Fighting Fraud (Fraud Act 2006 and Digital Fraud Committee Report)

Baroness Blake of Leeds Excerpts

Friday 30th June 2023 Lords Chamber

[Baroness Blake of Leeds (Lab)]

My Lords, I express my sincere thanks to the noble Baroness, Lady Morgan, and all her committee—who will from now on be known as the fraud squad. It is evident from my engagement with the committee that its members formed a very strong bond, and a very collaborative report is the result. I commend them for that. I also thank all the organisations and individuals who have sent us briefings to assist our debate.

I welcome the opportunity to be involved in discussing this report, particularly after spending with many other noble Lords in this Chamber many hours and days debating and voting on the Economic Crime and Corporate Transparency Bill, which in large part deals with fraud as the most common type of crime—not only of economic crime but of any crime.

Fraud has become utterly prolific in this country, and I am afraid that the Government simply have not kept pace. Regularly editing it out when presenting crime statistics does not change this fact, and it certainly does not change the experience of Britons who, according to UK Finance, experienced 3 million cases of crime, to the tune of £1.2 billion, just last year. Despite this, as we have heard, only 1% of our police resources are focused on economic crime and only 0.01% of cases are brought to court. Only three convictions for serious fraud were secured last year—a reduction of seven since 2015. The committee makes it clear that our public sector and criminal justice systems are failing to keep pace with fraudsters, and its recommendations make it clear that this must be a priority to reverse the trend, recognising the increasing complexity that we are working with.

I want to stress the emotional impact on the British public as a major consequence of fraud. As the report explains well, fraud involves manipulation and deception. Victims are often blamed for crimes committed against them and feel shame for having fallen for the crime, despite being a clear victim of a criminal act. The often devastating impact can be emotional trauma and psychological harm, also affecting physical health. The noble Baroness, Lady Lane-Fox, gave a very powerful description of the impact.

We have heard today of the sheer breadth and audacity of fraud crimes, playing on the vulnerable. There has been an increase related to the increased use of digital applications since Covid—banking apps are only one aspect of this. There is advertising on our phones, scamming of debit cards at hole-in-the-wall facilities as well as a range of economic crimes so well documented in the report. Reform is vital to ensuring that we protect individuals and businesses across the country, but the enormous scale of fraud in this country, the links between economic crime and violent crime, war, corruption and human trafficking, and exposure to money laundering also threaten the strength of our economy, the stability of our world and the UK’s international reputation.

I am pleased to be able to speak on this report at a time when Members of this House have worked together to send to the Commons six excellent amendments to the Economic Crime and Corporate Transparency Bill, with many more changes made after working productively with Ministers—for example, to strengthen the role of Companies House and the overseas register, to create a new offence of failing to prevent fraud, to stop those who wish to silence journalists and others exposing large-scale economic crime, and extending the cost cap for civil recovery cases. I applaud the Government for the changes that they have made during the passage of the Bill. However, we know that there is a lot more to do. I hope that the Minister will convey the strength of feeling when the debate goes back to the Commons and that our amendments will be protected.

We have to recognise that we live in a different world since the Fraud Act 2006 was passed. It was introduced in the same year as Facebook became open to the general public, having started as a social media platform just for Harvard students. The ability for fraudsters to use technology, the internet and our telecommunications system has driven a huge increase in fraud. According to UK Finance, telecommunications account for 18% of fraud but 44% of the monetary value of losses. Falling for text fraud is as easy as opening a message that tells you that your parcel is due for delivery.

Tackling fraud means tackling online fraud and telecommunications fraud. I welcome the measures in the Online Safety Bill that seek to prevent online fraudulent advertising in that specific context, but wider internet fraud must also be tackled. Telecoms fraud, for which the committee said that the sector had

“allowed blame to be placed elsewhere”,

also needs to be dealt with. The noble Lord, Lord Sandhurst, gave a very clear exposition of that.

The Government’s response makes it clear that they recognise the significant threat that fraud poses to the UK. Given that, why does their strategy aim only to reduce fraud by 10% on 2019 levels by the end of this Parliament? Can the Minister tell me how close we are to that 10% now, and what measurable progress can we expect over the next few months? Looking further into the future, what reduction does he want by 2030 or 2040? Taking fraud seriously as a crime to me means being significantly more ambitious.

There have been some very serious questions for the Minister, but can I add another by asking what progress has been made on replacing Action Fraud? If only 1% of police resources are dedicated to fighting economic crime—and we all agree that that is ridiculously low, given that fraud is the most common crime—does the Minister think that the law enforcement response that he has outlined will be sufficient? As my noble friend Lord Browne has said, the issue of resources will be absolutely critical. As my noble friend Lord Davies said, do we actually need a specialist agency in this space? Do we really believe that the companies are being incentivised to prevent fraud? What other measures does the Minister have to bring into place?

The UK has now achieved a disastrous reputation as a lucrative market to commit fraud. We have heard about the appalling impact on victims My hope is that the Government’s further responses will lead to urgent action and a determination to raise awareness of the extent and impact of fraud on our citizens and our economy that is bringing misery to so many.