(1 year, 6 months ago)
Grand CommitteeRead Hansard Text Read Debate Ministerial Extracts
Baroness Jones of Moulsecoomb
To ask His Majesty’s Government what assessment they have made of the effects of corruption in the United Kingdom.
Baroness Jones of Moulsecoomb (GP)
My Lords, I thank noble Lords very much for coming today. It has been incredibly difficult for me to finalise what to say this afternoon, simply because I wanted to mention a current fiasco—a current example of corruption—and there were so many popping up that I had to keep delaying what I was putting into my speech. I decided to go with the Kwasi Kwarteng issue, because I thought that was a rather nice one.
For me, the point is that political corruption is absolutely endemic in our country, and we really ought to be ashamed of that. It is embedded in our system. We often fail to recognise it simply because we do not know about it, because it is covered up. It does a huge amount of damage. It damages our social fabric and individuals who engage in it. It is not all about personal greed—it is sometimes about corporate greed—but it is about greed, and it contributes to the growing gap between rich and poor. It also stops us dealing with major issues such as poverty and our climate emergency.
In 10 minutes I do not have enough time to deal with all forms of corruption, as noble Lords can imagine. For example, I cannot deal with corruption in the police, in prisons, in local government, associated with our borders, in the construction sector or even among Lords appointments, which of course would be a rich source of stories about corruption. I will deal with four types of corruption, and there is some overlap: political access, corporate lobbying, party donations, and procurement and privatisation.
First and foremost, and most obvious, is political access. In his previous job, our Chancellor held undisclosed meetings with—I could list them all—the chief executive of Saudi Aramco, the world’s largest oil producer; the chief executive of SABIC, the world’s fourth-largest petrochemical company; and the chair of Alfanar, an industrial conglomerate. Obviously, meetings with these people are absolutely fine and could easily be part of his job, but they are meant to be logged by civil servants. A government spokesperson said there had been an “administrative oversight”. It leads to the question: how many administrative oversights of this kind never come to light? Kwarteng was flown around the kingdom by various helicopters and jets, which apparently provided the opportunity for the oil company to lobby the Minister then responsible for the UK’s energy policy on opportunities for the company. Other points of discussion on the flights were redacted, so we do not know what they talked about. Although it is perfectly okay to take lifts, he really should not have taken them from private companies.
Then we have people such as Owen Paterson working for Randox as a second job and David Cameron using his inside track to lobby for Greensill. Money buys access to, for example, the personal phone numbers of civil servants, Ministers and officials. A recent Public Accounts Committee report said that it could not be sure that all the Randox contracts, which were worth £777 million, were “awarded properly” and that there was obvious potential for conflicts of interest. On Greensill, the Treasury Committee accepted that
“Mr Cameron did not break the rules governing lobbying by former Ministers, but that reflects on the insufficient strength of the rules”.
So we cannot hold people to account.
The public view becomes that there is one rule for people like us and another for them. Of course, it is not only things such as partygate, which showed a clear division on what people were allowed to do—it is also clear from the way in which the Government tried to change the rules to get Owen Paterson off the hook. This is systemic corruption, not isolated, individual corruption. We should all be very concerned. These examples are the tip of the iceberg—the individual cases that we get to hear about because of media activity.
My second issue is corporate lobbying, and its influence over policy. Uber spent £75 million a year on public relations and lobbying to successfully swing policies in its favour. Companies spend that kind of money only because they think that it will guarantee them a profitable return. Many second jobs that MPs have are actually a form of corporate lobbying, a value-for-money addition to the company’s PR budget that buys them the access they need. For example, Nadhim Zahawi allegedly earned £1.3 million from his second job at Gulf Keystone Petroleum. Again, this is not illegal—he can do that—but it is a much bigger and more damaging influence on our politics and policies than parliamentarians want to admit.
As well as individual companies lobbying, there is a network of right-wing think tanks that refuse to declare their corporate donors but launch policy reports on issues that directly benefit those donors. The media should be demanding transparency, and so should Parliament, when we see those policy institutes give us opinions disguised as evidence. Sometimes their members are even promoted to jobs in government. To quote George Monbiot in 2011, “Downing Street and government in the last decade has been completely captured by this network.” He is referring to the right-wing think tanks.
The third form of corruption, party donations, is more direct and visible, because big donations to political parties have to be declared. We can strongly suspect that the reason why we are still building houses and new developments without solar panels, without the best energy conservation standards available and without charging points or heat pumps is that property tycoons account for around one-fifth of donations to the Conservative Party. The reason why people are buying new homes and are energy bill payers rather than net contributors to the grid is because developers paid a toll of £891,000 to the Conservative Party in the first quarter of 2021 alone. The reason we are struggling to get a common-sense measure such as charging points for electric vehicles as standard on new buildings is that developers do not like it, and they pay good money to ensure that the Conservative Party listens to them more than it listens to climate scientists.
Is it not strange that oil and gas companies are getting new licences in the North Sea despite the climate emergency, or that they are getting £150 billion of taxpayers’ money which they have not done anything extra to earn, or that taxpayers are carrying the burden of that £150 billion for the next 20 years, instead of a windfall tax? Systemic political corruption has real-world consequences and real victims, so it is important to put this on the record now so that the next generation understands how Parliament did relatively little while the world started to heat up and burn in our climate emergency.
The fourth category of corruption, and perhaps the largest in terms of profitability, is the British system of procurement and privatisation. It has become a visible form of corruption due to the excesses of the Covid crisis. The system for preventing conflicts of interest failed, with firms referred to the Government’s VIP lane, a dedicated mailbox for parliamentarians and officials, where they were 10 times more likely to win contracts. Twenty-five of the 50 companies in this VIP lane supplied PPE worth £1 billion that was not fit for purpose, amounting to 59% of all money awarded to VIP-lane companies for PPE. The Covid purchasing fast track was open to abuse, and that is what the Government encouraged in the middle of a pandemic.
This is a reason why the Government are now burning £4 billion of unusable PPE supplied by donors and friends of the regime and bought with taxpayers’ money. This corruption was hidden behind a wall of lawyers, who worked on behalf of the Government to hide the most basic information about who benefited from the contracts and who they spoke to in order to get them. This is collusion or corruption and points to systemic corruption.
Of course, we are not immune here in your Lordships’ House. In June, it emerged that one Conversative Peer accepted £3,000 a month from a private firm to open doors with No. 10 and Ministers. Now I like open doors. I nudge a few doors open myself to help people. But I do not take money for it. I do it for people who cannot afford to pay for it, and I make sure that they get their voices heard. It is not a democracy if you have to pay for access. It is more like a Putin-style oligarchy run for and by the rich and corporations.
I think I am running out of time, which is absolutely infuriating because I have another two or three pages. Of course, I could spend all day here listing the problems and the corruption. We need this Government gone. I am not so naive as to think that that will be the solution to everything, because of course it will not. What we need is strong, decent rules and for people to understand that they are going to get caught.
Lord Sikka (Lab)
My Lords, I thank the noble Baroness, Lady Jones of Moulsecoomb, for securing this debate, and I fully agree with everything she said.
The UK is drowning in political, financial, legal and other forms of corruption. Evidence is all around us. Open any newspaper any day and what do we find? We find mis-selling of financial products on an industrial scale, rigging of interest and foreign exchange rates, pension abuses, tax dodges, money laundering and cooking the books. I have been doing accounting since 1968—that is a long time—and I cannot make head or tail of the accounts of large companies any more. They are incredibility opaque, yet the Government do absolutely nothing, and that opacity provides the cover to shift profits, dodge taxes and launder money. Whenever you ask questions in the Chamber, you get a standard kind of answer read from a sheet. Nobody really deals with the issues. We have phone hacking, diesel emissions, raw sewage dumping, insider trading and auditors such as KPMG admitting that they falsified audit files. Companies are filing fictitious accounts. A large number of small companies are doing that, yet nothing seems to happen.
The UK does not even have a central enforcer of company law. There is cognitive capture—not just capture, but cognitive capture—and regulators are pretty much useless. I shall give the Committee some examples. Between 2017 and 2021 there have been just two successful convictions for insider trading in the UK. NatWest is the only bank ever convicted of money laundering, and only because it admitted it. Despite strong condemnations in the courts, no big accounting firm has been investigated, fined or prosecuted for selling unlawful tax avoidance schemes. I keep asking Ministers to please name one firm. They always dodge the issues. The Bribery Act 2010 introduced the offence of failure to prevent bribery. The Crown Prosecution Service has secured just one conviction. The SFO has secured two. That was after the companies themselves pleaded guilty because of what came out of the US. Separately, Standard Bank, Rolls-Royce and seven other companies were let off with a deferred prosecution agreement—in other words, carry on as usual.
In 2018, the Government launched the National Economic Crime Centre to tackle what they call high-level fraud and money laundering. There is yet to be even a single prosecution. It is no good the Minister in response referring me to a plethora of laws. What we need is action, and that action is missing. The key reason for corrupt practices is to secure profits and high executive pay. The Government have absolutely no mechanism for ensuring that executives do not benefit from ill-gotten pay packets.
The state continues to fail to tackle corruption because it has a close relationship with big business. I am reminded of a quote by Adam Smith in his 1776 book, in which he says that
“the English legislature has been peculiarly attentive to the interests of commerce and manufactures”.
Some 250 years later, little has changed. This Government actually shield organisations which in writing say that they have been engaged in criminal conduct.
For example, in the US in 2012, HSBC admitted in writing that it had been engaged in criminal conduct. It paid a $1.9 billion fine for money laundering. It is a UK-registered, supervised bank, but it faced absolutely no investigation of any kind. Without making any Statement to Parliament, it later emerged that the Chancellor, George Osborne, the Governor of the Bank of England and the head of the Financial Services Authority secretly wrote to the US authorities asking them to go easy on HSBC. It was too big to jail and too big to fail—so carry on. And HSBC has carried on.
In how many other countries do Ministers cover up criminal conduct? It is certainly happening here. If we do not investigate these malpractices, there is zero chance of developing any effective laws, regulations or other mechanisms.
The Financial Conduct Authority and the National Crime Agency know that banks have been forging customers’ signatures to repossess their homes and businesses. I have had a dialogue with the Minister before; more than 10,000 pages of evidence have been submitted. Three years later—nothing. No action whatever. Even worse, the City of London Police fraud investigation unit is now funded by Lloyds Bank, which is no stranger to banking fraud. You cannot make this up.
A former Thames Valley police and crime commissioner said:
“I am convinced the cover-up goes right up to Cabinet level. And to the top of the City.”
That is the indictment—but nothing happens.
Secrecy is a key ingredient in corrupt practices and the UK leads the way. The financial secrecy index published by the Tax Justice Network ranks the UK as the 13th most secretive nation out of 141 countries. As I said, I cannot make head nor tail of company accounts any more. The rules are made by the corporate elites, auditors do not care—they sign and disappear—and there is virtually no accounting accountability or transparency in company accounts.
The Government’s obsession with deregulation has resulted in many small companies filing false accounts at Companies House. I have tabled many Questions drawing attention to that. Too many of these small companies are now fronts for money laundering. I have looked at the Economic Crime and Corporate Transparency Bill and it does not curb any of these things.
As the noble Baroness, Lady Jones, said, our political system is not up to the job of curbing corruption. It is available for hire to the highest bidder. Knighthoods and peerages are for sale. As Mohamed Amersi, who funded Boris Johnson’s campaign, said:
“You get access, you get invitations, you get privileged relationships, if you are part of the set-up”—
and obviously lucrative contracts then follow.
Too many legislators, in both Houses, are on the payroll of corporations, including those that are engaged in illicit financial flows. The inevitable outcome is inadequate scrutiny, laws and legislation. People can see that the system is corrupt and really needs reform, but I cannot see this Government reforming it—so hopefully they will make way for a Labour Government to do so.
Lord Evans of Weardale (CB)
My Lords, I congratulate the noble Baroness, Lady Jones, on allowing us to talk about this important topic. I declare an interest as chair of the Committee on Standards in Public Life, although I speak in my own capacity this afternoon.
I do not share the apocalyptic vision of corruption that some have put forward. In comparison with some countries, we are fortunate not to have high levels of visible corruption in the UK. We have a respectable but not outstanding position in the Transparency International perceived corruption index but that does not necessarily tell us the whole story. The trouble with corruption is that it is an insidious threat. It can creep up on us a step at a time, and once it has taken root it is extremely difficult to get rid of. We would therefore be wise to take steps to head off any further deterioration in our position in this country. While the UK does not have the blatant corruption that you see in some countries, we have clearly, as a matter of policy, turned a blind eye to the perpetrators of corruption overseas using London for business or leisure purposes, and this introduces a risk to the integrity of our institutions and our national life.
I will focus on two areas in my brief remarks. First, corruption is about the misuse of entrusted power. Therefore, those of us who have the most power in our society, including those in political life, must be seen to be beyond reproach where corruption or potential corruption is concerned. We have a patchwork of arrangements in this country to protect public standards, not all as strong as they need to be and some under considerable pressure. The Committee on Standards in Public Life made a series of recommendations last year to strengthen these arrangements, and I hope that the Minister can give us an update on when the Government are likely to be able to respond to that report. So far, the response has been very patchy.
Similarly, corruption thrives where there is a lack of accountability, openness and due process, so the reluctance of some in public life to give an open and honest account of their actions and the failure of some departments to meet their freedom of information and transparency release obligations is a matter of considerable concern because it opens a door to corruption. Again, I hope the Minister can give us some reassurance that those undertakings will be met in future. Once again, Lord Nolan’s seven principles of public life, which include honesty, integrity, openness and accountability, demonstrate their continuing value and relevance.
The second point I want to touch on is investigation. The UK, with a few exceptions, has a pretty good suite of laws and regulations relating to money laundering and financial crime, as a result of which FATF, the international money laundering body, gives us good points and good scores. In my view, the problem is that we lack the well-resourced and proactive investigation capability for breaches of those regulations, which is what gives the regulations their teeth. By comparison, the United States does not have quite such a comprehensive array of regulations but has a much stronger system for investigating those who fall short, and that determined and aggressive investigation ensures that the rules are actually followed more often because of the deterrent effect.
However, in the UK, what measures are in place, for instance, to ensure that accurate details are provided in Companies House records? Why are ultimate beneficial owner rules so easy to avoid and why does government appear to have been reluctant to implement them? Given the vast number of suspicious activity reports made by banks and other institutions to the National Crime Agency, why does the National Crime Agency have so few resources to follow these up and to investigate the suspicious activity that has been reported to it? That leads to considerable frustration in the banks, for instance, that they report activity but they very rarely get any feedback. Why does the UK Treasury not have the determined and aggressive investigative posture of the US Treasury, which has an impact internationally? Without investigation and enforcement, regulations are a dead letter.
I received an email last year from a British businessman, who wrote the following:
“I’ve run a software company whose role is to provide tools to those battling against fraud and financial crime. I therefore sadly have a ringside seat to the explosive growth of fraud and crime in our country in the last decade. Encouraged by tolerance of sleaze, the growth of unimpeded criminality has accelerated in the last two years. The UK is now the undisputed world capital of financial crimes of all kinds. Law enforcement is splintered into myriad organisations which all have no real mandate and no funding. Tax payer funded organisations like Companies House or Action Fraud are put at the disposal of criminals to assist their activities or prevent law enforcement. Known criminals directly purchase influence in political parties without any fear.”
I leave it to noble Lords to judge whether that is a fair assessment of our current situation, but it is absolutely clear that the UK has questions to answer. We are vulnerable to corruption, especially as we host so many corrupt individuals and organisations.
A useful first step would be the appointment of an anti-corruption champion to take forward the work previously done by John Penrose MP. Can the Minister update us on the prospects for that appointment being made? We could be doing much more to avoid sliding down the international ratings. If we fail to act, we will find it very difficult to reverse our decline.
The Lord Bishop of Leeds
My Lords, I am grateful to the noble Baroness, Lady Jones of Moulsecoomb, for securing this urgent debate, unnervingly but possibly appropriately overseen by a rather Caucasian Moses.
I was pleased to see that the United Kingdom Anti-Corruption Strategy 2017-2022 and the Library note for this debate both begin with definitions of corruption. Broadly speaking, they define it in terms of the abuse of office or illicit procurement for personal gain—the misuse of entrusted power, as the noble Lord, Lord Evans, put it. That is reasonable enough, but I want to offer another definition. Corruption happens when integrity is reduced to expediency and principle to mere pragmatism.
Of the many possible examples we could draw to mind, we might fix on the years of complacent steering of Russian money through the sewers of London. Despite many warnings about both the nature and impact of this, it was financially convenient and politically cost-free. Then, once Vladimir Putin went off-piste in Ukraine, suddenly the language changed to that of moral outrage: same money, same people, same oligarchs, same “brutal dictator”, same banks—the only thing that had changed was the temperature and political expediency. Principles of integrity and transparency, the virtues extolled by Nolan, were frequently mentioned and comprehensively ignored when convenient money was involved.
In the wake of the Brexit referendum in 2016 and the tortuous years of subsequent legislation, the House heard many challenges to the abuse of language—the “normalisation of lying”, the “corruption of the public discourse”. Virtue received a nod while those in the highest power in our land sought to ignore both the claims and consequences of corruption. Corruption is not primarily about systems; rather, it is about character, both individual and corporate. What do we see in today’s papers? Reports in the Times of a letter from the chair of the House of Lords Appointments Commission to the Prime Minister and the leader of the Opposition asking them to avoid promoting candidates who are “unsuitable”. I do not need to name examples who, by virtue of their nomination, bring our polity into disrepute—money, power and influence.
I am not naive and I do not speak from some moral pedestal. Lord Acton’s famous dictum:
“Power tends to corrupt and absolute power corrupts absolutely”
was, after all, addressed to an Anglican bishop and related to the writing of history about the Inquisition. In fact, his point was pertinent to today’s debate. He wrote:
“I cannot accept your canon that we are to judge Pope and King unlike other men, with a favourable presumption that they did no wrong.”
That is why it matters when those with power throw integrity and virtue to the winds while enriching or protecting themselves. It is utterly corrosive of public ethics and the common good.
Earlier I referred to what I call the corruption of the public discourse. Corruption begins with language. The German philosopher Peter Sloterdijk writes that the nature of our public discourse matters because
“moral and political aberrations almost always start with linguistic neglect”.
Edmund Burke understood the powerful influence of abstract terms such as liberty or equality, which have the power to move people without enlightening them. Yet politicians who revere Burke also seem to see fit to defend draft parliamentary legislation that proposes to breach international agreements and therefore the rule of law, give unlimited power to Ministers to fill in the detail of skeleton Bills, see accountability as a nuisance and ignore conventions such as correcting on the record things that have, to put it generously, been misspoken in our parliamentary Houses.
These things matter. Behaviour and language are never neutral. The insidious truth is that corruption ignored, downplayed or spun opens the door to corruption elsewhere in both individual and corporate life. Why no ministerial ethics adviser? Why no anti-corruption tsar? Why still no real pinning down at a systemic level of cronyism, dodgy lobbying and unaccountable political donations that lead to personal reward? Why a laughing dismissal of hedge fund professionals who game a mini-Budget and make millions out of the economic and social misery caused to the rest of the population? No champagne parties for the losers. Why do we tolerate a legal system that is being run down, as if justice does not require adequate funding and resourcing? Why a Ministerial Code that reduced moral accountability on the part of Ministers? What just recompense for the public, whose money was used to pay billions in contracts to government cronies during the Covid pandemic? I will not mention the honours system.
All this is in plain sight. If we choose to ignore what is evident, we incur ethical judgment on our neglect. This is not incidental. If democracy and the rule of law are to mean anything, if integrity in public life is something to be honoured and not mocked, if public virtue is not to be shrunk into political or economic pragmatism or expediency, this Parliament must clean up its own act, pay attention to its use of language, show an example of transparent accountability in its vital work and demonstrate the power of humility in setting a public culture.
I have positive proposals for the Minister: set up an anti-corruption board with teeth and independence and appoint an ethics committee in Downing Street or the Cabinet Office with the power to hold the powerful to account.
Baroness Kramer (LD)
My Lords, I join those congratulating the noble Baroness, Lady Jones, on obtaining this debate. I wish it had a much wider audience. It really ought to be taking place on the Floor of the House because corruption, particularly in political life, impacts everything we do. I listened to the noble Baroness, Lady Jones, talk about the VIP lane that we were all aware of as a fast lane for friends and family to get PPE contracts during Covid. For many of us, that was almost the nadir of a collapse in standards. As we look far more broadly, every speaker so far has raised issues of that kind of corruption, all the way through even to our procedures, which now allow this structure of skeleton Bills and policy disguised in the form of statutory instruments so that it is not subject to refusal or amendment. So many areas need to be tackled.
In this country we are particularly vulnerable because we tend to be quite complacent. We believe that we, the British, may have our problems but we are so much better than everybody else. Having some real debate in the House, with major attendance, might persuade people that instead of resting on what we perceive as our historical and iconic laurels, we need to examine what we do in almost every aspect. I will pick up the focus that the noble Lords, Lord Sikka and Lord Evans, pursued and the other speakers touched on: the financial services sector. It is the one I know best.
The right reverend Prelate talked about the way in which we ignored the London laundromat. We tut-tutted about it but knew that oligarch kleptocrat money was flowing into the City and that it was a major facilitator, but until the invasion of Ukraine the Government were not particularly interested in taking any action. The legislation in the first round of the Economic Crime (Transparency and Enforcement) Bill had been sitting in an in-tray for at least a decade. It was ready to go and might, had it been introduced in time, have had a more significant impact in stemming that ongoing development of corruption.
When we passed the Economic Crime (Transparency and Enforcement) Bill, at the heart of which, noble Lords will remember, was the creation of a register at Companies House of overseas beneficial owners of property in the UK—one of the main mechanisms for washing dirty money—we put in place no meaningful verification system. I understand that there is some strengthening in the economic crime Bill version two, but I want to ask the Minister about that, because I am extremely worried that it seems to outsource to third parties the role of providing verification. I am not clear that there is command and control with the registrar of Companies House or whether the registrar has been given the resources to make sure that verification, which is critical, is effectively enforced.
I am focusing on the registration scheme as a narrow example. It relies heavily on enforcement. This issue was well described by the noble Lord, Lord Evans, in a broader context, because that enforcement has to come from the National Crime Agency. It has 118 staff in total to investigate financial crime despite the complexity of the issues. Frankly, the power of the enablers—the lawyers, accountants and property developers, all of whom are involved in money laundering—is often overlooked. They are capable of fighting back against any enforcement agency and making life extremely difficult. I do not understand why—perhaps the Minister can tell me—we do not say that at least some portion, if not all, of the money that comes from fines, forfeitures and confiscations of the wrongdoers should not flow back to the National Crime Agency, the Serious Fraud Office and even, when they are engaged with it, to local police forces because we might finally have a sufficiently funded resource to take action against corruption. We must also focus on those enablers. I do not understand why we do not have a failure to prevent anywhere that I can find in the economic crime Bill. They must be dealt with, and they must understand that they will pay if they engage in facilitating corrupt behaviour.
We also have a problem at the regulatory level, and again I will focus on the financial services area. Frankly, the Financial Conduct Authority and even to some extent the PRA are a busted flush when it comes to any kind of enforcement. I have two quick examples. One is HBOS. I sat on the Parliamentary Commission on Banking Standards and listened to weeks of evidence on the collapse of HBOS. It collapsed because senior management, including the last two CEOs, dropped credit standards to a ridiculous point so that they could grow their loan portfolio like mad, which of course resulted in very high bonuses in their take-home packets. They also funded the bank in the overnight markets, giving it no stability. The FCA and PRA came out this summer with a complete whitewash of the senior management. Obviously, a few junior people have been thrown to the wolves, but the senior management has walked away and has not being declared unfit. In the Libor scandal, which no one ever dares refer to these days, ordinary borrowers and businesses across the globe—because something like 60% or 70% of all lending was priced off Libor globally—will have last quadrillions of pounds, dollars, yen and other currencies in lending because false submissions were made to establish the Libor benchmark. Those submissions were deliberately falsified to enhance bank profits and the bonuses of senior bankers, and no one at senior level has ever been declared unfit as a consequence of all of that.
I am out of time but there is so much to be done. I would have liked to address whistleblowers, who are very badly treated under our current system, and I will say just one quick thing before I sit down. I ask the Minister to read my Private Member’s Bill on creating an office of the whistleblower to champion and protect whistleblowers. It is a mirror of a Bill produced by a member of his party down in the House of Commons. If we do not act on those people who are the citizen’s army that deters crime, we will never come to grips with the corruption that exists.
Lord Coaker (Lab)
I congratulate the noble Baroness, Lady Jones, on securing this important debate. All noble Lords, including the noble Baroness, Lady Kramer, have mentioned different aspects of corruption within our society. As the noble Lord, Lord Evans, said, we can argue about what the level of corruption is. For me, at the moment this country faces a crisis of public confidence in many of our institutions. That crisis of public confidence comes from many well-documented examples of corruption, misuse and abuse of power and failure to hold to account people, businesses and money. That is insidious. It is eroding and eating away at the fundamental principles of our democracy.
I say to the Minister, who will make a measured and reasoned reply in response to the debate, that I am pleased with what the noble Baroness, Lady Jones, has done. The system needs a shake up and a wake-up call. A surge of electricity needs to be put through it. There have been many economic crime Bills, ethics watchdogs and standards committee reports, time after time. I agree with the examples the right reverend Prelate the Bishop of Leeds gave, but the frank reality is that it does not matter which Government it is—I want a Labour Government and I hope that is what will happen—we have to have somebody who uses that power to hold people and businesses to account in a way which means that they are not frightened of them but of the law and being held to account. That is the real issue before us. Where is the will within government, our country and the international community to take it on? We describe the problem, we talk about the problem, we say what should be done about it and what can be done about it, and it goes on in the way that my noble friend Lord Sikka mentioned when he went through various things.
The situation is incredible. As the noble Lord, Lord Evans, the right reverend Prelate and the noble Baronesses, Lady Kramer and Lady Jones, pointed out, it comes to something when on the Floor of the House—it is no wonder there is a crisis of confidence—just a few months ago the Minister responsible for tackling fraud resigned. I have his letter here. He read it out. He said that the Government were not serious about tackling fraud. It is no wonder the public lack confidence. The Minister himself, the noble Lord, Lord Agnew, resigned, saying the Government were not serious. He was not talking about the lack of law. It was one particular law, and he was talking about his belief about whether the Government were serious in taking it on and whether the system was serious.
I think the noble Lord, Lord Evans, and the right reverend Prelate mentioned John Penrose MP. He did not just move on; he resigned. He did not just stand aside. He resigned in disgust at what was going on. He was the anti-corruption tsar appointed by the Government. So the Minister in the Lords responsible for tackling fraud and the anti-corruption tsar resigned. Why did the anti-corruption tsar resign? He said that the Prime Minister of our country had broken the ministerial code and had not been—let us put it this way—forthright in his explanation of what had happened: in other words, in how he responded to the Sue Gray report. Absolutely at the heart of this—leaving aside what the level of corruption is, which we can debate another time—the noble Baroness, Lady Jones, hit the nail on the head. Many people in this country believe that there is one law for us—us, people in Rooms like this, the establishment, however you judge that—and one law for everybody else. That is what people think, and it is corrosive of democracy if we do not address it.
The Minister will say, “The Government are doing this, the Government are doing that; we’ve got an economic crime Bill and systems of accountability.” Why is it that, when all of that exists, people are seen to be getting away with it time after time? That is what people think, and if the Government, whoever they are, do not address that, there will be serious consequences.
This is not just about Parliament; people feel that way about many of our institutions, including senior members of the Church, the legislature and the police. People do not feel that they represent them in the way that they used to. Something has gone wrong; it is because they feel that the system is corrupt. It is not just about money; it is about making sure that your mate gets somewhere, and so on. People are sick of it, and then want something changed. The Minister must respond to that challenge, not by listing the Acts and the various initiatives that will take place but by saying what will be done about it.
I will use this opportunity to raise something that has always really irritated me. When I was a Member of Parliament in the other place I found it happened time after time, and other former Members of Parliament, and other people, will have found it too. We talk about one law for us and one for them. Why is it that, according to a report from TaxWatch just a year ago, if you are a benefit claimant in the UK, you are 25 times more likely to be prosecuted for benefit fraud than tax fraud? In other words, many of the poorest people in our country face more serious consequences for benefit fraud. Let me make it clear that no one should defraud benefit, before we go down that track—of course that is wrong. But why do they face greater threat from the law than many of the wealthiest, richest and most privileged people in our country?
Something has gone seriously wrong; that is what people think. When the Minister responds—whether this Minister or another, from this Government or another—people want a surge of electricity through the system so that it actually delivers what it says it will, rather than just passing various laws that make no difference at all.
The Parliamentary Under-Secretary of State, Home Office (Lord Sharpe of Epsom) (Con)
My Lords, I thank the noble Baroness, Lady Jones of Moulsecoomb, for securing this important debate, and I am grateful to all noble Lords for their contributions. I will do my very best to answer the points that have been raised. Noble Lords will appreciate that some of them are broadly philosophical, and perhaps I will come back to those in due course, and some I cannot answer. On the points made by the noble Lord, Lord Sikka, I am not qualified to opine on the accountancy rules; that does not fall under the Home Office, as he will be well aware. It is a Treasury matter, and I will be certain that it sees the contents of his speech and will try to get him a response.
The Government are fully committed to protecting our institutions and systems from those who wish to undermine or abuse them. Like the noble Lord, Lord Evans, I do not believe that this country is systemically corrupt, but corruption poses a significant threat to all democracies, and to our economy and security. The Government are steadfast in their determination to ensure that the UK has the strongest possible defences and upholds the highest possible standards.
Before I talk about some of the things that the Government will do, it is worth defining corruption in response to the point made by the right reverend Prelate. The debate has raised a number of topics which demonstrates how broad a topic corruption can be, so it is important that we understand what we mean by corruption and define its scope. Corruption is the abuse of entrusted power for private benefit that usually breaches laws, regulations, standards of integrity and/or standards of professional behaviour. Corruption need not be economic in nature and can still exist even if everyone has acted within the law. Therefore, it is imperative that we also consider actions that go beyond economic crime legislation and capture the broader elements of corruption.
Corruption is harmful in many ways. It threatens national security, global stability and development; it can amount to a hidden tax stifling the growth we need to get our economy moving; and it can undermine trust in our democratic institutions—a point that I think all noble Lords made. As the former president of the World Bank, Robert Zoellick, said so eloquently,
“corruption is a cancer that steals from the poor, eats away at governance and moral fibre and destroys trust”.
Corruption is far from a victimless crime. While the impact of corruption is often hidden, we must never forget that it undermines the efficiency of public services, weakens the security of ordinary citizens and hurts the bottom line of businesses. More broadly, as the noble Lord, Lord Coaker, just noted, it undermines trust.
All noble Lords have asked what the Government plan to do. I will go into some detail, but I have only a limited amount of time, so I commit to write to noble Lords if I cannot cover all their specific points.
Economic crime is undoubtedly a multidimensional and multifaceted issue. There is a strong correlation between corruption and economic crime, and we are taking strong action in that regard. The Economic Crime (Transparency and Enforcement) Act 2022 was introduced in March, containing key measures to help crack down on dirty money, including from Russia and other foreign elites abusing our open economy, and provide greater powers to identify and investigate the illicit wealth of criminals. These powers have been put to immediate use.
The Combating Kleptocracy Cell in the NCA was set up after the invasion of Ukraine and recognises a significant increase in the NCA’s operational capability. I have seen those people in action and am in awe of their efforts. About £400 million has been allocated to tackle economic crime over the next three years.
The Government are following up on this expedited legislation with the Economic Crime and Corporate Transparency Bill, currently going through its Second Reading in the other place. I hope that will deal with the point made by the noble Baroness, Lady Kramer, about Companies House enforcement; among a suite of measures, the Bill includes reforms to Companies House that will bear down on the use of thousands of UK companies and other corporate structures as vehicles for economic crime, including fraud, international money laundering, illicit Russian finance, corruption, terrorist financing and illegal arms movement.
On strategy, the UK has long been seen as a world leader in dealing with corruption, from the UK-led anti-corruption summit in 2016, to the current anti-corruption strategy, which has served as a model for many other countries. Noble Lords may have seen our annual updates to Parliament on the progress we have made against this strategy. As they show, we have taken a number of important steps during the strategy period.
However, we know that the threat does not stand still, and we cannot be complacent. That is why the Government are developing a new anti-corruption strategy to succeed the existing strategy, which expires at the end of this year. The Security Minister will lead on that work as we look to build on the progress to date and make the UK even more resilient against the threat posed by corruption.
That resilience includes the overseas territories and Crown dependencies. They are separate, self-governing jurisdictions, but I am pleased that they have committed to upholding international standards and to having publicly accessible registers of who ultimately owns companies in place by the end of 2023. Gibraltar has already introduced such a register. I should note that this exceeds the standards required by the Financial Action Task Force.
The subject of standards in public life came up in a couple of contributions. The recent DHSC court case against the Government on Covid contracts ruled in our favour on all grounds. It showed the exceptional circumstances that Ministers and civil servants worked under during the pandemic to deliver impartial decisions to reach the best outcomes for the nation.
The Government are also working on their response to the recommendations made by the Committee on Standards in Public Life and in the Boardman reports. The Government have already issued new guidance on the declaration and management of outside interests in the Civil Service, and in July updated the House on progress made in responding to those reports, including outlining which recommendations have already been adopted. I will happily update the House on progress once more has been made.
On fraud and procurement, some issues overlap with standards in public life; I will go into more detail on those. Fraud is undoubtedly a significant and growing threat. Victims of fraud can suffer both serious financial and emotional harm, and we know that the money fraudsters make can fund other serious and organised crimes.
Public procurement is an important area of focus. Through the Procurement Bill currently going through Parliament, we aim to deliver a step change in transparency, with notices mandated for direct awards and publication requirements extended from planning to termination, including contract performance. This will embed transparency throughout the commercial life cycle so that the spending of taxpayers’ money can be properly scrutinised. Not only will this allow better detection of fraud and corruption; it will also enable better value for money and efficiency.
I will digress briefly on PPE, raised by the noble Baroness, Lady Jones. Contrary to allegations of potential conflict of interest in the awarding of contracts, the National Audit Office made clear that it
“found that the ministers had properly declared their interests, and we found no evidence of their involvement in procurement decisions or contract management”.
Our priority throughout the pandemic was saving lives. More than 19 billion items of PPE were delivered to front-line staff to keep them safe. The normal tendering process takes a minimum of 30 days; this was obviously not practical under those circumstances. It was essential that we were able to act quickly in an emergency. Under rules that existed years before Covid, contracting authorities are allowed to award contracts directly when there is a situation of
“extreme urgency brought about by an unforeseeable event”.
Obviously, Covid was that.
The higher-priority lane was one way of helping us to identify credible opportunities for PPE procurement so that front-line workers received the protection they needed. Ministers were not involved in the decision to establish the high-priority lane, nor were they offered a decision on whether this should be created. This was an internal process within the PPE cell, led entirely by officials. I could go on but I think that covers the principal questions asked.
I hope noble Lords will forgive me for leaning forward. Unfortunately, my brief is slightly between my glasses and non-glasses range so I have no choice but to do so.
Tackling fraud more broadly requires a unified and co-ordinated response from government, law enforcement and the private sector to better protect the public and businesses, reduce the impact of fraud on victims and increase the disruption and prosecution of fraudsters. That is why we will publish a new strategy to address the threat of fraud against citizens. Whatever form it takes, fraud is a despicable crime that we must confront with all the energy and expertise we can summon.
Corruption not only undermines trust in our democratic institutions, as all noble Lords have noted; it also creates vulnerabilities that our adversaries can exploit. We must remain alive to those risks, which can undermine development, stifle economic growth and threaten global stability. We must also ensure that we keep the protection of our national security at the forefront of our efforts while maintaining the highest possible standards in public life.
The National Security Bill, currently before Parliament, completely overhauls our espionage laws and creates new measures to enable our law enforcement and intelligence agencies to deter, detect and disrupt the full range of modern-day state threats. The new foreign influence registration scheme, which has been added to the Bill, aims to strengthen the resilience of the UK political system against covert foreign influence and provide greater assurance around the activities of specified foreign powers or entities.
Many noble Lords referred to the role of businesses. Business has a huge role to play, of course, particularly as we seek to strike new trading relationships across the world. We are asking businesses to compete in new markets and be innovative in their approach. This is especially vital in times of global economic hardship but corruption can be a hidden tax on companies, denying them a level playing field. This must be countered.
Lord Sikka (Lab)
Forgive me for this intervention; I will be quick. How does the Minister reconcile what he has said with the statement made by Chris Philp, who is, I believe, the Treasury Minister? He said that the Government will ensure that
“no business under 500 employees is subject to business regulation”
and that this will be extended to businesses with up to 1,000 employees in due course. How can that be reconciled with any of these anti-fraud and anti-corruption strategies?
Lord Sharpe of Epsom (Con)
I apologise to the noble Lord; I will have to ask the relevant Minister what he meant by that. I have not read that particular statement, so I cannot help him.
As I was saying, this must be countered. We are seeking strong relationships with our new trading partners to reduce these risks, and our businesses operating abroad know that they must comply with the high standards set in the Bribery Act 2010—a piece of legislation noble Lords have previously found to be a “global gold standard” in their post-legislative scrutiny. We are actively enforcing the Bribery Act. Operational successes in recent foreign bribery cases over 2021 included the Serious Fraud Office’s conviction of Petrofac Ltd—resulting in over £77 million in fines, confiscation orders and costs—and a deferred prosecution agreement with Amec Foster Wheeler Energy Ltd, resulting in £103 million in penalties and costs that also included compensation to Nigeria. On the subject of DPAs—deferred prosecution agreements—and in answer to the noble Lord, Lord Evans, they have raised over £1.6 billion.
I am being told that I am out of time. I apologise to those I have not managed to answer, particularly the noble Lord, Lord Sikka, with his very specific query; I will get back to him on that. I am grateful to all those who have participated in this debate, and I agree: these issues strike at the heart of our democracy, security and economy. As I have made clear, the Government are absolutely determined to root out and tackle corruption however and whenever it appears.