Economic Crime and Corporate Transparency Bill

Debate between Baroness Blake of Leeds and Lord Leigh of Hurley

Committee stage
Monday 27th March 2023 Grand Committee

[Baroness Blake of Leeds (Lab)]

My Lords, Amendment 23 is tabled in the name of my noble friend Lord Coaker, which my noble friend Lord Ponsonby and I have signed in support. The amendment does not form part of a group. It seeks to clarify the Bill’s definition of an appropriate address for company registration. It is aimed in particular at trying to stop the terrible practice—which is widespread, as we heard at Second Reading—of companies using false addresses. Although Clause 28 defines an appropriate address, our amendment goes further in defining what is not an appropriate address, including a Post Office box.

In terms of public awareness of the debate that we are having as the Bill goes through, the use of false addresses is one of the most publicly well-known issues with Companies House, and we really should be putting all our efforts in to try to prevent it. People trying to prove that companies are registering falsely at their address often have to go to far greater lengths to prove that they are the proper residents of the said address than the person setting up the company. I hope that this amendment provides an opportunity to talk about the use of false addresses and, therefore, the impact that it has on the public. It is one of the most visible parts of the current failure of Companies House. As things stand, Companies House does not do any detailed check on an address where a company is registered, particularly if it uses the basic criteria laid down by Companies House.

I am sure that I am not alone in having listened to many of the different programmes in the media, particularly on the radio but on other outlets as well, which have had this vexed issue as their subject. You hear about the absolute distress caused to people, who are completely innocent in the process, who come home and find letters sent to their address and many other factors which lead them to understand that someone has falsely set up a company using their name or address—and on this occasion we are talking about their address. The most important issue to recognise here is that this can take years to disentangle, and it can cause distress and untold misery, and we have a collective responsibility, with the passage of this Bill, to make sure that Companies House does all the work that it can to help.

The important issue to bear in mind is that the onus should be on the businesses to prove that they are legitimate rather than it being on individuals to prove it is a scam and their innocence. I hope that other noble Lords will comment on this amendment, and I hope that collectively we can work together to make sure that innocent members of the public are given the full protection possible by the new legislation. I beg to move.

[Lord Leigh of Hurley (Con)]

I take up the noble Baroness’s invitation to comment on this amendment, although I have just received a text from my mother who says that, having been called a business guru by the Minister, I should keep quiet and not say any more. However, this is a very important issue on which I spoke at some length at Second Reading, and quoted an article in the Times highlighting the problem. The noble Baroness is quite right that it blights people’s houses when they find it to be a registered office, which they had not intended it to be and, of course, the information does not go to the right person.

Nevertheless, I am very concerned by this amendment as worded, because it says:

“An address is not an “appropriate address” if … it is not a place where the business of the company is regularly carried out”.


I assume that paragraphs (a), (b) and (c) in the amendment would be separated by an “or”, because many companies choose as their registered office their solicitor or accountant, with good reason, particularly in these days of working from home, start-ups and virtual companies, where they do not have a single office space but move around the place. The main place of business may be an apartment where they happen to live, so it is convenient and sensible to choose a solicitor’s or accountant’s office as their base. Indeed, when I worked as a chartered account in a large accountancy firm some 35 years ago, that was very common.

Sadly, I do not think the amendment as worded achieves what the noble Baroness seeks, but neither does the Bill: with the greatest respect to the Minister,

“would be expected to come to the attention of a person acting on behalf of the company”

is a bit convoluted for what we know we want to achieve. Although I cannot support this amendment at this time, I very much hope that before the next stage, we might come up with some wording that achieves where we all want to go.

Economic Crime and Corporate Transparency Bill

Debate between Baroness Blake of Leeds and Lord Leigh of Hurley

2nd reading
Wednesday 8th February 2023 Lords Chamber

[Baroness Blake of Leeds (Lab)]

My Lords, it is always a pleasure to follow the noble Lord, Lord Wallace, one of my fellow Yorkshire advocates; we have done a lot of work together in that part of the country. I add my thanks to the Minister, the noble Lord, Lord Sharpe of Epsom, and his team for meeting us earlier this week. I also welcome the new Minister, the noble Lord, Lord Johnson of Lainston, to his place, and very much look forward to continuing to work with both in a constructive way.

I am very heartened by the debate, as there was so much consensus from all Benches; many have remarked on the universal welcome for the Bill. Both Ministers must be aware of the grit and determination to make sure that something comes from this that is meaningful, challenging and effective. I have a sense that there will be several Committee days where we will look at the detail in so many of the areas we have covered tonight but with which we cannot deal in the few minutes we have left. As well as that consensus, we have also heard concerns in the incredibly well-informed contributions across the House about the time taken to bring in the legislation and the gaps that remain within it.

There are some interesting questions that I would like some answers to from the comments that have been made. For example, where is the register of overseas properties? The noble Lord, Lord Vaux, made a couple of interesting comments that have not been picked up, and asked a very simple question. What have the Government learned so far from attempts that have been made to bring legislation forward?

I was very struck by the comments of the noble and learned Lord, Lord Garnier, about the victims of fraud. We should, as my noble friend Lord Sikka, said, look at the police response in this case.

[Lord Leigh of Hurley (Con)]

I do not think that the House needs to be detained by references to the noble Lord, Lord Sikka, as he is not in his usual place. This is the second time in a debate that he has not been in his usual place, and therefore we need not spend time analysing and commenting on his remarks.

[Baroness Blake of Leeds (Lab)]

I apologise and accept the noble Lord’s point entirely—forgive my lack of experience in these matters.

On the experience of cyber mentioned by my noble friend Lord Davies, and to pick up on the point made by the noble Baroness, Lady Morgan, I have received a text telling me that my parcel has not been delivered. I can tell noble Lords that I do not do ordering online for parcels. My kids do—they have them piling up by the door—but I do not. That is exactly what we are all subject to. One momentary loss of concentration and we go down a terrible pathway that is very difficult to get out of.

I am also interested in alternative ways in which to pursue litigation, raised by the noble Lord, Lord Faulks. We do not do enough in this area; there is too much of a confrontational approach, which perhaps holds us back. We have to be honest that the delay between 2016, when the Government first promised reform, and today, has seen years of economic crime coming through and affecting so many people. As we heard earlier in the debate, we have also seen a significant increase in the scale of the issue in recent years. As the noble Lord, Lord Clarke of Nottingham, said, this is the money laundering capital of the world. What a terrible state of affairs.

My noble friend Lord Ponsonby gave us detailed statistics that I shall not go through again. I think that we all know the scale of the problem that we are facing. What we do know is that economic crime has far-reaching consequences for individuals, businesses, our broader economy and our national security. My noble friend Lord Browne gave such a brilliant and passionate exposure of the impact across such a wide piece. He described it as being on an extraordinary scale—the noble Baroness, Lady Morgan, called it “prolific”. We should remember the extent of what we are talking about here.

I am not sure that we have paid due attention to the huge damage that this does to our national finances, and we should look through the prism of that. The numbers quoted by different organisations are extraordinary. The National Crime Agency estimated £100 billion annually, and Spotlight on Corruption estimated £190 billion annually. These are extraordinary numbers that we cannot afford. Of course, what we know is that we have to follow the money. Where does this money actually go and what is it then used for, in the hands of criminals and corrupt Governments, with economic crime funding other serious organised crime such as people trafficking, drug smuggling, arms dealing and fraud? As we have heard from many contributions, it also helps those in power abroad looking to silence whistleblowers, muzzling democratic opposition and, as we know, waging war against other nations.

Britain’s reputation as an excellent place to do business and a supporter of the rule of law and democracy worldwide risks being eroded further if we continue to allow criminals and oligarchs to use London as a safe haven for their ill-gotten gains and to use the law to silence whistleblowers. And what a day to talk about this, when we have had the enormous privilege of President Zelensky coming to address both Houses.

As we have heard, there is much to welcome in the Bill, but much more work is needed to achieve the necessary improvements. I am pleased, as others have expressed, that the Government have responded to concerns from the other place relating to corporate criminal liability, recognising the significance of failure to prevent, to disclose in order to prevent, detect or investigate economic crime. We will be examining the wording from the Government on this issue closely. They must be strong enough to effectively tackle fraud at the scale at which British people and businesses are exposed to it, as we have heard expressed so eloquently this evening.

We have heard a lot of contributions on the provisions on the reform of Companies House. I do not want to dwell on that here; we will obviously come back to it. I will just say that I believe that the changes that are being proposed are root-and-branch changes and should be welcomed. But, as so many have expressed, it remains questionable whether the scale of the problems has been fully taken into account and whether enough resource and, importantly, capacity are on hand to deal with the massive task before us.

The Bill also misses the opportunity to strengthen labour market enforcement, including infringements of national minimum wage law. As we have heard, the loopholes in the overseas register need to be looked at again, as does the strategy for recouping assets seized during economic crime enforcement and, again, ensuring that they reach the victims. Businesses will be looking to the proposed legislation to provide long-overdue consistency and clarity and—above all—transparency in proceedings. Achieving adequate accountability and the ability to close loopholes will remain priorities in the next stages of the Bill.

As I have said, this Bill is welcome, but it is certainly not finished. The speeches across the House today pay testament to that and demonstrate the House’s desire to get this legislation right. There is an expectation of movement from the Government. I look forward to working with both Ministers to make sure that we get the legislation to the place it needs to be.