather than being faced with a fait accompli at the last minute, because I think there is a lot more to be done here? This perhaps plays to my noble friend’s point about the iterative improvements this Bill is going to need over the next few years, because it is fiendishly complicated.

The other piece to this jigsaw is the likelihood of prosecution of bad actors. Having been in business many years, I am afraid that the phrase that has often been offered to me when one is trying to get things done is “It’s the cost of doing business.” If the fines are so weak and the enforcement so inconsistent, it sends a message to those bad actors to continue, because—let us be realistic—is the NCA or Companies House, or any of these other people, going to take an action against a promoter in the British Virgin Islands for £10,000 of unpaid fees? It is just not going to happen, unless we are very clear that there is a mechanism for that to happen and that the fines very quickly get to a level that makes it worth while for litigators, acting on behalf of the taxpayer and the Government, to do that. I beg to move.

[Lord Sikka (Lab)]

My Lords, I rise to speak to a number of amendments in my name in this group—there are eight of them—and I will be fairly brief.

First, Amendments 5 and 13 basically ask the beneficial owners and various other parties to provide their former names. In Part 4 of Schedule 1, the Bill requires managing officers who are managing the beneficial owner’s interest to provide their former names. But the same is somehow not required for registerable beneficial owners where they are persons other than individuals—which could be companies that are forever changing their names, or other parties. What I am seeking to do through Amendments 5 and 13 is to, as it were, align the various provisions in the Bill, and I hope that the Government will be agreeable to that.

Amendments 8, 12 and 14 require the beneficial owners, or their managing agents et cetera, to provide a list of any criminal convictions and sanctions against them. At the moment, the Bill does not ask for that kind of information, so it is perfectly possible for somebody to look at this proposed register of property ownership and not know that the ultimate beneficiaries have various convictions, which may well be abroad. It really exerts pressure on them to either come clean or to avoid the UK altogether—which perhaps would be more preferable. Again, it is a fairly straight forward suggestion asking the Government to act upon that.

The meatier part of my eight amendments relate to Amendments 18, 19 and 20, which take issue with the Government’s provision of the definition of registrable beneficial interest, generally taken to be 25% of the shares or voting rights, or somebody having significant influence or control. As it is now defined it is too wide. Indeed, the provision of any number is too wide. If you say it is 25%, it is not inconceivable that half a dozen people will get together and make sure that nobody gets to 25%. If you specify 20%, that will be exactly the same. So four, five or six drug traffickers can get together and own a fraction of a company, and through that they can invest their proceeds in a property. Under this kind of approach, none of them would be identified as a beneficial owner or count as a person of significant control, because they do not meet the thresholds specified in the Bill.

The Bill as presently drafted leaves open the possibility that companies holding UK property would continue to hide the identity of true owners by claiming that there was no beneficial owner. This is already a major problem at Companies House for the companies already registered in the UK. That has been identified by a number of whistleblowers and a number of leaks that we have had. However, rather than tackling the issue, the Government have imported these problems into the Bill, and it is quite likely that the Bill will not achieve its assumed objectives.

So I suggest that there should be no numerical specification of the beneficial interest definition; rather, any interest should be disclosable. It is not every day that ordinary individuals want to buy UK property through opaque offshore companies. They have a reason why they want to do this, so we must make sure that absolutely no door is open to them. By leaving this definition, the danger is that the Bill simply will not achieve its objectives. I therefore recommend my amendments to the Government in the hope that this will help to end the abuses.

[Lord Vaux of Harrowden (CB)]

My Lords, I support most of the amendments in the group, including the government amendments, which are generally very helpful.

I will speak to Amendment 24 in my name and to the similar Amendment 23, in the name of the noble Baroness, Lady Chapman, both of which are intended to address the possibility of there being a very long period between a change in the ownership of the entity and that change being reported in the annual update. I thank the noble Lord, Lord Cromwell, for his support in this. Amendment 23 would require an update to be filed within 14 days of when a person has become or has ceased to be a registrable beneficial owner. My Amendment 24 is slightly wider, requiring any changes in registered information to be reported within 14 days. However, both amendments seek to bring the overseas entity regime into line with the persons of significant control regime that UK companies must follow. To be honest, I would be content either way.

As the Bill is currently drafted, an overseas entity could register and then immediately change its beneficial ownership and we would not get to know about that for a full year, during which time any number of actions could take place, including the sale of the property to an innocent third party who unwittingly might find themselves enriching a criminal or someone subject to sanctions.

The Bill rightly puts restrictions on the disposition and registration of property, but it does nothing to deal with the more likely scenario of the overseas entity itself, or indeed an entity further up the ownership chain, being sold; indeed, this 12-month grace period almost wilfully ignores that. It seems rather perverse that the overseas entity regime should be more benign than the regime that applies to persons of significant control for UK companies.

In his helpful all-Peers letter of Friday, the Minister explained that the reason they have done it this way is to protect innocent third-party buyers from not being able to register the purchase of a property if the overseas entity turns out to be in breach of the requirement to report a change. That is obviously extremely important. However, a very simple solution is already built into the Bill. The overseas entity has the ability, under Clause 7(8), to shorten the update period and file an update immediately before it sells. Any innocent buyer would simply insist that this happens before the sale is completed, and that would deal with the problem that the Minister explained. Accordingly, I see no reason why one of Amendments 23 or 24 should not be accepted, so that overseas entities would have the same reporting requirements as UK companies have. The whole point of the overseas entity register is that we should know who beneficially owns UK properties. Allowing that information to be potentially up to 12 months out of date cannot make sense. I cannot think of any other corporate register that would allow such a long period to notify changes.

17:15

Given the urgency, I will not divide the House, but this is just another example of a matter that requires proper, unrushed discussion, and I hope the noble Lord is ready to have those discussions as we progress through the wider economic crime landscape.

I want to comment also on Amendment 53 in the name of the noble Lords, Lord Clement-Jones and Lord Fox, and the noble Baroness, Lady Chapman. At Second Reading, the issue of enablers and how to disincentivise them was raised multiple times. The Minister referred to the UK’s existing robust system of anti-money laundering regulations, but he went on to rather undermine that by saying that the Solicitors Regulation Authority had issued only 14 fines in 2021 and that the Institute of Chartered Accountants in England and Wales had cancelled the membership of only six firms—I remind the House that I am a member of the ICAEW. These are tiny numbers given the acknowledged size of the problem, and the fines are almost irrelevant, averaging just £11,600 for solicitors and just £3,000 for accountants. That is self-evidently not enough to disincentivise the enablers, which must explain at least in part why London has become known as the “London Laundromat” or “Londongrad”. Amendment 53 goes some way to deal with this by creating an express offence if a professional fails to disclose knowledge or suspicion of false or misleading information to the registrar.

While I strongly support that, I would go further and introduce an active requirement that a regulated professional must make a positive statement, added to the register, that they have carried out their due diligence and have satisfied themselves that the information about beneficial ownership is correct. As I explained at Second Reading, there is a world of difference between a duty to report suspicions and an active requirement to confirm the information. In the former, the professional remains unnamed. They are only on the hook if a problem later becomes public. So they may feel that the risk of turning a blind eye is quite low, especially set against the small fines that they would face, which I mentioned earlier. Their reputation is not affected unless they get caught, which happens rarely. The noble Lord, Lord Cromwell, alluded to this in his Second Reading speech when he referred to certain bankers who seem surprisingly willing to act for apparently high-risk clients.

Making a positive statement that they have verified the information, on the record, would publicly associate the professional with the information registered. That would seriously concentrate their minds both reputation-wise and legally—they would be putting their reputation clearly on the line. There could be no wriggling off the hook because they relied on someone else. Turning a blind eye would be an active decision rather than a low-risk, passive decision not to say anything.

I considered adding an amendment to this effect, but it can more easily be dealt with in the regulations to be issued under Clause 16, particularly subsection (2)(c). Given the desire to pass the Bill quickly, I decided not to submit an amendment. However, it is an important point and I would like to follow this up as part of those regulations. Would the Minister be willing to meet with me and perhaps others to discuss the matter further?

Finally, the noble Lord, Lord Sikka, has tried to add a number of information requirements, all of which are sensible. I hope that the Minister will actively consider those under the powers to regulate in Clause 4.

[Lord Eatwell (Lab)]

My Lords, I will make a couple of observations on the amendments put forward by my noble friends Lord Sikka and Lady Chapman, and the noble Lords, Lord Fox and Lord Agnew. These observations are based on my experience as chairman of the Jersey Financial Services Commission. The Bill as drafted is significantly weaker than the requirements for registration in Jersey. For example, on the point made by my noble friend Lord Sikka, under the Control of Borrowing (Jersey) Order, any interest can be required to be registered without one of these numerical levels.

Secondly, with respect to the amendment proposed by my noble friend Lady Chapman and others, in Jersey, the requirement is that a change of beneficial ownership be registered within 21 days. This 12-month period is really foolish. It provides an open door to misbehaviour.

I support my noble friends Lord Sikka and Lady Chapman and friends in the amendments they have put forward. We should be able to achieve at least the level of seriousness achieved in Jersey.

[Lord Cromwell (CB)]

My Lords, there is clearly a great deal we can learn from Jersey and I am very happy to follow the noble Lord, Lord Eatwell.

I will speak to Amendment 24, to which I have added my name, and will also make a couple of comments on Amendment 53—there may be a slight sense of déjà vu, as my noble friend Lord Vaux has done the same.

In relation to Amendment 24, on page 3 of his very helpful all-Peers letter of 11 March, the Minister explains that Companies House would not know if a legal entity registered abroad was compliant with the 14-day rule. Likewise, this would not be visible to a third party, whereas that third party could be confident that, if an annual date had passed, the register would be up to date.

I am not convinced that that is so clear-cut or indeed helpful. This approach means that, for up to 12 months, an entity could keep hidden its change in ownership structure. Only at that point would it be in breach if it had not disclosed the change—or possibly multiple changes. Assuming—which may be a bold assumption given some of the entities—that the entity indeed complied with a 12-month date to reveal changes, this would still leave the third party in the dark for up to 12 months and the entity under no obligation to register the changes and having that as a defence. In short, it is possible for entities to game the system by carefully timing their changes. Twelve months, or even one month, can be a long time in business.

This also makes it possible for an entity to waste the time and resources of the acquirer and the regulatory and enforcement agencies if, for example, it becomes subject to sanctions based on its ownership but can claim, at a time to suit itself, that the affected owner or owners actually no longer own it. A 14-day limit greatly tightens the ability of both the registrar and any third party to see, at least in the case of compliant entities, any registered changes in as close to real time as is practicable.

Where entities are not compliant and fail to declare changes in this timely way, should this emerge in due course, it should give the third-party acquirer grounds for withdrawal and the authorities grounds for pursuit. This does leave an obligation on the registrar to ensure that entries are kept up to date, but that is a technological and resourcing issue perhaps better addressed in other amendments. For these reasons, I added my name to Amendment 24 and support it. I urge the Minister to rethink the 14-day requirement.

I shall now make a few comments on Amendment 53. In paragraph 4 on page 2 of the same letter, in relation to the purpose of the Bill, the Minister acknowledges that there will be those who seek to exploit opportunities to avoid it—he also referred to this earlier today. I raised at Second Reading the issue that there are enablers whose approach to reporting suspicions is light-touch or simply to turn a blind eye. I also advocated the idea put forward very eloquently by my noble friend Lord Vaux a few moments ago of having a named senior official on the hook. Simply saying that existing regulations cover this is to deny the evidence that there are entities and enablers in the area addressed by this Bill that have been skirting round existing regulations too easily by claiming ignorance or that suspicion was only mild. I think this may be more specifically reflected in the reference in paragraph 5 on page 5 of the Minister’s letter of 11 March, which says in relation to verification of information that:

“We expect that this will include a role for professionals regulated in the UK by the Money Laundering Regulations.”


This amendment, by including suspicion rather than certain knowledge, covers the loophole by which enablers can claim not to have had certain knowledge even if they should have had reasonable suspicion. This makes it considerably more difficult for enablers and others to look the other way and strengthens the hand of those seeking to hold them better to account. I support this amendment.

[Lord Clement-Jones (LD)]

My Lords, I shall speak to Amendment 53. I thank the noble Lords, Lord Cromwell and Lord Vaux, for their support, although I understand that they would like to see this tweaked to go further. I also thank the noble Lord, Lord Eatwell, for his supportive comments.

The Bill needs to be comprehensively amended to close the loopholes that currently allow professional enablers to undermine the effectiveness of, and even circumvent, the checks aimed at detecting, disrupting and deterring economic crime. One of the key ways this can be done is by imposing a positive duty on professional enablers to disclose knowledge or reasonable suspicion that misleading, false or deceptive information has been provided to the registrar of overseas entities.

As I set out on Second Reading, professional enablers, such as lawyers, accountants and bankers, are the gatekeepers of economic crime and the Government need to adopt a comprehensive strategy towards them. Given the nature of their work, there is an inherently high risk that these professionals may unwittingly enable economic crime, but there are also enablers that specialise in services aimed at concealing the source of wealth or ownership so as to frustrate the objectives of the law.

This poses a particularly acute challenge in the context of the Bill’s attempt to tighten the checks around the beneficial ownership of property by overseas entities. The UK’s 2017 national risk assessment of money laundering and terrorist financing revealed that 50% of suspicious activity reports related to the legal sector in 2016 were linked to the property market, illustrating that real estate transactions are especially susceptible to money laundering.

As the noble Lord, Lord Vaux, very eloquently deconstructed, the Minister prayed in aid regulation by the Solicitors Regulation Authority and the Institute of Chartered Accountants in England and Wales on Second Reading. Does the Minister really believe that these regulators are the way to tackle these professional enablers? The current model for supervising professional enablers is fragmented and weak. In the legal and accountancy sectors alone, there are 22 different professional body supervisors, or PBSs. In its 2021 report, the Office for Professional Body Anti-Money Laundering Supervision found that the vast majority—some 81%—of these legal and accounting PBSs do not implement an effective risk-based approach to supervising their members as required by the money laundering regulations. Where is the evidence that they can do the kind of job needed to root out corrupt behaviour in sanctions avoidance or as envisaged by this Bill?

In summary, it is critical that the Bill addresses the heightened risk that professional enablers, particularly conveyancers and lawyers, will frustrate the objectives of the register of overseas entities. Beyond this modest amendment, urgent reform is needed—I hope it will take place in the second Bill—to ensure that there is effective, comprehensive supervision of professional enablers. This should be fully addressed when we come to the second economic crime Bill.

[Lord Rooker (Lab)]

My Lords, I had not intended to speak today. I came to learn and listen to the experts on areas I do not know much about. But listening to the noble Lords, Lord Cromwell and Lord Clement-Jones, I am reminded of an example. I know this would not be classed as money laundering, but the well-known spiv, Aaron Banks, was responsible for what is, I think, the biggest political donation in British history—I think it was £8 million—during the Brexit referendum period. When it came to investigation by the Electoral Commission, which had the responsibility for doing this, he was not an unwitting enabler. His conclusion was, “We’re cleverer than the regulator.” The Minister does not want to be faced with that during the passage of this Bill and its actions, so he would be very wise to accept the spirit of some of these amendments.

[Baroness Jones of Moulsecoomb (GP)]

I think it is obvious that the Minister will accept a lot of these amendments, because they are from people who are much cleverer than most of us in this Chamber.

I support most of the amendments—even all the government amendments, because they are quite helpful, particularly those that require the disclosure of whether any beneficial owners of property are subject to sanctions, and the strengthening of the criminal offences for false declarations. However, it is obvious from the speeches of other noble Lords that the Government are still falling short and that the Bill needs to be tougher. For example, Amendments 23, 24, 57 and 58 all need to be inserted into the Bill.

All beneficial interests should be registered, not just those acquired on or after 1 January 1999. That is a completely arbitrary date and should be removed. The Minister shakes his head; I guess he will argue that it is a very important date. I disagree.

This legislation is being rushed through as an emergency, but the Government are content to wait another year, following initial registration, before any changes in beneficial ownership take place. I cannot see the logic in that and I think most people will not either. It makes much more sense to update the register within 14 days of any changes.

17:30

[Lord Fox (LD)]

My Lords, this is the first time I have spoken today. I will make a couple of points from the Front Bench that reflect on the other groups as we debate them.

We on these Benches share the hopes of the Government and, indeed, Her Majesty’s loyal Opposition to get this Bill on to the statute book as quickly as we can. For that to happen, the Government seem to be moving on a number of issues, which will be helpful. For our part, we have had to suspend the level of scrutiny that this Bill would normally attract. That has been difficult for us because, as we heard at Second Reading and have already heard in debate on the first group, much could be done to improve and extend the Bill.

As such, and as we have already heard from the noble Lords, Lord Vaux, Lord Cromwell, Lord Cormack and Lord Empey, there are a number of solid assurances that the Minister can give us—he hinted without necessarily assuring in his response to the previous group. We would appreciate an undertaking from the Minister that, when we return to this topic on the second part of this Bill, or ECB 2 as we now have to know it, there will be a frank assessment from the Government as to the operations of ECB 1, and a chance to debate and modify ECB 1 in the light of that frank assessment.

Further, the four planned elements of ECB 2 were set out by the noble Baroness, Lady Williams, at Second Reading. They indicate a fairly narrow—indeed, dangerously narrow—focus for that Bill. A commitment from the Government that they will enable that Bill to be broadened, and that some of the issues we have already heard and some more that we will hear later will be added to the curriculum of that Bill, will be very important.

This is a large group of amendments; noble Lords will be pleased to know that I will not take them one by one and summarise them all. There are a number of amendments from the Government, which we welcome, but I will briefly highlight Amendment 24 in the names of the noble Lord, Lord Vaux and Lord Cromwell. We have heard from them so I will not reiterate their speeches. We believe that this important issue is possible and do not see why it is not something the Government could easily incorporate in the current form of the Bill.

I will primarily speak on my noble friend Lord Clement-Jones’s Amendment 53, to which the noble Baroness, Lady Chapman, and I have added our names. We have heard today and at Second Reading that this is the issue that hits at the heart of the problem we face, and the scale of the infiltration of stolen wealth that has come into the United Kingdom. It is why the kleptocrats have been so comfortable here: they have been feather-bedded by a welcoming committee of enablers, anxious to claim new clients and get some of the money. For some so-called enablers—indeed, most of them—that temptation was outweighed by their moral and practical concerns. We should note that clearly. Unfortunately, for others, such as the sorts that the noble Lord, Lord Vaux, identified, the temptation has been too great. A significant minority of practitioners have taken the “ask no questions and tell me no lies” philosophy to doing business.

This amendment would really do no more than reinforce what should be happening already, but it restates it in a different way. Within each of these enabler services, there needs to be a senior partner or director who signs off on the due diligence and is accountable to the law for doing so.

In closing, I note a briefing from the Law Society that arrived in my inbox this morning. It expressed concern about this amendment. The pressure group said that the amendment appears to extend a duty of due diligence to all stages of client take-on and transactional/advisory work. Its concern was that it would

“create a significant burden on professional services such as law firms that would be difficult for them to meet”.

In other words, this due diligence would be too hard to do. That tells us that there is work to be done in this area.

[Lord Coaker (Lab)]

My Lords, this is yet another group of amendments with contributions from across the Chamber that signifies some of the problems we have in fast-tracking this part of the Bill. Many noble Lords, including my noble friend Lord Sikka, have put forward sensible amendments that would improve the Bill, but we cannot accept them because we are in a rush to get it through. They are common-sense amendments. I take very much the point that the noble Lord, Lord Empey, made: if we are not careful we will have a situation where we pass the Bill and, in a week or a couple of months’ time, there will be an oligarch, a kleptocrat or whatever you want to call them—somebody living off dirty money—on the front pages of the papers parading themselves as having got round what the Government have only just passed.

Of course, that is the whole purpose of the amendments that so many noble Lords have put forward: to say to the Government that they have to address some of this. If they cannot address it in this Bill, which clearly they will not be able to do because it is emergency legislation—we all accept the crisis in front of us—let us have a cast-iron guarantee that the second economic crime Bill will come quickly to address these various issues and that we will be able to come back to them. Those are the reassurances that so many of us are looking for from the Government. I do not think that is too much to ask.

As my noble friend Lord Rooker pointed out, with his normal passionate use of the English language, we do not want a situation where people—I cannot remember who he referred to—parade around saying, “Look, we’re cleverer than the regulator.” That undermines democracy and Parliament. It undermines all of us. That is how serious it is when people flaunt their ability to circumvent the law. That is not in our interest, whatever the crisis we face. I know that the Minister would accept that.

I am grateful to all noble Lords who have tabled amendments in this group, which cover a variety of non-trust provisions relating to the register of overseas entities. I should give my noble friend Lady Chapman’s apologies. She cannot participate in proceedings for personal reasons, but she tabled Amendment 23, which, like Amendment 24 in the name of the noble Lord, Lord Vaux, seeks to accelerate the reporting of changes in beneficial ownership, for reasons ably supported by my noble friend Lord Eatwell. Again, this seems absolutely common sense; it does not seem to be a point of argument.

The Government are keen to stress that the vast majority of entities that apply to join the register will be entirely above board. We accept much of that. However, under the current provisions, a shell company could be registered under certain ownership on day 1, with new appointments to the board made on days 2 and 3, but it would be required to report that only 12 months later. That is clearly not acceptable or sensible. As my noble friends Lord Sikka and Lord Eatwell, the noble Lord, Lord Vaux, and others said, something should be done about that. The Government should see what changes they can make.

There are legitimate questions about enforcement, but do the Government agree that there should be a general principle that entities need to be proactive in reporting changes? The Minister should accept Amendment 23, or indeed Amendment 24, but if not, he should commit to giving this further thought as the Government begin to draft the next piece of legislation.

We are also sympathetic to other amendments in the group, including Amendment 3 from the noble Lord, Lord Agnew, and Amendment 53 from the noble Lord, Lord Clement-Jones, supported by my noble friend Lady Chapman and the noble Lord, Lord Fox, which tries to start to deal with enablers. On so-called enablers, it would be helpful to understand what steps, if any, the Government have taken since Russia invaded Ukraine. As this is an emergency piece of legislation, what emergency action have the Government taken with respect to enablers? There have long been stories of lawyers and estate agents who purposely avoid asking their clients probing questions because they know that the answers would preclude them from doing business with them. It is time to say, “Enough is enough and we will seek you out and do something about it.”

We know that some individuals have sought to urgently offload their UK-based interests and, if they are seeking to rush sales through, we would hope that estate agents and others were already querying the reasons for that. In addition to any steps that might have already been taken, what steps do the Government plan to take over the coming days and weeks to deal with that problem? This series of amendments asks various questions, but ultimately seeks to tighten up a Bill that is in all our interests.

[Lord Callanan (Con)]

First, I thank all noble Lords who have contributed to this debate. Before I address the amendments tabled, I reiterate the point I made earlier. This will be almost the first register of its kind in the world. We should accept that we are leading on this. I completely accept that we may not have everything perfect, but we will learn as we go—just as we did, in the example I cited, when we implemented the people with significant control requirements for domestic companies. We had to learn and iterate that, and now many other countries have followed our lead. That is a good thing. I re-emphasise that we will be perfectly willing to revisit these measures if it transpires that we have not got everything quite right.

[Lord Eatwell (Lab)]

Just thinking off the top of my head, I can think of four registers of this ilk which exist already.

[Lord Callanan (Con)]

I would be happy to debate with the noble Lord. When I queried this, my information was that Germany potentially has something similar, but nobody else. I am happy to exchange letters with him about numbers, but that is not the information I have.

Before I move on, perhaps I may correct something I said on the first grouping—which will teach me to pluck numbers from memory rather than consulting my notes. The correct figure is that there are 30,000 overseas entities registered in the UK owning approximately 95,000 properties. I think I may have said that the other way round. I slightly disagree with the noble Lord, Lord Sikka. The vast majority of those are perfectly legitimate entities. We are an open trading environment and welcome investment from all over the world. International companies owning headquarters in the UK do so perfectly legitimately. The vast majority of these entities are legitimate. A small minority are not, and they are the ones we seek to catch in this register, but we must be fair to the vast majority which are perfectly legal, above board and just seeking to use the UK to do business, which we encourage.

Let me also pick up the points made by the noble Baroness, Lady Jones. Although I am grateful that she is supporting the government amendments—I will write that down for posterity, because I am not sure it will happen again—we did not just pluck the dates of 1999 for England and Wales and 2014 for Scotland out of thin air. We did not just sit there and think what date we would make it retrospective to. Those were the dates of incorporation when that was required by the Land Registry, so it is appropriate to go back to them. Northern Ireland has never required this, so it is impossible to retrospectively apply the provisions there. I hope she will accept that we did not just make these dates up; they are put in place for a reason.

17:45

Moving on to the amendments, let me start with those tabled by my noble friend Lord Agnew and the noble Lord, Lord Sikka. These amendments broadly deal with additions to the required information that needs to be provided at the point of application in respect of beneficial owners and managing officers.

Amendment 3 in the name of my noble friend Lord Agnew would add to Clause 4 a provision to enable the registrar, on an application for registration, to request further information to be provided in a timely manner where there appear to be material omissions or suspected false statements. This amendment also provides that an application may not be accepted unless the registrar is satisfied that any request for further information has been adequately addressed. Amendments 5 and 13 would provide that registrable beneficial owners and managing officers also have to provide any former names. Amendments 8, 12 and 14 relate to information that should be provided by managing officers on sanctions that apply or any criminal convictions that are held.

Although I understand the motives for these amendments, it is fair to point out that a rigorous amount of information is already required for application, as outlined in Schedule 1. The register of overseas entities is itself designed to increase transparency. The information required on beneficial owners is closely based on the existing requirements for information required on people with significant control in the UK company regime.

Again, it is worth remembering that the majority of entities registering will be legitimate, and we have to balance the burden of this reporting for them with the benefits that the Bill will deliver. That is a balance that we have sought to strike throughout the development of the register.

[Lord Sikka (Lab)]

I refer the Minister to an entity called Business Bank Italy Ltd. It was owned by a convicted Mafia person from Italy, who registered this bank here and it had a website inviting wealth management. At Companies House, there was absolutely no declaration of any criminal convictions. Previously, the same person registered as secretary and director of another company, where the same person provided information in Italian. When it was translated into English, it read, “My name is the Chicken Thief, my occupation is a fraudster”, and the address was “Street of 40 Thieves, town of Ali Baba in Italy.” There is no information on whether there was any criminal conviction or anything else. The Minister just said that there are robust checks at Companies House. Where are these robust checks? I could pick out that example. Companies House did not carry any out; neither did any government department. As he knows, I have been filing a lot of Written Questions of late drawing Ministers’ attention to all kinds of strange goings-on in companies. It seems to me that, by rejecting the idea that somebody has to provide their former names and a record of criminal convictions and sanctions, the Government are opening the door for these people to misbehave.

[Lord Callanan (Con)]

We are not opening the door. I assume that the companies the noble Lord is referring to are existing UK-registered companies; I know he has asked me a number of Written Questions about companies registered on the UK database, and I totally accept his point. He is pointing out an issue we are well aware of: that the existing UK companies register is a dumb register. The registrar is obliged under existing law to accept the information tabled to her. The noble Lord has raised a number of examples and tabled Written Questions to me about some patently ridiculous information that has been supplied. I get regular correspondence from noble Lords and from constituency Members of Parliament where false information is given and false companies registered at people’s addresses, unknown to them, and they then receive correspondence.

The difficulty at the moment is that the registrar does not have the legal power to query the information registered to her. If the noble Lord will be patient and wait for economic crime Bill part 2, which is coming, he will find that it will deal with this precise point. It will give the registrar the ability to query that information and provide that people must give identity details, passport information, et cetera, when they register. This is a massive change to the operation of Companies House—the biggest change for something like 170 years to the register database. It will give the registrar the power to query that information and people will have to provide evidence of their identity, addresses, et cetera. The noble Lord is right—there are a number of ridiculous examples—but we will deal with that. I am aware of it, and it will be in the next Bill.

In addition, information regarding designated persons who are listed on the UK sanctions list is already published for free via GOV.UK by colleagues in the Office of Financial Sanctions Implementation.

Finally, the verification mechanisms of the register, which will be provided for under Clause 16, will ensure as far as possible that the information provided is highly accurate. This register will provide vital information and in turn give enforcement agencies even greater information to take actions and carry out their own investigations. Therefore, on balance and taking into account the reasoning we have set out, we are unable to accept these amendments.

However, I am in agreement with the noble Lord on the particular importance of ensuring that there is clear information for users of the register about whether individuals identified as beneficial owners of the overseas entities are subject to UK sanctions. It is in the public interest for users of the register of overseas entities to be able easily to see whether a registrable beneficial owner is a designated person listed on the UK sanctions list.

The Government have therefore tabled their own Amendments 7, 9 and 11, which would mean that the required information about a registrable beneficial owner will include information about whether they are designated by virtue of the Sanctions and Anti-Money Laundering Act 2018. These three amendments would require overseas entities to confirm whether any of their registrable beneficial owners are designated persons listed on the UK sanctions list. It would be an offence not to do so. This information would be displayed publicly on the register. This will ensure that this information is then more easily accessible to the average user of the register. That fulfils a requirement raised by a number of noble Lords, and by Members of the other place when they debated this legislation. I hope that the noble Lord, Lord Sikka, will appreciate that these three amendments will deliver a good deal, if perhaps not all, of the intention of his amendments and those proposed in the other place.

I move on to Amendments 18, 19 and 20, also tabled by the noble Lord, Lord Sikka, which relate to the level of shareholding that would define a “beneficial owner”. His amendments seek to remove the 25% level altogether, to capture any person who holds any shares in the overseas entity in scope.

The 25% threshold contained in the Bill is in line with global norms with regards to beneficial ownership. The Financial Action Task Force, which sets global anti-money laundering and counterterrorist financing standards, has found that this threshold is acceptable as an example of how to determine beneficial ownership. As a result, 25%—or more than 25%—is used in many jurisdictions, such as in the US and in the European Union’s recent anti-money laundering directives. The 25% threshold also follows the UK’s PSC—person with significant control—regime, which similarly requires beneficial ownership information of UK-registered companies. When the PSC regime was in development—

[Lord Burnett (LD)]

Does the 25% limit cater for class rights in the definition of control? In other words, you can have 10% and 90% but the 10% have all the voting rights.

[Lord Callanan (Con)]

I think it refers to rights of control—the actual percentage shareholding of the company—but if I am incorrect on that, I will certainly write to the noble Lord.

When the PSC regime was in development, significant analysis, including consultation, considered the question of thresholds. The threshold of more than 25% reflects the level of control a person needs in voting rights, under UK company law, to be able to block special resolutions of a company. It was considered that 25% represented the optimum opportunity to understand who is in a position to exert significant influence and control over a company. Collecting information on legal ownership below that threshold would be much less likely to do this. Removing the threshold altogether would have the effect of essentially creating a register of shareholders rather than a register of beneficial ownership, which—I hope noble Lords will agree—is not appropriate for the purposes of the Bill and the transparency involved in this register. Maybe the noble Lord, Lord Sikka, likes going through thousands of register entries, but I am not sure it would be helpful to most people.

For entirely legitimate entities, there could be hundreds or thousands of shareholders. For instance, think of a large foreign company that owns property in the UK. I am really not sure whether it would be tremendously helpful to have literally thousands of individual shareholders on the list of a property’s beneficial owners. For example, in the case of public limited companies with highly dispersed ownership, where shares can be bought and sold frequently and instantly, removing the 25% threshold would make the requirements of the register disproportionately difficult to comply with, as entities must first send a notice to those that they believe are their beneficial owners, and then allow time for potential beneficial owners to respond.

We are mindful of the risk that an individual wishing to disguise their beneficial ownership might, for example, deliberately reduce their shareholding. We have considered this, and so have made provision that means that anyone, regardless of their shareholding or voting rights, who exerts or has the right to exert significant influence or control over an entity is captured within the meaning of “beneficial owner”. This includes anyone who holds the right to appoint or remove a majority of the board’s directors. Perhaps that takes account of the point the noble Lord made earlier.

I am sorry that the noble Baroness, Lady Chapman, cannot be with us today. I thank her and other noble Lords for Amendments 23 and 24. In particular, I thank the noble Lord, Lord Vaux, for his engagement and for the points he has made. I am very happy to meet the noble Lord to discuss these matters further.

These amendments would require overseas entities to update the register not just annually but when there has been a change in beneficial ownership. I know this matter has been exercising a number of noble Lords. It was also raised in 2018, during pre-legislative scrutiny of the then draft registration of overseas entities Bill. At the time, the scrutiny committee accepted fully in its report that this requirement would be difficult to enforce without active investigation. This would also create great uncertainty for third parties transacting with the overseas entities. This is the key reason why we have adopted the 12-month threshold.

A change in beneficial ownership is not necessarily foreseeable and would not be knowable to any third parties, including Companies House, without detailed investigation. As I said, there are about 30,000 of these overseas entities. As such, a requirement for an overseas entity to update its information when there is such a change means that, at any point in time, it could be compliant one moment and then not compliant the next. Our problem is that we think this creates significant legal uncertainty for any third parties engaging with the entity and seeking to purchase the property from it.

[Lord Cromwell (CB)]

Can the Minister help me and explain why they would be non-compliant if they had two weeks within which to register it? As long as they did it within two weeks, they would be fine.

[Lord Callanan (Con)]

Yes, but they would have to be tabling notices to any potential beneficial owners in order to update the register. We think that if we have a yearly update, any third party transacting with that entity would then have sufficient legal certainty to be able to proceed. The point is not that the entity might not register the change of ownership but that the third party, and indeed Companies House, have no way of knowing whether it has. Therefore, a third party could engage in a transaction thinking that the original entity is compliant and then discover afterwards that it has not updated its register and is non-compliant, and therefore potentially lose its money and be unable to proceed with the transaction because it cannot register the property. On balance, we think the better option is to have a yearly update cycle, but I realise that this is a point of debate and I am happy to discuss it further. I know that the noble Lord, Lord Vaux, is engaged in this.

[Lord Vaux of Harrowden (CB)]

The Minister has not addressed the point that this can easily be dealt with by bringing forward the annual update, which a company has the ability to do under—I think, from memory—Clause 7. If that were done as part of the property transaction, that solves the problem completely. Does the Minister disagree with that?

[Lord Callanan (Con)]

No, I do not disagree with that. It is, of course, perfectly possible—

[Lord Eatwell (Lab)]

My Lords, on the same point, would it not be helpful for a third party to know who it is actually dealing with? Under the Minister’s proposal for 12 months, it could rely on the register and find out that it is dealing with someone it had not expected at all.

18:00

[Lord Callanan (Con)]

Indeed it would be helpful, and that is why we have the transparency of the register in the first place. Returning to the point made by the noble Lord, Lord Vaux, it would indeed be possible for them to update it, and it is of course perfectly possible that the advisers of the third party buying that property would wish to say to the entity that they wanted it to update the register in terms of formal ownership before they could advise their clients to proceed with the transaction, which is a point that the noble Lord made to me. That is different in terms of due diligence of the third party’s financial legal advisers, but in terms of the legal requirements, we think that it is best to leave it at 12 months. However, maybe we could have further discussions on this before we get to the second Bill.

To summarise, a change in beneficial ownership is not necessarily foreseeable and would not be knowable to any third parties, including Companies House, without detailed investigation. As such, a requirement for an overseas entity to update its information when there is such a change means that it could be compliant one moment and non-compliant the next, at any point in time. Our point is that this would create significant legal uncertainty for any third parties engaged with the entity.

I remind noble Lords that the key sanction for non-compliance with the new register—apart from the criminal penalties for non-compliance—which interferes with existing property rights is effectively to make it impossible for the buyer to then register title, if purchasing from a non-compliant entity. Of course, if they have transacted with an overseas company in a different jurisdiction, it might be very difficult for them to then take appropriate legal action to recover any sums that they have paid. This is not about providing a free “get out of jail” card for the overseas entity; it is genuinely about protecting the rights of third parties that wish to transact with them.

As the noble Lord, Lord Vaux, pointed out, the onus is on the buyer and their agents to ensure that they do not transact with a non-compliant entity. In order to protect the buyer, who is likely to be an innocent third party, it follows that there must be absolute legal certainty in every case as to whether the overseas entity doing the selling is compliant. An annual update with a transparent end date for the update period will give third parties transacting with the overseas entity the certainty that they need. The annual update already requires an overseas entity—

[Lord Cromwell (CB)]

I do not wish to be argumentative with the Minister—well, perhaps I do—but can he confirm in respect of the third party buying the company that that company will be compliant even if, say, 11.5 months ago, they changed their ownership because they will not have had to register?

[Lord Callanan (Con)]

Yes, that provides the required legal certainty to the third party that is buying it, at the expense of, perhaps, a certain amount of transparency for that 11.5-month period. So, yes, I accept that.

The annual update already requires an overseas entity to provide information about its current beneficial owners, as well as any changes since its last update. This latter information was added as a result of the pre-legislative scrutiny of the Bill, providing a complete picture of an overseas entity’s beneficial owners. For these reasons we do not believe a change in the updating period is necessary or desirable, and I therefore encourage noble Lords not to press their amendments.

Turning to government Amendments 49, 50, 51 and 52, the Government have listened to the concerns raised about the need to deal effectively with anyone seeking to file false or misleading information or those who know or suspect that they may be filing false information, and we have taken on board those concerns. I thank all noble Lords who raised these concerns with me. They made the point that the evidential threshold to prove intent or recklessness is too high in the clauses as drafted. I have therefore tabled these government amendments to ensure that those who provide false or misleading information “without reasonable excuse”—in other words, a lower legal barrier—can be prosecuted and are subject on conviction to an unlimited fine. This will catch those who seek to facilitate and enable money launderers and the corrupt.

Furthermore, we have amended the threshold for what, under our amendments, constitutes an aggravated offence. This removes the reference to the word “recklessly”, which caused a lot of concern in the other place and to the noble Lord, Lord Fox, and others in this place. It also retains the potential for imprisonment and an unlimited fine if convicted of the aggravated offence of knowingly filing false, misleading or deceptive information. I hope this addresses the concerns.

I thank the noble Lord, Lord Clement-Jones, for Amendment 53, which would create a criminal offence of failing to disclose to the registrar certain information when a professional knows or suspects, or has reasonable grounds for knowing or suspecting, that misleading, false, or otherwise deceptive information was provided to them in their professional capacity. Again, I understand the noble Lord’s motive for proposing this new clause, but I hope that he will agree that his aims can be met by the existing provisions in the legislation regarding offences for the provision of false information, as developed in the way I have just set out by the Government’s amendments to lower the threshold needed for prosecution. We are confident that this will ensure that enforcement agencies have sufficient capacity to tackle those who seek to subvert the integrity of the register through the provision of misleading information.

I also take this opportunity to reassure the noble Lord—

[Lord Clement-Jones (LD)]

My Lords, I am afraid I do not agree with the Minister; I am amazed that he thought that I would. The Government need a strategy to catch these enablers in the way that they currently operate. What strategy do the Government have? The Minister was just about to pass on to other things. He has prayed in aid the professional regulators, such as the SRA and the ICAEW, and he has more or less said that the legislation is absolutely fine: it will catch the enablers properly. But does the Government not need a proper strategy for dealing with enablers? They cannot gloss this over. Is the Minister prepared to look at this carefully before the next Bill?

[Lord Callanan (Con)]

Of course, we are constantly looking at these matters. The Treasury is implicitly engaged in pursuing crackdowns on the so-called enablers that the noble Lord has mentioned, and the anti-money laundering regulations exist. This register, which is a transparency measure, is designed to provide information to the public, HMRC and other law enforcement agencies that can then take the appropriate action under the other provisions. However—before the noble Lord, Lord Fox, gets up—I totally agree with the noble Lord that we need to look again at whether the anti-money laundering statutes are appropriate. It is not for this legislation, but I am sure it is something we will want to look at in detail before we get to the next Bill, because it is a complicated area of law. If we do not, I am sure the noble Lord will wish to table his amendments again then.

[Lord Fox (LD)]

Each time the Minister speaks on this, I do not hear him acknowledge that there is a problem. In order for there to be a solution, there has to be an acknowledgement that there is a problem. So, does the Minister agree with me that there is a problem with unscrupulous enablers currently operating in the City and the United Kingdom? Unless the Minister agrees, I do not think that we can have much hope of a solution.

[Lord Callanan (Con)]

I am happy to agree with the noble Lord. If there is one firm of accountants or one legal practice that is turning a blind eye to these provisions, there is a problem with which we need to deal. Nobody wants to see that; we want to give the UK a reputation as the best place in the world to do business and to crack down on the small minority of the legal profession that are abusing their position and facilities—of course we would want to do that.

[Lord Clement-Jones (LD)]

My Lords, I am sorry to interrupt the Minister and slow the proceedings but, on that point, the Minister began to move, gradually, towards thinking about the enablers, and mentioned anti-money laundering legislation. But it is wider than that: it is about sanctions, economic crime in general and the provisions of this Bill. Is the Minister prepared to undertake to look more broadly across the piece?

[Lord Callanan (Con)]

Yes. Obviously, a number of different government departments would be involved in doing this, but a number have been involved in putting the provisions into this Bill, and a number will be involved in the provisions of the next economic crime Bill. Of course, we want to take action against lawyers and accountants who abuse their positions to benefit some of these oligarchs and others. We have all seen the press reports and we all know the people that we are concerned about. I would not seek to defend them in the slightest, and I hope that we will be able to put the appropriate sanctions in place to deal with them.

[Lord Cormack (Con)]

Does my noble friend think it would be a good idea to set up a Committee of your Lordships’ House immediately after the Bill has gone on to the statute book, like these special Select Committees that are set up for specific purposes, so that you have a number of knowledgeable Members of your Lordships’ House, among whom I do not include myself, who will be able to provide expert examination of this Bill on a continuous basis?

[Lord Callanan (Con)]

The noble Lord often suggests setting up special Committees of this House. He will know that it is way above my pay grade to dictate to the House authorities what committees they wish to set up for examining particular Bills. I know from appearances that there are some extremely good and effective committees already in this House examining all parts of the Government’s legislative agenda and all departments—but, if the noble Lord can forgive me, I will not get into instructing the House authorities on what committees to set up to future scrutinise our work.

Relevant firms, including financial institutions, law firms, accountancy firms and estate agents, under the anti-money laundering framework, must inform Her Majesty’s Treasury as soon as practicable if they know, or have reasonable cause to suspect while carrying out their business, that they have encountered a person subject to financial sanctions, or a person who has committed a financial sanctions offence. They must state the information on which the knowledge or suspicion is based, and any information they hold about the person by which they can be identified. It is already an offence to fail to comply with this reporting obligation. I understand that the noble Lord does not think that the legislation is applied properly—perhaps we can look at that—but there is already an offence on the statute book.

Activity which seeks to evade these new beneficial ownership reporting obligations should be taken into account in the course of these firms taking a risk-based approach to anti-money laundering, and any suspicions of sanctions evasion should be reported in accordance with their legal obligations. I am pleased to say that Treasury Ministers will be writing to the anti-money-laundering supervisors of the relevant professional enablers on this matter, highlighting that the Government will be expecting everyone in these sectors to be particularly vigilant.

I hope that, with the reassurances that I have provided on this important issue, the noble Lord will feel able to withdraw his amendment.

[Lord Vaux of Harrowden (CB)]

The Minister was kind enough to offer to meet with me about my Amendment 24. I actually asked about meeting regarding the verification regulations in Clause 16. Is he prepared to do that, probably with others, as it is very important that these regulations get the input of all these highly intelligent people around the Committee before they are issues, rather than afterwards?

[Lord Callanan (Con)]

Yes, I am happy to meet with the noble Lord and his colleagues to discuss that matter.

[Lord Agnew of Oulton (Con)]

I beg leave to withdraw the amendment.

Amendment 3 withdrawn.

Clause 4 agreed.

18:15

Schedule 1: Applications: required information

Amendment 4 not moved.

Amendments 5 to 16 not moved.

Schedule 1 agreed.

Schedule 2: Registrable beneficial owners

Amendments 17 to 20 not moved.

Schedule 2 agreed.

Clauses 5 and 6 agreed.

Clause 7: Updating duty

Amendments 21 to 27 not moved.

Clause 7 agreed.

Clause 8 agreed.

Clause 9: Application for removal

Amendments 28 to 32 not moved.

[The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)]

I advise the Committee that if Amendment 33 is agreed to, I cannot call Amendment 34 by reason of pre-emption.

Amendment 33

Moved by

[Lord Callanan]

33: Clause 9, page 7, line 23, leave out sub-paragraph (i) and insert—
“(i) is entered, on or after 8 December 2014, as proprietor in the proprietorship section of the title sheet for a plot of land that is registered in the Land Register of Scotland,”Member’s explanatory statement
This amendment expands the scope of circumstances where an overseas entity is registered as the proprietor of a relevant interest in land for the purpose of Clause 9 (to include, for example, Keeper-induced registration) by removing the requirement for there to have been an application for registration.

[Lord Callanan (Con)]

My Lords, I start this grouping by speaking to the government amendments, which I have tabled. They are Amendments 33, 75 and 76; 35, 36 and 37; 63 and 77; 65, 66, 69, 70 and 72; 68 and 71; and 73 and 81. I hope that everybody is taking careful note, because there will be a check later.

These are technical amendments relating to land registration in Scotland, tidying up some of the drafting in the Bill. If it would be of assistance to noble Lords, I am happy to speak in more detail on any of these, but meanwhile, in the interests of time, I will move on to the more substantive government amendments in this group.

Amendments 73 and 74 make small but important technical changes to the Bill to ensure that Schedule 4 operates effectively in line with the land registration law of Scotland. These amendments add to existing provisions when an application must be rejected by Registers of Scotland because of the implications for who will be shown in the Land Register of Scotland as the owner of a plot of land. These amendments ensure consistency and clarity in setting out the circumstances in which a prescriptive claim application might result in a prescriptive claimant being provisionally entered as the owner of a plot in Scotland.

I am mindful that several noble Lords and Baronesses, including the noble Baroness, Lady Chapman of Darlington, and the noble Lords, Lord Fox and Lord Sikka, have tabled amendments to shorten the transition period proposed. To inform that debate, I thought it might be helpful to set out several government amendments that we hope will help to ease concerns about the length of the transition period for registering retrospective property ownership and the perceived risk of people moving illicit assets in the meantime—a concern that has been raised with me by several noble Lords.

Amendment 86 requires overseas entities when registering, who have disposed of certain land between 28 February 2022—the date that the Bill was published—and the date of their application to register, to submit a statement with their application setting out details of what has been sold and the beneficial ownership of the entity immediately before that transfer of title. The land in scope is that which otherwise would be caught by the transition period: that is, land that was registered after 1 January 1999 in England and Wales and after 8 December 2014 in Scotland. The noble Baroness, Lady Jones, now knows why we have selected those dates.

This is an anti-avoidance measure. It would mean that any overseas entity disposing of any of their property in the period from 28 February and the date of their application to register on the register of overseas entities must provide information about the entity’s beneficial ownership immediately before the disposal. They must provide that information by the end of the transition period. This will mean that law enforcement will therefore have access to a record of the beneficial ownership to aid the enforcement of historic cases, and the seller would no longer be able to avoid being under a legal duty to provide beneficial ownership information by disposing of a property in advance of registering—something that I know was a significant concern for many noble Lords. This new disclosure requirement should significantly strengthen law enforcement’s abilities to investigate and prosecute both buyer and seller, and all involved in the transaction, should the criminal law have been broken.

Crucially, it addresses the concerns that have been raised with me in both Houses that corrupt people must not be allowed to sell up and escape the transparency that the register will bring. It is my submission that this measure will be more effective than any further reduction in the transition period, which risks opening up the provisions of the register to legal challenge, something that would no doubt be exploited by those wishing to avoid it.

Amendments 55, 60, 64, 79 and 82 align the transitional periods under Schedules 3 and 4 with the period in the new clause inserted by Amendment 86.

Amendment 87 supplements Amendment 86 by making it an offence for certain overseas entities who do not apply for registration during the transitional period, and every officer in default, to fail to provide information equivalent to that required by Amendment 86. That means information about relevant dispositions in land made on or after 28 February 2022 and the end of the transitional period. In the case of continued contravention, an offence is also committed by every officer of the overseas entity who did not commit an offence in relation to the initial contravention. A person guilty of an offence is liable on summary conviction to a fine and a daily default fine of up to £2,500 a day in England and Wales.

Amendment 88 makes further supplementary provisions, including a power to make regulations in connection with the new clause inserted by Amendment 86.

Amendment 59 reflects the revised transitional period of six months. It requires the Chief Land Registrar to act as soon as reasonably practicable, and in any event before the end of the transitional period, to enter a restriction in relation to an estate in land owned by an overseas entity that became the registered proprietor of that estate following an application made before commencement of the Bill.

Amendments 66, 69, 70 and 72 are technical amendments relating to land registration in Scotland. In the interests of time, I propose to move on to other substantive amendments, but am more than happy to speak on these amendments in more detail if required. I beg to move.

[Lord Sikka (Lab)]

My Lords, I apologise; I am not sure if it is my turn or someone else’s. I have four amendments in this group. I have listened carefully to what the Minister has said about Amendment 86. The real problem is that you can have an overseas entity that can be used to buy a property in the UK. When that property is sold, money is laundered, but before the six-month period is over the overseas entity is liquidated so there is no information of any kind to file. By giving anyone more than 14 days—this is a theme referred to earlier by the noble Lords, Lord Cromwell and Lord Vaux—the Government are inviting these kinds of cat-and-mouse games.

I recommend that no one should have more than 14 days. After all, that is what we give at the moment to UK companies to file information about persons with significant interest as per Part 21A of the Companies Act 2006, which says that the PSC’s details must first be recorded in the company’s internal register within 14 days of the change and Companies House must be notified within a further 14 days, which is the maximum permitted. So why are overseas entities to be given a longer period? We seem to be creating an opportunity here, a window, for these entities to misbehave, and at the end no declaration of any kind can be made. Fourteen days is not too demanding in the era of electronic filing. We must close all opportunities for anyone to circumvent the filing requirements and thereby get away with basically laundering their proceeds.

My second two amendments are Amendments 58 and 67, which, as has been referred to, are about the amnesty that is built into the Bill. The Bill grants amnesty from disclosures to those who acquired property in Scotland before 8 December 2014 and before 1 January 1999 in England and Wales. That is completely contrary to the Bill’s claim of adding transparency and providing no hiding place for dirty money. The amnesty will mean that large swathes of UK property are owned by overseas companies without any public knowledge of their true owners; people will simply not know who owns them.

I shall give some examples of Scottish property that is owned by anonymous offshore companies purchased before 8 December 2014 where people do not know who the true owners are: Strathfillan Forest, owned by Thar Enterprises in Jersey, registered at the Land Register in June 1999; Ardfin Estate, on the Isle of Jura, owned by Ardfin Lodge Ltd, again in Jersey, registered in November 2010; Glenogle Estate, owned by Glenogle Estate Ltd in the Isle of Man, registered in May 1999; most of Charlotte Square in Edinburgh, owned by Fordell Estates Ltd in the British Virgin Islands, registered in the Land Registry in 2010; Glenborrodale deer forest, owned by Luna Ltd in the Bahamas, registered at the Land Register in July 2000; and the Pitmain Estate, owned by Ranita Management SA in Panama. Even if these properties are acquired with clean money, people have a right to know who their neighbours are and who owns a large part of their locality. Are these people actually socially responsible? The Government are legally creating an amnesty, and that is really unacceptable.

This opacity is not just an issue in Scotland: it is an issue for the whole of the UK. Close to 250,000 residential properties in the UK are registered to individuals based overseas. UK property worth more than £170 billion is estimated to be held overseas, much of it anonymously. Last October, the Pandora papers leak revealed that Heads of Government, oligarchs, business tycoons, ruling families and Middle-Eastern monarchs were among the anonymous owners of at least £4 billion of property, held through offshore shell companies. When did they acquire that? We do not quite know: it might well have been before the dates specified in the Bill.

18:30

Some 6,000 properties in the Royal Borough of Kensington and Chelsea—which is the most unequal borough in the country—are thought to be owned by offshore companies. This pattern is repeated in Mayfair and Eaton Square, which is now home to 400 fake banks. Nobody knows who owns those properties. We are entitled to know, and therefore ask the questions.

This Government have not portrayed this as an amnesty—earlier, the Minister portrayed it as, “It was somehow administratively convenient”—but it is actually an amnesty. There is nothing else to it: the Government’s amnesty means that we will never know the true owners of these companies. Rather than adding transparency, the Government are adding opacity, and that is unacceptable. My amendment therefore seeks to remove that amnesty and make sure that all overseas owners with a beneficial interest in UK property—no matter where they are—are held to account and identified.

[Lord Coaker (Lab)]

My Lords, it is a pleasure to follow my noble friend Lord Sikka, who again comes forward with a number of amendments that are common sense and seek to shine a light on what is actually going on, and would deliver the transparency that so many of us seek in the Bill. We come to the transition period and the retrospective application, which is the subject of one of the most important groups, if not the most important group, of amendments this evening. It relates to the speed at which the register is implemented, as well as new measures that will apply during a proposed six-month transition period.

My noble friend Lady Chapman, along with the noble Lord, Lord Fox—we are grateful for his support—tabled Amendments 56, 61, 80 and 83. They seek to accelerate the implementation of the register of overseas entities, requiring initial registration within 28 days of commencement—again, seeking to avoid a situation where individuals or entities simply circumvent the law. This is not just a view held by us: the ICAEW, an accountants’ body, in the briefing that it sent your Lordships, also supported three months as a new transition period, with the ability to extend it for a further three months, were there a need to do so.

It is also worth noting that the sanction provisions—Part 1 of the Bill—will not commence on Royal Assent. Rather, they will require a commencement order laid by the Secretary of State. We understand that various steps need to be taken before that order can be laid. Can the Minister indicate how many steps there might be and roughly how long that will take? Is the upcoming Prorogation of Parliament, for example, likely to delay the introduction of any of the enabling regulations? When the Government moved from 18 months to six months in the other place, that left many thinking that the register would be active before the year end. Could it not actually be longer, given the need to implement various IT changes, inform people of the new requirements and so on? The House requires some reassurance about the commencement: in other words, when do the six months actually start? It could be six months now before the six months start: that would be a year for the implementation period. That is of real concern to us all, given the concerns that there are about the six months; so while we welcome the measures outlined in government Amendments 86 and 87, they do not prevent land being sold, gifted or transferred, and neither do they further reduce the current six-month implementation window. As many noble Lords said at Second Reading, a register of overseas entities has been promised for a number of years, and we certainly do not want any further delay, but there are serious questions to be asked.

Along with the noble Baroness, Lady Kramer, we also tabled Amendment 92. This is an evolution of the David Davis amendment considered in the other place. We accept that one very high-profile person of interest was Roman Abramovich. He is now subject to sanctions, and he plans to leave Chelsea under whatever arrangements he manages to make—or not, given the sanctions on him. However, one of the concerns around his case was that the Home Office was actually studying his affairs, but had no powers to take interim action while that assessment was being carried out. Is there therefore not a great deal of merit in our amendment, which seeks to freeze assets on an interim basis where there is good reason for doing so? In other words, if we are looking to sanctioning somebody, surely we would want to freeze their assets to prevent them from getting rid of them before a full order is put in place. At the moment, as I understand it, that cannot happen. I am not sure that under the Bill it would able to take place either, without this amendment. The Government might wish to look at the interim freezing of assets.

It might be, for example, that a person of interest hails from Belarus, which continues to enable the actions of Russia’s armed forces. What can be done about that? Does the legislation cover people in that situation as well? Again, we pose these questions to be helpful to the Government and raise serious concerns. We want the initiatives to succeed, but it is only with scrutiny—and the Government reacting and responding to the scrutiny, and acting on the various amendments that noble Lords have put forward from across this House—that we can have confidence in them. There might be only a few bad individuals among the applicants to the new register but the truth is, as my noble friend Lord Sikka and others have said, that we simply will not know what the case is unless there is maximum transparency. That transparency cannot come quickly enough.

[Baroness Kramer (LD)]

My Lords, my colleagues are doing all the heavy lifting from these Benches, and I am incredibly grateful to them. I have signed Amendment 92 in the name of the noble Lord, Lord Coaker, which I think found itself in drifting into the wrong group: it is actually part of group 3. One of the reasons why I signed it is this frustration, which I know the Government share, that, before a sanction is actually put in place, the individual who is likely to be sanctioned has, in a sense, plenty of warning signs and can use that opportunity to move various resources to a safe haven.

Much of the conversation around this Bill has been on fixed assets that are difficult to liquidate—property or complex companies—and I can understand why they might be less concerned about people knowing they are about to be sanctioned having the opportunity to move those. However, those same individuals tend to have very large investments in far more easily transportable assets—cash equivalents. I know that the Government are going to be looking at cryptocurrencies, which I have been very concerned about, when they get to the second phase of this Bill. It would, however, also be wrong to ignore such assets as jewellery and art. That is not just a tale from an Agatha Christie novel. I was a banker for many years in the mid-west, and most of my clients were exemplary people, but we certainly had one scoundrel who made the slight mistake of trying to impress a very charming young woman with an English accent and, as a consequence and with the aid of specialists, I was able to seize something worth close to half a billion dollars in artwork and jewellery against an attempt to defraud the bank. I ask therefore that the Minister think about these liquid assets, which play a part of the picture, but have been very little part of the discussion.

[Baroness Jones of Moulsecoomb (GP)]

I think that is a story for the noble Baroness’s memoirs, and I look forward to reading it.

There are lots of good amendments in this group but I want to speak to Amendments 56, 57, 61 and 62 about the implementation period. For me, the six-month implementation period makes absolutely no sense. We are trying to rush this through—we here are going to sit until I do not know what time tonight or tomorrow morning to make this emergency legislation happen, but we are still giving people six months to do this. The Government are taking so long that activists are going into oligarchs’ mansions and seizing them in London and Paris to house refugees, if we ever get any refugees here. I cannot blame this Government for the Paris seizure, but it suggests that people are getting very tired of the fact that they are being so slow about this. Why would anyone need six months? If they have been honest about paying their taxes, declaring profits and detailing the origin of their money, why do they need six months? Surely, any decent accountant—I am sure that there are several in your Lordships’ House—could sort this out within 14 days or, at the worst, 28 days. I think there is no reason for the Government not to support one of these two pairs of amendments that shorten the implementation period.

[Lord Pannick (CB)]

My Lords, I shall speak about Amendment 92 in the names of the noble Lord, Lord Coaker, and the noble Baroness, Lady Kramer, which would introduce a new clause headed:

“Asset freezing in respect of individuals considered for sanctions”.


Before I address that amendment, I need to give a fuller description of my interests—or, more accurately, my non-interests—than I would normally give. The reason for that is because in the House of Commons last week during the Second Reading debate on this Bill, Mr Matt Hancock complained that the 2018 Act contained amendments that

“came from those who are acting for oligarchs and then legislating for loopholes.”—[Official Report, Commons, 7/3/22; col. 31.]

The Home Secretary responded that she “wholeheartedly” agreed with Mr Hancock.

The position is this: with the noble and learned Lord, Lord Judge, who I see is in his place, I tabled amendments to what became the 2018 Act. They were designed to ensure a fair procedure and compliance with the rule of law. On Report, on 15 January 2018, the Government brought forward at column 442 amendments of their own on these subjects which were supported by me and, much more importantly, by the Labour and Liberal Democrat Front Benches. The House of Commons was content with the provisions approved by your Lordships’ House.

It is correct that in 2017 and 2018 I did not mention that I have advised and represented one client on sanctions matters in the last 10 years. I mention it today for the avoidance of any doubt. It was President Putin’s close associate Arkady Rotenberg. I represented him in 2014 and 2015 in the Court of Appeal on a sanctions issue in family law proceedings. I also advised him in relation to his claim in the General Court of the EU in mid-2015 challenging the sanctions against him, although I did not represent him at the hearing of his case in Luxembourg in 2016.

Of course, I did not put forward amendments to the sanctions Bill in late 2017 and early 2018 to legislate for loopholes. I put forward amendments with the noble and learned Lord, Lord Judge, as I have done on so many other Bills, because I am concerned about the width of ministerial powers and the need for fair procedures.

18:45

I did not refer to the Rotenberg case in 2017 and early 2018 because the Guide to the Code of Conduct, even in the latest version, makes clear at paragraph 111 that:

“Declarable interests are usually current interests … Former interests may exceptionally be declarable”.

I took the view—I hope correctly—that there was and is no exceptional reason to refer to the Rotenberg matter. First, I had done no work for Mr Rotenberg for over two years and secondly, as the Minister, the noble Lord, Lord Ahmad of Wimbledon, said at Second Reading, the Bill was

“about powers and not policy”.—[Official Report, 1/11/17; col. 1374.]

He described it as “a technical Bill” to create a legal framework for a domestic sanctions regime after we left the EU. In his closing speech at Second Reading, the Minister said that

“it is a Bill based on principle”.—[Official Report, 1/11/17; col. 1420.]

I also did not think, and do not think, that I need exceptionally to refer to a past case because of the role of a barrister. I advise people on the law and argue their case in court, whoever they are and whether I agree with them or find them or their views or their conduct objectionable or, indeed, reprehensible. It is my professional duty under the Bar code of conduct. To quote from the code of conduct, a barrister cannot refuse to represent a potential client

“on the ground that the nature of the case is objectionable”

or

“on the ground that the conduct, opinions or beliefs of the prospective client are unacceptable to him or to any section of the public”.

The code of conduct adds that any such discrimination is

“inherently inconsistent with your role in upholding access to justice and the rule of law”.

I am quoting from the Bar Standards Board Code of Conduct, rules C28 and C29.d and the guidance at gC88.

The fact that I advised and acted in 2014 and 2015 for Arkady Rotenberg certainly does not mean that I support his conduct, sympathise with him, or would wish to change the law to promote his interests or those of other friends and associates of Putin. Indeed, I have also acted in the last 10 years for Mikhail Khodorkovsky, a prominent opponent of Putin who, for that very reason, spent many years in prison in Siberia. I represented him and his business partner in the European Court of Human Rights in a series of cases which established that they had not received a fair trial.

I am grateful to noble Lords for giving me the opportunity to explain the position. I very much care about the opinion of noble Lords and my reputation in this House. I have no declarable interests and I did not have any in 2017 and 2018

I turn to Amendment 92. I can understand that the 2018 Act needs revision in the light of President Putin’s appalling behaviour. I can understand concern at the slow pace at which the Government have proceeded to sanction individuals. I do not accept that the contents of the 2018 Act explain that slow pace. The EU has acted much more speedily even though it has a general requirement that sanctions, like any other administrative action, must satisfy a test of proportionality and comply with the European Convention on Human Rights. The real impediment to speedy action here—it is the subject of Amendment 92—is the lack of sufficient officials to address the cases.

In my opinion, Amendment 92 is unnecessary. Clause 53 introduces a new urgent procedure to designate anyone who has been sanctioned by the EU, the USA or our other allies and I do not understand or accept why another urgent procedure is required, especially one that will impose very substantial restrictions on individuals merely because, to quote Amendment 92, a person

“is being considered as a subject for sanctions.”

That would be an enormously broad discretionary power for the Secretary of State in circumstances where he or she does not currently have a proper basis for making a designation.

The power would be draconian indeed. Simply because the person is being considered for sanctions, they would, under proposed new subsection (3), only be allowed on pain of criminal penalty to spend money to meet “basic needs”, which are confined to ensuring

“that they and … family members are not imperilled.”

This could go on for six months, until the Secretary of State decides, as may be the case, that there is no basis for designating such a person.

As the noble and learned Lord, Lord Hope of Craighead, said in paragraph four of his Supreme Court judgment in HM Treasury v Ahmed in 2010, to freeze the assets of people makes them

“effectively prisoners of the state”.

The noble and learned Lord added that designation orders are

“intrusive to a high degree”.

There are, of course, cases where designation orders are appropriate and we have seen many of them in the last weeks, particularly in the last few days. But I do not accept that it is appropriate or necessary for Ministers to have a power to freeze someone’s funds simply because they are being “considered” for sanctions. That would be an unacceptably broad power which would be quite impossible to reconcile with the rule of law.

[Lord Fox (LD)]

My Lords, it is a pleasure to follow the noble Lord, Lord Pannick. I am glad that he had the opportunity to say what he had to say; I was surprised that he did not speak on Second Reading, for that very reason, so I am glad he has now had a chance—

[Lord Pannick (CB)]

I am very grateful to the noble Lord. I had an unavoidable other professional commitment, and the Second Reading took place at very short notice.

[Lord Fox (LD)]

It did indeed, and I am glad that the noble Lord has had the opportunity to speak.

Once again, we have a huge number of varied amendments lumped into the same group, which I think is a side-effect of the process we are travelling through. I am going to focus on two themes. I am not going to interpose myself between lawyers on the subject of Amendment 92, but I look forward to the Minister’s response to the comments of the noble Lord, Lord Coaker, and my noble friend Lady Kramer.

I will turn to Amendments 56, 61, 80 and 83 in the name of the noble Baroness, Lady Chapman, and signed by myself. I will be brief because I do not think we have to speak for very long on this. The noble Lord, Lord Coaker, has been eloquent in this vein already in the unfortunate absence of the noble Baroness, Lady Chapman.

During Second Reading we heard a chorus of disapproval on the six-month transition period, and there is a good reason for that. The noble Lord, Lord Coaker, was clear on those reasons, as were other speakers, including the noble Baroness, Lady Jones, and the noble Lord, Lord Sikka. We have to focus on what the Government are seeking to achieve and how they are going to achieve it. While that number is very important, the second number, introduced by the noble Lord, Lord Coaker, may be even more important, and it is the one covered by Amendment 97 in my name. It seeks to bring commencement forward to the First Reading of this Bill in the Commons. When I tabled that amendment, I was thinking of the National Security and Investment Act, which did just that.

In one of the meetings that the Minister kindly invited me to, he set out a number of reasons why that commencement date is, in Government’s view, not popular. The longer the Minister’s explanations were, the more alarmed I became, because it is clear now that the commencement date is subject to the pace of the slowest moving IT project. That is a matter of great concern, and certainly should be to your Lordships’ House.

In looking at the six-month transition period, we cannot isolate it from the commencement period, as the noble Lord, Lord Coaker, wisely stated. What the Minister has to think about and convince your Lordships of is how these two times work together. Can they be concurrent? Indeed, can commencement start without the whole system being in place? In other words, can there be some flexibility in how parts of the Bill come in? That would be controlled through statutory instruments, which the Government have control over.

Commencement is one thing, statutory instruments are another and the transition period is a third. They all add up to either a long time or a medium amount of time. The Minister needs to explain the formula the Government have in mind, because at the moment it seems to be a blank number. We do not really know when the terms of this Bill will be in place.

[Lord Callanan (Con)]

I am mindful that several noble Lords, including the noble Baroness, Lady Chapman of Darlington, and the noble Lords, Lord Fox and Lord Sikka, have tabled a number of amendments in this group. I will start with Amendment 34 in the name of the noble Lord, Lord Foulkes, who I see is not in his place. I will speak to it alongside Amendments 58 and 67 tabled by the noble Lord, Lord Sikka, as they cover the same subject of retrospectivity and the subject the noble Baroness, Lady Jones, raised earlier.

These amendments seek to extend the scope of the definition of overseas entities registered as the proprietor of a relevant interest in land by removing the registration dates currently stated in the Bill. This has obviously been an area of interest in both Houses. The Government, of course, agree that the register should be as comprehensive as possible. However, there is no benefit to be gained from removing the dates as suggested, as I explained to the noble Baroness, Lady Jones, earlier. Doing so would instead create legal uncertainty. Due to the way information was collected prior to those dates, the land registries would have no way of reliably and consistently identifying properties owned by overseas entities and those that are not. It was not compulsory in England and Wales, for example, to register the jurisdiction of ownership before 1 January 1999. As such, the Land Registry would have this information only where the overseas entity had voluntarily supplied the information itself.

The amendment would result in inconsistent application, as the information needed to enter restrictions on disposition on to relevant titles is not readily available before these dates. They were not just dreamt up arbitrarily; these dates are put in for good reason. The result of removing the reference to the registration dates would be that only those entities that could be identified as being overseas entities could be brought properly into scope. Others that could not be so identified would not be.

This situation would also introduce significant uncertainty for buyers. There would be no way of providing absolute legal certainty as to whether an entity should or should not be in scope for those properties registered before 1999 in England and Wales, and before 2014 in Scotland. Third parties who were in the process of or considering purchasing a piece of land in the UK registered before those dates could not be sure whether they were engaging with an overseas entity that was in scope of the Bill, and which could become non-compliant at any time. The existing clauses are therefore essential for the register to be effective and operable, and to provide certainty as to which overseas entities are actually in scope of the requirement to register once the register goes live.

Finally, I remind the House that the agents who support property transactions are, as we have said earlier, all covered by the provisions of the anti-money laundering regulations. If there are properties with titles held by overseas entities going back further in time, when those entities next come to sell or lease those properties, the agents involved will be obliged to conduct appropriate checks for money laundering.

I turn now to Amendments 56, 57, 61, 62, 80 and 83 on the transition period. I thank the noble Baroness, Lady Chapman, and the noble Lords, Lord Fox and Lord Sikka, for their amendments to shorten the transition period as proposed. Of course, as the noble Lord, Lord Fox, has just said, I am aware that speed of implementation of the register and of the transition period has been the focus of much debate in both Houses so far. The Government have already reduced the transition period from the initially proposed 18 months to six months.

19:00

I have also tabled amendments, which I have just spoken to, to further ensure that there is no gap in coverage of overseas entities selling their property now. These amendments will require overseas entity sellers to declare beneficial ownership and provide information to Companies House if they sell at any time from 28 February this year, when the Bill was first published, up to the end of the transition period. I hope that this will alleviate concerns that criminals who are currently selling their property can get off scot-free.

This will be more effective than any further reduction in the transition period; first, because the shorter the transition period, the greater the risk that the provisions of the register might be challengeable under the European Convention on Human Rights, especially the right to enjoyment of property. Property owners who do not comply in time will have their property rights affected; that is quite a severe sanction and it is retrospective. The Government do not interfere with individuals’ rights lightly and this interference could not have been reasonably expected when rights over the properties within scope of the register were first acquired. This is a serious point. No doubt, those who wish to avoid these requirements and who are able to afford expensive legal teams will take advantage of any opportunity to do so. The legal risks are heightened because limitations in Land Registry data will not allow us to write in advance to all affected by the new requirements. Therefore, it is essential for legal reasons that we give owners reasonable time to register.

Secondly, in considering a shorter transition period, it is important to remember that the majority of properties held via overseas entities will be owned by entirely law-abiding businesses and people; this is a point that I have made a number of times. As I said earlier, we are talking about around 95,000 properties in England and Wales owned by some 30,000 overseas entities. Only a tiny fraction of these are likely to be held by criminal or corrupt interests. Many of the ultimate owners will be law-abiding British companies who have adopted these structures for legitimate commercial reasons. In some cases, complex chains of ownership may make it difficult to identify the beneficial owners if the timeframe given is too short. It is not the case that the managing officers of the entity itself will necessarily know, and they will need time to take legal advice and make any necessary enquiries. Others in scope of the new requirements will be British nationals who have adopted the arrangements for legitimate reasons of privacy; for instance, celebrities who do not want their addresses to be known publicly. These individuals may want to apply to Companies House for their personal details to be protected from public view on the new register, but the threshold for exemption from the public register will be high, and it is right that individuals have time to seek advice on their options and how to make a case to the registrar.

To conclude, any legal challenge, whether brought by someone deliberately seeking to evade it or by a law-abiding organisation or individual unhappy with the time they have been given to comply, could jeopardise the implementation of the entire register. A balance must be struck between ensuring that there is no place to hide for corrupt elites and kleptocrats and allowing for the free enjoyment of property and maintaining the UK’s reputation as a stable investment environment. The six-month transition period, along with our proposed amendment to require sellers to declare beneficial ownership for disposals now, achieves this purpose. We believe that the register will have an immediate dissuasive effect and sends a strong message that the UK will not be a home for illicit wealth. However, implementation of this register is not essential to the UK placing effective sanctions on Russian nationals now. Other measures in this Bill will help us to do that.

The new register should be seen as a longer-term measure to help us to clean up our property market and will be a key tool for the NCA as it deploys more unexplained wealth orders in future. We have included it within this Bill as a message of intent, alongside measures that will have more immediate impact. I am acutely aware of the strength of feeling that this register is overdue and must be implemented as swiftly as possible. I can assure noble Lords that I share this wish. Companies House is readying a team right now and will move forward as soon as this Bill achieves Royal Assent. I also remind the House that what we collectively want to achieve is not just speedy but effective implementation. The six-month transition period, coupled with the new requirement to report disposals to Companies House where these have occurred since the publication of this Bill, will achieve this aim. I therefore hope that, in the light of that information, noble Lords will not press their amendments and that government amendments will be supported. I shall withdraw the government amendments now, but retable them on Report.

I move on to Amendment 97, tabled the noble Lord, Lord Fox. I am sure that the House can be in no doubt about the Government’s appetite to bring the register of overseas entities into force as quickly as possible. I can assure the House, as the Minister responsible, of my personal commitment to bringing the register into operation as quickly as possible. I commend the noble Lord’s enthusiasm to expedite it further, but I am afraid that I cannot agree to this amendment, because I do not believe that it would have the desired effect.

It is clear that compliance with Part 1 of the Bill cannot be achieved overnight, hence the need for there to be a transitional period within which overseas entities can take the necessary steps in that regard. Backdating the commencement of Part 1 to 1 March 2022 would defeat the point of the necessary transitional period. It is also important that industry has time to understand the changes to the new sanctions legal test and that we are able to engage on guidance before it comes into force. While the end of the Part 1 transition period will be the key date for compliance, Members can draw reassurance from the fact that the requirements of the register clauses, in terms of information to be provided by overseas entities, encompass acquisitions of property and land that long predate the First Reading of this Bill, in some cases by decades. I therefore hope that the noble Lord will not press his amendment.

I thank my noble friend Lord Agnew for his Amendments 62A, 76A and 84A. These seek to prevent an overseas entity that makes a registrable disposition of property valued over £1 million during the transition period from accessing or removing the proceeds of their disposition from the UK for a period of six months. It would require that the money is held in a UK stakeholder account for that amount of time. I understand the spirit of this amendment, which is aimed at preventing the criminal minority from selling up and taking their assets out of the UK in the short term. However, I have already explained to the noble Lord personally, and to the House, how the transition period is in place to allow owners of property, who in the vast majority of cases are entirely law-abiding, to register or dispose of property before the registration becomes obligatory, and any restrictions on their property come into effect.

This amendment would have a disproportionate impact on legitimate owners and would also be difficult to justify in relation to interference with property rights. I have no doubt that those malingering entities that wish to avoid the requirements of the register and can afford expensive legal teams will take advantage of the legal risk that this poses. I have already tabled amendments to require overseas entities sellers to declare beneficial ownership and provide information to Companies House, if they sell at any time from 28 February this year up to the end of the transitional period. This is an appropriate and proportionate anti-avoidance measure imposed on those overseas entities selling properties before the end of the transitional period, ensuring that law enforcement will have the right information to pursue any subsequent investigation, if appropriate.

If a property has already been identified as belonging to a sanctioned person, there will already be a freeze on that asset. If it has not been so identified, but it later transpires that anyone involved in the transaction knew that they were or might be dealing with an asset linked with a sanctioned individual, all those involved in the transaction will have committed an offence and can be pursued by law enforcement.

In addition, my noble friend’s amendments as drafted are likely to cause legal uncertainty. The term “registrable disposition” carries legal significance in England, Wales and Northern Ireland but has no directly corresponding concept in Scotland. The amendment as drafted would therefore introduce a great deal of legal uncertainty in Scotland and may fail to achieve the desired legal effect. Also, the term “stakeholder account” is undefined by these amendments. While the intent could potentially be understood by the drafting that the account would belong to, say, a solicitor, I am afraid that there would be a great deal of legal uncertainty as to what qualifies as a stakeholder account. For these reasons, I hope my noble friend will understand that the Government cannot support these amendments.

Moving on to the fabled Amendment 92—

[Lord Faulks (Non-Afl)]

I am very grateful to the noble Lord for giving way. He talks, understandably, about a transition period and the need for everybody to adjust to the new provisions. However, while Ukraine may have come as a surprise, the existence, or likely existence, of this register cannot fall into that category. I am sure the noble Lord would agree with me that anybody who had owned property would have had years to prepare themselves since it was first mentioned in 2016. It was mentioned in the Criminal Finances Act and again in the Sanctions and Anti-Money Laundering Act. Why is there so much need for further transition, when anybody would have been aware of these provisions?

[Lord Callanan (Con)]

The noble Lord will know from his time in Government that the law officers provide confidential legal advice to Ministers. I can only say to him that I am personally satisfied that this six-month period is appropriate. We are taking a severe step with this legislation; we are retrospectively interfering with property rights. Whether the legislation has been flagged in advance—I think David Cameron first promised it in 2015—does not, as I understand it, alter the legal case that somebody who wished to purchase expensive legal help to challenge the legislation would be able to do so under the Human Rights Act. I can do no more than assure the noble Lord that the officials and I are acting under the legal advice that we have received about the appropriate period. I can assure him that I wish to bring this in as quickly as I can. He will be aware that the Government originally proposed a period of 18 months. Following fairly significant political pressure, we have taken further advice and have managed to reduce it to six months. I am seriously concerned that, if we reduced it further, we could be subject to legal challenge. I am happy to speak to him outside the House.

[Lord Fox (LD)]

My Lords, I assume that the noble Lord, Lord Faulks, has had the answer he required. To come back to implementation and commencement, it is not clear what the trigger for commencement would be. Can the Minister be clear on what the trigger for commencement will be and, having stated that, can he perhaps undertake to maintain a dialogue with your Lordships’ House on how reaching that trigger is getting along and when we might expect the commencement of this Bill?

[Lord Callanan (Con)]

I totally understand the point the noble Lord is making. I cannot give him a precise date; all I can say is that I am keen to commence this legislation as quickly as possible, but there are number of steps that we need to take. We need to publish and implement a number of statutory instruments on the back of this. Companies House needs to put the systems in place; it has already been given the funding for that. The computer systems need to be set up and the register needs to be activated. I am very happy to maintain a dialogue and keep the House informed, but the ultimate answer to the question of when the legislation will be commenced is: as soon as we possibly can.

[Lord Fox (LD)]

Given that your Lordships’ House has demonstrated that it can process statutory instruments at an insatiable rate, my point that the rate-determining step is an IT system in Companies House is entirely correct. Would the Minister confirm that?

[Lord Callanan (Con)]

It is a number of different things. There are administrative procedures to be put in place; the IT system is of course important—I am hesitant to give assurances on when a government IT system might operate. It is not a hugely complicated system, but it needs to be done and to be put in place. Of course, we also need to go on to the next step, namely the economic crime Bill which will follow this one and will give Companies House the right to query the information that has been provided, as I outlined to noble Lords earlier. However, I am very happy to keep the House informed as to commencement dates. I am sure a lot of people will be writing to me about it and will be using the devices of the House to table Questions to ensure that my feet are held to the fire on this one.

19:15

[Lord Faulks (Non-Afl)]

I am sorry, but I had not quite got an answer. I absolutely appreciate the Minister’s sincerity in wanting to get this register ready. My point was that the transition would come as no surprise. His answer—as I understood it—was that the Government are concerned about possible legal action, which is not quite the same thing, because I think he is talking about a possible challenge under Article 1 of Protocol 1 to the European convention. I respectfully suggest to him that lawyers are being extremely cautious about this because, in the circumstances, it would be quite a brave court that would decide that the time allowed for transition was so short that they would be allowed to retain possessions.

[Lord Callanan (Con)]

I thank the noble Lord for his legal advice; I should not let my prejudices against lawyers get in the way here, but no doubt there are others who one might want to employ who might give a different opinion. All I can say is that we are acting under the advice that we have received. I am told that while people may have had an idea in advance that we would be introduce such legislation, the fact of Parliament actually passing it will, I suspect, be the legal test for when the register starts and when the requirements come into force—whether or not it had been flagged up in advance. However, that would be my opinion as a mere engineer, not a lawyer; I am sure that other opinions are no doubt available.

I turn now to Amendment 92—

[Lord Sentamu (CB)]

My Lords, I apologise that I was not here for Second Reading. I went down with a very bad cold and I wrote to the Convener’s office to say that I could not be here, so I apologise.

Can the Minister explain why the Government had gone for 18 months instead of six? Was the legal advice for 18 months that someone could challenge, so a longer transitional period was needed? Yes, there could be cases that come up, but if the intention is quite obvious and very clear why the decision is being taken, could he tell us why—no matter the number of days that you give for the transition—a very rich oligarch could not still bring a case regardless? I cannot understand why we have gone from 18 to six months, and now the Government are saying to stick at six because there will be a legal case. As a legislator, I just do not understand that.

[Lord Callanan (Con)]

I am happy to explain it to the noble and right reverend Lord. This is a severe piece of legislation retrospectively interfering with someone’s property rights going back—in the case of England and Wales—to 1999. Somebody could not have known when they entered into that transaction that we would wish to retrospectively legislate for that. There is a section in the Human Rights Act—I think it is the section quoted by my noble friend—about enjoyment of property and we are interfering with that. Bearing in mind that these are overseas entities for which contact details are sometimes not available, my advice is that we need a reasonable period for the entity concerned to become aware of their legal obligations. The rich oligarch mentioned by the noble and right reverend Lord may wish to bring a challenge against us on the basis that we had not allowed a reasonable period. What a “reasonable period” is then becomes a matter of legal definition and argument, for which there are obviously a variety of views. That is probably the best summation I can give of the case. I hope that satisfies the noble and right reverend Lord.

Moving on to the famous Amendment 92, I thank the noble Lord, Lord Coaker, for his innovative suggestion for a wide-ranging power for the Secretary of State aimed at preventing asset flight before the formal imposition of sanctions. I hope the measures we have added in the other House go a significant way towards dealing with the kinds of situations the noble Lord may have in mind. The sanctions measures in the Bill are designed to ensure that we are able to respond even more effectively to world events using those sanctions. While, of course, we are living in unprecedented times, I am concerned that his proposals would give huge amounts of power not just to the Secretary of State in relation to Putin’s regime but to future Secretaries of State with regard to people who are not yet the subject of sanctions regimes. Much as I hate to admit it, I think I agree with the noble Lord, Lord Pannick—for a change—on this one. We need to tread carefully on such matters. Indeed, this amendment would provide an open-ended power to freeze assets for an unspecified period prior to sanctions being imposed and includes custodial penalties for those who breach it.

I think we have led the world in sanctioning Putin and his cronies. In some areas we have gone further than the EU; for example, we have banned all 3 million-plus Russian companies from getting loans in the UK or from listing. The Government strongly support measures to ensure that sanctions are effective and will continue to keep under consideration all steps necessary to achieve that. In light of what I have said, I hope the noble Lord will not press the amendment, but this is on the understanding and with the commitment that the Government will continue to keep under review how we ensure that we have all the tools at our disposal to ensure that sanctions are as effective as possible.

In conclusion, I am aware of the strength of feeling in the House on this issue of the transition period. It has been made clear to me in meetings, in particular with the noble Lord, Lord Coaker, and the Opposition Front Bench, and the noble Lord, Lord Fox, and the Liberal Democrat Front Bench. I have listened carefully to the points made in this debate, particularly the powerful remarks made by the noble Lord, Lord Coaker, and I am grateful for the constructive approach that the Opposition in particular have adopted on this matter. I will, of course, continue discussions with the noble Lord, and I am sure we will continue to talk these matters through before we commence Report on the Bill. I beg leave to withdraw the amendment.

Amendment 33 withdrawn.

Amendments 34 to 37 not moved.

Clause 9 agreed.

Clauses 10 and 11 agreed.

Clause 12: Identifying registrable beneficial owners

Amendments 38 and 39 not moved.

Clause 12 agreed.

Clause 13 agreed.

Clause 14: Sections 12 and 13: supplementary

Amendment 40

Moved by

[Baroness Kramer]

40: Clause 14, page 9, line 34, at end insert֫—
“(1A) The Secretary of State must, within 6 months of this section coming into force, by regulations, establish within the office of the registrar a whistleblower office to receive whistleblowing reports on the accuracy of information provided under sections 12 and 13 and to provide confidentiality and protection from retaliation for any such whistleblowers.”Member’s explanatory statement
This amendment would require the Secretary of State to establish a whistleblower office within the office of the registrar to receive whistleblowing reports on the accuracy of information provided under sections 12 and 13 and to provide confidentiality and protection from retaliation.

[Baroness Kramer (LD)]

My Lords, I will try to be brief on this issue. Amendments 40 and 41 both refer to whistleblowers and protection for them. Whistleblowers will be absolutely crucial if the register proposed in this legislation is to be accurate, but they will also be crucial for unexplained wealth orders and sanctions to be fully effective. Where those whistleblowers expose kleptocrats, hidden assets, money-washing schemes and individuals linked with owning, hiding and laundering, they will be taking really serious risks, both for themselves and for their families.

Confidential disclosure to a regulator or an enforcement agency only sometimes provides anonymity. It may be obvious who the whistleblower is because the information is held by so few people, or, as we have seen in many instances, it may be that the less scrupulous—whom we are going after—hire investigators in order to expose the identity of whoever spoke out.

At the very least, we need to be sure that there are genuine safe disclosure channels, and they need to be communicated in a very powerful way to everyone who might have information. The risk is not just physical harm by criminals, although that comes to mind when we think of the particular pool of individuals that this legislation is aimed at; it is also retaliation by enablers—the banks, the legal firms, the accounting firms and others. I fear that they have an unfortunate track record of quite devastating retaliation. Some obviously are very much better than others, but I anticipate that the kinds of entities that are sufficiently lax internally that they are willing to provide support to those engaged in money laundering and whose money has come through kleptocracy will be among the sternest in using retaliation against a whistleblower.

Individuals who lose their job or their contract are informally but effectively blacklisted—that probably is the least of their problems. Those who lose their jobs turn to employment tribunals. I know that the Government often pray in aid employment tribunals, but I suspect that many people are not aware of how costly an employment tribunal is for the individual seeking to make their case: we are talking about thousands of pounds and it can easily reach £100,000 or more. The entity they are up against can obviously afford the best lawyers and the most significant QCs. It is also very possible for an employer to string out an employment tribunal through various legal tools. Three years is not at all unusual, and seven years is not unknown, even for a successful whistleblower. During that time, the whistleblower has no income and must pay the high legal costs, with all the consequences for their family and their friends, from whom they borrow. This inequality of arms and the general stress of the whole process force many whistleblowers to settle and to sign agreements that prohibit disclosure.

The Government will say, “They can always make disclosures to regulators and enforcement agencies”, but it is certainly true that many whistleblowers become so afraid after they have been through the grinder of this process that they do not even dare to do that. This is part and parcel of how legal firms and others try to shut down anyone exposing wrongdoing by the powerful. We discussed SLAPPs at Second Reading, when my noble friend Lord Thomas went through some of the kinds of strategic lawsuits against public participation that have been levied against authors and journalists who have exposed kleptocrats. Imagine that same energy and attention turned on someone who is seen as an insider or an employee—it would be an even more bitter and devastating reaction.

The United States knows the value of whistleblowers in a way that is, frankly, ignored in this country. It is why we have a history of so many fewer prosecutions and convictions. Indeed, most financial scandals are exposed first by the Americans. You can almost go through a list—if there is any American connection, you can pretty much guarantee that it was a US agency that first exposed the problem. US prosecutors, and I have talked to many, will tell you that at least half of the convictions for financial crime in the US depend fundamentally on whistleblower evidence. Whistleblower evidence also assists in many more cases. In this country, if you ask the regulators and enforcement agencies, they will say that whistleblowers make only minor contributions. That may explain why prosecution in this country is, frankly, quite rare.

Last year, the United States, in anticipation of the issues we are facing now, passed the Kleptocracy Asset Recovery Rewards Act with extraterritorial reach, both as an incentive to whistleblowers and to compensate them for what are recognised to be career-ending and, in these particular instances, potentially life-threatening disclosures. There is a very interesting preamble to the legislation that makes clear the depth of concern that Congress had. At this moment, I would have to say to any potential whistleblower in a case where there is the slightest US connection, “Go to the Americans, your information will be taken seriously, you and your family will be protected and you will not end up ruined”. I cannot say the same thing to any potential whistleblower here in the UK and I think that has to change, and quickly.

19:30

The Government have said they will review the whole whistleblower framework at some point, but we need that flow of information to be coming in as rapidly as possible, particularly in this crisis time, when we have the Russian invasion of Ukraine. If we take the actions that make it possible for whistleblowers to speak out and provide that information, although we can never fully eliminate the risks, we can go an awfully long way towards that. I know there is no chance of getting it incorporated into this legislation, but I would really like the Government to onboard the importance of it and make sure that it is in the economic crime Bill part II.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise very briefly to make my first contribution in Committee on these two very important amendments. Both were very comprehensively introduced by the noble Baroness, Lady Kramer.

As a former journalist, I reflect on how protecting your sources is something that is drummed into you from a very early stage in your career. However, one thing I have observed over 20-plus years as a journalist is how much more complex this has become. Having been an editor at the Guardian Media Group, I know what difficulties there are in trying to protect sources these days. That is on the technical side of things. But, as the noble Baroness, Lady Kramer, said, there is also the issue of how torrid a time some people have had even when whistleblowing about what you might describe as ordinary and mainstream companies. We have seen that with people who have exposed safety and financial issues. With some of the people we are looking to target here, it is crucial that there is the security of knowing that, if information comes out and others seek to prosecute, uncover and expose them, there will be a group looking after the whistleblower. The noble Baroness has made a very important point.

[Lord Agnew of Oulton (Con)]

I support the amendment of the noble Baroness, Lady Kramer. I accept that it is unlikely to go into this Bill, but I very much hope that it will go into mark 2.

I do not share the somewhat Panglossian view of my noble friend the Minister that this whole crime issue is a tiny issue. There is a wall of bad money out there trying to get in, and we have been far too complacent. The Transparency International report of 2018 looked at the BVI and found over 1,100 companies involved in 200 major frauds to the value of tens of billions of pounds. This was just one territory.

Whistleblowers are a vital source of information and intelligence. The noble Baroness, Lady Kramer, is right in saying that we do not recognise them nearly enough in this country. I will not go on further, save to ask the Minister replying that she will take back this issue and ensure that it is plumbed into the next Bill.

[Lord Cromwell (CB)]

I rise briefly, in part to support this whistleblower amendment. I have asked questions on this in the House before. They are very poorly treated—this is just a fact. I agree with the noble Baroness, Lady Kramer, that we need to do better, but I also agree with her that it probably does not fit into this Bill. The noble Baroness has been a tireless advocate for an office for the whistleblower, and such a facility needs to be brought forward rather than permanently left to wither on the vine, as has been the case.

When I asked a question about whistleblowers before, a Member of the House, who was sitting behind me and is no longer with us, said, “Don’t you mean snitches?”. That is exactly the kind of culture we face. I hope that the Government, broader than this Bill, will look seriously at an office for whistleblowers.

[Baroness Smith of Basildon (Lab)]

My Lords, in some ways, the amendments from the noble Baroness, Lady Kramer—she has done the House a service in tabling them—go to the heart of some of the issues that we have with the Bill as a House. It is that tension between recognising that the Bill is inadequate in many ways and recognising its necessity and why we are passing it today.

I am grateful to the noble Baroness, Lady Kramer, because her speech tonight was very powerful in setting out the reasons why such measures are essential. From what she was saying and in listening to the Minister earlier, and given the impact that these measures could have on the implementation of the measures in the Bill, it seems to me important that the Government look at this as a matter of urgency. There are huge merits to her arguments and it would be useful to know what the Minister can say on behalf of the Government.

It has been clear over a number of years that there is a multitude of undesirable activities that have come to light only because of the bravery of whistleblowers. The process started by this Bill—to be continued, as we have heard, by the second economic crime Bill—will, we hope, result in a lot more information coming forward. If that is the case, we should recognise that those who bring forward information of wrongdoing are performing a public service, and we rely on them to do that. No one should be in the position that they fear giving evidence because of reprisals or because they think no one is going to take them seriously and nothing will be done about it. Both are equally bad.

We accept not only that the registrar’s office should have a mechanism for receiving and processing the information but, on the point the noble Baroness, Lady Kramer, raised, the importance of doing everything possible to protect the individuals who have raised concerns. Without that protection, we are not going to get the people we need coming forward or they will do so at huge detriment to themselves. I hope the Minister will be able to tell us what the Government are doing on this. We have heard previously that this is something they are looking at and that something will come forward, but we need something a little more concrete, given the importance of this to this Bill.

The noble Lord the Minister spoke earlier about the measures that will be in the second economic crime Bill. I think we really needed a commitment not only that something like this will be considered for that Bill—we are happy to have discussions about how that could be done—but that it will come forward not just in the next Session but early in the next Session. To delay anything undermines the very purpose of being here tonight, to see through legislation which is now an emergency but need not have been an emergency. As the noble Lord, Lord Faulks, mentioned earlier, many of these things have been known about and talked about, but they have not come to fruition. Tonight there is an opportunity to say that we recognise the inadequacy of the Bill but also the necessity of it. I hope we will hear a very positive response from the Minister that there will be something to address this in the next Bill and that this will come very early in the next Session.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank the noble Baroness, Lady Kramer, for this amendment. I acknowledge that she has a very impressive record of championing the whistleblowers’ cause. Indeed, as a number of noble Lords have said, this is clearly a common cause in the House.

Amendment 40 seeks to establish a whistleblowers’ office within the office of the registrar to receive whistleblowing reports on the accuracy of information and provide confidentiality and protection from retaliation. This amendment would do so by conferring an obligation on the Secretary of State to create the office within six months of Part 1 of this Bill coming into force.

This amendment would make changes to Clause 14, a supplementary clause that relates specifically to Clauses 12 and 13. Clause 12 sets out that an overseas entity must take reasonable steps to identify registerable beneficial owners and obtain the required information. The steps that must be taken in this regard include giving an information notice to any person that it knows or has reasonable cause to believe is a registrable beneficial owner. It also gives the person who is thought by the entity to be a beneficial owner an opportunity to correct inaccurate information where necessary.

Clause 13 builds on what is presented in Clause 12 by providing an overseas entity with additional powers to obtain information in order to identify beneficial owners if necessary. It provides that an information notice can be presented to a person who is thought to be able to assist with providing beneficial ownership information. This clause allows for entities to take extra steps in ensuring they have taken all reasonable steps to identify the beneficial owners. The Government believe that the provisions in Clauses 12 and 13 will help in making sure that the correct beneficial owners are identified and registered.

Companies House already offers an anonymous “report it now” function for anyone to raise concerns about the accuracy of information it holds. We will ensure that this functionality is extended to the new register of overseas entities. It is also worth noting that Companies House will be provided with expanded and stronger powers to challenge and pursue suspicious filings in the forthcoming second part of the economic crime Bill, as set out in our recent White Paper. This will include a new power for the registrar to query information, including in light of concerns raised by third parties. Those concerns might be raised through the “report it now” function or through other mechanisms, including duties on the regulated sectors. We will take care to ensure that those third parties are suitably protected.

The noble Baroness, Lady Kramer, mentioned the American scheme. There are different opinions on the impact of providing financial incentives to whistleblowers, reflecting local legal, political and social norms. However, organisations representing UK whistleblowers, such as Protect, do not recommend the introduction of financial rewards or incentives. The FCA and the PRA undertook research considering an incentive scheme for whistleblowers and published their conclusions in July 2014. They concluded then that providing financial incentives to whistleblowers would not encourage whistleblowing or significantly increase the integrity and transparency of financial markets.

The noble Baroness, Lady Smith of Basildon, asked what the Government had done to improve the whistleblowing framework. This work is ongoing, but we have already increased the scope of those protected by our whistleblowing laws by extending protection to groups previously not included. This greater transparency around the work of prescribed persons aims to increase confidence among whistleblowers that their disclosures are taken seriously and to improve consistency across different bodies in the way they respond to disclosures.

[Baroness Smith of Basildon (Lab)]

I asked not what the Government had done but what they were going to do.

[Baroness Bloomfield of Hinton Waldrist (Con)]

Sorry; I misunderstood.

It is right and proper that the Government review the whistleblowing framework once we have had sufficient time to build the necessary evidence of the impact of the most recent reforms. We acknowledge that an effective whistleblowing framework is an important part of the UK’s ability to tackle corruption and all forms of economic crime and illicit finance. These acts are, by their nature, often covert. The Government are committed to ensuring that individuals are able to speak up about the behaviour of bad actors.

In recent years the Government have continued to improve the whistleblowing framework, and we will continue to do so in future. It is important that whistleblowing disclosures are dealt with properly and by the right body. This is why BEIS maintains and regularly updates the prescribed persons order. Officials work closely with other government departments, the devolved Administrations and regulators to ensure the list is up to date. I can assure noble Lords that this work is ongoing, and we will continue to improve the whistleblowing framework in the near future.

With that, I ask the noble Baroness to withdraw her amendment.

[Baroness Kramer (LD)]

Obviously, I am very disappointed with the answer and the ongoing complacency that undermines the legislation we are passing, but at this point in time I beg leave to withdraw the amendment.

Amendment 40 withdrawn.

Amendment 41 not moved.

Clause 14 agreed.

Clause 15 agreed.

Clause 16: Verification of registrable beneficial owners and managing officers

Amendment 42

Moved by

[Lord Eatwell]

42: Clause 16, page 10, line 24, at end insert—
“(A1) All information delivered to the registrar for the purposes of sections 4(1)(c), 7(1)(d) and 9(1)(e) must be verified by the registrar.”Member’s explanatory statement
This amendment places a statutory responsibility on the Registrar to secure the verification of the relevant information in the register.

[Lord Eatwell (Lab)]

My Lords, I explained at Second Reading that lack of data verification at Companies House has been a fundamental factor in enabling—indeed, encouraging—the flow of dirty money to London. Lack of data verification has played a major part in securing London’s position as the money laundering capital of the world. As I argued last week:

“Companies House is a library in which any shameful book can be deposited”—[Official Report, 9/3/22; col. 1496.]


and accepted without fear of exposure or retribution. Indeed, just earlier this afternoon, the noble Lord, Lord Callanan, described Companies House procedures as “dumb”.

This afternoon, we have been debating amendments to the Bill that will define more accurately and more widely the sort of information that will, as a result of the Bill, be required to be offered to the registrar. However, nothing we have discussed so far will guarantee that the information is accurate. If it is not accurate, it is useless or indeed worse than useless.

19:45

We are dealing with sophisticated crooks. In the past they have been successful in subverting our financial system by providing inadequate, misleading or downright false information to Companies House, which has meekly accepted it. The crooks will try to do the same in the future, perhaps especially with respect to the information required as a result of the Bill. The only way to prevent the objectives of the Bill being undermined is to have in place the best possible system of data verification. What does that involve? It involves forensic accountants using the wide range of electronic information systems that is available today, reinforced by the National Crime Agency, backed up by agreed information gateways with fellow regulators in other jurisdictions and with foreign economic crime enforcement agencies such as the FBI, and, of course, supported by our own security services. It is quite obvious that that sort of programme can be conducted only by an official public agency—an official public registrar.

This amendment would make it a statutory requirement for the registrar to secure the verification of the relevant information in the new register. It would place the registrar at the heart of the verification process. Noble Lords should note that this does not mean that Companies House must right away have in place the trained staff and appropriate systems, or in six months’ time. In due course, Companies House must have those capabilities, but even if in the short run it does not have the necessary technical resources, they exist within the British Isles and can be commissioned to help to do the job.

The statutory requirement would also pose the financial resources question: does Companies House have the financial resources to do the job? If it does not, then, as pointed out by the Institute for Government in its discussion of the Bill, we have all been wasting our time. Making verification a statutory requirement would place the financing question at centre stage. It just cannot be fudged. Of course, even a thorough verification system will not be infallible, but, without it, all our efforts this afternoon will have been in vain. I beg to move.

[Lord Faulks (Non-Afl)]

My Lords, I entirely support what the noble Lord, Lord Eatwell, said. It is very much along the lines of the recommendations of the Joint Committee which I had the privilege of chairing. I quote just one paragraph:

“It is regrettable that, as currently conceived, the proposed Register of Overseas Entities will have insufficient verification checks to deter criminals who wish to submit false information. It therefore seriously risks failing in its central policy aim: to provide a reliable and transparent record of the beneficial ownership information of overseas entities investing in the UK property market.”


We discussed a number of the points that the noble Lord made so eloquently at Second Reading and today, including placing a greater burden on professionals to verify information. It is clearly fundamental; without verification, the Bill will not be as successful as it should be.

[Baroness Kramer (LD)]

My Lords, I will speak briefly on this issue, because I am very much of the opinion, as are many in the Committee, that a combination of both a public register—so that civil society groups, journalists, activists and people in different countries will have access to different kinds of information—and vigorous verification is the kind of safeguard we need if we are to end the history of the London laundromat and prevent London remaining a magnet for a great deal of dirty money that is floating around the globe.

Like many people, when I heard that there would be a register of beneficial owners of property that would have a verification component and that verification would be introduced at Companies House, I was elated. Then I actually read the language in the Bill and it seemed, as the noble Lord, Lord Faulks, said, so light touch that there might be something vigorous, but on an exceptional basis and not as a matter of routine. As there is little in the Bill to strengthen the responsibilities of the enablers, I am worried that we will end up with the worst of all worlds—a headline that makes it looks as though we are taking significant and serious action, but implementation that completely misses the mark.

I know the Minister has sometimes said that we have plenty of legislation to deal with enablers, and which has been strengthened somewhat, but if we had adequate legislation to deal with enablers we would not have a single instance of money laundering in this country, because nobody bringing in dirty money is able to buy a single piece of property, take control of a company or engage in any other activities without using an enabler. You need the lawyers, accountants and property developers. We clearly cannot choke off that particular avenue to sustain the London laundromat. All these things come together. I hope the Minister will look again at verification. It will partly be a matter of resources—those absolutely matter—but it also has to be standard practice that a very high level of verification is embedded to deal with every item in the register.

[Lord Pannick (CB)]

My Lords, I share the concerns expressed about the need for rigorous verification. I note that Clause 16 confers a broad power on the Secretary of State to make regulations in this field. Is the Minister able to assure the Committee that those regulations will impose a rigorous form of verification and requirements along the lines of those that have been proposed?

[Lord Cromwell (CB)]

Before the Minister tries to answer that, we need to recognise delivering what the noble Lord, Lord Eatwell, wants would be absolutely transformative to Companies House. There is no tinkering at the edges here; this would be a massive transformational change and, unless we get that, this amendment will not deliver what is being asked of it.

[Lord Vaux of Harrowden (CB)]

I will quickly add to the comments from the noble Lord, Lord Pannick. Clause 16 sets out the regulations must

“make provision … about the information that must be verified … about the person by whom the information must be verified … requiring a statement, evidence or other information to be delivered to the registrar for the purposes of sections”

et cetera. Perhaps the Minister could enlighten us as to what he has in mind there.

[Lord Coaker (Lab)]

My Lords, I am grateful to my noble friend Lord Eatwell for moving Amendment 42. As we all know, he has a huge amount of experience in this field, having overseen many of these matters in another jurisdiction. He has long pressed the Government to introduce a register of this kind, but Amendment 42 calls for proper data verification. As we have heard from a number of noble Lords—the noble Lords, Lord Vaux and Lord Cromwell, the noble Baroness, Lady Kramer, and others—it is essential to the credibility of this Bill to ensure that any data is verified and accurate, as my noble friend Lord Eatwell put it.

The Government moved a little on this topic when the Bill was in the House of Commons, passing what was then Amendment 49, as we heard from other noble Lords, requiring the Secretary of State to lay regulations outlining the verification process before the register goes live. We welcome that move as it provides greater certainty, but as we have already heard, it prompts a number of supplementary questions and, in our view, does not go far enough. That is what Amendment 42, which we support, seeks to address.

When will we see the regulations? Will the process be based on previous consultations or require a separate engagement exercise? What if they are brought forward and the envisaged process is deemed inadequate? What if we end up getting the Bill before the SI has been laid? As with the earlier group on the transition period, we need greater clarity on process and timescales. Surely, accurate, verified data as required by my noble friend Lord Eatwell’s Amendment 42 is essential; without it, the Bill simply will not succeed.

[Lord Callanan (Con)]

I first thank the noble Lord, Lord Eatwell, for tabling Amendment 42 and for his thoughtful contribution at Second Reading on the same subject. He is, of course, absolutely right: I agree wholeheartedly that ensuring the public can be confident that the data on the register is reliable is of the utmost importance. That is why, as has been referred to, the Bill already provides for the making of regulations to create a robust and effective verification mechanism.

Clause 16 sets out that:

“The Secretary of State must by regulations make provision requiring the verification of information”,


which must be in place before an overseas entity can undertake certain actions. These actions include applying for registration to, or removal from, the register. Clause 16 sets out that these regulations can include provisions about

“the information that must be verified … the person by whom the information must be verified … requiring a statement, evidence or other information to be delivered to the registrar for the purposes”

of registration, updating of information and removal from the register.

This amendment seeks to add a statutory responsibility on the registrar to ensure the verification of any information provided to the registrar in accordance with the regulations made under Clause 16. The amendment would place responsibility for ensuring that information is verified on to the registrar, which means that the registrar would have to be satisfied that the information provided at the application stage is verified. We believe that such an addition would be nugatory to the already robust verification process that will be set out in regulations attached to this Bill once it has passed through Parliament.

The regulations that will be made under Clause 16 include the ability to specify the types of statements and evidence that the registrar can require in order to be satisfied that the information submitted to the register is appropriately verified. We expect that UK professionals regulated under the money laundering regulations will have a role to play in the verification process. We are, of course, aware of concerns raised in this House about enablers who might seek to undermine our systems. The verification process that will be set out in regulations will ensure that, whatever process is used, it cannot be undermined by enablers of unlawful activity. To support this, as was referred to by the noble Lord, Lord Coaker, we have also put forward an amendment that would ensure that, where anyone submits information that is false or misleading without reasonable excuse, they can be held to account for that.

I would also direct noble Lords’ attention to the amendment tabled by the Government in the other place, which committed to bringing regulations made under Clause 16 into force before any applications for registration may be made under Section 4(1). Therefore, creating a specific statutory requirement for the registrar to secure verification, as the amendment proposes, is in my opinion not necessary. The verification mechanism already contained in the Bill will ensure that those engaging with the regime have confidence in the information held on the register. I therefore hope that the noble Lord will feel able to withdraw his amendment.

[Lord Eatwell (Lab)]

My Lords, I always think that the government defence of “not necessary” is the weakest we ever hear in this House. My amendment calls for a clear statutory requirement for verification. Just think of the contrary, which the noble Lord is supporting: that there will not be final statutory verification, and that information will be provided by professionals, enablers. He says that we can ensure that this will not “undermine the process”. If he believes that, he will believe anything. How can he ensure that it will not undermine the process, unless there is a means of checking that it is not undermining the process?

We are dealing with very sophisticated crooks with the best legal advice that money can buy and the Minister is leaving the Bill naked, with the key protection lacking that is necessary to sustain confidence in financial markets in this country. This is a sad day for the probity of those markets. Having said that, regrettably, I beg leave to withdraw the amendment.

Amendment 42 withdrawn.

Clause 16 agreed.

Clause 17 agreed.

20:00

Clause 18: Exemptions

Amendment 43

Moved by

[Lord Fox]

43: Clause 18, page 11, line 18, leave out paragraph (b)
Member’s explanatory statement
This amendment removes the ability of the Secretary of State to exempt an individual from the requirements to register their overseas entities on the grounds of the economic wellbeing of the United Kingdom.

[Lord Fox (LD)]

My Lords, Amendment 43 is also signed by the noble Lord, Lord Coaker. During Second Reading, I spoke at length on this issue, so noble Lords will be pleased to know that that allows me to be brief in Committee. The amendment is clear, but I shall briefly explain its purpose. Frankly, it is one of the simpler amendments we have before us.

Clause 18 deals with exemptions. Subsection (1) gives the Secretary of State the power to write to a person to exempt them from this part of the Bill if said Secretary of State is satisfied that one of three conditions is fulfilled:

“(a) in the interests of national security … (c) for the purposes of preventing or detecting serious crime”—


I do not think any of your Lordships would find that an unacceptable condition—but

“(b) in the interests of the economic wellbeing of the United Kingdom”.


First, what does that mean, and secondly, why is it there?

The Minister heard not just my words but the compelling words of the right reverend Prelate the Bishop of Leeds, my noble friend Lady Kramer and others who explained—and I hope the Minister understood—why Clause 18(1)(b) is the wrong message to be sending, particularly at this time. I explained this issue to some members of the general public—people who do not actively engage in the sport of politics—and asked them what they thought. Their reply was, “Isn’t that the approach that got us into this trouble in the first place?” Quite. That is the message that the clause is sending.

This part of the Bill is designed to deliver transparent information that can be used by authorities, potential business partners and others to avoid trading with kleptocrats, thieves and money launderers. Hiding that information unnecessarily cannot be good for the economy. Why would a Secretary of State want to do that in these conditions? Amendment 43 removes that power from the Bill, and I beg to move.

[Lord Callanan (Con)]

My Lords, it might be helpful for the Committee, before it debates this amendment, if I set out that of course I am aware of the strength of feeling on this issue and am very grateful for the engagement with the noble Lords, Lord Coaker and Lord Fox, and others on it over the weekend and the past few days.

As I indicated earlier, we are keen to progress this vital legislation collaboratively and swiftly, and I again pay tribute to the Opposition for helping us to do that. Therefore, if I tell the House that the Government are prepared to accept Amendment 43 tabled by the noble Lords, Lord Fox and Lord Coaker, should they wish to re-table it on Report, perhaps that would enable a more speedy consideration of this group.

[Lord Agnew of Oulton (Con)]

My Lords, in view of that, I will not press my Amendment 44.

[Lord Coaker (Lab)]

It would be appropriate to thank the Minister for agreeing to accept the amendment in my name and that of the noble Lord, Lord Fox, so I put that on the record, and we will come back to it on Report.

[Lord Fox (LD)]

I said it would be swift, but I had not calculated that it would be quite this swift, so I thank the Minister for meeting us in this way and making this move; it is much appreciated. With that, I beg leave to withdraw Amendment 43. I will bring it back on Report.

Amendment 43 withdrawn.

Amendment 44 not moved.

Clause 18 agreed.

Clauses 19 to 21 agreed.

Clause 22: Material unavailable for inspection

Amendments 45 and 46 not moved.

Clause 22 agreed.

Amendment 47 not moved.

Clauses 23 and 24 agreed.

Clause 25: Data protection

Amendment 48 not moved.

Clause 25 agreed.

Clauses 26 to 30 agreed.

Clause 31: General false statement offence

Amendments 49 to 52 not moved.

Clause 31 agreed.

Amendment 53 not moved.

Clause 32: Land ownership and transactions

Amendment 54

Moved by

[Lord Callanan]

54: Clause 32, page 19, line 13, at end insert—
“(5A) The Secretary of State must consult the Department of Finance in Northern Ireland before making regulations under subsection (4).”Member’s explanatory statement
This amendment requires the Secretary of State to consult a Northern Ireland department before making regulations under Clause 32(4).

[Lord Callanan (Con)]

My Lords, Amendments 54 and 84 require the Secretary of State to consult the devolved Administrations before making regulations on devolved land matters. It is appropriate when the Secretary of State is legislating on devolved matters in this space to consult the responsible devolved Ministers. This approach is supported by Ministers in the Northern Ireland Executive and in the Scottish Government.

The Bill seeks to make amendments to the Land Registration Act (Northern Ireland) 1970 to capture properties in Northern Ireland within the register of overseas entities by adding a new Schedule 8A. Clause 32 of the Bill allows the Secretary of State to amend by regulation the new Schedule 8A measures on Northern Ireland land provisions and the register of overseas entities.

It is, of course, convention that Westminster shall legislate only with the consent and support of devolved Ministers on devolved matters. The support of Northern Ireland Ministers has been secured for the provisions of the Bill but, should the measures be amended in the future, it is justified that the Secretary of State ought to consult with the Department of Finance before laying regulations. It is for this reason that Amendment 54 is being made. It will ensure that devolved Ministers continue to contribute on devolved matters.

The Bill also makes amendments to the Conveyancing (Scotland) Act 1924 and the Land Registration etc. (Scotland) Act 2012, including adding new Schedule 1A to the 2012 Act to include Scottish properties bought on or after 8 December 2014 within the scope of the register of overseas entities. Paragraph 13 of Schedule 4 to the Bill allows the Secretary of State to make further provisions for the purpose of requiring or encouraging an overseas entity owning land in Scotland to submit to the register of overseas entities.

As with Northern Ireland, Scotland has devolved competence for land provisions. I am pleased to say that the Bill has secured a legislative consent Motion from the Scottish Parliament, but this amendment would ensure that Scottish Ministers are consulted before regulations are laid, which will further impact those devolved matters. I beg to move.

[Lord Hope of Craighead (CB)]

My Lords, as someone who takes a close interest in devolution matters, I am delighted with these amendments. I have quite often moved amendments in similar terms and not been successful. It is a pleasure to see the Minister produce amendments in the very terms that I would have liked to have seen in the Bill. I very much welcome them both.

[Lord Faulks (Non-Afl)]

As a fellow member of the Constitution Committee, I endorse what the noble and learned Lord said. This is one of the points that we as a committee regularly make: it is one thing to have the Sewel convention in primary legislation; it is another to have it in subordinate legislation. We very much welcome this as a matter of practice.

[Lord Fox (LD)]

Never has the noble Lord, Lord Callanan, received such glowing praise, in my experience, and here am I to heap more of it on. These amendments are very welcome, as is the legislative consent from the Scottish Government. I have one point that I am sure the Minister will be able to confirm: I hope the Government will be able to continue the level of consultation the Minister could show through the regulation-making process and the statutory instruments.

[Baroness Smith of Basildon (Lab)]

I can add to the Minister’s embarrassment. We are pleased to see these amendments brought forward. I have two questions. I think I understand why it is different, but it might be helpful if the Minister could put on record why one amendment refers to the Department of Finance in relation to Northern Ireland yet in the other, for Scotland, it is Scottish Ministers. It seems slightly odd. Secondly, has formal engagement begun already and, if not, when will that start? Overwhelmingly, we thank the Minister and hope that this is a sign of things to come.

[Lord Callanan (Con)]

I should quit while I am ahead on this one. I am not sure this will continue with other Bills, but let us welcome it when it happens.

I thank noble Lords for their brief comments. I am happy to confirm to the noble Baroness, Lady Smith, that engagement has already started. I have spoken to Scottish Ministers. I think I spoke to Welsh Ministers, but if not some of my colleagues have. I definitely also spoke to Ministers from Northern Ireland. I will get back to her with the precise reasons why it is the Department of Finance. I suspect the problem is that we have not been able to get a formal consent Motion from the Northern Ireland Assembly because it is not sitting, but we do have written confirmation from the Ministers that if the Assembly had been sitting they would have recommended that a legislative consent Motion be granted. I suspect that is why the Department of Finance is mentioned, rather than the Northern Ireland Assembly.

After moving the amendment, I now ask that it be withdrawn so that I can retable it and the other amendments on Report.

Amendment 54 withdrawn.

Clause 32 agreed.

Schedule 3: Land Ownership and Transactions: England and Wales

Amendments 55 to 64 not moved.

Schedule 3 agreed.

20:15

Schedule 4: Land ownership and transactions: Scotland

Amendments 65 to 84 not moved.

Schedule 4 agreed.

Schedule 5: Land ownership and transactions: Northern Ireland

Amendment 84A not moved.

Schedule 5 agreed.

Clauses 33 to 38 agreed.

Amendments 85 to 88 not moved.

Clause 39: Interpretation

Amendment 89 not moved.

Clause 39 agreed.

Clauses 40 to 46 agreed.

Clause 47: Limits on costs orders in relation to unexplained wealth orders: England and Wales and Northern Ireland

Amendment 90

Moved by

[Lord Clement-Jones]

90: Clause 47, leave out Clause 47 and insert the following new Clause—
“Civil recovery: costs of proceedings
After section 316 of the Proceeds of Crime Act 2002 insert—“Civil recovery: costs of proceedings<strong>316A </strong> Costs orders(1) This section applies to proceedings brought by an enforcement authority under part 5 of the Proceeds of Crime Act 2002.(2) The court may not make an order that any costs of proceedings relating to a case to which this section applies (including appeal proceedings) are payable by an enforcement authority to a respondent or a specified responsible officer in respect of the involvement of the respondent or the officer in those proceedings, unless—(a) the authority acted unreasonably in making or opposing the application to which the proceedings relate, or in supporting or opposing the making of the order to which the proceedings relate, or(b) the authority acted dishonestly or improperly in the course of the proceedings.””

[Lord Clement-Jones (LD)]

This amendment would provide limits on costs orders in relation to all civil recovery proceedings brought by an enforcement authority under Part 5 of the Proceeds of Crime Act 2002, which enables law enforcement authorities to recover property obtained through unlawful conduct without the evidentiary difficulties of securing a criminal conviction. The effective exercise of these powers is essential if civil recovery is to fulfil its purpose of deterring criminals who are as concerned, if not more concerned, with losing their assets than they are with losing their liberty.

The current costs regime for civil recovery is fragmented, with different rules applicable in different courts. I am very well aware that on the other side of the aisle are some of the experts in this area. Civil Procedure Rules apply in the High Court, the Court of Appeal and county courts. Rule 44.2 of the CPR sets out the general principles in civil proceedings that costs follow the result—that is, the winner pays the loser’s costs, but the court retains discretion to make a different order and determine the amount of costs to be paid. The principles relevant to the exercise of judicial discretion to award costs in civil proceedings in the Crown Court and magistrates’ courts have evolved over time through case law.

In civil proceedings brought by public authorities in the Crown Court and magistrates’ courts, the approach to costs is reflected in the so-called Perinpanathan principle. This includes civil recovery proceedings brought under Part 5 of the Proceeds of Crime Act 2002. In the Perinpanathan case, the Court of Appeal held that, where a public authority is unsuccessful in bringing an application, the default position or starting point is that no order for costs is made. However, a successful private party may be awarded costs if the conduct of the public authority justifies it. As a result, enforcement authorities will rarely have to pay costs when pursuing civil recovery in the magistrates’ court, but are exposed to significant costs in High Court proceedings, where the general rule is that the unsuccessful party pays the legal costs of the successful party.

Clauses 47 and 48 reflect a recognition that significant and deterring costs have made enforcement authorities reluctant to utilise unexplained wealth orders in their current iteration. Only nine UWOs, relating to four cases, have been obtained by the National Crime Agency since this investigative tool was introduced in January 2018. The unsuccessful UWO application in the Aliyev case, which I mentioned at Second Reading, left the NCA facing £1.5 million in legal costs.

Limiting the liability of enforcement authorities to pay costs in UWO proceedings is a welcome step, but it is a piecemeal intervention which does not address the chilling effect of adverse costs orders in civil recovery proceedings more broadly. This proposed amendment seeks to ensure consistency of approach in civil recovery proceedings so that adequate cost protections encourage enforcement authorities to put their economic crime-fighting tools to effective use. At present, the prospect of prohibitively expensive legal costs effectively renders certain assets out of the reach of underresourced law enforcement agencies. We need a new, consistent cost protection regime for law enforcement agencies and regulators under the Proceeds of Crime Act as a whole.

I am very grateful to Spotlight on Corruption for raising this issue and laying the grounds for this amendment. The starting point should be that a law enforcement body or regulator should not be ordered to pay costs where it is unsuccessful in bringing or defending civil proceedings. This would have the effect of each party bearing its own costs. However, the court should retain discretion to depart from this default rule in cases where there is good reason. This could include where the law enforcement body or regulator has acted unreasonably in bringing or defending proceedings and where the interests of justice and fairness would be offended, including where substantial financial hardship is likely to be suffered by the successful party if a costs order is not made.

I very much hope that the Government see the merits of Amendment 90 and of applying it in the same way to Scotland—the notice to oppose the Question that Clause 48 stand part of the Bill would have exactly that effect. I beg to move.

[Baroness Smith of Basildon (Lab)]

My Lords, I will be brief. I have listened very careful to the noble Lord, Lord Clement-Jones, and my understanding is that the Government are seeking to protect the enforcement bodies, such as the National Crime Agency, from the costs of legal action. Clearly, it is important to provide these agencies with an element of cover from being pursued for costs, as they must be free to investigate activities as they see fit and not fear the potential costs of bringing what they believe to be a legitimate case. As we have heard already tonight, the resources available to those being investigated is often hugely significant.

The noble Lord, Lord Clement-Jones, is proposing a much broader approach on this than in the government clauses, applying the principle to all civil recovery proceedings under Part 5 of the Proceeds of Crime Act 2002, not just to unexplained wealth orders. The Bill is quite narrow in scope, and the Government may not see fit to put this into this legislation, but I hope that there is an opportunity to debate this further. I would be grateful if the Minister could say something not just on whether it fits into this Bill but on the Government’s general approach to the issue.

[The Minister of State, Home Office (Baroness Williams of Trafford) (Con)]

My Lords, I thank both noble Lords for their points on this amendment. The Government are as one with the noble Lord, Lord Clement-Jones, that agencies must not be limited in their efforts to investigate wrongdoing and protect the public from harm. He has tabled an amendment which touches on this very concern.

The noble Lord will be aware of the significance of the amendments that the Government have introduced to reform the cost rules as applied to UWO cases. Protection from costs mean that the court only has discretion to award costs against an enforcement agency, as he knows, if it acted dishonestly, unreasonably, improperly, or not on grounds that appear to be reasonably sound. The UWO procedure is an investigative tool and is not determinative of civil rights or obligations. It is used to obtain information about the ownership of certain property that may not otherwise be available to an enforcement agency.

Existing case law—as the noble Lord has pointed out, in magistrates’ courts through Part 5 applications—enables them to routinely adopt a position that they will not order costs against law enforcement where the agency has acted honestly, reasonably, properly and on grounds that reasonably appeared to be sound. However, this does not occur in High Court cases, where the costs involved are often much higher and for which protection is now given in the Bill in relation to UWO cases. The Government will ensure we are doing everything appropriate to ensure law enforcement agencies are equipped to take on corrupt elites, and their costs liabilities are appropriately mitigated. I hope that gives the noble Lord the comfort that he needs.

[Lord Fox (LD)]

I just have a question. In the context of this Bill, the choice of UWOs was regarded by many as curious because it was a niche activity until such time as it was plunged centre stage by this Bill. There is a whole range of other things. In choosing to deal with cost protection for one element, there seems to be an imbalance. My noble friend used the words cost protection regime. Would the Minister acknowledge that there is scope for going away and spending time on a review of the overall cost protection landscape and coming back with something that is joined up rather than piecemeal—which is what we have got here?

[Baroness Williams of Trafford (Con)]

Yes, I think I was clear in my opening remarks that I am not at odds with the noble Lord, Lord Clement-Jones, at all. The noble Lord, Lord Fox, is absolutely right that, in the longer term, we should look across the whole cost landscape. What I am trying to say is that, in protecting agencies incurring costs in Part 5, it unintentionally removes the current clauses relating to Part 8. I am trying to differentiate between Part 8 and Part 5 of POCA. It is utterly unintentional, I am sure, but I hope that helps the noble Lord.

[Lord Clement-Jones (LD)]

My Lords, the Minister is speaking the language I understand now—if it is technically flawed, then of course it is ripe for withdrawal. I welcome what the Minister said about getting consistency across the landscape, because that is clearly important. There is absolutely no reason why it should not be across the whole of the proceeds of crime landscape.

Perhaps I can squeeze a commitment out of the Minister. We managed to get the noble Lord, Lord Callanan, to commit to looking at certain aspects of enablers in the second economic crime Bill—I think we need to call it the ECB 2 now. If the Minister could give us a commitment that the Government will look at this question of the cost landscape as part of the second round, when we can consider these issues in much greater detail and at greater length, then I would be entirely satisfied.

[Baroness Williams of Trafford (Con)]

I am very happy to explore the cost landscape after this Bill because, as I said, I am principally not at odds with the noble Lord at all.

[Lord Faulks (Non-Afl)]

I was somewhat concerned by the lack of response to what the noble Lord, Lord Fox, said about UWOs being a niche activity. I hope the Minister can reassure the Committee that one of the effects of the change in the Bill will be that they will very much not be a niche activity. Certainly the original intention—I understand, having read the legislation that brought them in—was that there would be 20 per year. Can we have some reassurance that there are going to be a great deal more and it will not be a niche activity?

[Baroness Williams of Trafford (Con)]

I share the sentiment of my noble friend that they will not be a niche activity. The measures in this Bill, particularly in terms of costs, will make it far easier for our law enforcement agencies to not be stymied by costs in bringing these things forward.

[Lord Clement-Jones (LD)]

My Lords, I am grateful to the Minister for her responses. As she understands, one of my main motives is to bring pleasure to the Treasury. Given that the NCA’s budget—we talked about its budget—for crime prevention is, I think, something like £4 million and there was £1.5 million in costs in the Aliyev case, we would clearly all be winners if this review takes place. I thank the Minister for that commitment and, in the meantime, beg leave to withdraw the amendment.

Amendment 90 withdrawn.

Clause 47 agreed.

Clauses 48 to 51 agreed.

20:30

Clause 52: Streamlining process of making sanctions regulations

Amendment 91

Moved by

[Baroness Neville-Rolfe]

91: Clause 52, page 32, line 35, at end insert—
“(2A) In section 1, after subsection (10) insert—“(11) Before making any regulations under this section the Secretary of State must lay an impact assessment before Parliament.(12) The Secretary of State must specify a date on which regulations made under this section cease to have effect.””Member’s explanatory statement
This is a probing amendment and is intended to seek confirmation that an impact assessment will be prepared before such regulations are laid. It also provides for appropriate sunset Clauses.

[Baroness Neville-Rolfe (Con)]

My Lords, as we move on to the final group, I rise to move my Amendments 91 and 96. I was sorry that the short notice prevented me speaking at Second Reading, and as the Bill may have implications for trade and investment, I declare my interest as the chair of the UK-ASEAN Business Council.

Today we are rightly focused on Russia, and are full of sympathy and horror for all that is happening in Ukraine. This Bill has been accelerated and we all want to speed it on its way. I am well known for taking a contrarian view to try to tease out important issues as part of the vital role of scrutiny by the House of Lords. For example, on the Covid legislation, I emphasised the importance of perverse effects and cost benefit, and I think I was right to worry about the adverse impact on health problems other than Covid, such as cancer, and the harm to children’s education, and on the social agonies of the pandemic. Happily, that is behind us thanks to the Government’s brilliant record on vaccination.

As my noble friends the two Ministers said in their very helpful recent letter, the economic crime Bill is novel, particularly in relation to property rights, and largely unprecedented in other countries. In most respects, it will also apply very widely and way beyond Russia, as the Minister made clear. It is concern about that which is behind my amendments.

There are three aspects. First, while a good deal is on the face of the Bill, there are also wide-ranging regulation-making powers, so I propose that any such regulations should be subject to an impact assessment before being laid. The object of this is to ensure that they are properly thought through and to minimise red tape, bearing in mind that the Bill extends beyond the current crisis. I am very grateful for the three impact assessments that have been produced by BEIS, the Home Office and HM Treasury. Helpfully, the BEIS impact assessment discusses on page 36 a Malaysian investment—Battersea power station. Fortunately, it concludes—presumably with its knowledge and agreement—that the new rules would not have resulted in new information being made available or any substantive compliance costs relative to the value of the investment.

However, with my practical mien and business experience, I know how easy it is to get the detail wrong in legislation and regulation of the kind we are debating. The money laundering regulations are a good example. The compliance costs on the honest, including, but not confined to, the rules on politically exposed persons—such as affect some noble Lords—are often burdensome. The bureaucracy involved is also bad for the UK economy without, apparently as we have heard, actually catching the bad guys. So I believe we must stick to the discipline of impact assessments which requires us to balance these matters and do our best to get the rules right, simple and clear across the wide areas covered by this Bill. We also need proper enforcement, probably by investment in tough public sector experts, not external lawyers.

Secondly, I am seeking assurances on the use of sunset clauses. To those noble Lords who are remainers, I refer them to some good practise by the EU—the five-year reviews in single market legislation. These reviews were uncomfortable for incumbents, both the civil servants or the large or dominant external players, but they were good for new thinking and for new entrants. My amendment asks for a specific end date to regulations. But, of course, it is possible to vary the timescale and provide for extensions, as was done with the Covid regulations.

My final area of concern, articulated in Amendment 96, is that there should be a review of all the provisions we are putting so rapidly into law in this Bill and the regulations and guidance made under it. That would take place a year after its passage or at some other suitable period, allowing for the economic crime Bill part 2. It would cover, first, its effectiveness in achieving the objectives set out in the Explanatory Notes; secondly, its impact on parties involved, including small business, whose investments in the UK might dry up needlessly; and, finally, enforcement, especially enforcement by Companies House. I share the concerns expressed by others on the need for accuracy, resourcing and effective enforcement, and I look forward very much to hearing from the noble Lord, Lord Brennan, and my noble friend Lord Agnew of Oulton.

I have no wish to delay the Bill. Indeed, I am proud to have played a part as the Minister responsible for the Small Business, Enterprise and Employment Act 2015, which contained the domestic provisions on beneficial ownership discussed here in this very House. I also worked on the groundwork for David Cameron’s commitment to a register for foreign companies which own or buy property in the UK. The importance of getting this on to the statute book quickly has been underlined today by Ukraine’s tragic circumstances. I beg to move.

[Lord Cromwell (CB)]

My Lords, I recognise that we are on the home straight. On Amendment 91, the House needs to be clear whether we are having a sunset clause or not. My understanding from the outset from talking to Ministers is that we are not, and that this is going to be a permanent piece of legislation. In fact, throughout the two days we have debated this, we have been talking up having ECB 2—something I coined, which I am glad everyone has adopted—to fill in the gaps and be the unspecified bag at Christmas in which we are all going to find our favourite toys, but we shall see.

[Baroness Neville-Rolfe (Con)]

Just for clarification, my proposal is for sunset regulation within the regulations, not within the Bill itself—which will, of course, be entirely permanent.

[Lord Cromwell (CB)]

My mistake; I struggle with joined-up writing.

Since I get only bite of the cherry and have an amendment coming up in my name, I will tackle both Amendments 93 and 95 on resources. It is widely acknowledged and was highlighted emphatically by speakers at Second Reading that the resourcing of those responsible for the difficult work of identifying, investigating and prosecuting those covered by the Bill are currently inadequate. In the Minister’s letter of 11 March, which I referred to earlier, page 6 refers to an overall package of £400 million and the creation of a kleptocracy cell in the National Crime Agency and says that the NCA has “surged additional officers”. I am aware that the NCA has obtained fewer than five prosecutions for economic crime offences in the last five years and has seen its budget cut, despite calls for increases. The number of investigators at the proceeds of crime centre has declined, despite Parliament raising concerns. I simply do not know whether the resourcing now referred to is sufficient, but I am told that a figure of £1.7 billion is a more realistic amount to get this job done.

Amendment 95, to which I have added my name, calls for an annual review of the suitability of funding arrangements for enforcement agencies. A theme of our debates has been the need to revisit what we have discussed and agreed to here. It is pure vanity to pass legislation that cannot be enforced and resourced effectively. This amendment will be useful in making sure that a proper focus on resourcing is maintained. I therefore support Amendment 95 or, if it is preferred, Amendment 93, which has much the same effect.

Turning finally to Amendment 94 in my name, I am very grateful to the noble Lord, Lord Thomas, for adding his name to it. We have heard an awful lot about enablers during our debate, which draws a pantomime hiss that used to be reserved for lawyers, accountants and bankers—but, unfortunately, we all fall into that category of enablers now.

A number of speakers, myself included, raised the issue of SLAPPs, or lawfare, at Second Reading. As is appropriate at this stage, I do not propose to rehearse in detail what was said then. Nevertheless, it is a well-established fact that UK law firms and others—some, anyway—undertake deliberate intimidation tactics known as lawfare to prevent journalists and others bringing matters of public interest to light.

It is further well known that this has ensured that information in the public interest is regularly neutered or hidden. The rule of law requires equality before the law, but this behaviour goes well beyond any reasonable approach to a defence of reputation. It is the dark side of our legal system, where inequality of arms means that the wealthy can—at times, using ill-gotten gains—out-resource those on whom we as a society rely to find out the truth and shine a light into dark places.

The Defamation Act 2013 sought to introduce some protective measures, but this is a complex area of law that not only is costly but carries the risk of liability for the other party’s costs. It is this prospect of bankruptcy or insolvency that is primarily used to intimidate journalists and other organisations. Furthermore, such a defendant against a claim may be unable even to obtain a legal representative willing to take on the risk of cost recovery from the other side. Even what are known as “trials of preliminary issue” regularly run up costs of £25,000 or more, and a full trial will often cost well above £500,000. Even if successful, the defendant will be faced with the irrecoverable portion of their costs, which can also be very substantial—and we should remember that this does not take into account all the work, time, disturbance and anxiety before a court action even arises.

We must not allow the Bill’s purpose—tackling dirty money and illicit practices of the sort that it covers—to be undermined by allowing the wealthy to abuse our legal system in order to intimidate and muzzle the free press in this way. Amendment 94 would require the Government to assess how the Bill might be frustrated, have its impact blunted and its implementation thwarted by such conduct, and it would require the Government to share their findings with Parliament.

The Bill is operating in a very compressed timeline, and I am grateful to the Minister for his email exchange with me over the weekend on this issue. I note that the Deputy Prime Minister announced on Friday the launch of an urgent call for evidence in this area, and I have the Minister’s assurance that this call for evidence will not be just a listening exercise but that:

“Where action is needed, we will take it quickly and effectively”.


The origin of the Bill’s arrival here is the Russian invasion of Ukraine. An immediate step by the Putin regime has been to shut down the channels of free communication and free media within Russia. Surely we must ensure that we do not allow the same regime to do the same in the UK. I therefore invite the Minister to confirm on the record the Government’s commitment to this, not just as a one-off inquiry but on a regular basis, as foreseen in Amendment 94. I also ask him to confirm that the action he has referred to will include specific provision for it in ECB 2. I beg to move.

[Lord Thomas of Gresford (LD)]

It is a real pleasure to follow the noble Lord, Lord Cromwell. I spoke at length on this matter last Wednesday and I do not propose to speak on it again. Three things have happened since then. The Lord Chancellor has called for evidence, as the noble Lord pointed out. My Private Member’s Bill, which I referred to, seems to have reached its final form, and I hope it will be progressed quickly. I very much hope that this problem is properly dealt with in a very short time, and I await the Minister’s response.

[Lord Agnew of Oulton (Con)]

My Lords, I shall speak in support of my amendment, which seeks to achieve two things: an annual review of the funding adequacy of our crime-fighting agencies in this area, and a report within three months of the Bill, and annually thereafter, to set out how well we are managing this whole area.

I know we will hear warm words from the Minister about various sums of money—£400 million and so on—but the brutal reality is that this whole thing has been abysmally funded; that is the only way we can describe it. The noble Lord, Lord Cromwell, is right that the NCA’s own funding has fallen by some 4% in real terms at a time when international crime has been soaring.

20:45

Our efforts are also so fragmented. The area that is of concern to me, as noble Lords will be aware, is the failure of the bounce back loan programme. One little example highlights the problem of the lack of clarity around funding. When the British Business Bank and BEIS failed to get a grip of the data on the fraud going on with bounce back loans, the counter-fraud team in the Cabinet Office stepped in with a very small sum of money—£2.6 million—to analyse a tranche of loans in the bounce back loan book. It identified £1.5 billion-worth of potentially fraudulent loans. That cost £2.6 million but the funding will run out in about two weeks’ time and the British Business Bank has decided not to continue the exercise, saying that it does not have any money. This gives a sense of the failure, because there is no consistent funding to go after these things. NATIS is similar. A tiny but effective organisation, it goes after some of the most serious crime. It is given tiny sums of money to pursue complex cases but then does not have the money the next year, so it has to drop those cases.

The Treasury will of course hate my proposal for an annual report to Parliament to set out some of these examples, which simply do not get aired, but it is the only way we can be serious about dealing with these issues when we get this and the next Bill through. They will be empty letters if we do not have the resources available to go after these people. I am probably one of the most hawkish politicians when it comes to spending public money but, if there is one area where we will get a dramatic return on investment, it must be this one. Indeed, I expect all the agencies to be held to account on this. If they do not return a dividend of three times what they get, they are not doing the job properly, frankly. In this legislation and ECB 2, we are giving them the tools. They need to know that they need to spend the money well.

That leads me to the second part of my amendment, which is about an annual report to Parliament to account for progress in these areas. The agencies must be candid on the areas in which they are failing but also set out their successes. However, as was mentioned earlier in the debate, there are some 20 different agencies all scrambling around here, with no proper central co-ordination. I pushed for a central body to oversee counter-fraud across government. I hope that it is being thought about, but it does not exist yet. An annual report bringing all this together would start to provide the proper spotlight on this activity.

[Viscount Waverley (CB)]

My Lords, given the hour, I will be concise and crack on in support of the need for sufficient human and financial resources being made available, given the global implications.

Despite high-level government commitments on fighting economic crime, the Government have hitherto failed to invest sufficient resources to ensure that enforcement is effective. Reinforcing the case is paramount. We should double key law enforcement annual budgets from £852 million to £1.7 billion. A £2.7 billion increase in funding for national and local agencies to tackle serious and organised crime and to improve the system’s capabilities across digital, forensics, covert surveillance and financial investigations, to match the increasing technological sophistication of the serious and organised crime groups operating in the UK, is necessary, with budgets to invest in structures, skills, capabilities and technologies across the system.

We should double the budget for sanctions enforcement. In the past three years, the NCA has conducted only three criminal investigations into sanctions breaches, with no resulting prosecutions. It has just 40 employees.

We should create a central economic crime-fighting fund out of the money generated by law enforcement’s economic crime activity. If the proceeds had been reinvested into the agencies, on top of their core budgets, overall enforcement spending could have been provisionally increased by an additional £748 million a year—an increase of approximately 93% on current funding levels. This would allow investment in state-of-the-art IT infrastructure and data analysis capabilities. This central fund would replace the system for redistributing the proceeds of asset recovery—the asset recovery incentivisation scheme—which is broken.

Working with the judiciary to ensure better judicial management of cases to strike out abusive litigation tactics is key, in addition to working with industry to develop an enforceable model litigant code for lawyers, to prevent the use of stalling and spurious tactics that waste court time and drain public resources, and allowing law enforcement bodies to raise salaries within their budgets, so that they can be more competitive in the salaries they provide to attract the best and brightest.

I will bring my remarks to a close. We must allow law enforcement to spend more on legal fees to get the best legal advice; prosecuting and investigating bodies cannot compete. We need specialist economic crime judges; enforcement bodies face a UK court system with few judges specialised in economic crime or confiscation. Finally, we must raise Companies House fees to £100. Current fees of just £12 for an incorporated company are too low, allowing considerable abuse of the system. Companies House needs to become a key digital data hub to help law enforcement and provide a service for the whole of the UK about suspicious corporate behaviour, rather than its current state as a passive receiver of false or inaccurate information.

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I rise briefly to support the amendment from the noble Lord, Lord Agnew. Over the years, one has seen concentrations move as to what parts of the criminal justice or investigation system matter. It is important to appreciate that this will be expensive, but we must have a system that, as regards the resources we give to justice, is open and transparent. There is no way this can be done without a proper annual report. Too often have I heard, “Oh, we can have an efficiency here or an efficiency there; we’ll do a little bit less of that or find incentives somewhere else”. No, that is not good enough for the task that faces us, and our nation, in ensuring the reputation of the City of London. I therefore warmly support the view that we should have a proper economic and financial analysis of the tools needed.

[Lord Fox (LD)]

We are in danger of reaching the end of this in unanimous agreement, so I shall introduce a little rancour in responding to the amendment from the noble Baroness, Lady Neville-Rolfe. When she read the Hansard report of the Second Reading, she will have seen a strand going through a number of speeches that said the purpose of the Bill must be permanent rather than a “here today, gone tomorrow” sort of purpose—a fashion. Her notion of sunset clauses hits counter to that. She is right that regulation has to be fit for purpose and that there should be reviews, and I welcome her joining the chorus for reviews that has been going throughout both the Second Reading and the Committee stage. I think the first opportunity for a review of the performance of ECB 1 and the regulations that make it work will probably be when we get to ECB 2. Thereafter, an annual review is a good idea.

We have heard from many noble Lords about progress on the subject of strategic litigation. I hope the Minister is able to confirm that this small amount of momentum will be able to pick up over the next few months as we go forward, perhaps focusing on my noble friend’s Private Member’s Bill.

A few moments ago the noble Lord, Lord Faulks, asked the noble Baroness, Lady Williams, whether UWOs were going to be a minority sport or something pursued in number. She has left, leaving the noble Lord, Lord Ahmad, to explain how it will be paid for. Unless there is money to pay for it, it will remain a minority sport. The noble Lord, Lord Agnew, and the noble Viscount, Lord Waverley, clearly encapsulated the point that none of this can happen unless the investigating and prosecuting forces are both skilled and resourced to deliver it. That is why I was pleased to co-sign Amendment 95 from the noble Lord, Lord Agnew. I look forward to hearing from the Minister how much money will be forthcoming and when.

[Baroness Smith of Basildon (Lab)]

My Lords, this seems an appropriate group on which to end Committee. It seems almost as if we have gone full circle, as there has been a similar theme throughout the debates at Second Reading and in Committee.

This group of amendments brings two things to the debate. When I spoke first today I made the point about the tension between us recognising the inadequacies of the Bill, with the comments made about ECB 2—which has now become part of the common language of your Lordships’ House—alongside acknowledging the necessity of the legislation. However, it also shows the determination—I am distracted by someone talking—of your Lordships’ House to make sure that the legislation is effective.

The only way we can do that is through the kinds of reviews that have been talked about, to ensure that, when we come to ECB 2, we will use the information—both the positives and the negatives as regards whether this legislation is working—to ensure that we can plug the gaps and take on other issues. I hope to see Companies House issues in the next legislation as well. On the issues we have been talking about—the resources needed, the commitment needed and the reports to Parliament—unless we have those reviews and assessments in place, we will not be able to do what needs to be done in ECB 2 or to plug any gaps we find here. Some kind of assessment, perhaps on the timescales envisaged in the amendment—an annual review to Parliament seems a very sensible way forward—are absolutely essential.

The only thing I disagree with the noble Baroness, Lady Neville-Rolfe, on is the importance of getting regulations as quickly as possible. I hope that, alongside those regulations, we will see some kind of impact assessment. Unless the Government know at least in part the impact that the regulations will have, there is no point in tabling them. We would not want to delay essential regulations in waiting for that but it is important that we have more information at all times.

I will flag up something that I raised in an earlier debate and which the Whip who was answering for the Government did not respond to. We hope that, when we come back on Report, we will have a commitment that we will see ECB 2 in the next Session of Parliament. We also want an assurance that that will be early in that Session. We have seen already that there is huge expertise in your Lordships’ House and that, when we have proper time for debate, we have better legislation. One of the saddest things about this Session of Parliament is that we have only just had the Second Reading of the Elections Bill. We have weeks to go and we are trying to cram a quart into a pint pot, and, having been here at two and three o’clock in the morning, I do not think that is a great way to make laws. I hope that we will see something of this importance very early on in the next Session of Parliament, which will enable this House to use its expertise to have proper debates and make a proper contribution.

All that remains to be said is that we want to have reviews in whatever form they take. These reviews and assessments will be absolutely essential if we are in any way serious about making this work.

[The Minister of State, Foreign, Commonwealth and Development Office (Lord Ahmad of Wimbledon) (Con)]

My Lords, I thank all noble Lords for these amendments. I must admit that, as we reach the end of Committee, I find myself in a somewhat novel position as the Foreign, Commonwealth and Development Minister to your Lordships’ House, talking to some amendments which have been raised in other departments. I am grateful to all noble Lords who have engaged directly with my noble friend Lord Callanan, my noble friend Lady Williams and me on various issues.

I thank all Front-Benchers for their direct engagement. It was an intense weekend of toing and froing for many people, but again, it shows the best of your Lordships’ House when we come together on such an important issue. Talking more broadly as the Sanctions Minister and the FCDO Minister, everyone understands the importance of getting the Bill through at the earliest opportunity, and I am grateful for noble Lords’ engagement in Committee.

21:00

I thank my noble friend Lady Neville-Rolfe for tabling Amendment 91. This seeks confirmation that an impact assessment will be prepared before sanctions regulations are laid, and proposes that sunset clauses are included in the sanctions regulations. On her first point, I reassure her that the FCDO conducts impact assessments in appropriate cases. An impact assessment was carried out and published for the Sanctions and Anti-Money Laundering Act 2018, for example, and others have been published directly for the autonomous sanctions regulations. These include those for the Global Anti-Corruption Sanctions Regulations 2021, and those specifically in relation to certain recent changes to the Belarus and Russia sanctions regimes.

Let me turn now to my noble friend’s second point. The noble Baroness, Lady Smith, and the noble Lord, Lord Fox, have also pointed to this issue—sunset clauses. While I thank my noble friend for her recommendation, foreign policy and national security objectives do not neatly fall within defined periods. Our sanctions need to be sufficiently flexible to respond to changes in circumstances. The inclusion of a sunset clause could also reduce the impact of sanctions if it implied that there might be an automatic expiry unrelated to achieving the purposes of a given sanctions regime. In addition, ongoing certainty in our sanctions legislation is needed in respect of our ongoing United Nations and international obligations. I assure my noble friend, however, that there are routes for designated individuals to seek review of their designations at any given time. The amendments brought forward by the Government in the Bill will allow for maximum impact to be brought on Mr Putin and those who support him. I hope that, in outlining our current policy, I have been able to reassure my noble friend as to the Government’s intention, and I hope she will be minded to withdraw her amendment.

Amendments 93 and 96 seek to place an obligation on the Secretary of State to provide an annual report on the operation of the Bill and its impacts. Let me say from the outset that I agree very much with noble Lords who, throughout this Bill, as the noble Lord, Lord Fox, pointed out, have called for its scrutiny. However, as my noble friend Lord Callanan explained earlier today, the entirety of the measures in the Bill will of course be subject to the usual post-legislative scrutiny process. This is a proportionate approach and, as such, it is unnecessary to include additional reporting requirements.

Companies House also publishes an annual report covering performance, accountability, financial statements, a trust statement, and late filing penalties. As the registrar’s role expands to deliver on the Bill and the one to follow, the Government will expect Companies House to expand the coverage of its performance-reporting accordingly. I am sure that this will be a point very much debated in ECB 2, as it has come to be known. However, I stress that I very much agree with my noble friend’s amendment that the new register of overseas entities needs to support a clampdown on the misuse of UK property as a means to launder illicit funds while protecting the ease of doing business. I assure my noble friend that this has been central to our considerations.

The vast majority of overseas entities will be owned by entirely legitimate individuals, and it is important that the Bill respects their existing rights and secures their compliance at the minimum additional burden. That means having only requirements that are strictly necessary and providing adequate transition time for legitimate entities. I also assure noble Lords that we have consulted extensively on this package, and it has won broad stakeholder support from businesses, professional groups and, importantly, law enforcement agencies and civil society for the balance it is striking.

Turning to Amendment 94, I am grateful for the typically considered views expressed by the noble Lord, Lord Cromwell, during Second Reading. As he pointed out on a lighter note on a serious issue, it seems interesting that, while we are talking about sanctions, we come up with the acronym “SLAPPs”, which is appropriate in its intent. “Strategic litigation against public participation” is a mouthful but, as he pointed out, the Government are already seized of the importance of this importance. This issue applies more widely than just to this Bill, and it is important that the Government take a strategic approach to addressing it.

As we have already heard, SLAPPs are typically brought against journalists, writers and publishers, although an action may be brought against any person or group perceived as a threat in exposing or criticising the claimant’s practices. The noble Lord, Lord Cromwell, acknowledged a letter which he has received about this. He is correct; I can confirm that the Deputy Prime Minister and the Justice Secretary announced on 4 March that the Government would launch an urgent call for evidence. This will enable us to follow up on a number of key areas. My noble friend Lord Wolfson will also be engaging with noble Lords on this very key issue directly. This means that we will be able to hear at first hand the personal and professional experiences of those who have been involved in SLAPPs. That includes those with expertise and experience in this field, whether from the media and publishing world, the legal profession, the judiciary or a campaign group.

The other aspect is the chilling effect of SLAPPs, and the perfectly appropriate news investigations that may be curtailed, or not even started, because of the fear or risk of incurring the crippling expense of High Court litigation. However, I assure noble Lords that we are clear that the call for evidence should not just be a listening exercise, something which I know concerns them. It will be critical that we move quickly on reforms to address the problem of SLAPPs. We will explore and consult on a range of measures. As the letter received by the noble Lord acknowledges, where action is needed, we will take it quickly and effectively. Indeed, if legislation or changes to rules of court are required, we will pursue them. Given the wider action and assurances I have provided, I hope that the noble Lord, Lord Cromwell, will be minded to withdraw his amendment. As I said earlier, I know that my noble friend Lord Wolfson will engage on this very issue.

Amendment 95 concerns additional reporting on the funding of enforcement agencies in relation to this Bill and economic crime more generally. I agree with noble Lords, including my noble friend Lord Agnew, that we can make legislation and establish new departments and units. However, as the noble Baroness, Lady Smith, said quite appropriately and accurately, we need to ensure that they are effective and that they can do the work they are designed to carry out. The NCA, and other enforcement agencies like it, have a duty to be open and transparent in their deployment of public funds. As noble Lords know, these agencies publish annual reports on their expenditure, which can be found online. The Government have developed a sustainable funding model that demonstrates our commitment to tackling economic crime, a point made by a number of noble Lords in this debate. The combinations of this year’s spending review settlement and private sector contributions through the levy will provide economic crime funding totalling, as has been acknowledged, around £400 million over the spending review period.

I share with noble Lords that my noble friend Lady Williams and other Home Office Ministers have worked hard to increase the agency’s core baseline funding. It has risen from 62% to more than 80% following the findings of the cross-departmental review of the NCA’s funding model. Importantly, this will allow enforcement agencies to invest in their core infrastructure—a point made by a number of noble Lords—and provides them with increased stability of funding and improved operational flexibility to address changing priorities. I trust that noble Lords are assured, to this extent, that the Government remain committed to being transparent, and that the existing parliamentary oversight of the funding of enforcement agencies is currently sufficient.

In the assurances I have given in addressing the amendments, I hope that I have been able to address the questions raised by noble Lords, including my noble friends, during this debate. In this respect, I once again assure noble Lords that the intent behind bringing this Bill forward is very much to ensure that we can act quickly. I am sure that further discussions—both as we move forward in the implementation of aspects of this Bill, and indeed in our debates and discussions on ECB 2—will also return to some of the themes which have been raised during the passage of this Bill.

The noble Baroness, Lady Smith, raised a valid point about the timing of the new Bill. I am sure she will appreciate that I cannot confirm the specifics of that, but she has made that point and I assure her I will take it back—others have noted its importance. Equally, I respect and have regard for your Lordships’ House and all the contributions made during the course of the Bill, recognising the importance of holding the Government to account on these important issues. The passage of the Bill has demonstrated not just the accountability of the Government to your Lordships’ House, but your Lordships’ House at its best in how we work together when it is required.

[Lord Empey (UUP)]

Before the Minister sits down, while progress has been made on providing funding for the investigatory bodies, given that we expect imminent and immediate impact on investigations from the passage of the Bill, what assurance can he give the Committee that personnel with the necessary qualifications and experience will be available in the very short term, even though the funding may be following them?

[Lord Ahmad of Wimbledon (Con)]

My Lords, within the agencies, particularly the NCA, of course we have great expertise and insights. I cannot provide the noble Lord with specific numbers but, as I said earlier, the Government very much stand by the principle that in introducing these regulations and these new powers, and when it comes to the implementation of our sanctions policy, we need to ensure that we are fully and appropriately resourced so that those people who are sanctioned can be acted upon.

[Lord Burnett (LD)]

Further to the question from the noble Lord, Lord Empey, has the Minister consulted the Inland Revenue, which deals with anti-avoidance matters on a daily basis and has considerable expertise in these matters, and in the artificial transactions that often occur and come under its scrutiny?

[Lord Ahmad of Wimbledon (Con)]

My Lords, I stray into the work of other departments—both the Home Office and the Treasury—but I can assure noble Lords that this is an all-of-government approach, ensuring that not only are we acting appropriately in whatever department we need to act, but of course that there is appropriate funding and support for the actions we are taking.

[Baroness Neville-Rolfe (Con)]

My Lords, I am very grateful to all those who have taken part in this short debate. I thank my noble friend the Minister for his response. My probing amendment applied to Part 4 of the Bill, of course—so, to all regulations made under it—but I understand exactly where he was coming from on the sanctions provisions.

As we are short of time, I will dispense with the customary summary of the excellent points that have been made this evening, except to emphasise to the noble Baroness, Lady Smith of Basildon, that I am as keen as anyone else to avoid delay. I was glad that she also saw value in impact assessments appropriately tabled.

I think there is a measure of agreement across the Committee on the need for adequate enforcement of the provisions in the Bill and on the need to provide the necessary resources. I will return to this matter, to the idea of effectiveness reviews and indeed to the various regulations, in due course. I agree with my noble friend the Minister that the House has worked well on this Bill to get it through Committee in such a short time—but for now I beg leave to withdraw my amendment.

Amendment 91 withdrawn.

Clause 52 agreed.

Amendment 92 not moved.

Clauses 53 to 61 agreed.

Amendments 93 to 96 not moved.

Clauses 62 and 63 agreed.

Clause 64: Commencement

Amendment 97 not moved.

Clauses 64 and 65 agreed.

House resumed.

Bill reported without amendment.

Economic Crime (Transparency and Enforcement) Bill

Monday 14th March 2022 Lords Chamber

Order of Consideration Motion

21:15

Moved by

[Lord Sharpe of Epsom]

That the amendments for the Report stage be marshalled and considered in the following order:

Clauses 1 to 4, Schedules 1 and 2, Clauses 5 to 32, Schedules 3 to 5, Clauses 33 to 65, Title.

Motion agreed.

Arrangement of Business

Monday 14th March 2022 Lords Chamber

Announcement

21:15

[Lord Sharpe of Epsom (Con)]

My Lords, we have now concluded Committee on the Bill. As I hope my noble friend the Chief Whip explained earlier, Members now have until 9.45 pm to table their amendments. The time for Report stage to start will be advertised on the annunciators.

Genetically Modified Organisms (Deliberate Release) (Amendment) (England) Regulations 2022

Monday 14th March 2022 Lords Chamber

Motion to Approve

21:16

Moved by

[Lord Benyon]

That the draft Regulations laid before the House on 20 January be approved.

Relevant document: 29th Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument).

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Benyon) (Con)]

My Lords, this instrument before us today seeks to use existing powers under the Environmental Protection Act 1990 to simplify the process of research and development in plants that have been produced by genetic technologies such as gene editing, where the resulting genetic changes could have been developed using traditional breeding methods.

Over the past 30 years advancements in genetic technologies have been rapid and have led to the development of a range of beneficial outcomes such as disease resistance. But the regulation has not kept pace with our better understanding of the risks and is now seen by scientists as restrictive and outdated. Genetic technologies such as gene editing include a range of breakthrough approaches that provide a precise way of introducing genetic changes such as disease resistance, making the whole breeding process more efficient and responsive. Field trials do currently take place; however, uptake has been low, with estimates suggesting that no more than two field trials for plants happen in England each year. Leaving the EU has provided us with the opportunity to adopt a new, science-based, proportionate regulatory approach.

This instrument, in practice, will remove certain technical barriers for research and development such as processing applications, advertising and post-trial monitoring of genetically modified plants that could have been produced by traditional breeding. It will simplify the need for the Secretary of State to give consent on an individual basis before propagating plant material is placed into the soil.

I hope it will be useful to provide noble Lords with an example of how gene editing could be used. Virus yellows are a group of viruses spread by aphids affecting major crops such as sugar beet. These viruses can cause yield losses of up to 50%. They are currently controlled using a range of pesticides. Over the past four years, a study funded by UK Research and Innovation has identified several promising sources of genetic resistance against virus yellows. Using gene editing to give resistance to virus yellows would reduce the need for pesticides and help protect crops against the virus, helping to protect the environment, increase food production and reduce costs to farmers.

Last year, we ran a consultation on the regulation of genetic technologies and received nearly 6,500 responses. We considered all the consultation responses carefully and sought advice from the independent scientific experts, the Advisory Committee on Releases to the Environment, which concluded that gene-edited organisms do not pose any greater risk than organisms produced through traditional breeding methods.

In the government response to the consultation, we set out how we will clear a path for genetic technologies such as gene editing through the implementation of a step-by-step approach on how we govern the use of organisms developed using genetic technologies. This SI is the first small and proportionate step in our approach, unlocking science and innovation in an area which holds great potential to help improve the sustainability and productivity of agricultural systems.

Our approach with this SI follows international practice. Other countries, including some of our major trading partners, have already begun delineating regulations between organisms produced by genetic modification and those of genetic editing. For example, the United States passed the SECURE rule in 2020. This means that any GM crop that could have been developed through traditional breeding and which has a history of safe plant-pest use is exempt from the need for regulatory approval.

Across the world, other countries are moving forward in their take-up of gene editing. We are internationally renowned for our scientific excellence in genetics and genomics, yet we cannot fully explore what this technology has to offer. This instrument will help us adopt a more proportionate approach, based on science, to the regulation of gene editing, allowing our bioscience sector to test the benefits and safety of new products by simplifying the current system while ensuring checks and balances are still in place.

Turning to enforcement and monitoring of the SI, I would like to reassure the House that this instrument is for non-marketing, research and development purposes only. The checks and balances I am referring to are existing, robust regulatory frameworks on GMOs and field trials. Any commercial cultivation of these plants will still need to be regulated in accordance with existing GMO rules. In addition, our established GM Inspectorate, run by the Animal and Plant Health Agency, will continue to act as an inspecting body of GM field trials, including those enabled in this SI. I want to be clear that the gene-edited organisms captured by the SI will not contain functional DNA from different species but will have targeted changes to their existing DNA.

We are pursuing this change with secondary legislation as there are existing powers conferred on the Secretary of State, through the Environmental Protection Act 1990, which enable him to remove certain requirements on GM plants in particular circumstances. This amendment is limited in its scope, revising only the regulatory burden for non-marketing purposes of a small category of GM plants. It does not change the GM status of these plants, as the definition of a GMO is not changed by the SI.

We are committed to pursuing these changes in an open and transparent way. As part of this, guidance is being written by ACRE that will allow developers to determine whether a plant could have occurred naturally or been produced by traditional breeding techniques. It will also cover the process by which notifications must be made to Defra concerning non-marketing uses of “qualifying higher plants”. The territorial application of the SI is England only. Collaboration between researchers in different parts of the UK is unlikely to be affected by the change introduced by this SI.

In conclusion, gene editing has the potential to help improve the sustainability and productivity of agricultural systems by helping farmers to grow plants that are more nutritious, more resilient to climate change and less reliant on pesticides or fertilisers. We are committed to proportionate, science-based regulation that protects people, animals and the environment. Together with other innovation approaches, this instrument will help us adapt to the impacts of climate change, reduce emissions and meet our ambitions in the Government’s 25-year environment plan. I beg to move.

Amendment to the Motion

Moved by

[Baroness Bennett of Manor Castle]

Leave out all the words after “that” and insert “this House declines to approve the draft Genetically Modified Organisms (Deliberate Release) (Amendment) (England) Regulations 2022.”

[Baroness Bennett of Manor Castle (GP)]

My Lords, this amendment asks the House to decline to approve this statutory instrument—for total clarity, what is generally known as a fatal amendment. I thank the Minister for his very clear introduction to some of the scientific aspects of the SI and for clearly setting out the differences between gene editing and older forms of GMO technology. I thank all noble Lords who have joined us at this late hour. As the noble Baroness, Lady Smith of Basildon, commented earlier, we so often do very important things very late at night. I am sorry about that, but that is not my choice—nor indeed that of most Members of your Lordships’ House, I think.

The Green Party’s position against genetically modified crops and animals is clear, but I will not make any arguments about that tonight. The argument I am making is that this statutory instrument is scientifically muddle-headed, unclear and most likely to create a legal tangle. The fact is, though, that noble Lords do not have to listen to me on that; they can listen to your Lordships’ Secondary Legislation Scrutiny Committee. We have to give great thanks for the tremendous work it does slogging through so much material. Its concerns about this statutory instrument shine through very clearly from the length and detail of its report. In the earlier debate, the noble Lord, Lord Clement-Jones, I think put scare quotes around the term “technically flawed” and suggested that that was a particularly grave insult in your Lordships’ House. I am afraid that I think this statutory instrument is technically flawed.

The basis of the statutory instrument is that plants that could have been produced naturally or by traditional breeding methods could be planted out in field trials without the current requirement to produce a risk assessment or to seek government approval for non-marketing purposes, as the Minister said. But there is as yet no guidance as to what scientific or regulatory criteria will be used to determine what fits the definition of “could be naturally occurring” or “by traditional methods”, which produces what is referred to as a “qualifying higher plant”.

The Secondary Legislation Scrutiny Committee’s language is typically measured and calm, as noble Lords would expect, but the committee “regret”—a very strong word in its terminology—the fact that there is no guidance to explain what this means. I thank the Minister for arranging a meeting with him, his officials, experts and a number of NGOs with which I have been working on this, during which it was asked when the guidance would be produced. The answer was “in a few months’ time”. We are being asked to vote on something when we have no idea what it actually means. I do not know whether the Minister can provide me with any updates on that.

It is very clear from the consultation responses that this term is not recognised in any existing markets or certified sectors such as organic. It is interesting that the Minister talked about how the US and other places are loosening regulation of gene editing, but they are doing so by changing their regulation of the method; they are not focused on the outcomes. No other place is working in the way we are by referring to traditional breeding or natural methods.

In response to the consultation, the Wildlife and Countryside Link said that there is “no conclusive evidence” that organisms created by gene editing

“could be achieved through traditional breeding.”

The Conservative Animal Welfare Foundation found that there was no basis for Defra’s claims, bluntly noting:

“The entire purpose of expanding the use of gene editing … is to create animals that do not occur naturally”—


or, in this case, plants. The Organic Research Centre said that Defra’s premise is

“unproven in theory and should not be the basis for changing regulations or removing protections.”

21:30

Noble Lords might say that those conclusions are drawn from one side of the argument, but I point them to the Institute of Food Science & Technology, which called the Government’s approach “overly simplistic”. The Microbiology Society said it was “purely philosophical”. The Roslin Institute found it “exceptionally challenging”. The British Veterinary Association referred to it as “fundamentally flawed” and to the way the consultation was done as “leading, misleading” and “likely driven by industry”. The Universities Federation of Animal Welfare suggests

“the use of traditional breeding methods as a benchmark for what is and what is not acceptable is neither useful, nor scientifically logical.”

Finally, the FSA’s Advisory Committee on Novel Foods and Processes said that a yes/no answer on this question was just not realistic:

“it is first necessary to have clarity on what constitutes ‘traditional breeding’”.

The key issue here is the problem of lack of definition. We come back to the Secondary Legislation Scrutiny Committee, which regrets that the Government have said that they intend this SI to be the first step in a process, with broader changes to GMO regulations, but provide no details of the context in which this instrument can be considered. The committee noted that, were this to be primary legislation, there would be no doubt that your Lordships’ House would be trying to introduce definitions into a Bill, as we cannot in an SI. The committee concludes that, with broader legislation, that would be the appropriate approach.

We find ourselves in a remarkably similar situation to that with the economic crime Bill, which we have just been debating. There, we are rushing through one thing with the promise of a second stage later, except that with the economic crime Bill, we all know why we are rushing through that stage; there is good reason for it and people have agreed to it. We have no explanation of why we need this rush here.

I just briefly mention broader concerns about the guidance, which is to be produced by the Advisory Committee on Releases to the Environment, a government advisory body. All the members of that committee have professional interests in biotechnology, and only one has expertise in ecology. None appears to have expertise in environmental toxicology.

There are many other concerns I could raise, but I shall come to a final point, which was raised by the Minister: these are regulations for England and, as Defra told the Secondary Legislation Scrutiny Committee, both the Welsh and Scottish Governments have made it very clear that they do not wish to pursue equivalent action in Scotland and Wales. This raises an issue, because seeds are not subject to border control. In his introduction, the Minister, as did the government press release, explicitly mentioned sugar beet, which is, of course, wind pollinated and has the potential to spread over many kilometres and therefore crossbreed with wild or cultivated relatives. It is interesting that this crop is focused on so often, given its destructive environmental and public health outcomes.

I am aware that we do not very often pass fatal amendments, but this is a crucial issue. Yet again, as we have seen in other cases, we are encountering an ideology of cutting red tape. As we have seen in so many instances, such as the terribly tragic case of Grenfell, red tape is the rules that help keep us and our environment safe. As the Minister also said in his introduction, the Government are looking for purposes for Brexit and sees this as a possible one.

It is important that we have clarity on everyone’s position on this SI. We are not voting—and I intend to call a vote—on GMOs; we are voting on whether this SI is an appropriate instrument. I beg to move.

[Viscount Hanworth (Lab)]

My Lords, I am a member of the Secondary Legislation Scrutiny Committee and I can assert that the committee is supportive of the purposes of this statutory instrument. However, the committee has been critical of the presentation of the instrument, as indeed it has been of the presentation of a large number of instruments. I find the objections of the anti-GM lobby to this statutory instrument to be wide of the mark. Its specific objections to the instrument may be disposed of readily as can its wider objections to genetically modified crops.

The main objection that has been raised against the instrument is that it gives no justification for the claim that a genetic modification effected by gene editing could have occurred naturally. In fact, the statement has a very precise meaning. It means that nothing is introduced into the genome by editing it. Only the genes already present in the organism—or crops, which we are actually talking about—will be subject to the editing. The crops will have at least two copies of the gene and, in many cases, there may be more copies. Wheat, for example, has three copies of its genome. Some of the genes may be of a wild variety and others may be of a cultivated variety. The purpose of gene editing would be to ensure the plant has a homogeneous genetic endowment of the cultivated variety. The presumption is that this will lead to a more fruitful crop.

A project aimed at homogenising the genome via selective breeding might take many years and is liable to be time-consuming and expensive. It bears repeating that the process of gene editing will not introduce any alien material into the plant. This fact serves to negate one of the wilder alarms of the anti-GM lobby, which warns that alien genetic material will be introduced into other plants by inadvertent pollination. There are, in fact, no such alien genes to be guarded against.

Another false alarm of the lobby is that genetically modified crops might propagate rampantly, thereby despoiling the natural environment. The truth of the matter is that cultivated crops are largely incapable of self-propagation. This is surely true of cereal crops, which require threshing to release their seeds. Other crops, if they do succeed at reproducing without human intervention, are liable to die out after one or two generations. I believe that we can confidently dispose of the objections to this instrument. It proposes the alleviation of some burdensome restrictions, which have been impeding research programmes in plant science and agricultural science.

[Lord Krebs (CB)]

My Lords, I will speak very briefly, in part to echo the points made by the noble Viscount, Lord Hanworth. I listened very carefully to what the Minister said in his introduction and, as has been pointed out by the noble Viscount, the key point was that gene editing involves no introduction of novel genes into the genome. In so far as it involves no introduction of novel genes, it is surely in principle something that could arise by natural reproduction—in the normal process of breeding that takes place in agricultural crops and animals. So I do not buy the argument that the definition is unclear; I thought that the Minister was very clear.

The only other point I want to make is on the question of whether something “occurs naturally”. That is quite a risky approach to take since nothing in any agricultural crop or any livestock is natural. These are things that have been produced over the last 10,000 years by selective breeding. If we are trying to create some prelapsarian nirvana where things are natural, we will have to turn the clock back 10,000 years and forget about all the things that we survive on today. So, although I regret having to disagree with the noble Baroness, Lady Bennett, on this occasion I do so.

I would be very interested to hear the Minister’s response to one point raised by the noble Baroness about the problem of different parts of the United Kingdom when crops drift across from one side of the boundary with Wales or Scotland to the other. I would think of it more in terms of the retail of the products. Let us suppose that a blight-resistant potato is developed by gene editing, as seems quite likely, and it is on sale in the shops in England. What will the retailers do about stocking the shelves in Wales and Scotland if their product is not allowed there? I would be very interested to hear the Minister’s response on that.

My basic point, however, is that I totally support this statutory instrument and, like the noble Viscount, Lord Hanworth, I do not think that the arguments against it are at all compelling.

[The Earl of Lindsay (Con)]

My Lords, like the noble Viscount, Lord Hanworth, I am a member of the Secondary Legislation Scrutiny Committee, or SLSC, which is an easier mouthful to get through. Also like him, I believe that our report has been misunderstood in some quarters. It was not seeking to comment on the purpose of these draft regulations but acknowledged that there were shortcomings in how they had been laid. The shortcomings did not add up to the summary that the noble Baroness, Lady Bennett, used—that we saw them as technically flawed—but none the less we set out in the report where we saw shortcomings. We felt, for instance, that there should have been more detail in the Explanatory Memorandum, we could have done with more clarity regarding the qualifying criteria, and we felt that the relevant guidance should have been available to the SLSC at the same time as our scrutiny of the draft regulations.

The concerns we set out in our report are not at all unusual and I regret, I think on behalf of the whole committee, that this is the case. Too often at the moment we find that the parliamentary scrutiny of proposed SIs is hampered by the accompanying information being short on detail, obscure or indeed missing altogether, such as with impact assessments that are due but have not been produced on time. As a committee, we raised some of these systemic concerns in our recent report Government by Diktat: A Call to Return Power to Parliament, which I hope the House will have an opportunity to debate in due course.

My second, indeed main, point is about the purpose of these regulations, which I strongly support. I welcome the prospect of controlled field trial research involving plants produced by genetic technologies such as gene editing, where the resulting genetic changes are the same as those that could have been developed using traditional plant-breeding methods. Gene editing is a potentially transformative research tool, and plant-breeding techniques are much more precise, effective and rapid than the traditional breeding methods can ever hope to deliver.

My noble friend the Minister made a very relevant point: current regulations in this area are outdated; they were enacted more than 30 years ago, before these techniques were even conceived of, let alone developed and applied. We need to reform and update these regulations, particularly in relation to gene-editing techniques. Indeed, this is also recognised at an EU level. The SI marks a relatively modest but very important step towards aligning our regulatory approach with the approach already adopted in other parts of the world. The other reasons I support the SI have been well articulated by the Minister, so I will not repeat them, given the hour.

[Lord De Mauley (Con)]

My Lords, I will be brief, but I start by declaring an interest as the owner of a farm. I am a newcomer to the Secondary Legislation Scrutiny Committee, but there is a danger here that those reading our reports could confuse our criticism of the Government’s process, which is our legitimate purpose, with criticism of the policy, which is neither our purpose nor our duty.

Unfortunately, much of the developing world has been misled into a suspicion of GM technology by a misapprehension that the EU has operated under a blanket ban on GM crops for many years. The reality is different: in fact, the EU has a long-standing regulatory process designed specifically for GM crop approval. In practice, however, polarised views across the EU member states have meant that the scientific evidence has often been ignored, crops have remained stuck in the system, and it was therefore difficult to make progress. However, views seem now to be changing in the EU.

21:45

I recall answering a Question at the Dispatch Box on the subject of GM in 2013 from the noble Lord, Lord Taverne, in which he informed the House that, before the turn of the millennium,

“several reports from the Royal Society, supported by every single national academy of sciences in the world, concluded that GM crops were no danger and caused no harm to human health or the environment. Since then, the enormous expansion in the cultivation of GM crops outside Europe and especially in emerging countries has strongly reinforced that conclusion”.

My response to him was that we were indeed

“going to need all the tools in the box to feed the rapidly growing world population”.

We ought to want the United Kingdom to take a leading role in feeding the world and increasing the resilience of global food supplies, not to stand by watching others take the lead. The United Kingdom is the natural home for scientific research; we surely want companies and research providers to know that the UK is the best place for them to carry out their work, which is exactly what these regulations are all about.

In the same debate in 2013, the noble Baroness, Lady Hayman, alluded to the strength of support in this House for the science and evidence-based approach that the Government advocate. She said that it would be

“irresponsible, given the need … to cope with a rapidly expanding and often malnourished and starving population, not to take the opportunities offered by GM and by the independent scientific expertise in this country to move forward and save lives”,

and she referred to “GM cotton manufacture” as having had a strongly positive impact on the

“lives of agricultural workers across the world”.—[Official Report, 26/6/13; cols. 736-38.]

These regulations are very clearly about releasing plants with genetic modifications which specifically could have been produced by traditional breeding, and only for non-marketing purposes. That latter point may address the last point raised by the noble Lord, Lord Krebs. The important message is for the Government to engage more widely, but I would not want to stand in the way of the first, tentative step represented by these regulations. Like other noble Lords, I strongly support them.

[Baroness Parminter (LD)]

My Lords, the point of regulation is to balance the benefits and any potential harms of a given process. This SI changes the regulation from a precautionary principle to an American proof of harm, a fundamental change enabled only because we have now left the European Union and are no longer subject to its positions on the precautionary principle. While we had many debates in this House on the then Agriculture Bill and the fact that the Government were maintaining the precautionary principle, we are going to have many debates where the use is very much qualified by the term “proportionate”. This is the first example where we are seeing just how proportionate everyone’s commitment to the precautionary principle is going to be. We can only worry what the Prime Minister’s promised Brexit freedoms Bill will deliver, when we see this being the first instance of what the precautionary principle actually means.

The question is whether the evidence is so overwhelming that it is right that the regulatory framework should be changed. While the noble Lord, Lord Krebs, and others point to benefits, of which I am sure there are some, there are also harms. The question therefore is whether the balance is right. In the justification that the Government have given in the Explanatory Memorandum, they cite only ACRE principally as the scientific body. I am not sure that I would go so far as the noble Baroness, Lady Bennett, in questioning the motives and links of some of the people in ACRE, but it is but one body, and it is clear from the consultation itself that there is not unanimity among that scientific body.

We are signatories to the Convention on Biological Diversity, which is brought together by biological and scientific experts around the world, and they say that, with regard to synthetic biology, nations should take a precautionary approach. The Convention on Biological Diversity says we should take a precautionary approach, yet the Government are saying that we will move to the American model of proof of harm. I notice that the Minister very carefully referred to the Americans but not to the European Union. While some may claim that the Europeans are looking to move, they have not moved yet. They are still fixed on not allowing this form of gene editing and, given that our biggest agricultural market is the European Union, it raises the question of where we are actually going to market these products in the long term.

But I do not want to repeat points that have already been made. I want to make two points. The first is that there is no public mandate for this. The Explanatory Memorandum, which gives figures for how many people respond to the government consultation, makes it absolutely clear that the public are overwhelmingly opposed and businesses are overwhelmingly opposed. The Government are setting off down a track where there is no market in the UK at present—and, as I just said, our biggest agricultural trading partner, if we were to go down this route in the future, does not allow it. So, the Government have a fundamental question to answer: where is their mandate for this?

Equally, if the Government say, as I suspect the Minister will, that they will be consulting with the public on this in the future, it seems odd to me to bring forward the regulatory framework without setting out first how to consult the public. It is as important, if not more important, at this opening stage in this salvo, that the Government are committed to labelling these products, if they are going to end up on the food markets in the future. You should not set off down a track without making a firm commitment to those members of the public who do not want this technology—and, as I said, the majority of people say they do not—that you are going to label this in the future. I would hope the Minister will be able to say in summing up that the Government are committed—if they are prepared to be open to this by changing the regulation today—to labelling. So my first point is around: where is the mandate for this?

My second point is, for me, a really powerful one. In this country, we are committed to environmental justice. We are signatories to the Aarhus convention, which gives members of the public the right to challenge decisions that have gone ahead at all stages in the future. In a democracy, things happen that people do not like, and that is fine. But, in order to be able to undertake that job of challenge, members of the public have to be able to have the information about trials and initiatives. Yet, going through the SI, looking at the prescribed information, I see we are getting away from all this information that used to be provided to the public. All we are going to be asking these companies to provide is the name, address, telephone number and email address of the person with overall responsibility for the project—nothing about the locale or location.

If I was doing my gardening on my allotment—after this SI goes through, as I am sure it will—I might want to find out why some of my crops might be changing their genetic formulation. Forgive me, I did my degree in theology, so my awareness of scientific terms is limited. But the basic point is that if you want to make a challenge, you need to know where it is. Yet under this SI, in the prescribed information, members of the public are not able to know where these are taking place. That seems contrary to our commitments under the Aarhus convention and, more importantly than that, our commitment to allow people to have environmental justice.

If this Government want this to go ahead, they should at least have the decency to allow people who oppose it in the future to have the information at their disposal to make their complaints. The wording in this SI does not give me confidence that people have the right to environmental justice that I think they should have in this country. It is for that reason, principally—although other matters are important too—that this SI fails to give people environmental justice, that I support the amendment in the name of the noble Baroness, Lady Bennett.

[Lord Jopling (Con)]

My Lords, I must begin by declaring my interests as a farmer and also by saying to your Lordships that I have some knowledge of the science, in that I have a degree in agriculture. In its final comment, the Select Committee said:

“The draft Regulations are drawn to the special attention of the House on the ground that they are politically or legally important and give rise to issues of public policy likely to be of interest to the House.


I agree with that so much. These are very important issues.

Years ago, soon after becoming a Member of your Lordships’ House, I was a member of a Select Committee chaired by that admirable chairman, the late Lord Reay. We did a study, which lasted for quite some time, on genetic modification. At the end of it, we shone a green light on continued development of the production of genetically modified crops and animals. But we also raised a very strong caveat that we had to be very careful not to go hell-bent on developing this science, because there were so many imponderables in it. The point of our committee’s report was that we ought to do everything we could to encourage the science to find out what was sensible to develop and what was dangerous to develop. One issue that I remember was over salmon, which had not been handled very well and which was dangerous. However, we acknowledged that the importance of genetic modification was something that one had to take very seriously.

Somebody made the point that I have often made, which is that, although some say that genetic modification is just a development of normal breeding, hybrid breeding and so on, it is not. Somebody—I forget who—made the point that this is the first time that we have been able as scientists to cross an elephant with an oak tree, putting it to its extremes. This is the first time that one could think of doing that, and so it is very important. Genetic modification could be crucial in dealing with some of the horrors which could lie ahead of us, of increasing world population, and of water shortage and climate change causing difficulties in food production. We are back to Malthus here. Genetic modification could become a very important tool in combating the possibilities—not the probabilities—of world starvation in the future.

I remember very well that, when I first became Minister of Agriculture, years ago in the 1980s, a very distinguished scientist told me that one of the great breakthroughs would be the possibility, through genetic engineering, of being able to amalgamate wheat with the capabilities of legume crops, which as we know extract nitrogen from the air, like clovers and other plants. The wheat itself could then extract nitrogen from the air. That was a possibility. It has not worked, but it is an example of what might have worked and might possibly work in the future. It is only science that will take us this way, and that is why these regulations are important and helpful. As my noble friend the Minister said, this encourages the scientists to develop these possibilities.

22:00

We know—and I make no aspersions towards those who have spoken in questioning this order—that in some areas of the press, genetic modification gives rise to a totally new barmy army of those who are utterly ignorant of the science but latch on to what seems an easy scare topic. This is a serious matter; it is a helpful and serious measure the noble Lord has put before us, and I wish it well.

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, I thank the Minister for his excellent introduction, and for his time and that of his officials in providing a briefing. I congratulate the noble Baroness, Lady Bennett of Manor Castle, on her introduction to the amendment to the Motion. The use of genetically modified crops and plants is an issue which divides people, both those growing crops and the public at large. The noble Baroness, Lady Bennett, is knowledgeable on this subject, having gained an honours degree in agricultural science.

The Secondary Legislation Scrutiny Committee and the Delegated Powers and Regulatory Reform Committee have looked at this SI and found it wanting, as demonstrated by its report. In its response to the Secondary Legislation Scrutiny Committee, Defra has claimed that this SI enables

“the bioscience sector to test the benefits and safety of relevant new products ‘without the burden of unnecessary regulatory processes’”.

I am in favour of reducing bureaucratic burden but would expect this to be an open and transparent process. My noble friend Lady Parminter has covered this aspect in detail. The resulting field trials taking place from this SI are not transparent. No one will know where they are taking place. This could be next to a local authority allotment site in a rural area or next to an organic farm where wind-blown seed transference could have a devastating effect on the organic farmer. Given that we have the lowest uptake of organic farming in Europe, this is extremely worrying. We should be encouraging organics, not jeopardising them with secret GM field trials.

The Explanatory Memorandum refers to upcoming wider reform but provides no information on what the government plans are for this wider reform. Nor does it provide any guidance which is alleged to come from ACRE shortly. As we have no idea of what the government interpretation of “shortly” is, can the Minister give any indication of when this guidance will be available?

The noble Baroness, Lady Bennett of Manor Castle, has indicated that ACRE is not an independent body. The consultation carried out by Defra indicates that the scientific bodies are not overwhelmingly in favour of gene editing. During the passage of the Environment Act, there was discussion on the importance of adopting the precautionary principle. The path we are about to embark on will throw this out of the window and replace the precautionary principle with an ethos of a proof of harm scenario, which is a very different kettle of fish.

Plants grown as a result of this SI are for non-marketing purposes and cannot be marketed without the consent of the Secretary of State. This does not in any way curtail the ability of a Secretary of State to give his or her permission for marketing without any further debate in Parliament. This is a direct bypass of the democratic process which Parliament should carry out.

Defra has indicated that it will move to a self-declaration system following advice from ACRE. Again, this is a concern to organic farmers. Defra says it will be the responsibility of researchers to abide by the law and gain authorisation for GM plants if this material gets into commercial products. Since the sites of trials and subsequent self-declaration systems are unknown, how will organic farmers be able to protect their crops and produce if they do not know where such field trials are taking place? It could be close to their land.

I turn briefly to the devolved Administrations, as referred to by the noble Lord, Lord Krebs. The Scottish and Welsh Governments have made it clear that they do not wish to pursue equivalent changes in Scotland or Wales. Is this not going to cause confusion across the country as a whole? Perhaps the Minister can comment.

I could go on but, given the hour, I will draw my remarks to a close. During the consultation, 88% of the individuals and 64% of the businesses responding were opposed to this change in the regulations. Given that there are very conflicting views on the efficacy of the science, I am not able to support this SI.

[Lord Young of Norwood Green (Lab)]

My Lords, I state my position as a remainer, but there are two things I welcome in coming out of the Common Market. One is the CAP, and this particular—

[Baroness Bloomfield of Hinton Waldrist (Con)]

I am sorry, but the noble Lord was fast asleep for the entire duration of the Minister’s speech. He really should not participate in this debate, having failed to take advantage of the opportunity to listen to it.

[Lord Young of Norwood Green (Lab)]

I was not—

[Baroness Bloomfield of Hinton Waldrist (Con)]

I had to send a note via the doorkeeper to wake up the noble Lord.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I declare an interest in my involvement at Rothamsted, as set out in the register.

I thank the Minister for his introduction and the noble Baroness, Lady Bennett, for raising considerable concerns about the impact this SI might have on the environment. We know that these concerns have resonance among the public at large, and it is right that they are taken seriously and seen to be addressed. I am also grateful to the Secondary Legislation Scrutiny Committee for its forensic dissection of the proposals. Again, it is raising serious concerns that must be addressed.

I accept that this SI, in its current form, makes only minor changes to the regulation of GM research, which occurs only in highly regulated and respected research establishments. It is not about releasing GM food into the food chain. Nevertheless, we cannot ignore the history of GM development, which was not properly regulated in the past and created a public backlash we are still living with today. The public rightly want to be assured, on both public health and environmental grounds, that the existence of artificially modified organisms in the land and air, and ultimately in their food, is safe. If we are to persuade them that this is the case, we need to proceed with the best independent scientific evidence and the utmost transparency. These principles need to be applied both to determining the fate of this SI and to the more radical proposals that we understand this Government are now developing.

We recognise the potential advantages that scientific progress can make to the agritech sector. Many of these were flagged up in our consideration of the Agriculture Act and the Environment Act. Our knowledge of the importance of biodiversity and the adverse impact of intensive farming comes from some of the latest scientific research. We now understand the huge advantages of eco-friendly farming, harnessing the power of nature to farm in a productive and sustainable way. Again, we learn a lot of that from the scientific community. Using fewer artificial fertilisers, pesticides and herbicides can rebuild the health of our land for the long term. This goes hand in hand with the development of crops that can provide natural resistance to disease and destruction. Science and innovation will continue to have a key role to play in our food systems of the future.

However, one thing that has come to light in considering this SI is that scientists themselves are not all agreed on the approach being taken by the Government. I am grateful to my shadow Defra colleague in the Commons, Daniel Zeichner, for painstakingly reading through all the submissions and highlighting some of the discrepancies among scientists in the Commons debate on this SI. As has been said, this SI attempts to delineate between genetically modified organisms whose modifications could have occurred naturally and GMOs where an external unrelated gene has been introduced. The Government have chosen to define these naturally modified plants as “qualifying higher plants” but this definition has proved contentious among scientists. As Daniel Zeichner said:

“The Roslin Institute says: ‘it is exceptionally challenging to define which changes to the genome could have been produced by “traditional” breeding.’ The Royal Society says: ‘this question is problematic as there is a difference between what could be produced by traditional breeding in theory and in practice’. The Royal Society of Biology says: ‘No clear criteria can be described that would determine whether an organism produced by genome editing or other genetic technologies could have been produced by traditional breeding. This means no clarity can be achieved using this principle, and it is not appropriate as the basis of regulation.’”—[Official Report, Commons, Delegated Legislation Committee, 2/3/22; col. 7.]


These are hugely worrying critiques if the Government are planning to base the whole of the future reforms of GMO on this distinction.

Of course, the Government have quoted the advice of ACRE, the Advisory Committee on Releases to the Environment, in support of their proposal. However, that brings me on to the second concern, about transparency; this point was made by other noble Lords. It turns out that six of the seven scientists on the board of ACRE have links to commercial companies, and three of them quote Syngenta as an interest. So, although I am sure that these scientists are experts in their field, it does not appear that they have the independence to make a purely scientific judgment on this issue. This is precisely the sort of concern that will fuel public anxiety and objection if it becomes known. Can the Minister provide some assurance that the definition of “qualifying higher plants” will be revisited, given the existing doubts about whether that is the right phraseology to go forward? Can he assure the House that the propriety of ACRE to rule on these issue can be, and will be, reassessed?

I turn to the submission from the Secondary Legislation Scrutiny Committee, which raised a number of critical concerns about the proposals set out in this SI. It reiterated the concerns about the definition of a “qualifying higher plant”, to which I just referred. In response, the Government advised that they are in the process of developing guidance, which will be available shortly. When are we likely to see that guidance? The committee also raised concerns about the researchers creating GMOs having to self-declare whether their product is in this category, and about the fact that the new notification measures do not give details of the location or scale of the research; again, this issue was raised by other noble Lords. It points out that this is a major concern to the organic growers who want reassurance that their products will not be contaminated, putting their organic status at risk. I would be grateful if the Minister could address these concerns in his response.

The Secondary Legislation Scrutiny Committee also raised concerns about the devolution aspects of these proposals, given that they are England-only, and the Welsh and Scottish Governments have no intention of following suit; again, noble Lords raised this issue. Although this particular SI is focused only on research, does the Minister agree that it would any future commercialisation of products extremely difficult unless there was alignment in the internal market and with the outcome of the review of the EU’s GMO regulations that is currently taking place? It is interesting that even the majority of businesses that responded to the consultation opposed the proposal, so there clearly is no demand for GMO products to enter the food chain on the current basis. As the noble Lord, Lord Krebs, asked, how will that work if it is England-only, and how will those products potentially be marketed across borders? Businesses are obviously concerned about that as well.

Finally, the Secondary Legislation Scrutiny Committee regretted that we have no further information about the Government’s wider plan for reform. We share that concern, and I hope that the Minister is able to provide more information today.

We are not going to oppose this SI today, given the relatively small changes to research controls which it introduces. However, we will not be supporting the noble Baroness’s fatal Motion, as it is not our practice to do so, except in exceptional circumstances. None the less, I hope that the Minister is hearing the message that any future proposals will need to be underpinned by much more rigorous regulation. We need to have much greater transparency. It will need to be overseen by a truly independent and trusted scientific committee if it is to have any hope of gaining the public support—and the support of this side of the House—which it will need going forward. I look forward to the Minister’s response.

22:15

[Lord Benyon (Con)]

I am very grateful to your Lordships for a very good debate. I have that difficult balance to achieve of recognising the lateness of the hour and the business to which we must attend, while also answering the very many important questions which have been asked. I will respond to them in no particular order. I am grateful to the noble Baroness, Lady Bennett, for giving us this opportunity to address some of the concerns which she has raised. I am not sure that I am going to win her round, but I always live in hope.

A number of noble Lords raised the issue of different views from different scientific organisations. In the consultation, we received scientific evidence from a range of scientific and research institutes, such as the Royal Society, the Royal Society of Biology, the Roslin Institute, the John Innes Centre and many others. Many responses were nuanced, with some discussing the complexity in defining gene-edited organisms, suggesting that regulation should follow a product or characteristic-based approach where the end product determines the level of risk, rather than the process used. However, in their responses, many institutions pointed to the various benefits which gene editing can provide and supported the Government’s direction to regulate gene-edited organisms differently to GMOs. For example, the Royal Society of Biology said:

“Genome editing is a tool which holds promise and, if appropriately managed, offers a route to achieving many potential and much needed benefits to society … Creating a regulatory framework in which products of genome editing are not regulated in the way that GMOs currently are, is key to realising these benefits.”


The noble Baroness, Lady Bennett, and a number of others, also raised issues of the credentials of ACRE members. This is the one area of this debate by which I have been disappointed. Ministers in Defra appoint the committee members for ACRE, together with Ministers in the devolved Administrations and in accordance with the requirements of the Office of the Commissioner for Public Appointments. In ACRE’s framework agreement, their commitments on openness and transparency are outlined, including recording any actual or potential conflicts of interest arising in meetings, and the action taken to handle them, as per the Nolan principles. If we want to get the best people in this field, it is very likely that, at some point, they have done a piece of work for an academic institution or company—it is very hard to find someone who has not. Frankly, I would want people with real expertise and who are governed by very strict rules, as the outlined by the Nolan principles.

A number of noble Lords and Baronesses raised the issue of divergence with the devolved Administrations. The regulation of GMOs is a devolved matter. We wrote to devolved Administration Ministers after the release of the Government’s response, stating our intention to bring forward an SI on gene-editing plant research and development.

To address the point made by the noble Lord, Lord Krebs, the devolved Assemblies will not be making an equivalent regulatory change in their jurisdictions, as he said. Consequently, the territorial application of this SI is England only. This means that for any field trials being conducted in Scotland and Wales, scientists will have to continue risk assessments and seek formal consent before trials can commence. That regulatory divergence should not cause any issues for researchers, developers or the public. However, we are aware of leading research on gene editing that is being conducted in devolved Administrations, such as at the Roslin Institute and the James Hutton Institute in Scotland. We are aware that the NFU is supportive, including NFU Scotland.

As a number of noble Lords have pointed out, the EU is moving in the same direction as us, although not quite as fast as we are. Scotland has legislation that says that where possible it will mirror changes in policy in this area in the EU, so it could be that Scotland will pursue a similar route in time. That is up to Scotland. Our English institutions will work closely with the institutions that I listed because there is enormous interest north of the border and in Wales in getting this right.

The issue of guidance was raised, rightly. ACRE is in the process of developing guidance that will help developers wishing to undertake field trials with plants made using genetic technologies such as gene editing, and it will be finalised before Easter. If I may give a hint, developers will need to know whether their plants are exempt from GMO restrictions on the basis that they meet the criteria of a “qualifying higher plant”, which is defined in the SI. The guidance makes it clear that notification is required in all cases and that it is not necessary to seek formal confirmation from Defra regarding its qualifying status. The guidance demonstrates which types of genetic changes can result in a qualifying higher plant, and highlights examples to illustrate how key criteria relating to natural processes and traditional methods and selection might be applied. Further detail is provided for cases that do not fit these precise descriptions, and we make clear that developers can always seek a view from Defra if they are unsure. As I say, that will be available in detail before Easter.

Reflecting some of the concerns of the Secondary Legislation Scrutiny Committee, there has been a question about why this is being done as secondary legislation. We believe that the SI is limited in its scope—that is reflected in points made by the noble Baroness who leads for the Labour Party—revising only the regulatory burden for non-marketing purposes. On the question from the noble Baroness, Lady Parminter, about retail, there will be no retail; any produce from these trials will be destroyed. However, I think her point is wider than that, and if it then goes on to be licensed then of course transparency and labelling are issues that will be debated vigorously at that time. We have existing powers through the Environmental Protection Act 1990 that enable the Secretary of State to remove certain requirements on GM plants in particular circumstances, and that is why we think this is the right mechanism for bringing this to your Lordships.

A number of people have asked about off-target effects and the issue relating to organics. A number of noble Lords have referred to their entries on the register of interests. I did not. I am a farmer—I used to be an organic farmer. I did not think I had to declare an interest because this is nothing to do with farming; it is simply about trials. However, I am happy to declare my interest on the record. The advantage of gene editing over traditional breeding methods is that the genetic changes that it makes are more targeted, which makes the breeding process more efficient and responsive. Using gene-editing techniques means that off-target effects become more noticeable and in some cases predictable, allowing us to manage and control those off-target effects.

Points were also raised about the safeguards and containment measures of the plant field trials, including the risk, as I say, of the cross-pollination of the organic sector. I make this very clear: some of the information put out by campaign groups in their advice as to how to respond to our consultation wrongly hinted that this was some sort of deregulatory splurge that the Government were undergoing. I can assure noble Lords that that is not the context at all. This is a small, proportionate, science-based change to allow the right sort of research to take place. We are not deregulating.

We have more than 30 years’ experience of GM field trials in England which have not caused environmental damage. There has been no evidence thus far that pollen seed or other plant material capable of reproduction from GM field trials has affected businesses in the organic sector in the UK. The off-target effects occurrence rate can be below 0.01% in some cases and techniques such as CRISPR, which some noble Lords will be aware of, mean that we can detect and control them efficiently. Of course, the GM Inspectorate, run by the Animal and Plant Health Agency, will be monitoring this very closely.

This SI amends only the regulatory requirements for non-marketing purposes—a point I made earlier. The commercial cultivation of these plants and any food products derived from them will still need to be authorised in accordance with existing GM rules.

Another issue raised was public perceptions of this. Our social scientists undertook a detailed analysis according to established approaches which took account of all the responses and aimed to transparently report the findings of the consultation. We also consulted the independent scientific experts, ACRE, which concluded that gene-edited organisms do not pose any greater risks. After taking all responses and evidence into account, we decided to adopt a step-by-step approach to the regulation of gene-edited organisms that is science-based and proportionate. On the comments about public perception, other sources of public insight give a different, rather more informed view, I believe, of this type of technology, with 57% of participants not at all or not very concerned about it. A BEIS survey from 2019 found that 63% of participants supported the use of this kind of technology for disease-resistant crops, 65% supported it for crops resistant to adverse weather and 56% supported it for increasing the health benefits of fruit and veg.

The noble Baroness, Lady Parminter, raised the Aarhus convention. The Government consider that the approach being taken through this SI, further to the recent consultation exercise, is consistent with the UK’s international obligations. On public access to environmental information, under these regulations, researchers intending to release a qualifying higher plant for the purposes of a field trial must provide information about the project and this must be published on the register, which will be housed on GOV.UK.

I am conscious of time so I will rattle through two or three more quick points. The precautionary principle is key. The qualifying GM plants covered by this SI do not pose a greater risk to human health or the environment than their traditionally bred counterparts. Therefore, this is not a move away from the precautionary principle. We are committed to proportionate, science-based regulation that protects people, animals and the environment. I have read the EU Commission’s guidance on the precautionary principle, but that is a debate for another day. It is quite clear that we have veered away from the original intentions of the precautionary principle and that can very often be damaging.

I want to thank other noble Lords for raising a number of different points. We benefit from the wisdom and experience of my noble friend Lord Jopling, which goes back many decades. He is right to point out the wider benefits of this type of technology. The noble Baroness, Lady Bakewell, was right to plead the case for an open and transparent process, and I hope we have that.

I conclude by reminding noble Lords that, on almost anything I have ever dealt with at Defra, you can find science which supports a contrary view. I believe that the weight of scientific opinion on this is clear that this is a proportionate approach that will benefit society and allow this country to remain at the forefront of this kind of technological research. I commend the instrument to the House.

22:30

[Baroness Bennett of Manor Castle (GP)]

My Lords, I thank the Minister for his response and everyone who has taken part in this very interesting and comprehensive debate. Like the Minister, I am somewhat on the horns of a dilemma because I am aware of the number of people waiting for the next important business.

I will try to respond to the Minister’s comments. It is interesting that a lot of this debate has focused on the views of scientific institutions. He acknowledged that there is complexity in their response and that they are saying that this is a complex area—the problem of defining what could be like naturally occurring or through traditional breeding. It is interesting that in his introduction he said that we were aiming for simplicity here. However, what has been achieved is not simplicity but complexity, which is reflected in the fact that no other country is taking the direction that we are here of focusing on the outputs rather than on the processes.

I will pick up the Minister’s point about ACRE and its composition. Of course, it is not just the case that people may be unduly or unreasonably influenced by their professional interests. There is also the problem of groupthink, where you get a group of people from a similar background, with similar professional lives, all thinking the same way without someone asking critical questions. We really need to look at that in terms of the composition of that body.

The Minister stressed that this SI was limited in scope, and on one level I agree. However, the noble Baroness, Lady Parminter—I thank her very much for her extremely informative and thoughtful contribution to this debate—pointed out that this is a shift away from the precautionary principle to the American principle of proof of harm. That is not limited in scope but a 180-degree shift in legislative approach. The Minister rightly said, as have others, that we are not talking about retail sales of the product here. However, as the noble Baroness said, surely the aim is eventually to produce things for retail, otherwise what is the point? That is where we are headed with this.

I particularly thank the noble Baroness, Lady Bakewell of Hardington Mandeville, for pointing out the concerns of organic farmers. That is an area where there has been a great deal of concern. Again, the Minister was perhaps slightly self-contradictory in saying, “We haven’t had any problems with what we’ve done thus far”, while saying in his introduction, “There have been very few trials and very little has been happening because of the current regulations.” If we have had very few trials, perhaps it is not surprising that we have not seen results.

I will pick up a couple more points very quickly. Several people focused on the issue of the need to feed the world. I have to point out the fact that a third of British arable and half of American arable is used either to grow food for animals or to produce fuel crops. If we stopped factory farming, a lot of that food could feed humans, which would be a great deal healthier.

Several noble Lords, including the noble Lord, Lord Jopling, made an argument about GM crops. That is not the argument that I am making; I am making an argument about this SI. I apologise to the noble Earl, Lord Lindsay, because it is obvious that I did not make it clear enough in my introduction that I was not claiming that the Secondary Legislation Scrutiny Committee was commenting on the content of this; it was commenting on the form and the system. When I was addressing your Lordships’ House I thought that everyone in this Chamber knew that, but perhaps I should have made it clearer for people listening outside. I acknowledge that. However, he said, “These faults in procedure, as identified by the Secondary Legislation Scrutiny Committee, happen all the time.” That is not an argument for voting against my call to stop this SI. Surely at some point, with the huge systematic problems that the committee has identified in its report, your Lordships’ House has to say, “Enough—we cannot proceed with this way forward.”

I want to pick up finally on the comments from the noble Baroness, Lady Jones of Whitchurch. She made important points that we are not talking here about being against the science. The science has changed and developed enormously. The noble Lord, Lord Jopling, referred to the many complexities he saw decades ago, essentially the unknown unknowns and the known unknowns. We are gradually starting to uncover a great deal more about how genetics relate to the phenotype of plants, the behaviour of plants and the way organisms work. I point any noble Lords who really want to inform themselves about this to a great podcast called “Big Biology” that is all about the cutting edge of science. This science is changing at enormous speed, and an understanding of how genes work is very different from what was thought 10 or 20 years ago.

The noble Baroness, Lady Jones of Whitchurch, also pointed out how we are seeing huge advances in agroecology, of working with nature and incredibly complex natural systems—the billion organisms that should be in a healthy teaspoon of soil—and that we can work with those collectively. It is not a case of treating nature like a machine and changing one cog.

I am aware that there is a lot of pressure not to do this but I feel that the issue is crucial, so I do not feel at this point I can do anything but ask to test the opinion of your Lordships’ House.

The Deputy Speaker decided on a show of voices that the Amendment to the Motion was disagreed.

Motion agreed.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I beg to move that the House do now adjourn for a short period during pleasure to await the resumption of the Economic Crime (Transparency and Enforcement) Bill. Noble Lords should watch the annunciator; it will say when the House will resume.

22:36

Sitting suspended.

Economic Crime (Transparency and Enforcement) Bill

Report stage
Monday 14th March 2022 Lords Chamber

Report (and remaining stages)

Relevant documents: 22nd Report from the Delegated Powers Committee, 14th Report from the Constitution Committee

23:11

Clause 4: Application for registration

Amendment 1

Moved by

[Lord Callanan]

1: Clause 4, page 2, line 19, at end insert “and, where applicable, the statement and information mentioned in subsection (2A)”
Member’s explanatory statement
This amendment requires an application for registration as an overseas entity to include the information and statement required by subsection (2A) (information about trusts).

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, I thank everyone who contributed to a lively and interesting Committee. I will move these government amendments on trusts. The Government seek to make amendments that address concerns raised in this House and the other place about trusts. These amendments set out that, where a trustee of a trust or equivalent arrangement is a registrable beneficial owner, the overseas entity must give them formal notice to provide their personal information and information about the trust. This information will be disclosed to HMRC, law enforcement agencies and other specified persons with a public function for the purposes of taking action with any offences they commit. I beg to move.

[Lord Coaker (Lab)]

I am grateful to the Minister for bringing these amendments forward following the wide-ranging discussions we had earlier, when we had a full exploration of all the issues.

Amendment 1 agreed.

Amendment 2

Moved by

[Lord Callanan]

2: Clause 4, page 3, line 20, at end insert—
“(2A) Where an application includes information that a registrable beneficial owner is a trustee (see paragraphs 3(1)(f) and 5(1)(h) of Schedule 1), the application must also include—(a) the required information about the trust or so much of that information as the overseas entity has been able to obtain, and(b) a statement as to whether the entity has any reasonable cause to believe that there is required information about the trust that it has not been able to obtain.”Member’s explanatory statement
This amendment provides that where an application for registration as an overseas entity discloses that a registrable beneficial owner is a trustee, it must include additional information about the trust.

Amendment 2 agreed.

Schedule 1: Applications: Required Information

Amendments 3 to 5

Moved by

[Lord Callanan]

3: Schedule 1, page 41, line 6, leave out “the table in section 4” and insert “sections 4, 7 and 9”
Member’s explanatory statement
This amendment is consequential on changes to clauses 4, 7 and 9.

4: Schedule 1, page 42, line 3, at end insert—
“(f) whether the individual meets that condition by virtue of being a trustee.”Member’s explanatory statement
This amendment would mean that the required information about a registrable beneficial owner who is an individual includes information about whether the individual is a trustee.

5: Schedule 1, page 42, line 3, at end insert—
“(g) whether the individual is a designated person (within the meaning of section 9(2) of the Sanctions and Anti-Money Laundering Act 2018), where that information is publicly available.”Member’s explanatory statement
This amendment would mean that the required information about a registrable beneficial owner who is an individual includes information about whether the individual is designated by virtue of the Sanctions and Anti-Money Laundering Act 2018.

Amendments 3 to 5 agreed.

Amendment 6

Moved by

[Lord Callanan]

6: Schedule 1, page 42, line 21, at end insert—
“(g) whether the entity is a designated person (within the meaning of section 9(2) of the Sanctions and Anti-Money Laundering Act 2018), where that information is publicly available.”Member’s explanatory statement
This amendment would mean that the required information about a registrable beneficial owner which is a government or public authority includes information about whether the entity is designated by virtue of the Sanctions and Anti-Money Laundering Act 2018.

[Lord Callanan (Con)]

My Lords, the Government have put forward a number of amendments to the register of overseas entities provisions. These amendments will address a number of the concerns of Members of this House. The amendments expand the information requirements for registrable beneficial owners to include information about whether they are designated by virtue of the Sanctions and Anti-Money Laundering Act 2018.

The amendments also provide a revised threshold for the offence of providing false statements. These no longer have to have been submitted knowingly or recklessly. Rather, it will be an offence when the statement is merely misleading, false or deceptive and the person has no reasonable excuse for supplying such a misleading statement, with an additional aggravated offence carrying a higher penalty where it can be proved that a false statement was made knowingly.

The Government seek to make amendments to require the Secretary of State to consult with Scottish and Northern Ireland Ministers before making regulations to amend parts of the Bill that legislate on devolved land law matters. I beg to move.

Amendment 6 agreed.

Amendments 7 to 10

Moved by

[Lord Callanan]

7: Schedule 1, page 42, line 36, at end insert—
“(h) whether the entity meets that condition by virtue of being a trustee.”Member’s explanatory statement
This amendment would mean that the required information about a registrable beneficial owner who is a legal entity includes information about whether the entity is a trustee.

8: Schedule 1, page 42, line 36, at end insert—
“(i) whether the entity is a designated person (within the meaning of section 9(2) of the Sanctions and Anti-Money Laundering Act 2018), where that information is publicly available.”Member’s explanatory statement
This amendment would mean that the required information about a registrable beneficial owner which is a legal entity includes information about whether the entity is designated by virtue of the Sanctions and Anti-Money Laundering Act 2018.

9: Schedule 1, page 43, line 37, at end insert—
“PART 4A TRUSTS7A_(1) The required information about a trust is—(a) the name of the trust or, if it does not have a name, a description by which it may be identified;(b) the date on which the trust was created;(c) in relation to each person who has at any time been a registrable beneficial owner in relation to the overseas entity by virtue of being a trustee of the trust—(i) the person’s name,(ii) the date on which the person became a registrable beneficial owner in that capacity, and(iii) if relevant, the date on which the person ceased to be a registrable beneficial owner in that capacity;(d) in relation to each beneficiary under the trust, the information that would be required under paragraph 3(1)(a) to (c) or 5(1)(a) to (e) if the beneficiary were a registrable beneficial owner in relation to the overseas entity;(e) in relation to each settlor or grantor, the information that would be required under paragraph 3(1)(a) to (c) or 5(1)(a) to (e) if the settlor or grantor were a registrable beneficial owner in relation to the overseas entity;(f) in relation to any interested person (see sub-paragraph (3))—(i) the information that would be required under paragraph 3(1)(a) to (c) or 5(1)(a) to (e) if the interested person were a registrable beneficial owner in relation to the overseas entity, and(ii) the date on which the person became an interested person.(2) In sub-paragraph (1)(c) “name”, in relation to an individual, has the meaning given by paragraph 3(2).(3) In sub-paragraph (1)(f) “interested person”, in relation to a trust, means any person who, under the terms of the trust, has rights in respect of—(a) the appointment or removal of trustees, or(b) the exercise by the trustees of their functions.”Member’s explanatory statement
This amendment sets out the required information about a trust for the purposes of the amendments to clauses 4, 7 and 9.

10: Schedule 1, page 43, line 41, leave out “7” and insert “7A”
Member’s explanatory statement
This amendment expands the power to make further provision about the information required by the Schedule so that the power extends to the new paragraph 7A.

Amendments 7 to 10 agreed.

23:15

Clause 7: Updating duty

Amendments 11 to 15

Moved by

[Lord Callanan]

11: Clause 7, page 4, line 13, at end insert “and, where applicable, the statement and information mentioned in subsection (2A)”
Member’s explanatory statement
This amendment requires an overseas entity when complying with the updating duty to include the information and statement mentioned in subsection (2A) (information about trusts).

12: Clause 7, page 4, line 15, at end insert “and, where applicable, the statement and information mentioned in subsection (2B)”
Member’s explanatory statement
This amendment requires an overseas entity when complying with the updating duty to include the information and statement mentioned in subsection (2B) (information about trusts).

13: Clause 7, page 4, line 42, at end insert—
“(2A) Where information provided under subsection (1)(a) includes information that a registrable beneficial owner is a trustee (see paragraphs 3(1)(f) and 5(1)(h) of Schedule 1), the overseas entity is also required by subsection (1)(a) to provide—(a) the required information about the trust or so much of that information as the overseas entity has been able to obtain, and(b) a statement as to whether the entity has any reasonable cause to believe that there is required information about the trust that it has not been able to obtain.(2B) Where information provided under subsection (1)(b) includes information that a person who became or ceased to be a registrable beneficial owner was a trustee (see paragraphs 3(1)(f) and 5(1)(h) of Schedule 1), the overseas entity is also required by subsection (1)(b) to provide—(a) the required information about the trust or so much of that information as the overseas entity has been able to obtain, and(b) a statement as to whether the entity has any reasonable cause to believe that there is required information about the trust that it has not been able to obtain.”Member’s explanatory statement
This amendment requires an overseas entity, when complying with its updating duty, to provide additional information and statements about trusts, where relevant.

14: Clause 7, page 5, line 2, leave out from “The” to “, must” in line 3 and insert “information required by subsection (1)(a), and any statements required by subsection (1)(a) or (b)”
Member’s explanatory statement
This amendment is consequential on the amendments to clause 7(1)(a) and (b).

15: Clause 7, page 5, line 5, leave out “in relation to a person who has” and insert “as a result of a person having”
Member’s explanatory statement
This amendment is consequential on the amendment to clause 7(1)(b).

Amendments 11 to 15 agreed.

Clause 9: Application for removal

Amendments 16 to 20

Moved by

[Lord Callanan]

16: Clause 9, page 6, line 14, at end insert “and, where applicable, the statement and information mentioned in subsection (2A)”
Member’s explanatory statement
This amendment requires an overseas entity when applying for removal from the register to provide the information and statement mentioned in subsection (2A) (information about trusts).

17: Clause 9, page 6, line 16, at end insert “and, where applicable, the statement and information mentioned in subsection (2B)”
Member’s explanatory statement
This amendment requires an overseas entity when applying for removal from the register to provide the information and statement mentioned in subsection (2B) (information about trusts).

18: Clause 9, page 6, line 43, at end insert—
“(2A) Where information provided under subsection (1)(b) includes information that a registrable beneficial owner is a trustee (see paragraphs 3(1)(f) and 5(1)(h) of Schedule 1), the overseas entity is also required by subsection (1)(b) to provide—(a) the required information about the trust or so much of that information as the overseas entity has been able to obtain, and(b) a statement as to whether the entity has any reasonable cause to believe that there is required information about the trust that it has not been able to obtain.(2B) Where information provided under subsection (1)(c) includes information that a person who became or ceased to be a registrable beneficial owner was a trustee (see paragraphs 3(1)(f) and 5(1)(h) of Schedule 1), the overseas entity is also required by subsection (1)(c) to provide—(a) the required information about the trust or so much of that information as the overseas entity has been able to obtain, and(b) a statement as to whether the entity has any reasonable cause to believe that there is required information about the trust that it has not been able to obtain.”Member’s explanatory statement
This amendment requires an overseas entity, when applying for removal from the register, to provide additional information and statements about trusts, where relevant.

19: Clause 9, page 7, line 6, leave out from “The” to “, must” in line 7 and insert “information required by subsection (1)(b), and any statements required by subsection (1)(b) or (c)”
Member’s explanatory statement
This amendment is consequential on the amendments to clause 9(1)(b) and (c).

20: Clause 9, page 7, line 9, leave out “in relation to a person who has” and insert “as a result of a person having”
Member’s explanatory statement
This amendment is consequential on the amendment to clause 9(1)(c) about trusts information.

Amendments 16 to 20 agreed.

Amendment 21

Moved by

[Lord Callanan]

21: Clause 9, page 7, line 23, leave out sub-paragraph (i) and insert—
“(i) is entered, on or after 8 December 2014, as proprietor in the proprietorship section of the title sheet for a plot of land that is registered in the Land Register of Scotland,”Member’s explanatory statement
This amendment expands the scope of circumstances where an overseas entity is registered as the proprietor of a relevant interest in land for the purpose of clause 9 (to include, for example, Keeper-induced registration) by removing the requirement for there to have been an application for registration.

[Lord Callanan (Con)]

My Lords, the Government are putting forward a group of technical amendments on land registration and transactions in Scotland, in addition to some further substantive amendments. These amendments include obligations on overseas entities that disposed of land between 28 February 2022 and the end of the transitional period to outline the details of the beneficial ownership of the entity at the time of the transfer. I beg to move.

[Lord Coaker (Lab)]

My Lords, I want to say a few things about this group of amendments, and in particular to speak to my Amendment 62. As the Minister knows, we are generally supportive of the amendments in this group. The Government, to be fair, have moved in several areas, and that is to their credit. Once again, I thank the Minister and his ministerial colleagues for their engagement over the course of these last few days with respect to this Bill. It has been most helpful.

Earlier today, the Minister outlined several reasons for opposing a reduction in the transition period from six months to 28 days. In the spirit of compromise, we therefore tabled an alternative provision of 90 days for the transition period, and that is the subject of my Amendment 62. He will also know that this amendment is supported by the body representing accountants, which has said that it believes three months is a reasonable figure for the transition period. I shall not go over all the arguments on the length of the transition period that we have had today and at Second Reading, as the Minister will be very well aware of them. Noble Lords are worried that this will allow people to avoid the new rules and regulations and be able to circumvent them.

Furthermore, given the potential lengthy process that needs to be followedbefore Part 1 of the Bill can be formally commenced, we believe that there is also a case for accelerating the registration period. As I again said to the Minister, the commencement period is subject to the Secretary of State’s decision for Part 1, so there is no clarity as to when that will actually start. If there is a six-month transition period and six months until it is commenced, that will be a year. Therefore, we seek clarity from the Minister, even at this late stage, about the implementation of the measures in the Bill, not only with respect to the commencement date, but to some of the other issues. Can the Minister say anything further?

We would, of course, be delighted if the Minister were able to accept the amendment, but if he is to hold firm, would he be able to make certain commitments so that we would be clear on the steps that the Government are taking to ensure Parliament is appraised of the progress between this Bill receiving Royal Assent and the next, more substantial piece of legislation to be introduced—namely the Bill that has become known as economic crime Bill 2? We want to know something about the effectiveness of the measures within this Bill and the way forward to the next Bill.

Can the Minister confirm the scope of the next Bill? Will that be broad, and will there be an opportunity to amend some of the measures in this Bill as we move forward to the next Bill? As we know, many noble Lords have raised the issues within this Bill of the fact that there has not been proper scrutiny. It may well be that many of the points that noble Lords have raised will actually come to fruition, but we need some assessment of that from the Government so that we can then inform our deliberations with respect to the economic crime Bill 2.

Also, as I say, there is a general belief that, although we are allowing the Bill to pass because of the emergency we face, there are still significant weaknesses and omissions within it. There is, therefore, a need for the next Bill to be brought as soon as possible—that is absolutely crucial—rather than at some time in the future. Can the Minister give any assurances to the House as to when he expects the next economic crime Bill to come before your Lordships in order to discuss that? There are a number of questions for the Minister, and I look forward to hearing the answers to them to determine whether we wish to test the opinion of the House or not.

[Lord Fox (LD)]

Very briefly, my Lords, we thank the noble Lord and congratulate him on tabling this amendment. We on these Benches still remain concerned about the cumulative delay of transition and commencement—or the potential cumulative delay—so we are pleased that the Minister has another chance to respond to that particular concern. We also share the concerns of the noble Lord, Lord Coaker, about the speed with which ECB 2 arrives in your Lordships’ House.

[Lord Callanan (Con)]

I thank both the noble Lords, Lord Coaker and Lord Fox, for their extremely constructive engagement over the course of the weekend and over the course of a number of meetings and chats today. I really am very grateful for their constructive attitude and for their willingness to be open to the arguments that we have deployed in why we genuinely do not think that reducing the transition period further is a runner, for a whole variety of reasons we have discussed—I will not go into detail now. But I am grateful—I want to put that on record—for the support of the Opposition parties in accepting this as emergency legislation that we want to get through as swiftly as possible and passed down to the other place.

I also note their interest in seeing a rapid introduction of the measures of this Bill and their focus on ensuring its effective implementation—and also their interest in a wider range of issues that can be covered in the Bill. The forthcoming legislation on economic crime will, as I have said previously, provide for significant reform of the powers of the Companies House registrar. These will directly interact with the provisions of this Bill, enhancing further its effectiveness—for instance, by providing greater powers to query and act on the information on the register. I would be happy, therefore, to commit the Government that this House will have the opportunity to review the effectiveness of the current legislation in that wider context of our discussion on the new powers. I am also committed to the rapid implementation of the measures in this Bill, and I would also be happy to commit to updating the House on the Government’s progress on this within six weeks of this measure achieving Royal Assent.

I can reassure noble Lords that the further economic crime Bill that the Government intend to introduce in the next Session will be a broad one. We will, of course, consider and carefully examine any amendments put forward in either House which serve to strengthen our frameworks for tackling economic crime. As my honourable friend the Minister for Small Business, Consumers and Labour Markets—who I am pleased to see at the Bar of the House—said in the other place last week, we are committed to bringing forward the next economic crime Bill early in the next Session.

I hope that has provided sufficient reassurance for the noble Lord and that, therefore, he will feel able to withdraw his amendment.

[Lord Coaker (Lab)]

I thank the Minister very much for that reply. It does show that the parliamentary process works, because the Government have moved in a significant way to meet the concerns not only of myself and other noble Lords on this side but, indeed, noble Lords across the Chamber. These concerns are not resolved, but the Minister has given us a way forward, in particular by reviewing the effectiveness of the current legislation. That is an important concession from the Government, which will allow us to see whether the concerns raised about the Bill come to fruition or whether the Government are right to say that we are worrying about things that will not come to pass.

An update on progress within six weeks of Royal Assent is a significant step forward and another important concession from the Government. As my noble friend Lady Smith has raised on a number of occasions, we are particularly pleased about the Government’s commitment to an economic crime Bill No. 2 early in the next Session. I think the word “early” is significant for all of us because we believe that there are things that will need to be changed, and this means we will have the opportunity to do so. I thank the Minister once again for that.

Given the concessions that the Government have made and the demonstration of the way that the parliamentary process has worked within this context, I will not press Amendment 62.

Amendment 21 agreed.

Amendments 22 to 24

Moved by

[Lord Callanan]

22: Clause 9, page 7, line 33, leave out sub-paragraph (iii) and insert—
“(iii) is the tenant under a lease that was registered in the Land Register of Scotland on or after that date, or”Member’s explanatory statement
This amendment rephrases clause 9(8)(b)(iii) to ensure consistency with the language used at paragraphs 10(1) and 11(1) of Schedule 4.

23: Clause 9, page 7, leave out line 45
Member’s explanatory statement
This amendment is consequential on the amendment inserting a new subsection (10) into clause 9.

24: Clause 9, page 7, line 45, at end insert—
“(10) For the purposes of subsection (8)(b)(i)—(a) the reference to an overseas entity’s being entered as proprietor in the proprietorship section of a title sheet is a reference to the name of the entity being so entered, and(b) the date on which an overseas entity is entered as proprietor in the proprietorship section of a title sheet is, where the entry is made by virtue of an application for registration, the date of registration as determined under section 37 of the Land Registration etc. (Scotland) Act 2012 (date and time of registration).”Member’s explanatory statement
This amendment applies terminology used in the Land Registration etc.(Scotland) Act 2012 to clause 9(8)(b)(i) to ensure consistency between the two legislative schemes.

Amendments 22 to 24 agreed.

Clause 12: Identifying registrable beneficial owners

Amendments 25 and 26

Moved by

[Lord Callanan]

25: Clause 12, page 8, line 28, leave out from “obtain” to end of line 29 and insert “, for the purposes of the application under section 4 or 9 or for the purposes of complying with the updating duty under section 7—
(i) the required information about each registrable beneficial owner, and(ii) in respect of any registrable beneficial owner who is a trustee, the required information about the trust.”Member’s explanatory statement
This amendment requires an overseas entity to take reasonable steps to obtain information about trusts, where relevant.

26: Clause 12, page 8, line 40, at end insert “, and
(c) if the person is a registrable beneficial owner by virtue of being a trustee, to confirm or correct any of the required information about the trust that is specified in the notice and to supply any of the required information about the trust that the notice states the overseas entity does not already have.”Member’s explanatory statement
This amendment requires an information notice under clause 12 to deal with information about trusts, where relevant.

Amendments 25 and 26 agreed.

Clause 18: Exemptions

Amendment 27

Moved by

[Lord Fox]

27: Clause 18, page 11, line 18, leave out paragraph (b)
Member’s explanatory statement
This amendment removes the ability of the Secretary of State to exempt an individual from the requirements to register their overseas entities on the grounds of the economic wellbeing of the United Kingdom.

[Lord Fox (LD)]

My Lords, the arguments have all been made in the previous stage, when the Minister stood up and said that the Government were prepared to accept what was then Amendment 43; I was delighted. It is now Amendment 27, which I beg to move.

[Lord Callanan (Con)]

My Lords, I am happy to confirm and accept the amendment from the noble Lord, Lord Fox, also signed by the noble Lord, Lord Coaker, which was originally Amendment 43. It removes an exemption from reporting where this is in the interests of the economic well-being for the UK. As I said in Committee, I have listened carefully and we have engaged on this. In reflection of this and, as has been said, in the interests of working together to progress this vital legislation collaboratively and swiftly, the Government are happy to support this amendment.

Amendment 27 agreed.

Clause 22: Material unavailable for inspection

Amendments 28 to 30

Moved by

[Lord Callanan]

28: Clause 22, page 13, line 14, at end insert—
“(ba) any required information about a trust delivered to the registrar by virtue of section 4(2A), 7(2A) or (2B) or 9(2A) or (2B) (required information about trusts),”Member’s explanatory statement
This amendment means that the required information about trusts will be unavailable for inspection on the public register.

29: Clause 22, page 13, line 27, leave out paragraph (a) and insert—
“(a) it relates to a registrable beneficial owner or managing officer in relation to an overseas entity,”Member’s explanatory statement
This amendment ensures that date of birth and residential address information is protected even if it relates to a person who has ceased to be a registrable beneficial owner.

30: Clause 22, page 13, line 35, at end insert “, and
(d) it is not information about a trust delivered to the registrar by virtue of section 4(2A), 7(2A) or (2B) or 9(2A) or (2B).”Member’s explanatory statement
This amendment excludes information about trusts from the definition of “protected” date of birth and residential address information. This is because other amendments create different provisions governing the disclosure etc of information about trusts.

Amendments 28 to 30 agreed.

Amendment 31

Moved by

[Lord Callanan]

31: After Clause 22, insert the following new Clause—
“Disclosure of information about trusts
(1) This section applies to information delivered to the registrar by virtue of section 4(2A), 7(2A) or (2B) or 9(2A) or (2B) (required information about trusts).(2) The registrar may not disclose the information unless—(a) the same information is made available by the registrar for public inspection otherwise than by virtue of being delivered to the registrar by virtue of a provision mentioned in subsection (1), or(b) the disclosure is permitted by subsection (3).(3) The registrar may disclose the information to—(a) the Commissioners for Her Majesty’s Revenue and Customs, or(b) any other person who—(i) has functions of a public nature, and(ii) is specified for the purposes of this section by regulations made by the Secretary of State.(4) Regulations under this section are subject to the negative resolution procedure.”Member’s explanatory statement
This new clause generally prevents the registrar from disclosing the required information about trusts. But it also includes a new power to disclose information to HMRC or other specified persons with public functions.

Amendment 31 agreed.

Clause 25: Data protection

Amendment 32

Moved by

[Lord Callanan]

32: Clause 25, page 15, line 26, after “21” insert “, (Disclosure of information about trusts)”
Member’s explanatory statement
This amendment is consequential on the new clause about disclosure of information about trusts.

Amendment 32 agreed.

Clause 31: General false statement offence

Amendments 33 to 36

Moved by

[Lord Callanan]

33: Clause 31, page 18, line 13, leave out “knowingly or recklessly” and insert “, without reasonable excuse,”
Member’s explanatory statement
This amendment removes the mental element for the offence under clause 31 and introduces a reasonable excuse defence instead (for example to cater for cases where an overseas entity reasonably relies on information provided by others which turns out to be untrue).

34: Clause 31, page 18, line 18, at end insert—
“(1A) An offence under this section is aggravated if, when the document or statement is delivered, the person knows that it is misleading, false or deceptive in a material particular.”Member’s explanatory statement
This amendment provides that an offence under clause 31 is aggravated if it is committed by a person who knew that the document or statement provided is misleading, false or deceptive in a material particular. A later amendment imposes a higher penalty for an aggravated offence.

35: Clause 31, page 18, line 18, at end insert—
“(1B) A person guilty of an offence under this section, other than an aggravated offence, is liable —(a) on summary conviction in England and Wales, to a fine;(b) on summary conviction in Scotland, to a fine not exceeding level 5 on the standard scale;(c) on summary conviction in Northern Ireland, to a fine not exceeding level 5 on the standard scale.”Member’s explanatory statement
This amendment provides for the penalty for an offence under clause 31 other than an aggravated offence.

36: Clause 31, page 18, line 19, after “an” insert “aggravated”
Member’s explanatory statement
This amendment provides for the current penalty under clause 31 to apply only where the offence is an aggravated offence (because of the defendant’s knowledge).

Amendments 33 to 36 agreed.

Clause 32: Land ownership and transactions

Amendment 37

Moved by

[Lord Callanan]

37: Clause 32, page 19, line 13, at end insert—
“(5A) The Secretary of State must consult the Department of Finance in Northern Ireland before making regulations under subsection (4).”Member’s explanatory statement
This amendment requires the Secretary of State to consult a Northern Ireland department before making regulations under clause 32(4).

Amendment 37 agreed.

23:30

Schedule 3: Land ownership and transactions: England and Wales

Amendments 38 to 42

Moved by

[Lord Callanan]

38: Schedule 3, page 55, line 20, leave out “period of 6 months beginning with the commencement date” and insert “transitional period”
Member’s explanatory statement
This amendment and related amendments align the transitional periods under Schedule 3 with the period in new clause (Applications in the transitional period: information about land transactions).

39: Schedule 3, page 56, line 9, leave out from “estate” to end of line 10 and insert “as soon as reasonably practicable and in any event before the end of the transitional period”
Member’s explanatory statement
This amendment requires the Chief Land Registrar to act as soon as reasonably practicable, and in any event before the end of the transitional period, to enter a restriction in relation to an estate in land owned by an overseas entity since before the Bill comes into force.

40: Schedule 3, page 56, line 11, leave out “period of 6 months beginning with the commencement date” and insert “transitional period”
Member’s explanatory statement
This amendment and related amendments align the transitional periods under Schedule 3 with the period in new clause (Applications in the transitional period: information about land transactions).

41: Schedule 3, page 56, line 15, leave out “this Part of this Schedule comes” and insert “section 3(1) comes fully”
Member’s explanatory statement
This amendment changes the definition of “the commencement date” in Schedule 3 so that it is the same as the date from which the transitional period (as amended) would run.

42: Schedule 3, page 56, line 21, at end insert—
““the transitional period” has the meaning given by section (Applications in the transitional period: information about land transactions)(10).”Member’s explanatory statement
This amendment defines “the transitional period” for the purposes of Part 2 of Schedule 3 to have the same meaning as in new clause (Applications in the transitional period: information about land transactions).

Amendments 38 to 42 agreed.

Schedule 4: Land ownership and transactions: Scotland

Amendments 43 to 59

Moved by

[Lord Callanan]

43: Schedule 4, page 57, line 29, leave out “granted” and insert “delivered”
Member’s explanatory statement
This amendment ensures consistency with paragraph 7 of Schedule 4, which prohibits the delivery of a qualifying registrable deed in specified circumstances.

44: Schedule 4, page 58, line 34, at end insert—
“(3) Sub-paragraph (2) does not apply where—(a) the application is made by a person other than the overseas entity referred to in sub-paragraph (1)(b)(i), and(b) the deed in respect of which the application is made is a lease or an assignation of a lease the subjects of which consist of or form part of an unregistered plot of land of which that overseas entity is the proprietor.”Member’s explanatory statement
This amendment provides an exception to the application of sub-paragraph (2) in circumstances where a third party makes an application to register a lease or an assignation of lease, which necessitates the registration of the overseas entity’s title as a result of automatic plot registration.

45: Schedule 4, page 58, line 40, leave out “was registered” and insert “is registered, having been so registered”
Member’s explanatory statement
This amendment clarifies the point in time at which the overseas entity’s interest must have been registered in order to fall within the scope of this provision.

46: Schedule 4, page 59, line 2, after second “or” insert—
“(ii) in respect of a transfer of ownership or other event that”Member’s explanatory statement
This amendment clarifies that the exception provided for at paragraph 2(2)(a) applies in circumstances where the application for registration is in respect of a transfer of ownership or other event that occurs by operation of law.

47: Schedule 4, page 59, line 48, at end insert—
“(3) Sub-paragraph (2) does not apply where—(a) the application is made by a person other than the overseas entity referred to in sub-paragraph (1)(b)(i), and(b) the deed in respect of which title is being completed is a lease or an assignation of a lease the subjects of which consist of or form part of an unregistered plot of land of which that overseas entity is the proprietor.”Member’s explanatory statement
This amendment provides an exception to the application of sub-paragraph (2) where a third party makes an application to complete title in respect of a lease or an assignation of lease, which necessitates the registration of the overseas entity’s title as a result of automatic plot registration.

48: Schedule 4, page 60, line 9, leave out “was registered” and insert “is registered, having been so registered”
Member’s explanatory statement
This amendment clarifies the point in time at which the overseas entity’s interest must have been registered in order to fall within the scope of this provision.

49: Schedule 4, page 60, line 16, after second “or” insert—
“(ii) in respect of a transfer of ownership or other event that”Member’s explanatory statement
This amendment clarifies that the exception provided for at paragraph 4(2)(a) applies in circumstances where the application for registration is in respect of a transfer of ownership or other event that occurs by operation of law.

50: Schedule 4, page 60, line 46, after “43(1)” insert “or (5)”
Member’s explanatory statement
This amendment extends the scope of paragraph 5 to include applications made by virtue of section 43(5) of the Land Registration etc.(Scotland) Act 2012, provided such applications meet the other criteria set out in paragraph 5(1).

51: Schedule 4, page 61, line 2, at end insert “, and
(ii) that entry would be marked as provisional under section 44(1).”Member’s explanatory statement
This amendment narrows the scope of paragraph 5 to ensure that prescriptive claimants who are not overseas entities are not prevented from registering their prescriptive application where the existing title is held by an overseas entity.

52: Schedule 4, page 63, line 5, leave out paragraph (a) and insert—
“(a) an overseas entity is entered as proprietor in the proprietorship section of the title sheet for a plot of land that is registered in the Land Register of Scotland, having been so entered during the pre-commencement period,”Member’s explanatory statement
This amendment is consequential on the amendment to clause 9(8)(b)(i) and clarifies that the entry has to have been made during the pre-commencement period.

53: Schedule 4, page 63, line 33, leave out paragraph (a) and insert—
“(a) an overseas entity is entered as proprietor in the proprietorship section of the title sheet for a plot of land that is registered in the Land Register of Scotland, having been so entered during the pre-commencement period,”Member’s explanatory statement
This amendment is consequential on the amendment to clause 9(8)(b)(i) and clarifies that the entry has to have been made during the pre-commencement period.

54: Schedule 4, page 64, line 9, leave out “this Part of this Schedule comes” and insert “section 3(1) comes fully”
Member’s explanatory statement
This amendment changes the definition of “the commencement date” in Schedule 4 so that it is the same as the date from which the transitional period (as amended) would run.

55: Schedule 4, page 64, leave out lines 22 and 23
Member’s explanatory statement
This amendment is consequential on the amendment inserting a paragraph 12A into new schedule 1A to the Land Registration etc.(Scotland) Act 2012.

56: Schedule 4, page 64, line 24, leave out from “period”” to end of line 25 and insert “has the meaning given by section (Applications in the transitional period: information about land transactions) (10).”
Member’s explanatory statement
This amendment aligns the transitional period under Part 2 of Schedule 4 with the period in new clause (Applications in the transitional period: information about land transactions).

57: Schedule 4, page 64, line 25, at end insert—
“12A_ For the purposes of paragraphs 10(1)(a) and 11(1)(a)—(a) references to an overseas entity’s being entered as proprietor in the proprietorship section of a title sheet are references to the name of the entity being so entered, and(b) the date on which an overseas entity was entered as proprietor in the proprietorship section of a title sheet is, where the entry was made by virtue of an application for registration, the date of registration as determined under section 37 of the Land Registration etc. (Scotland) Act 2012 (date and time of registration).”Member’s explanatory statement
This amendment applies terminology used in the Land Registration etc.(Scotland) Act 2012 to paragraphs 10(1)(a) and 11(1)(a) of new schedule 1A to ensure consistency between the two legislative schemes.

58: Schedule 4, page 64, leave out lines 33 and 34 and insert “transitional period (within the meaning given by section (Applications in the transitional period: information about land transactions) (10)).”
Member’s explanatory statement
This amendment aligns the period mentioned in paragraph 13(2) of Schedule 4 with the transitional period in new clause (Applications in the transitional period: information about land transactions).

59: Schedule 4, page 64, line 43, at end insert—
“(4A) The Secretary of State must consult the Scottish Ministers before making regulations under this paragraph that contain provision that would be within the legislative competence of the Scottish Parliament if contained in an Act of that Parliament.”Member’s explanatory statement
This amendment requires the Secretary of State to consult the Scottish Ministers before making regulations under paragraph 13 of Schedule 4 that contain provision within devolved legislative competence.

Amendments 43 to 59 agreed.

Amendment 60

Moved by

[Lord Callanan]

60: After Clause 38, insert the following new Clause—
“Sharing of information by HMRC Sharing of information by HMRC
(1) The Commissioners for Her Majesty’s Revenue and Customs may disclose information to the Secretary of State or the registrar for the purpose of the taking of action in connection with an offence under this Part.(2) For the purposes of this section, the taking of action in connection with an offence under this Part includes any of the following—(a) investigating whether an offence has been committed;(b) prosecuting an offence;(c) imposing financial penalties for conduct amounting to an offence.(3) A person who receives information as a result of this section—(a) may not use the information other than for the purpose of the taking of action in connection with an offence under this Part;(b) may not further disclose the information unless the disclosure is necessary for the taking of action in connection with an offence under this Part.(4) It is an offence for a person to disclose, in contravention of subsection (3)(b), any revenue and customs information relating to a person whose identity—(a) is specified in the disclosure, or(b) can be deduced from it.(5) It is a defence for a person charged with an offence under subsection (4) to prove that the person reasonably believed—(a) that the disclosure was lawful, or(b) that the information had already lawfully been made available to the public.(6) Subsections (4) to (7) of section 19 of the Commissioners for Revenue and Customs Act 2005 apply to an offence under subsection (4) as they apply to an offence under that section.(7) In this section “revenue and customs information relating to a person” has the same meaning as in section 19 of the Commissioners for Revenue and Customs Act 2005 (see section 19(2) of that Act).”Member’s explanatory statement
This amendment permits HMRC to disclose information to allow the registrar and the Secretary of State to take action in connection with offences.

Amendment 60 agreed.

Amendment 61

Moved by

[Lord Callanan]

61: After Clause 38, insert the following new Clause—
“Applications in the transitional period: information about land transactions
(1) This section applies where an overseas entity makes an application under section 4 for registration before the end of the transitional period.(2) If the entity has not made any relevant dispositions of land during the period—(a) beginning with 28 February 2022, and(b) ending with the making of the application,the application must include a statement to that effect.(3) If the entity has made any relevant dispositions of land during the period mentioned in subsection (2), the application must include—(a) the required information about each relevant disposition of land made during that period (see subsection (5)),(b) in relation to each such disposition, the statements and information mentioned in paragraphs (a), (b) and (c) of section 4(1) expressed by reference to the state of affairs immediately before the making of the disposition, and(c) a statement that all of the information required by paragraphs (a) and (b) of this subsection has been included in the application.(4) In this section “relevant disposition of land”, in relation to an overseas entity, means—(a) a registrable disposition of a qualifying estate within section 27(2)(a), (b)(i) or (f) of the Land Registration Act 2002 other than—(i) a disposition made in pursuance of a statutory obligation or court order, or occurring by operation of law, or(ii) a disposition made by a specified insolvency practitioner in specified circumstances (within the meaning of paragraph 3(3) of Schedule 4A to the Land Registration Act 2002, as inserted by Schedule 3 to this Act);(b) the delivery by the entity of a qualifying registrable deed granted by it where the entity’s interest in respect of which the deed was granted was registered in the Land Register of Scotland on or after 8 December 2014, unless the deed was granted—(i) in pursuance of a statutory obligation or court order, or(ii) by a specified insolvency practitioner in specified circumstances (within the meaning of paragraph 2(5) of schedule 1A of the Land Registration etc. (Scotland) Act 2012, as inserted by Schedule 4 to this Act).(5) The required information about a relevant disposition of land is—(a) where the relevant disposition of land is within subsection (4)(a)—(i) the date of disposition, and(ii) the registered title number of the qualifying estate;(b) where the relevant disposition of land is within subsection (4)(b)—(i) the date of delivery of the deed, and(ii) the title number of the title sheet in which the entity’s interest is entered.(6) In subsection (4)(a) “qualifying estate” means—(a) a freehold estate in land, or(b) a leasehold estate in land granted for a term of more than seven years from the date of grant,of which the overseas entity became a registered proprietor in pursuance of an application made on or after 1 January 1999.(7) In subsection (6) “registered proprietor”, in relation to an estate, means the person entered as proprietor of the estate in the register of title kept by the Chief Land Registrar.(8) In subsection (4)(b) “qualifying registrable deed” means a registrable deed (within the meaning of the Land Registration etc.(Scotland) Act 2012) which is—(a) a disposition,(b) a standard security,(c) a lease (including a sub-lease), or(d) an assignation of a lease (including a sub-lease).(9) For the purposes of subsection (4)(b), a qualifying registrable deed is to be treated, as at the date of delivery, as having been granted even if at that time it has been executed by the overseas entity only.(10) In this section “the transitional period” means the period of 6 months beginning with the day on which section 3(1) comes fully into force.”Member’s explanatory statement
This new clause requires an overseas entity, when making an application within the first 6 months of the commencement of clause 3(1), to provide additional information about relevant dispositions of land on or after 28 February 2022.

Amendment 61 agreed.

Amendment 62 not moved.

Amendments 63 and 64

Moved by

[Lord Callanan]

63: After Clause 38, insert the following new Clause—
“Requirement for certain unregistered overseas entities to provide information
(1) An overseas entity, and every officer of the entity who is in default, commits an offence if—(a) at any time during the period beginning with 28 February 2022 and ending with the end of the transitional period, the entity has made a relevant disposition of land,(b) at the end of the transitional period the entity—(i) is not registered as an overseas entity,(ii) has not made an application for registration as an overseas entity that is pending, and(iii) is not an exempt overseas entity, and(c) the entity has not, after making the relevant disposition of land and before the end of the transitional period, delivered to the registrar—(i) statements and information of the kind mentioned in paragraphs (a), (b), (c) and (d) of section 4(1), expressed by reference to the state of affairs immediately before the making of the relevant disposition of land, and(ii) the required information about the relevant disposition of land (within the meaning of section (Applications in the transitional period: information about land transactions) (5)).(2) A person guilty of an offence under subsection (1) is liable on summary conviction—(a) in England and Wales to a fine and, for continued contravention, a daily default fine not exceeding the greater of £2,500 and one half of level 4 on the standard scale;(b) in Scotland or Northern Ireland, to a fine not exceeding level 5 on the standard scale and, for continued contravention, a daily default fine not exceeding one half of level 5 on the standard scale.(3) The contravention continues until such time as the overseas entity has delivered the statements and information mentioned in subsection (1)(c).(4) In the case of continued contravention, an offence is also committed by every officer of the overseas entity who did not commit an offence under subsection (1) in relation to the initial contravention but who is in default in relation to the continued contravention.(5) A person guilty of an offence under subsection (4) is liable on summary conviction—(a) in England and Wales, to a fine not exceeding the greater of £2,500 and one half of level 4 on the standard scale for each day on which the contravention continues and the person is in default;(b) in Scotland or Northern Ireland, to a fine not exceeding one half of level 5 on the standard scale for each day on which the contravention continues and the person is in default.(6) In this section—“exempt overseas entity” means an entity of a description specified in regulations under section 33(6);“relevant disposition of land” has the meaning given by section (Applications in the transitional period: information about land transactions) (4);“transitional period” has the meaning given by section (Applications in the transitional period: information about land transactions) (10).”Member’s explanatory statement
This new clause makes it an offence for certain unregistered overseas entities to fail to provide information about relevant dispositions of land made on or after 28 February.

64: After Clause 38, insert the following new Clause—
“Section (Requirement for certain unregistered overseas entities to provide information): supplementary
(1) Section 12 has effect as if—(a) subsection (1) included a reference to an overseas entity being under a duty to comply with that section before delivering statements and information under section (Requirement for certain unregistered overseas entities to provide information)(1)(c)(i);(b) subsection (2) included a reference to obtaining information for the purposes of section (Requirement for certain unregistered overseas entities to provide information)(1)(c)(i).(2) The Secretary of State may by regulations make further provision in connection with—(a) the provision of information under section (Requirement for certain unregistered overseas entities to provide information)(1)(c),(b) the verification of that information, or(c) the processing of that information by the registrar,including provision modifying any provision made by or under this Part or applying any provision made by or under this Part with modifications.(3) Regulations under this section are subject to the negative resolution procedure.”Member’s explanatory statement
This new clause makes further provision in connection with new clause (Requirement for certain unregistered overseas entities to provide information).

Amendments 63 and 64 agreed.

Clause 39: Interpretation

Amendment 65

Moved by

[Lord Callanan]

65: Clause 39, page 22, line 22, at end insert—
“(2) A reference in section 12 or 13 to a person who is a registrable beneficial owner of an overseas entity includes, in connection with the obtaining of information required by section 7(1)(b), 9(1)(c), (Applications in the transitional period: information about land transactions)(3)(b) or (Requirement for certain unregistered overseas entities to provide information)(1)(c)(i), a reference to a person who has ceased to be a registrable beneficial owner.(3) A reference in this Part to a trust includes arrangements, under the law of a country or territory outside the United Kingdom, that are of a similar character to a trust, and any related expressions are to be read accordingly.(4) The Secretary of State may by regulations make provision specifying descriptions of arrangements that are, or are not, to be treated as being of a similar character to a trust for the purposes of subsection (3).(5) Regulations under subsection (4) are subject to the negative resolution procedure.”Member’s explanatory statement
This amendment makes further interpretive provision, including provision extending the provisions of Part 1 of the Bill in relation to trusts so that they apply to arrangements of a similar character outside the UK.

Amendment 65 agreed.

Economic Crime (Transparency and Enforcement) Bill

3rd reading
Monday 14th March 2022 Lords Chamber

Third Reading

Relevant documents: 22nd Report from the Delegated Powers Committee, 14th Report from the Constitution Committee

23:32

Motion

Moved by

[Lord Callanan]

That the Bill do now pass.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, it is my great pleasure to thank all those who have supported the progress of the Bill. First, I thank the House of Lords Public Bill Office, the House clerks and the Office of the Parliamentary Counsel for their support and extremely hard work in ensuring that the Bill could be expedited through the House. In particular, I thank our new star of social media, my noble friend Lady Bloomfield—we shall all have to be very careful and make sure that we are paying attention when she is in the House in future—and my noble friends Lady Williams and Lord Ahmad, who have ably assisted me in getting this cross-cutting legislation through the House.

I also give particular thanks to my private office and the whole of the Bill team in both BEIS and the Home Office. All the civil servants working there are a credit to their profession. I can tell the House that they were working evenings and weekends. People were texting me at 10 pm last night, on a Sunday evening, on the details—so they have really assisted us by working hard. That is in addition to all the officials across government, in BEIS, the Home Office, the Treasury and the Foreign, Commonwealth and Development Office, who have all contributed by working tirelessly to get the Bill to this point. I also want to remember the late Nick Skates, a dedicated civil servant who spent many years working on these issues, tackling economic crime, who is very sadly not with us today to see the fruits of his labour.

I also give particular tribute to the Opposition spokesmen, the noble Lords, Lord Coaker and Lord Fox, and all their colleagues—the noble Baroness, Lady Chapman, and others—for their constructive challenge and continued support for the Bill. I am grateful to Members across the House for their valuable engagement and contributions to our debates on the Bill; it has been immeasurably improved by the work that they have put in in such speedy and short order. I also thank them for the support that they have already expressed for the upcoming second economic crime Bill, which the Government will introduce in the coming months, in the next parliamentary Session. I also pay tribute to the Joint Committee on the Draft Registration of Overseas Entities Bill, which, a few years ago, helped ensure that this legislation was in a good place prior to its introduction.

I express my gratitude and thanks to the devolved Administrations in Wales and Scotland for their support for the Bill. We are delighted that a legislative consent Motion has been agreed with Scotland.

I also thank the Northern Ireland Executive’s Department of Justice, the Department for the Economy and the Department of Finance for their support. In the absence of the Northern Ireland Executive, a legislative consent Motion cannot be secured from the Northern Ireland Assembly. However, given the active support of Northern Ireland Ministers, the Government have agreed to proceed with legislating on behalf of Northern Ireland. Ministers in Northern Ireland have, of course, been made aware of this. Both my department and the Home Office will continue to engage with Northern Ireland executive officials on devolved matters as the Bill is implemented.

The Bill will target sources of illicit wealth and their permeation through our economy. We will cut off these funds. We will send a message that the United Kingdom will not stand idly by when this exploitation is taking place. We will show the Kremlin that the United Kingdom will not facilitate or accept any aspect of aggression against any democratic nation. We will do so united, cross party and working together to bring these matters to fruition. I commend the Bill to the House.

[Lord Coaker (Lab)]

I start by thanking various people—including my family, who put up with me being on the telephone most of the weekend, often to the Minister. It was worth it in the end, as they say.

On a serious note, I thank everyone. This is a fast-tracked Bill, and that puts pressure on everybody. It is important to thank people at this time; it is a courtesy of the House but an important one to thank the staff, the clerks, the officers of the House and everybody who has enabled us to function in the way that we have and to put this extremely important legislation through the House. We are passing legislation which impacts on millions of people’s lives in this country, across Europe and beyond, and in thanking each other for doing that, we all ought to reflect perhaps a little more than we sometimes do on the enormity of the work that we do and the responsibility that we have. The people we are thanking should realise that they have made things possible in the Parliament of the United Kingdom, and that is something to remind ourselves of.

I also thank my colleagues: my noble friend Lady Chapman—who as we know has had to give her apologies for personal reasons today, and we wish her well—my noble friends Lord Kennedy and Lady Smith, and Dan Stevens in our office, who has worked tirelessly to keep us informed about the importance of different parts of the legislation.

I also thank the noble Lord, Lord Fox, and his colleague the noble Baroness, Lady Kramer, and others, for the work that they have done with us; and the many noble Lords across the Cross Benches who have taken the trouble to send me information, talk to me and give me the benefit of their expertise and knowledge. I have been very grateful for that; I hope that it has improved the contributions that we have all made to the House and in the end will improve the legislation that we take forward.

I thank the Minister again, as I did earlier, and his colleagues on the Front Bench for the co-operation that they have given us. Obviously there have been debates and discussions, but we have all had at the forefront of our minds the need to get the legislation through, and this has been a template for how to do that. I ask him to pass that on to all his colleagues. This is something important for our country.

This economic crime Bill 1—as we are calling it—needs to be improved, but we should remind ourselves that the bit that needs improving is not the emergency part. We should remind ourselves that we have passed an emergency Bill that allows us to do what we all want: to take effective action against dirty money within London—perhaps it should have been done before, but at least we are doing it now—and send a message to President Putin that he cannot act with impunity on the invasion of Ukraine. We stand united to try to deal with that. On the sanctions part—the real emergency part of the Bill—we all remain united. The message should go out clearly from this House of Lords back to the House of Commons and from us to the people of Ukraine, and to Russia itself.

As the Minister said, we will be moving from this economic crime Bill to an economic crime Bill 2. I am very grateful for the concessions he made. He will know the disquiet in the House about certain measures in the existing Bill, but he said that he would take that on board and reflect on the opinions expressed. It will allow us to take forward economic crime Bill 2 early in the next Session and build on the work we have done by putting improvements into it. Looking at various Cross-Benchers and around the House, I know that we will end up with a big economic crime Bill 2, which in the end will deliver the sort of legislation we all want to tackle the dirty money in our country.

I thank everyone again. It has been a pleasure and a privilege to be involved with this and I thank the Minister again for that.

[Lord Fox (LD)]

My Lords, as the noble Lord, Lord Coaker, reminded us, this is an emergency Bill. Your Lordships’ House has expedited it swiftly. In that regard, we should be pleased with how much scrutiny we have been able to pack into such a short time. The fact that there were 62 government amendments and two other amendments on Report indicates that quite a lot of work has been done, not necessarily all by us. I commend everybody who has participated in this, on Opposition Benches and the Benches opposite, towards a process where—I hope—Ministers believe that this is a better Bill than the one we received.

Looking forward, much hope is vested in the subsequent Bill. It is clear that the Government should expect that, when it comes, the level of scrutiny will be much higher and normal service will be resumed in the amount of time we expect to be available to give a quality look at it. In the meantime, we await the statutory instruments needed to drive this Bill and look forward to the six-week review on how commencement is moving forward.

I join the noble Lord, Lord Coaker, in thanking the Ministers—the noble Baroness, Lady Williams, and the noble Lords, Lord Ahmad and Lord Callanan—and their various Whips who have been here at different times. I particularly commend the Bill team. It is quite clear they must have lost an awful lot of sleep and weekends to get where we did; now all they have are a couple of dozen statutory instruments to sort out—so no pressure. I thank them very much for their hard work and thank the private offices of the noble Lord, Lord Callanan, and others.

I also thank the Opposition Front Bench—the noble Lord, Lord Coaker, and the noble Baroness, Lady Chapman, and her able sub the noble Baroness, Lady Smith. Of course, I give particular props to the home team of my noble friends Lady Kramer, Lord Thomas and Lord Clement-Jones, and of course Sarah Pughe, our legislation adviser, without whom everything would be incoherent.

In sending the Bill back to the Commons, we should remember that it is not an anti-Russian Bill. It is an anti-oligarch Bill and an anti-kleptocrat Bill. Of course, some of those criminals come from Russia. We should also turn the fire of this legislation on kleptocrats from Belarus and other such places and, in due course, on criminals from all around the world. This is against not the people of Russia but the criminals who have robbed the people of Russia, and we should remind ourselves of that. We look forward to the next phases of legislation in this area.

23:44

Bill passed and returned to the Commons with amendments.

23:44

Sitting suspended.

Economic Crime (Transparency and Enforcement) Bill

Monday 14th March 2022 Lords Chamber

Returned from the Commons

00:20

The Bill was returned from the Commons agreed to.

[Lord Ashton of Hyde (Con)]

My Lords, I beg to move that the House adjourn during pleasure until 12.45 am to await Royal Assent.

00:21

Sitting suspended.

Royal Assent

Royal Assent
Monday 14th March 2022 Lords Chamber

00:50

The following Acts were given Royal Assent:

Supply and Appropriation (Anticipation and Adjustments) Act,

National Insurance Contributions Act,

Economic Crime (Transparency and Enforcement) Act.

[Lord Ashton of Hyde (Con)]

My Lords, in begging to move that the House do now adjourn, I say a big thank you on our behalf to all the staff of the House for remaining so late.

House adjourned at 12.51 am.