Economic Crime and Corporate Transparency Bill

Consideration of Commons amendments
Wednesday 25th October 2023 Lords Chamber

Commons Amendments

18:25

A message was brought from the Commons, That they insist on their amendment made to a Lords amendment to the Economic Crime and Corporate Transparency Bill, they insist on their amendment made in lieu of another Lords amendment, and they disagree with the amendments made by the Lords in lieu of amendments to which the Commons previously disagreed.

Motion A

Moved by

[Lord Sharpe of Epsom]

That this House do agree with the Commons in their Amendment 151A and do not insist on its Amendments 151E and 151F in lieu.

[The Parliamentary Under-Secretary of State, Home Office (Lord Sharpe of Epsom) (Con)]

My Lords, with the leave of the House, in moving Motion A I will also speak to Motion B.

We are here again to discuss the Bill for what I am pleased to say is, I hope, the last time. As my ministerial colleague in the other place, Kevin Hollinrake, said earlier today, the House of Commons has expressed its strong will on these remaining issues three times now. I therefore hope that noble Lords will support the Government’s Motions this evening. I will keep my remarks brief.

I start with government Motion A on the failure to prevent fraud threshold. My noble and learned friend Lord Garnier’s amendment would have brought medium-sized organisations into scope by exempting only micro-entities and small organisations from the offence. The Government do not support any lowering of the SME threshold that we introduced, and I will briefly repeat the reasons why.

It is already an offence to perpetrate fraud. The objective of the new offence is to ensure that there is accountability where fraud occurs in large organisations, so there is simply no need to apply any such offence to smaller organisations, and it is more straightforward to use existing powers against smaller, less complex companies. Every time an offence like this is introduced, business owners end up distracted from running their businesses by the need to assess their compliance risks, which often involves taking professional advice. We assess that the revised threshold proposed by this amendment would cause medium-sized enterprises £300 million in one-off costs and nearly £40 million in annual recurring costs.

As my ministerial colleague flagged this morning, we have future-proofed this legislation by including a delegated power to allow the Government to raise, lower or remove the threshold altogether. As with all legislation, the Government will keep the threshold under review and will make changes if there is evidence to suggest that they are required. I therefore urge all noble Lords to follow the will of the other place and support the government Motion to reinsert the SME threshold.

I move to Motion B on the amendment tabled previously by the noble Lord, Lord Faulks, on cost protection in civil recovery cases. The Government remain of the view that this type of amendment would be a significant departure from a fundamental principle of justice—that of the loser pays—and therefore should not be rushed into without careful consideration. Furthermore, we have seen no clear evidence that this amendment would increase the number of cases taken on by law enforcement.

However, that is not to say that this type of amendment is necessarily a bad idea. That is why we have previously added a statutory commitment to the Bill to review the payment of costs in civil recovery cases in England and Wales by enforcement authorities and to publish a report on the findings and lay it before Parliament within 12 months.

Normally, with regard to civil cost reform in England and Wales, the Government would look to consult appropriate consultees, including the senior judiciary, the Law Society and the Bar Council. Enacting this reform now without a full review would not allow judges and relevant organisations, or their counterparts in Northern Ireland and Scotland, to comment on how it would be read and applied in practice. It would therefore be irresponsible for us to rush into making such a significant change at the end of the Bill without full consideration by Government and further scrutiny by Parliament. With that, I hope all noble Lords will agree that this is the responsible approach to take and therefore support the Government’s position.

In conclusion, I encourage all noble Lords to agree with the Government’s position on both areas. It is vital that we achieve Royal Assent without delay so that we can proceed to implement the important reforms in this Bill as quickly as possible. I beg to move.

18:30

[Lord Fox (LD)]

My Lords, I thank the noble Lord, Lord Sharpe, for his comments. It is good to see the noble Lord, Lord Johnson, here as well, because together, along with other colleagues, they have done a good job in bringing forward this important Bill, the objectives of which we all shared from the outset.

The debate we have had right across your Lordships’ House has not been party-political but about practicalities and aspirations for how this Bill will work when it finally gets Royal Assent. Thanks to this debate, there have been improvements as we have gone through the process. All noble Lords who have participated, not many of whom are here today, have added value to that process. That value has been recognised by Ministers, the ministerial team and indeed the departmental team in the way the Bill has changed during its progress through this House.

The noble Lord, Lord Sharpe, said that he hoped this would be the last time the Bill goes through this House, and I think he can see that it will be. But I hope it is not the last time we discuss its effects and what it seeks to achieve. Parts of the Bill are designed completely to overhaul the way Companies House operates. How that works, whether it works and the extent to which the abuses endemic in the system can be cracked down on will be a really important facet of the Bill.

Enforcement is very much within the remit of the noble Lord, Lord Sharpe, and the Bill’s effective enforcement is key to whether we succeed in bearing down on economic crime. All your Lordships support the enforcement agencies in their work, and in any opportunity we have to come back—whether through the secondary legislation opportunities provided in the Bill, or to review things going forward—enforcement will be vital to success.

I am happy that the noble Lord, Lord Sharpe, mentioned the two issues the noble and learned Lord, Lord Garnier, and the noble Lord, Lord Faulks, set out. The extent to which the extension of this measure to smaller and medium-sized companies can be reviewed is an important point; it was noted during debates many times and I am pleased that the Minister took the opportunity to reiterate the position. I hope that in due course, the review of whether the rules need to extend to smaller companies does indeed happen, and we are able to see whether it is necessary.

Cost protection is a wide and important issue when looking at this aspect of economic crime, as is whether enforcement can be cost-effectively delivered when large, wealthy concerns are in the crosshairs of the authorities. I welcome the review; we look forward to its results and to having the opportunity to debate it when the time comes. In the meantime, your Lordships can be satisfied that they have more than thoroughly scrutinised the Bill, which leaves this House in a better state than when it arrived.

[Lord Coaker (Lab)]

My Lords, the noble Lords, Lord Johnson and Lord Sharpe, have done an excellent job in improving the Bill; there are no two ways about that. It is probably incumbent on me at this point to remind noble Lords that the “failure to prevent” amendment was put into the Bill in your Lordships’ House, as were the protection from costs orders and the associated compromises. It would be remiss not to mention that.

Having said that, it is of course a little disappointing that the Government were not able to make further compromises, in particular the compromises that were moved in the other place by not only Dame Margaret Hodge but by two prominent Conservative Members of Parliament, Sir Robert Buckland and Sir Robert Neill. So there is clearly still concern around some of these issues, but it would be churlish not to recognise the progress that has been made and the fact that the Government are going to keep much of this under review. It will be interesting to see the results of that review in terms of how the legislation operates and whether it operates in the way the Government expect. It is important that Ministers keep on top of that to make sure that the legislation does what is expected of it. I have every confidence that the noble Lords, Lord Sharpe and Lord Johnson, will do that. I agree very much with the noble Lord, Lord Fox. Indeed, that has been a consistent refrain throughout the passage of the Bill, both in the other place and this place.

I will finish with this remark. The Bill is an important step forward, but the enforcement of it is everything. If laws that have been improved are not enforced, much of the debate and discussion we have had will not be as valuable as it should be. If the noble Lords, Lord Johnson and Lord Sharpe, can reinforce to their officials and the various agencies involved that enforcement is everything, as the noble Lord, Lord Fox, said, we will all be reassured.

I thank the noble Lords, Lord Sharpe and Lord Fox, and other noble Lords who have been involved in the Bill, including the officials. We have a piece of legislation that is much improved from where we started, and I look forward to its implementation.

[Lord Sharpe of Epsom (Con)]

I thank both noble Lords for their very generous remarks and I speak as well on behalf of my noble friend Lord Johnson of Lainston, who asked me to make that clear.

We agree that the Bill leaves the House in a better state. The noble Lords, Lord Fox and Lord Coaker, are right that the Bill makes major changes, and we agree that the enforcement agencies have a major part to play. One of the aspects of the Bill that we can now start to get on with is making sure that Companies House is appropriately resourced, as obviously it will have a major part to play in any future delivery of the aspects of the Bill that we have been discussing for more than 400 days, I believe.

We should take this opportunity to thank the enforcement agencies for their past and future efforts. We know that this is a complex area, and without them we would all be in a much worse place. But, for now, this Bill leaves this House in a much better state. I thank, as I know my noble friend Lord Johnson would, both noble Lords on the Opposition Benches, and others from all Benches, for their engagement. Throughout the passage of the Bill the Government have worked hard to ensure the right balance between tackling economic crime and ensuring that the UK remains a place where law-abiding businesses can flourish without unnecessary burdens. Having said that, I am quite sure we will return to some of these issues, as predicted—but, for now, I urge noble Lords to support the Government in their position.

Motion A agreed.

Motion B

Moved by

[Lord Sharpe of Epsom]

That this House do agree with the Commons in their Amendment 161A in lieu and do not insist on its Amendment 161D in lieu.

Motion B agreed.