Draft Criminal Finances Act 2017 and Economic Crime and Corporate Transparency Act 2023 (Consequential Amendments) Regulations 2024
(3 days, 16 hours ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Minister for Security (Dan Jarvis)
I beg to move,
That the Committee has considered the draft Criminal Finances Act 2017 and Economic Crime and Corporate Transparency Act 2023 (Consequential Amendments) Regulations 2024.
It is a great pleasure to serve under your chairship, Mr Efford, and to welcome the shadow Minister, the hon. Member for Stockton West, to his place. I spent a very long time on the Opposition Benches in various shadow ministerial roles, so I hope the shadow Minister will take it in the right spirit when I say that I wish him much longevity on the Opposition Front Bench. I note that he has been busy and has already done two statutory instrument Committees since his appointment. Opposition is hard work, as I know all too well. As he settles into his important role as a shadow Home Office Minister, I wish him the very best over the coming months—maybe years. Despite our political differences, I know that we both care deeply about the security and safety of our country. In that spirit, I very much hope to work constructively and in the national interest with all of the shadow Home Office team.
Before I address the contents of the statutory instrument, I will briefly provide some background. The Economic Crime and Corporate Transparency Act 2023 contained a wide range of reforms to reduce economic crime and increase transparency over corporate entities conducting business in the UK. This included reforms to enable targeted information sharing to tackle money laundering and remove reporting burdens on businesses. Additionally, the 2023 Act introduced new intelligence-gathering powers for law enforcement and reformed outdated criminal corporate liability laws.
The reforms to the unexplained wealth orders regime, corporate liability laws and targeted information sharing are already in force. More recently, guidance for the new offence of failure to prevent fraud was published last week, on 6 November. The offence itself will come into effect in September next year, allowing organisations to develop their fraud-prevention measures before the offence comes into force.
The 2023 Act also introduced—this is of most relevance to this debate—a new regime to tackle criminal and terrorist cryptoassets. The use of cryptoassets in illegal activity is increasing. When introducing and reviewing legislation, we must consider emerging technologies and how they can be harnessed by criminals to commit crimes or to hide their ill-gotten gains. Under the previous Government, a bespoke regime was included in the Proceeds of Crime Act 2002 to allow the effective seizure of both criminal and terrorist cryptoassets. The regime was included in the 2023 Act to make it easier to confiscate cryptoassets from criminals and to forfeit cryptoassets that are obtained from or intended to be used in either crime or terrorism.
On 26 April, the relevant cryptoassets measures came into force, and the powers are operational in England and Wales. As of the end of October, the new powers have been exercised in more than 80 cases, including cryptoasset seizures or confiscation cases involving cryptoassets. I do not intend to cover the content of the powers themselves, as they were debated extensively by both Houses during the passage of the 2023 Act. I will instead outline briefly the purpose of the statutory instrument and the reason why we are gathered here this morning.
The regulations will make a set of amendments that are consequential on the Criminal Finances Act 2017 and the Economic Crime and Corporate Transparency Act 2023. The regulations address missed consequential amendments to the Proceeds of Crime Act 2002 and ensure that the investigative powers that that Act included —for example, reference to cryptoasset investigations—are included in all necessary sections of the powers in order that they function properly and act in accordance with the policy intention.
The statutory instrument is required to complete the commencement of the Economic Crime and Corporate Transparency Act 2023. It will ensure that all the necessary legislation is in place and that there is legal certainty as to how cases will be dealt with. I commend the statutory instrument to the Committee.
Matt Vickers (Stockton West) (Con)
It is a pleasure to serve under your chairmanship, Mr Efford. I thank the Minister for his welcome and look forward to him returning to the comfy seats on the Opposition side in the not-too-distant future.
I also thank the Minister for bringing forward the regulations to tackle economic crimes and fraud. It is right that, as a country, we empower our law enforcement agencies with the necessary tools to address these pressing issues. The Economic Crime and Corporate Transparency Act 2023 was introduced in the previous Parliament specifically to confront the challenges of economic crime and corporate transparency. It was a necessary piece of legislation to ensure that we keep our country safe and our economic jurisdictions clean.
The Minister rightly highlighted the need to tighten the regulations to ensure their effectiveness. As I understand it, similar regulations were originally scheduled for discussion prior to the election. It is appropriate that they are adapted to align with the original intentions of the 2023 Act. A key aim of the legislation passed by the previous Government was to simplify powers, so it is appropriate for the current Government to do all they can to facilitate that process.
The Minister highlighted cryptoassets, the use of which in illegal activities has been a worrying development over the last decade. Although it is challenging to ascribe specific figures, the National Crime Agency has suggested that over £1 billion in illicit cash is transferred overseas. Additionally, analysis by Chainalysis found that the total value of cryptocurrency received by illicit addresses globally exceeded £24 billion in 2023. I am therefore pleased that the new powers outlined in the 2023 Act, which are operational in England and Wales, have been exercised in more than 80 cases, as of the end of October, including cases involving the seizure and confiscation of cryptoassets. We must ensure that seizures continue effectively.
I would like to press the Minister for further clarity on a few specific points. Will he outline whether the Government anticipate an increase in the number of custodial sentences as a result of the regulations? Will he clarify how the regulations fit within the Department’s broader approach to cryptocurrencies? Has the Minister made any assessment of the types of cases in which such assets have been seized? Will the Department ensure that its strategy is robust in addressing those cases?
It will be essential to adapt and evolve the UK’s legislative response to economic crime. No matter how ingenious criminals may believe they are, we must always be prepared to thwart their efforts. I hope the regulations will play some small part in advancing that mission.
Dan Jarvis
I thank the shadow Minister for the constructive tone of his remarks. I am very grateful. I was particularly pleased to hear him reference the National Crime Agency, which provides me with a good opportunity to pay tribute to its work in this area. The NCA does not always get the acclaim that I think it deserves. The people who work there are fantastically dedicated public servants and, on matters relating to economic crime, as well as on other matters, they do an extraordinary job to serve the public.
The shadow Minister raised a number of entirely reasonable and constructive points. He pressed me on the need to ensure that the work we are doing sits as part of a broader strategy; I absolutely give him that assurance. I discussed these matters with the Minister at the time when we were in opposition, and we worked on them co-operatively and on a cross-party basis. Matters relating to cryptocurrency and the seizure of such assets and matters relating to economic crime are not matters of party politics. It is my intention to work co-operatively with the shadow Minister and Members from all parties to progress the work we are doing in government.
The shadow Minister rightly made the point about ensuring that the Government’s legislative approach keeps up with emerging technology and with criminals’ developing tactics and techniques. Criminals can be incredibly cunning. It is part of the nature of the way in which they operate, particularly in the field of economic crime, that the rapid rate of technology change and the different measures they employ, very much on an internationalised basis, means that Government and law enforcement agencies must constantly review their approach. We must ensure that we do not just seek to keep pace with criminals but are one step ahead of them.
The shadow Minister made an entirely reasonable point about whether the Government consider it likely that, as a consequence of the changes to the legislation, there will be an increase in arrests and custodial sentences. Rather than give him an answer that is not as considered as I would want it to be, I will write to him on that point. It is an entirely fair question, but one on which I want to take advice. I will get back to him as as soon as possible.
There is nothing more that I can add, other than to thank the Committee for considering the statutory instrument. As I have set out, it is necessary to complete the commencement of the Economic Crime and Corporate Transparency Act 2023. I therefore commend it to the Committee.
Question put and agreed to.
Draft Local Loans (Increase of Limit) Order 2024
(3 days, 16 hours ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chief Secretary to the Treasury (Darren Jones)
I beg to move,
That the Committee has considered the draft Local Loans (Increase of Limit) Order 2024.
It is a pleasure to serve under your chairmanship, Ms Vaz, and to bring forward the order for parliamentary approval. The order increases the aggregate limit on local loans through His Majesty’s Treasury’s Public Works Loan Board lending facility from the current level of £115 billion to £135 billion. As specified by the powers within the Public Works Loans Act 1875 and the National Loans Act 1968, those are loans to any local authority for any purpose for which the authority has the power to borrow. In accordance with the powers in the 1968 Act, His Majesty’s Treasury can increase the aggregate limit on outstanding loan debts through statutory instruments up to the maximum limit specified in the Act, which is currently set at £135 billion.
As of March 2024, the Public Works Loan Board’s stock of loans stood at £103.7 billion and is expected to increase further, broadly in line with forecasts for overall local authority borrowing. The Government are therefore bringing forward this statutory instrument to ensure that local authorities can continue to access lending from the Public Works Loan Board to support their capital investment plans and treasury management.
The Government recognise the valuable contribution that local authorities make to the social and economic infrastructure of this country and are committed to supporting local investment through the Public Works Loan Board. His Majesty’s Treasury will continue to work with the Ministry of Housing, Communities and Local Government to ensure that local authorities are borrowing in a prudent manner and not for speculative, for-profit investment, which is now prohibited through our Public Works Loan Board lending guidance. I stand ready to answer any questions from the Committee and look forward to receiving its support for this legislation.
Mark Garnier (Wyre Forest) (Con)
It is exciting—fantastic—for me to start my new job as a shadow Treasury Minister on something so utterly uncontroversial. Obviously, we will support this; there is no question about that. But I would like to make a couple of points.
It is interesting to see that the Public Works Loan Board amount, on a year-by-year basis, has now gone up to pre-pandemic levels, and that we have come back up quite quickly. It is also worth bearing in mind that that was around the time when the new rules were introduced about prudence; it will be interesting to see whether there is any explanation as to why that has happened now. It could be perfectly harmless, but it is important for monitoring.
I have three principal questions. First, the Minister mentioned the rules that were brought in. Can the Government confirm that they will remain committed to those new rules? That is very important. They were there to avoid speculative investment, and we want the money to be properly used to benefit local communities, albeit at a commercial rate of return. It is important to make sure that speculation does not come into this, so can he confirm that?
Will the Government also confirm that they intend to closely monitor how councils are borrowing? That is important because some well-meaning district councils may make some slightly unwise decisions. What metrics will the Government use to make sure that local authorities are borrowing prudently in accordance with the rules, so that we can understand how that is being monitored? Finally, what steps are being taken to manage debts effectively, ensuring that they do not hinder future potential borrowing requirements or place tighter strain on local authorities that may or may not be struggling with tight budgets for one reason or another?
We are keen to support the order; it is a perfectly reasonable thing and it is important for us to support our local authorities. Some are incredibly innovative and a lot of the money is used to support local communities at a commercial rate of return. We see nothing wrong with that, but I will be grateful if the Minister can help me with those questions. It looks as if we may be finished within five minutes.
Daisy Cooper (St Albans) (LD)
As others have said, this legislation is uncontentious; I am happy to support it. This is a good opportunity to highlight the difference that some of these loans make to people’s lives. In my local area of St Albans, the district council has used Public Works Loan Board borrowing to help fund a range of really ambitious projects in our local area. That has included investment in social housing, such as the King Offa and Hedges sites; decarbonisation and improving the energy efficiency of council homes; investment in vehicles and equipment used for recycling, street cleaning and waste collection, which has helped our district council to achieve one of the highest recycling rates in the country; and investment in a regeneration project in the heart of the city, which is providing social, rented and shared ownership homes along with commercial space to rent.
Simply put, the Liberal Democrat administration at St Albans district council is really ambitious for our area, but it could not have achieved so much, or done work at such a scale to make homes warmer and cost less to heat this winter, without access to this productive borrowing facility. We very much hope that future applications from our and other councils will make just as much difference to people’s lives. We are very pleased to support the measure.
Darren Jones
I am grateful to hon. Members for sharing their feedback on this statutory instrument and asking a number of questions. The rate of lending is broadly in line with market expectations; post pandemic, it reflects the fact that activity is now getting back to normal after the pandemic years, when fewer things could be done.
We are committed to the guidance on speculative investment and commercial lending, and that will remain in place. As a Treasury, we have general oversight of the Public Works Loan Board and the guidance and monitoring in respect of which the loans are taken out across the country. It is for local authorities, of course, in their own institutional capacity—through their own committees and audit functions—to look at the reasons for borrowing locally and see that that capital is being used well on the ground, but the Treasury has powers to intervene on particular loans and councils if concerns are raised.
Housing is, of course, a really important part of lending from the Public Works Loan Board, which is why we have extended the housing revenue account discount rate on lending for a further year, into financial year 2025-26.
Question put and agreed to.
4.37 pm
Committee rose.