Protection for Whistleblowing Bill [HL]

Baroness Kramer Excerpts

Friday 2nd December 2022 Lords Chamber

Moved by

[Baroness Kramer]

That the Bill be now read a second time.

Relevant document: 19th Report from the Delegated Powers Committee

[Baroness Kramer (LD)]

My Lords, I thank the All-Party Parliamentary Group on Whistleblowing and its past and present chairs, Stephen Kerr and Mary Robinson, for the APPG’s role in making sure that this issue is heard in Parliament. Lawyers working with the APPG developed the Bill that I am bringing forward today in a further refined version. I thank the academics who contributed to the Bill, but those lawyers, leading practitioners in this field, and WhistleblowersUK made a critical contribution to drafting a Bill which can work in the real world.

Whistleblowers are the canaries in the mine; they give the earliest alert to wrongdoing of all kinds, especially by powerful entities, both public and private. In a meeting last week with major financial auditors, I was told categorically that 40% of fraud is uncovered through whistleblowing rather than formal management, audit and compliance processes. I cannot think of a scandal exposed in any field, from the NHS to financial services to money laundering, where whistleblowers have not played a vital role. I draw noble Lords’ attention to the news today of the scandals at University Hospitals Birmingham and the way in which whistleblowers there were treated.

Good organisations value whistleblowers and act on their information. We rarely hear about those instances because harm is halted in its tracks. Sadly, some organisations turn on whistleblowers overtly or covertly, and with vindictive hostility. Effective regulators and enforcement agencies regard whistleblowers as a citizens’ army that greatly extends their reach beyond their formal resources and acts as a deterrent. However, virtually none of them provides any protection except confidentiality, which cannot be guaranteed, because the identity of a whistleblower is often evident due to the nature of the information and because many people’s first instinct when they see wrongdoing is to speak out to those in charge. When there is retaliation against the whistleblower, there is no regulator batting on their team.

This country led the way in providing legislation to give some protection to whistleblowers with the Public Interest Disclosure Act 1998, but it is limited and virtually unamendable because it functions only within employment law. It covers only workers speaking out about their employers, not clients, suppliers, contractors and others. PIDA provides redress, but only for a worker facing retaliation and through the employment tribunal, which is a costly process and does not allow for the recovery of legal fees.

Dr Raj Mattu faced a legal bill of £1.48 million to clear his name in the employment tribunal and it took seven years, in which he had no work. On winning, he was awarded only £1.22 million. Lawyers tell me that a whistleblower needs at least £40,000 to get to a tribunal, often a three-year process, and that the case then can linger for years, especially with employer appeals. The awards rarely cover the lifetime career impact and informal blacklisting is never considered.

PIDA provides no mechanism to make sure that a whistleblowing report is investigated or that the whistleblower ever knows what happens. These limitations persuade many people not to speak out. Those who do speak out often become so shell-shocked and frightened that they accept settlements that include confidentiality clauses that effectively silence them—the Americans call them non-disclosure clauses. This is the rationale for replacing PIDA. Of all whistleblowing claims brought before the employment tribunal, only 4% succeed, such is the weakness of the Act in upholding workers’ rights.

The various regulators react differently to whistleblowing. Some are very diligent but others, frankly, regard whistleblowers as emotionally troubled people, not a source of vital information. Many do not use skilled investigators to triage the information and therefore tend to overlook it. If anyone doubts that, I recommend Dame Elizabeth Gloster’s excellent report on the FCA and the London Capital & Finance scandal. Identifying who is the right prescribed person for a particular disclosure can be a nightmare; for wrongdoing in the education sector, I defy anyone to tell me which cases need to be reported to the school, the local authority, Ofsted or the Department for Education. The NHS has the National Guardian system, but it is basically a signposting operation with no power of action.

The European Union recently issued a detailed directive on whistleblowing protection. Feedback on this indicates that it lacks teeth, but it goes in the right direction. The USA is aggressive in recruiting and rewarding whistleblowers. The Bill does not copycat the US system, but the key lesson I take from the US is that only if you have very powerful enforcement and a very strong whistleblower regime can you afford to risk lighter regulation. We have neither in the UK. The UK has waited far too long to update its whistleblower protection, albeit that we will do it in a British way.

The Bill adopts the strategy of creating an office of the whistleblower to act as a champion for whistleblowing and to set standards and good practice, particularly among the regulators and prescribed persons. The last time I brought forward a Bill for such an office, the Minister argued that it would be swamped by overseeing 35,000 whistleblower-initiated investigations a year. But of course, the design is for a compact office that works through the regulators and with relevant persons setting standards for procedures, not investigating cases itself except where no regulator is available. The office would be paid for by fines that it can levy against those who retaliate against whistleblowers—an arrangement that I will elaborate on in a moment.

In his objections last time, the Minister also argued that regulators are experts who need no overarching body to set standards or monitor them. If he remains of that opinion, he needs to explain to this House why so many scandals in so many sectors arise every year because whistleblowers have either been afraid to come forward or have been ignored. Other speakers today will provide evidence of failures by citing individual cases. I tell the Minister that—obviously off the record—regulators have told me directly that they wish for the office to be created, as whistleblowing is an area in which they require expert support and help.

The Bill defines a “protected disclosure”, clarifying what qualifies as the content of such a disclosure, and who is a “relevant person” to whom it can be made. It lets the office of the whistleblower set standards for how the information is treated. The office also has principles and objectives that include encouragement and support for speaking out and the establishment of standards for procedures and reporting. It ensures that disclosures are followed by investigation and action—the most important ask, frankly, of every whistleblower. Importantly, that clause is qualified to exclude disclosures that are “frivolous, malicious or vexatious”. Non-disclosure agreements, which I mentioned earlier and are so often used to supress investigations, are banned specifically for whistleblowers.

At the heart of the Bill lies protection for whistleblowers, so that if the office determines that a whistleblower is at risk of retaliation, it can issue an interim relief order. If the office determines that a whistleblower has been subjected to detriment, it can issue a redress order that can include an order to pay compensation. That is a far speedier process than the current employment tribunal and without cost to the whistleblower: in effect, it is a reversal of the power structure as well. Such powers are balanced in the Bill, so that any party disputing an order levied on them can appeal to the First-tier Tribunal.

The Bill in effect reverses the current burden of proof that requires a whistleblower to prove to a tribunal that the detriment they have experienced is a result of whistleblowing. It also removes the inequality of arms, since any entity or employer challenging a redress order is facing the office, not a lonely whistleblower with few resources. Today, other speakers will vividly illustrate the issues with real-life cases. I have with me some 17 letters, primarily from whistleblowers, including some from Ireland, which is going through a revised version of the PIDA, which many people think could be an answer—the letters make it evident that it is not. We need a change to normalise and eliminate stigma from whistleblowing, which we know will not only expose wrongdoing but, perhaps even more importantly, deter it in the first place. The Bill creates the framework for that culture change, protecting those who do the right thing. I beg to move.

--- Later in debate ---

[Baroness Kramer (LD)]

My Lords, I will follow the usual convention of not giving a wind-up speech at the end of a Private Member’s Bill, but I acknowledge that so many of your Lordships spoke so eloquently. There were brilliant speeches about very individual situations that bring to light exactly the culture and reality for whistleblowers today. I point the noble Lord, Lord Callanan, to that. These are not exceptions but, if you like, exceptions that prove the rule. Although he can cite many instances in which known whistleblowers are recognised and acknowledged by regulators, so many scandals continue to occur—week after week, month after month, sector by sector—that it is clear that the current system is completely inadequate.

We have dealt with the problem he noticed in the Bill by seeking to fund the office of the whistleblower through its share of the penalty system. This is a self-funded body. He will recognise that, in the United States, which has a much more expansive system, that works exceedingly well. There are plenty of ways to extrapolate from that opportunity and to make sure that there is no call on the public purse to have this office of the whistleblower in place.

If the Minister feels that the regulators are troubled by the idea of an overarching body, I suggest that he talks to them. I think he will discover that they find this area so difficult to manage that they welcome the idea of having in place an office and someone with the expertise to help make sure that their standards are appropriate.

On the issue that the noble Lord, Lord Browne, raised about the Official Secrets Act and making sure an investigation happens, this is about not exposure to the press but having in place within any organisation the methodologies, procedures and standards to make sure that, when a whistleblower raises an issue, it is properly and appropriately investigated.

I finish with this, because to me this is the absolute key and the reason I beg the Minister to either pick up this Bill or proceed with his review urgently. I echo the noble Lord, Lord Bassam, and so many others who spoke. Every day that we do not have proper protection for whistleblowers, someone is making the decision not to speak out against abuse of people in a care home, misogyny in the police force, or the scam perpetrated by their financial services institution. Carry this across so many entities and the damage to the public welfare and the public interest is recognised as substantial.

As ordinary citizens we pay a price for the absence of an effective, powerful scheme to provide proper protection for whistleblowers to ensure that people speak out at the earliest possible opportunity and that action can be taken to protect us in the many ways that I am sure the Minister believes ought to be available to us. Please will he act with urgency? I was so upset to hear him again use the words “in due course”, which are recognised in this House as the long-grass statement. I hoped we might get a “shortly”. Will he please urge his colleagues to act soon, before more people suffer because detriment is not exposed in the very early days when it could be?

Bill read a second time and committed to a Committee of the Whole House.

Economy: The Growth Plan 2022

Baroness Kramer Excerpts

Monday 10th October 2022 Lords Chamber

[Baroness Kramer (LD)]

My Lords, I have this vision of the noble Lord, Lord Dobbs, sitting beside fireless firesides.

Let me switch tone and say to the noble Baroness, Lady Neville-Rolfe, that I recognise and welcome her to her new role. I assume that she will speak frequently on Treasury issues, so we will have a great deal of very polite combat. I also very much welcome the noble Baroness, Lady Gohir. She said that she would look at everything through the lens of women’s lived experiences, and she did exactly that in this debate. I say to the right reverend Prelate the Bishop of Birmingham that it is a really sad farewell. He has always spoken for ordinary people, he did so again today, and we will sorely miss him.

The noble Lord, Lord Burns, summarised the subject of our debate. He said that the financial event

“has not gone down well”.

I do not just repeat that for its understatement, but I do say that this was not just an issue of communication and optics. I follow in the footsteps of my noble friend Lord Fox and quote Larry Summers, the former US Secretary of the Treasury, who summed up that event as

“misguided fiscal policy coupled with lack of central bank credibility coupled with toxic leverage creating positive feedback loops”—

only an American could say that—

“that led cumulatively to a disastrous outcome.”

A disastrous outcome is what we are living with and, frankly, that is something that I think no one in this House would have ever wished upon this country.

I concur with those in my party who look at the mini-Budget and say, “Keep a cap on energy prices but at the lower rate of last April; give longer protection to small businesses; keep the tax cuts that help ordinary people but scrap the rest and start again.” We need to remove not just the cancellation of the 45p rate but the reversal in corporation tax increases—I will talk a bit about that in a moment. The Government need to levy a much more rigorous windfall tax on oil and gas companies. I say to the noble Lord, Lord Forsyth, that, if he looks at the Lib Dem plan, he will see there the money that is needed to be able to fund significant parts of the support for ordinary people by going back much further, making the levy far more significant —not just a mere 25%—and taking away all the various opt-outs and concessions provided if oil companies go and invest in oil and gas.

I say to the Government that this not the time for ideology; we need an absolutely practical plan—I think of what the noble Lord, Lord Skidelsky, said. We need a plan that protects people and businesses and grows the economy and an OBR forecast that both informs that plan and informs all of us. It is not just the financial markets that are shaken, but ordinary people who suddenly realise that prices, including for food and energy, will remain cripplingly high. Liz Truss has said that benefits will rise far less than inflation—though I hope, like many people in this House such as the noble Baroness, Lady Stroud, the noble Lord, Lord Carlile, the right reverend Prelate the Bishop of Durham and many others, that that will be revisited, because, frankly, it is cruel. Interest rates and mortgage costs are rising sharply, and the Institute for Fiscal Studies has warned that stealth freezes in tax and benefit thresholds will take twice as much money from UK households as they stand to gain from the Government’s cuts to headline rates.

On public services, quite a number on the Conservative Benches—the noble Lord, Lord Howell, and others—talked about the importance of cutting public services, whether by function or overall. But these services are already struggling in the face of inflation, and I am very afraid that we will see cuts, particularly in the education sector, which would be an utter blow to any growth agenda.

The UK stands out from other G7 countries in the failure of our economy to recover to pre-Covid levels. That failure is owned by the Conservative Government and the Conservative Party—it cannot be blamed on Covid or Russia. When the Prime Minister speaks of an anti-growth coalition, and when I look back at what has been happening in this country, she is describing herself, the Tory party and their record. I stand on Benches, and I believe much of the Opposition stand on Benches, that are fundamentally and have always been pro-growth.

The last OBR numbers that we saw demonstrated a huge hit to the UK as an international trading nation. It is, as the noble Lord, Lord Inglewood, said, an inevitable consequence of hard Brexit. Even the most optimistic view of new global trade and plans for lax regulation across the board scarcely claw back a fraction of that trading loss. That issue must be fundamentally tackled.

If I may reflect the noble Lord, Lord Londesborough, here, productivity has barely improved for a decade. It is not hard to see why. The Government have underfunded education and skills at all levels, despite a lot of fine talk and endless ideological tinkering. Business investment has declined sharply from already low levels despite some of the lowest corporation tax rates in the developed world. I say to people like the noble Lords, Lord Forsyth and Lord Bridges, and the noble Baroness, Lady Noakes, that for 10 years we have had incredibly low corporate tax rates and, every single day of that 10 years, they have failed to generate growth. It is time to recognise when a policy has failed and not to make it the central lynchpin of a so-called growth agenda. We need a policy that works, not one that simply meets a soundbite test.

With the weak pound, we may well see more foreign money coming to the UK, but it will not be money to build our businesses; it will be the asset strippers and the vultures, and they are already circling. Goldman Sachs has openly said that it is hunting for cut-price assets from UK pension funds to take advantage of the liquidity pressures—and it is the respectable end, frankly, of the vulture industry. The AIM, which is always a good canary in the mine for business investment, has slumped to a 13-year low.

The Government have completely failed to reshape the financial sector to support patient capital—the noble Lord, Lord O’Neill, addressed a lot of this—and to provide scale-up funding. Without that, frankly, we lose most of the benefits of innovation. The plan now to remove the cap on bankers’ bonuses, and much of the deregulation in upcoming Bills, is designed to let risk rip once again, rewarding the chancers, the price fixers and the churners, abetted by a regulatory system with no backbone. I forget who said this in the debate, but somebody cited 2008 and asked, “Have we really learned nothing?”

Infrastructure expansion is constantly on again, off again. We do not so much have a planning problem; it is the lack of competent government leadership, which blows hot and cold on public projects and encourages private developers to put forward insultingly inappropriate development plans. That is why local communities object to them. Thirty-storey high-rises; intensive development; a disregard to public amenities: no wonder we have public opposition and delays. That is where reform is needed.

We have a shortage of working-age population on an exceptional scale. Let me quote the Public Services Committee this July:

“ONS statistics show that the number of people of pensionable age will grow by 28% between 2020-45, while the number of working age people will grow by just 5%.”


Various people discussed our labour market, problems not addressed at all by this Budget. Frankly, on those grounds alone, the Government’s immigration policy is utterly senseless.

As for the idea that the net-zero target is anti-growth, that displays, as the noble Baronesses, Lady Hayman and Lady Walmsley, said, a complete failure to understand the dynamics of sustainability. Let me quote the IMF:

“If the right measures are implemented immediately and phased in gradually over the next eight years, the costs will remain manageable and are dwarfed by the innumerable costs of inaction.”


Germany by 2025 is expected to have 11.3% of the world’s electric vehicle battery manufacturing capacity. We, who think of ourselves as a car-building country, will have only 0.8%. France is now investing on a far greater scale than we are in carbon capture and storage. Which countries do this Government think will dominate the future and reap the economic rewards of sustainability? Reform the energy market—it needs it—but this Government’s focus on increasing oil and gas exploration and fracking will either force us to abandon that target or load this country in the future with billions in stranded assets that ordinary people will have to pay for, a point made by my noble friend Lady Sheehan.

We have to deal with the public debt, which will not evaporate—I pick up the point made by the noble Lord, Lord Bridges—because the Treasury has been issuing index-linked gilts to the point that they are now something like 25% of public debt. I listened to people trying to compare us with the United States, but that has both the dollar and a domestic market of 350 million people. The EU has a domestic market of 450 million people. Both have a base of stability which we do not enjoy. The need for the Bank of England to declare its willingness to buy £65 billion in gilts to stabilise the market a week ago underscores how vulnerable we are. The noble Lord, Lord Davies, raised an important point: we should be very careful as we change the rules on pension funds, because seeing them invest in illiquid assets will create its own series of risks. My noble friend Lady Bowles once again warned us how blinkered we can be to risk because of the way we structure accounting standards.

There has been so much mismanagement for so many years, driven by ideology, rather than facing up to the real world. My party and I have, in many speeches, tried to draw the attention of the Government to the economic growth crisis and every time—noble Lords can go back and look in Hansard—we have been summarily dismissed. We have no choice now but to get this right. Ideology needs to be set aside and competence needs to replace it.

Queen’s Speech

Baroness Kramer Excerpts

Monday 16th May 2022 Lords Chamber

[Baroness Kramer (LD)]

My Lords, let me take this opportunity to join in the many thanks to Her Majesty the Queen and express our pleasure at seeing her in such good form over the weekend.

“Yesterday upon the stair,

I met a man who wasn’t there.

He wasn’t there again today”.

How better to describe this Government’s abject failure to recognise the scale and urgency of the cost of living crisis facing ordinary people? The Minister said that the Government must store up contingency resources for the future crisis. This is the future crisis: it is here now and action is required now. It has nothing to do with personal budgeting, home cooking or somehow getting a much higher paid job next week. Inflation continues to surge, especially on energy and food, and interest rates are rising. We have the spectre of stagflation.

The National Institute of Economic and Social Research reports that 1.5 million people will see soaring food and energy costs outstrip disposable income this year, forcing them to drain savings or go deeper into debt. The Yorkshire Building Society and the Centre for Economics and Business Research expect average household spending to exceed average income by over £100 a week within two years. Almost 60% of SMEs are now relying on the absolute no-no of borrowing to cover their basic insurance payments. A cost of living crisis is being followed by a debt crisis.

The Government are AWOL when they should be acting. They should immediately restore the £20 uplift to universal credit, cancel the increase in national insurance contributions and cut VAT temporarily from 20% to 17.5%, as my party has been calling for. That VAT cut would put an extra £600 into a typical family’s pocket, as well as support businesses, especially small businesses, who had hoped that they were recovering after Covid but are now slipping into crisis.

We can pay for it. The Government may finally be considering a windfall tax on the super-profits of the oil and gas companies—which interestingly my party called for while Labour was still contemplating the issue. However, a windfall tax does not undercut future investment, despite what we hear from Ministers. Shell has announced £8.5 billion in share buybacks for 2022, and BP is expecting to do at least £6 billion in share buybacks and hopes that the market will accept more. Companies buy back shares when they have set aside money for every reasonable investment and are still awash with cash. There is no investment risk.

It is not only the oil and gas companies that have had a windfall. The surge in prices because of inflation delivered the Chancellor an unexpected extra £9 billion in VAT by last January and will deliver at least another £40 billion of windfall VAT by the end of Parliament. Indeed, because of the freeze in thresholds, soaring inflation will also drive thousands more people into higher income tax brackets, with another unexpected windfall for the Treasury. The noble Lord, Lord Forsyth, made the point that the rising revenues of the oil and gas companies are also leading to a windfall for the Treasury. If you took less than half of that VAT windfall, along with an oil and gas windfall tax, you could pay for the cost of living rescue which I have just put forward. I understand that the Government want to hold back unexpected tax revenues for a dramatic tax cut just before the next general election, but surely even this Government cannot remain that cynical in the face of the immediate economic crisis in so many lives.

The Queen’s Speech also failed to address the fundamentals of economic growth. The OBR forecast for growth is dire. I am talking not just about the drop in GDP in March but the OBR’s longer-term running rate of growth; at just 1.75%, that is a level which cannot support our current standard of living. We have a working-age population shortage across the whole skills spectrum, with the dependency ratio rising sharply to a dangerous 57%. The OBR estimates 1.2% long-term scarring from a workforce shortage.

Our productivity growth continues to struggle, at a shade over 1%. Two key drivers of productivity are market size and market access, and we threw those out of the window with Brexit. Business investment is the lowest in the G7 by far, and CBI forecasts suggest that it will stay in that dreadful position. Remember, the trade deals and the magic deregulation that the Government boast about are already assumed in those dreadful forecasts. The OBR has identified a sharp decline in Britain’s trading capacity:

“The UK … appears to have become a less trade intensive economy, with trade as a share of GDP falling 12 per cent since 2019, two and a half times more than in any other G7 country”.


For us, dependent on commerce in trade, this is some of the worst news that we could ever have received. We must restore our trading relationship with the European Union, and quickly. The answer is certainly not getting ourselves into a trade war.

Personally, I will work on the Treasury Bills in the Queen’s Speech, and so will make a few remarks on those. We have seen the UK Infrastructure Bank Bill, and we have a reasonable idea of what will be in the financial services and markets Bill. However, the UK Infrastructure Bank is a midget compared to the European Investment Bank and the money that it used to supply here, and we are going to have to think far more ambitiously. The fact that housing does not qualify for support from the UK Infrastructure Bank strikes me as really quite shocking.

The financial services and markets Bill will be huge but, as the Minister pointed out, one of its key issues is to make competitiveness a target for the regulators. I just remind this House that we used to win the race to the bottom on competitiveness and it gave us the 2007-08 crash. This is an issue about which we have to be extraordinarily careful.

Both Bills continue—and this is a fundamental constitutional issue—the Government’s project to shift power from Parliament to the Executive and regulators, eliminating effective accountability. I struggled with this because, one day, a different Government might be in power, but a local Conservative gave me the answer. He told me, “We, the Conservatives, expect to win the next election with a very thin majority, so it is critical to take power away from Parliament now and give it to the Executive while we can”. We can best describe these Treasury Bills as massive Henry VIII Bills.

My colleagues will address many other sectors and issues, not least the inadequacy of the response to climate change, which also embeds huge economic opportunity and was pretty much ignored in the Queen’s Speech. Indeed, the Queen’s Speech Bills are basically culture wars, wedge issues and a grab of power from Parliament by the Government. Embedded within a lot of it is quite a good dose of nasty. I have been on the doorstep in the last few weeks and the public are increasingly sickened by nasty. Pretty much everyone I spoke to demanded that the Government address the cost of living crisis as an emergency and take action now.

Economic Crime (Transparency and Enforcement) Bill

Baroness Kramer Excerpts

Committee stage
Monday 14th March 2022 Lords Chamber

[Lord Coaker (Lab)]

My Lords, it is a pleasure to follow my noble friend Lord Sikka, who again comes forward with a number of amendments that are common sense and seek to shine a light on what is actually going on, and would deliver the transparency that so many of us seek in the Bill. We come to the transition period and the retrospective application, which is the subject of one of the most important groups, if not the most important group, of amendments this evening. It relates to the speed at which the register is implemented, as well as new measures that will apply during a proposed six-month transition period.

My noble friend Lady Chapman, along with the noble Lord, Lord Fox—we are grateful for his support—tabled Amendments 56, 61, 80 and 83. They seek to accelerate the implementation of the register of overseas entities, requiring initial registration within 28 days of commencement—again, seeking to avoid a situation where individuals or entities simply circumvent the law. This is not just a view held by us: the ICAEW, an accountants’ body, in the briefing that it sent your Lordships, also supported three months as a new transition period, with the ability to extend it for a further three months, were there a need to do so.

It is also worth noting that the sanction provisions—Part 1 of the Bill—will not commence on Royal Assent. Rather, they will require a commencement order laid by the Secretary of State. We understand that various steps need to be taken before that order can be laid. Can the Minister indicate how many steps there might be and roughly how long that will take? Is the upcoming Prorogation of Parliament, for example, likely to delay the introduction of any of the enabling regulations? When the Government moved from 18 months to six months in the other place, that left many thinking that the register would be active before the year end. Could it not actually be longer, given the need to implement various IT changes, inform people of the new requirements and so on? The House requires some reassurance about the commencement: in other words, when do the six months actually start? It could be six months now before the six months start: that would be a year for the implementation period. That is of real concern to us all, given the concerns that there are about the six months; so while we welcome the measures outlined in government Amendments 86 and 87, they do not prevent land being sold, gifted or transferred, and neither do they further reduce the current six-month implementation window. As many noble Lords said at Second Reading, a register of overseas entities has been promised for a number of years, and we certainly do not want any further delay, but there are serious questions to be asked.

Along with the noble Baroness, Lady Kramer, we also tabled Amendment 92. This is an evolution of the David Davis amendment considered in the other place. We accept that one very high-profile person of interest was Roman Abramovich. He is now subject to sanctions, and he plans to leave Chelsea under whatever arrangements he manages to make—or not, given the sanctions on him. However, one of the concerns around his case was that the Home Office was actually studying his affairs, but had no powers to take interim action while that assessment was being carried out. Is there therefore not a great deal of merit in our amendment, which seeks to freeze assets on an interim basis where there is good reason for doing so? In other words, if we are looking to sanctioning somebody, surely we would want to freeze their assets to prevent them from getting rid of them before a full order is put in place. At the moment, as I understand it, that cannot happen. I am not sure that under the Bill it would able to take place either, without this amendment. The Government might wish to look at the interim freezing of assets.

It might be, for example, that a person of interest hails from Belarus, which continues to enable the actions of Russia’s armed forces. What can be done about that? Does the legislation cover people in that situation as well? Again, we pose these questions to be helpful to the Government and raise serious concerns. We want the initiatives to succeed, but it is only with scrutiny—and the Government reacting and responding to the scrutiny, and acting on the various amendments that noble Lords have put forward from across this House—that we can have confidence in them. There might be only a few bad individuals among the applicants to the new register but the truth is, as my noble friend Lord Sikka and others have said, that we simply will not know what the case is unless there is maximum transparency. That transparency cannot come quickly enough.

[Baroness Kramer (LD)]

My Lords, my colleagues are doing all the heavy lifting from these Benches, and I am incredibly grateful to them. I have signed Amendment 92 in the name of the noble Lord, Lord Coaker, which I think found itself in drifting into the wrong group: it is actually part of group 3. One of the reasons why I signed it is this frustration, which I know the Government share, that, before a sanction is actually put in place, the individual who is likely to be sanctioned has, in a sense, plenty of warning signs and can use that opportunity to move various resources to a safe haven.

Much of the conversation around this Bill has been on fixed assets that are difficult to liquidate—property or complex companies—and I can understand why they might be less concerned about people knowing they are about to be sanctioned having the opportunity to move those. However, those same individuals tend to have very large investments in far more easily transportable assets—cash equivalents. I know that the Government are going to be looking at cryptocurrencies, which I have been very concerned about, when they get to the second phase of this Bill. It would, however, also be wrong to ignore such assets as jewellery and art. That is not just a tale from an Agatha Christie novel. I was a banker for many years in the mid-west, and most of my clients were exemplary people, but we certainly had one scoundrel who made the slight mistake of trying to impress a very charming young woman with an English accent and, as a consequence and with the aid of specialists, I was able to seize something worth close to half a billion dollars in artwork and jewellery against an attempt to defraud the bank. I ask therefore that the Minister think about these liquid assets, which play a part of the picture, but have been very little part of the discussion.

[Baroness Jones of Moulsecoomb (GP)]

I think that is a story for the noble Baroness’s memoirs, and I look forward to reading it.

There are lots of good amendments in this group but I want to speak to Amendments 56, 57, 61 and 62 about the implementation period. For me, the six-month implementation period makes absolutely no sense. We are trying to rush this through—we here are going to sit until I do not know what time tonight or tomorrow morning to make this emergency legislation happen, but we are still giving people six months to do this. The Government are taking so long that activists are going into oligarchs’ mansions and seizing them in London and Paris to house refugees, if we ever get any refugees here. I cannot blame this Government for the Paris seizure, but it suggests that people are getting very tired of the fact that they are being so slow about this. Why would anyone need six months? If they have been honest about paying their taxes, declaring profits and detailing the origin of their money, why do they need six months? Surely, any decent accountant—I am sure that there are several in your Lordships’ House—could sort this out within 14 days or, at the worst, 28 days. I think there is no reason for the Government not to support one of these two pairs of amendments that shorten the implementation period.

--- Later in debate ---

Moved by

[Baroness Kramer]

40: Clause 14, page 9, line 34, at end insert֫—
“(1A) The Secretary of State must, within 6 months of this section coming into force, by regulations, establish within the office of the registrar a whistleblower office to receive whistleblowing reports on the accuracy of information provided under sections 12 and 13 and to provide confidentiality and protection from retaliation for any such whistleblowers.”Member’s explanatory statement
This amendment would require the Secretary of State to establish a whistleblower office within the office of the registrar to receive whistleblowing reports on the accuracy of information provided under sections 12 and 13 and to provide confidentiality and protection from retaliation.

[Baroness Kramer (LD)]

My Lords, I will try to be brief on this issue. Amendments 40 and 41 both refer to whistleblowers and protection for them. Whistleblowers will be absolutely crucial if the register proposed in this legislation is to be accurate, but they will also be crucial for unexplained wealth orders and sanctions to be fully effective. Where those whistleblowers expose kleptocrats, hidden assets, money-washing schemes and individuals linked with owning, hiding and laundering, they will be taking really serious risks, both for themselves and for their families.

Confidential disclosure to a regulator or an enforcement agency only sometimes provides anonymity. It may be obvious who the whistleblower is because the information is held by so few people, or, as we have seen in many instances, it may be that the less scrupulous—whom we are going after—hire investigators in order to expose the identity of whoever spoke out.

At the very least, we need to be sure that there are genuine safe disclosure channels, and they need to be communicated in a very powerful way to everyone who might have information. The risk is not just physical harm by criminals, although that comes to mind when we think of the particular pool of individuals that this legislation is aimed at; it is also retaliation by enablers—the banks, the legal firms, the accounting firms and others. I fear that they have an unfortunate track record of quite devastating retaliation. Some obviously are very much better than others, but I anticipate that the kinds of entities that are sufficiently lax internally that they are willing to provide support to those engaged in money laundering and whose money has come through kleptocracy will be among the sternest in using retaliation against a whistleblower.

Individuals who lose their job or their contract are informally but effectively blacklisted—that probably is the least of their problems. Those who lose their jobs turn to employment tribunals. I know that the Government often pray in aid employment tribunals, but I suspect that many people are not aware of how costly an employment tribunal is for the individual seeking to make their case: we are talking about thousands of pounds and it can easily reach £100,000 or more. The entity they are up against can obviously afford the best lawyers and the most significant QCs. It is also very possible for an employer to string out an employment tribunal through various legal tools. Three years is not at all unusual, and seven years is not unknown, even for a successful whistleblower. During that time, the whistleblower has no income and must pay the high legal costs, with all the consequences for their family and their friends, from whom they borrow. This inequality of arms and the general stress of the whole process force many whistleblowers to settle and to sign agreements that prohibit disclosure.

The Government will say, “They can always make disclosures to regulators and enforcement agencies”, but it is certainly true that many whistleblowers become so afraid after they have been through the grinder of this process that they do not even dare to do that. This is part and parcel of how legal firms and others try to shut down anyone exposing wrongdoing by the powerful. We discussed SLAPPs at Second Reading, when my noble friend Lord Thomas went through some of the kinds of strategic lawsuits against public participation that have been levied against authors and journalists who have exposed kleptocrats. Imagine that same energy and attention turned on someone who is seen as an insider or an employee—it would be an even more bitter and devastating reaction.

The United States knows the value of whistleblowers in a way that is, frankly, ignored in this country. It is why we have a history of so many fewer prosecutions and convictions. Indeed, most financial scandals are exposed first by the Americans. You can almost go through a list—if there is any American connection, you can pretty much guarantee that it was a US agency that first exposed the problem. US prosecutors, and I have talked to many, will tell you that at least half of the convictions for financial crime in the US depend fundamentally on whistleblower evidence. Whistleblower evidence also assists in many more cases. In this country, if you ask the regulators and enforcement agencies, they will say that whistleblowers make only minor contributions. That may explain why prosecution in this country is, frankly, quite rare.

Last year, the United States, in anticipation of the issues we are facing now, passed the Kleptocracy Asset Recovery Rewards Act with extraterritorial reach, both as an incentive to whistleblowers and to compensate them for what are recognised to be career-ending and, in these particular instances, potentially life-threatening disclosures. There is a very interesting preamble to the legislation that makes clear the depth of concern that Congress had. At this moment, I would have to say to any potential whistleblower in a case where there is the slightest US connection, “Go to the Americans, your information will be taken seriously, you and your family will be protected and you will not end up ruined”. I cannot say the same thing to any potential whistleblower here in the UK and I think that has to change, and quickly.

--- Later in debate ---

[Baroness Bloomfield of Hinton Waldrist (Con)]

Sorry; I misunderstood.

It is right and proper that the Government review the whistleblowing framework once we have had sufficient time to build the necessary evidence of the impact of the most recent reforms. We acknowledge that an effective whistleblowing framework is an important part of the UK’s ability to tackle corruption and all forms of economic crime and illicit finance. These acts are, by their nature, often covert. The Government are committed to ensuring that individuals are able to speak up about the behaviour of bad actors.

In recent years the Government have continued to improve the whistleblowing framework, and we will continue to do so in future. It is important that whistleblowing disclosures are dealt with properly and by the right body. This is why BEIS maintains and regularly updates the prescribed persons order. Officials work closely with other government departments, the devolved Administrations and regulators to ensure the list is up to date. I can assure noble Lords that this work is ongoing, and we will continue to improve the whistleblowing framework in the near future.

With that, I ask the noble Baroness to withdraw her amendment.

[Baroness Kramer (LD)]

Obviously, I am very disappointed with the answer and the ongoing complacency that undermines the legislation we are passing, but at this point in time I beg leave to withdraw the amendment.

Amendment 40 withdrawn.

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[Lord Faulks (Non-Afl)]

My Lords, I entirely support what the noble Lord, Lord Eatwell, said. It is very much along the lines of the recommendations of the Joint Committee which I had the privilege of chairing. I quote just one paragraph:

“It is regrettable that, as currently conceived, the proposed Register of Overseas Entities will have insufficient verification checks to deter criminals who wish to submit false information. It therefore seriously risks failing in its central policy aim: to provide a reliable and transparent record of the beneficial ownership information of overseas entities investing in the UK property market.”


We discussed a number of the points that the noble Lord made so eloquently at Second Reading and today, including placing a greater burden on professionals to verify information. It is clearly fundamental; without verification, the Bill will not be as successful as it should be.

[Baroness Kramer (LD)]

My Lords, I will speak briefly on this issue, because I am very much of the opinion, as are many in the Committee, that a combination of both a public register—so that civil society groups, journalists, activists and people in different countries will have access to different kinds of information—and vigorous verification is the kind of safeguard we need if we are to end the history of the London laundromat and prevent London remaining a magnet for a great deal of dirty money that is floating around the globe.

Like many people, when I heard that there would be a register of beneficial owners of property that would have a verification component and that verification would be introduced at Companies House, I was elated. Then I actually read the language in the Bill and it seemed, as the noble Lord, Lord Faulks, said, so light touch that there might be something vigorous, but on an exceptional basis and not as a matter of routine. As there is little in the Bill to strengthen the responsibilities of the enablers, I am worried that we will end up with the worst of all worlds—a headline that makes it looks as though we are taking significant and serious action, but implementation that completely misses the mark.

I know the Minister has sometimes said that we have plenty of legislation to deal with enablers, and which has been strengthened somewhat, but if we had adequate legislation to deal with enablers we would not have a single instance of money laundering in this country, because nobody bringing in dirty money is able to buy a single piece of property, take control of a company or engage in any other activities without using an enabler. You need the lawyers, accountants and property developers. We clearly cannot choke off that particular avenue to sustain the London laundromat. All these things come together. I hope the Minister will look again at verification. It will partly be a matter of resources—those absolutely matter—but it also has to be standard practice that a very high level of verification is embedded to deal with every item in the register.

[Lord Pannick (CB)]

My Lords, I share the concerns expressed about the need for rigorous verification. I note that Clause 16 confers a broad power on the Secretary of State to make regulations in this field. Is the Minister able to assure the Committee that those regulations will impose a rigorous form of verification and requirements along the lines of those that have been proposed?

Economic Crime (Transparency and Enforcement) Bill

Baroness Kramer Excerpts

2nd reading
Wednesday 9th March 2022 Lords Chamber

[Baroness Kramer (LD)]

My Lords, every day’s delay in bringing in these measures costs Ukrainian lives, so these Benches join in wishing to pass the Bill urgently. We have, however, been calling for the key property ownership elements in the Bill for years, and we wish we had had them at a time when we could have gone through it carefully, clause by clause, and amended their various flaws.

I am delighted that the Minister has given us an assurance that she will bring the sequel to the Bill promptly. We will be watching for that. It must, as she said, deal with Companies House, limited partnerships and cryptocurrencies, which I am glad she mentioned. I take note that Russia, on the day of the invasion of Ukraine, moved to control key crypto exchanges, and I say to the Government that it may be necessary to move on that issue ahead of part two, because it is an obvious escape hatch that Russia is taking full advantage of. We also hope that in part two the Minister will address two other areas: trusts, which appear not to be fully covered by Schedules 2 and 3, and freeports, with their secrecy privileges. There will be a great deal to do in part two.

As for this Bill, let me start with provisions that deal with the public register of the beneficial ownership of property in the UK. Why have those with property interests purchased with dirty money and hidden by shell companies been given a six-month transition period, during which implementation is suspended? I accept that this is less of an escape hatch than the original 18-month transition period in the first version of the Bill, but it still gives any oligarch plenty of time and scope to alter their arrangements, including by liquidating and moving assets out of the United Kingdom into a safe haven. I understand that the office of the registrar needs to be staffed, resourced and trained, but that should be done urgently and, if necessary, the registrar should be loaned staff to bring its capacity up as quickly as possible.

Surely, penalties for breaching the rules should be retro-effective. It is a technique used by HMRC, particularly against small taxpayers under the loan charge, and it seems ideal to be adapted to this particular set of circumstances. Perhaps the Minister could also tell us whether there are existing powers that could be sharpened to cover the transition period.

Why does the Bill give the Secretary of State sweeping powers to exempt anyone from the register in the interests of the economic well-being of the United Kingdom? That is an incredibly broad criterion, but particularly inappropriate in this country, where allies of Putin are utterly enmeshed as major players in our economy, from media to sport to manufacturing. I am sure that no Minister would dream of making an exemption now, during the Russian invasion of Ukraine, but the clause is a message—and not a subtle one—that, once the crisis fades, anyone with a significant investment in the UK economy, regardless of the source of their money, can expect the privilege of an exemption.

Again and again in this House, your Lordships have warned that the Bill must deal with the network of enablers: the legal firms, the accountants, the developers, the banks—in effect, those who have opened the gate to dirty money and used all their skills to keep it open. I said a few days ago that this would be painful. Enablers include many respected names with very close ties to the political establishment; but why does the Bill not crack down on them and why is there no failure-to-prevent clause included in the Bill, or some equivalent kind of action? It is absolutely vital.

I will say only one thing about unexplained wealth orders. I do not wish to belittle them but, given the extraordinarily high income that oligarchs and kleptocrats enjoy from their many business interests, how useful are these orders and these clauses in our current emergency? Do they really have very much practical relevance? I am not opposed to them, but let us not put undue weight on them.

I welcome the strengthening of sanctions, but I say to the Government that, whenever anything is done in hot haste—and it has to be done that way on this occasion; I fully accept that—it is very sensible later to do a review and work out whether what was needed was done, whether there was any overreach and whether the measures were entirely appropriate. I hope we will hear that from the Government.

Lastly, enforcement absolutely matters. How confident are the Government that the Crown dependencies and overseas territories have adequate sanctions and controls and enforcement capacity? For us, what is the Government’s resourcing plan? The registrar’s office, which will have to verify all this hoarded information, will face a mountain of data and process. When will it be staffed? At the last asking, the National Crime Agency, on which we heavily depend for enforcement, had only 118 staff to investigate all financial crime, despite its complexity and the powerful lawyers and accountants used by the other side. How many additional staff, rather than transferred staff, will there be in the new kleptocrat cell and when will it be up and running, effective and fit for purpose?

If ever there was a time when we needed whistleblowers—and fast—it is now. They are not even mentioned in the Bill. The United States recently passed the Kleptocracy Asset Recovery Rewards Act, with cross-border and extraterritorial jurisdiction. Are we seriously telling whistleblowers, “Go to the Americans—we can’t be bothered”? Or will the Government commit to tackling this omission, hopefully in this part of the Bill, but, if not, absolutely, definitely in Part 2?

--- Later in debate ---

[Lord Callanan (Con)]

I cannot win on this one: if I give too much time to pre-legislative scrutiny, for consultation et cetera, I will be criticised. I cannot give the noble Lord, a definitive time because, of course, it is not purely in my hands; it depends on parliamentary time, on the Whips, on the usual channels and on the availability of the House of Commons. It is certainly my intention to get it in front of noble Lords in a matter of months but I cannot be more specific than that. It will depend on when it gets drafted and when we can get parliamentary time. It is a firm commitment that we will bring it forward in the next Session—ideally towards the start of the next Session, if that helps the noble Lord.

I welcome the support from across the House, particularly from the Opposition Front-Benchers—I thank them very much. As I just said, I can reassure the noble Baroness, Lady Chapman, and the noble Lord, Lord Vaux, that the economic crime Bill will progress under normal procedures. I am sure there will be a full and detailed discussion about it. I will speak later to some of the points of the noble Baroness, and the noble Baroness, Lady Kramer. The noble Baroness, Lady Kramer, also raised the subject of the Crown dependencies. I can tell her that I spoke to the Crown dependency Ministers earlier today, just before I came in for this debate, and they are also fully on board with these measures, looking to help wherever they can and to progress similar measures in their own jurisdictions.

Moving on, many noble Lords, including my noble and learned friend Lord Garnier and the noble Lords, Lord Rooker and Lord Faulks, raised the legitimate question of why it has taken the Government so long to introduce the legislation. I can assure them it is not for the want of trying on my part; it is purely about the pressure on the legislative programme. They, as well as the right reverend Prelate the Bishop of Leeds, stressed the importance, and I totally agree, of stopping dirty money flowing from Russia and, indeed, other countries. This is not just about Russia. It benefits us in terms of Russia but, frankly, this reform is long overdue and it will also help us in the fight against money laundering from other jurisdictions. What matters is that, despite the long delay, we are now urgently bringing this legislation forward. We were planning to put this in the wider economic crime Bill but we decided to introduce these measures earlier, to put them into effect shortly. I am grateful for the support of the Opposition in doing that, and the wider economic crime Bill measures will follow in due course.

I take the opportunity to thank my noble friend Lord Faulks again, for all his work to develop the legislation and for some of the powerful points he made today. I reassure him that since we took the measure thorough pre-legislative scrutiny, we have been able to improve the legislation to reflect some of the pre-legislative scrutiny committees’ recommendations and to align it with the broader reform of Companies House, which I completely agree we need to do, to make the measure effective. I think the legislation as a whole will be more effective as a result of the scrutiny that has taken place. This has been central to ensuring the new requirements are workable and proportionate and that the register strikes the right balance between improving transparency and minimising burdens on legitimate economic and commercial activity.

I thank the noble Baroness, Lady Kramer, the noble Lords, Lord Hannay and Lord Vaux, and my noble and learned friend Lord Garnier for their points on the transition period. I think the noble Lords, Lord Coaker and Lord Fox, made similar points. Let me explain our logic on this. We have already reduced the transition period from 18 months to six months. I understand the importance that noble Lords attach to this, but it is important to remember that the majority of properties held via overseas entities will be owned by entirely law-abiding businesses and people. To give noble Lords an idea of the scale, we are talking about roughly 95,000 properties in England and Wales owned by some 32,000 overseas entities. It is a fact that only a tiny fraction of these are likely to be held by criminal or corrupt interests.

The transition period is an important protection for the rights of those legitimate owners of property and we have to be careful about interfering with individuals’ property rights, interference that could not reasonably have been expected when those rights over the properties within scope of the register were originally acquired. This legislation has considerable retrospective effects. We have to ensure that we are respecting those rights in a way that cannot be challenged—not least under human rights legislation. No doubt, those who wish to avoid these requirements and are able to afford expensive legal teams will take advantage of any opportunity to do so.

Many of the ultimate owners will be law-abiding British companies that have adopted these structures for legitimate commercial reasons. They could include real estate investment trusts, which are public companies whose core business is to manage and own properties that generate income, or particular pension schemes that hold land and properties. Others will be British nationals who have adopted the arrangements for legitimate reasons of privacy—a point made from the Cross Benches but I forget who made it. That may involve, for instance, celebrities who do not want their address to be known publicly.

As the noble Lord, Lord Fox, observed, I am aware of the strength of feeling expressed that corrupt people must not be allowed to sell up and escape the transparency that the register will bring. The Government see merit in requiring all those selling property to submit a declaration of their details at the point of transfer of land title during the transition period. This would mean that a zero-day transition period to provide certain information immediately would be given to anyone selling. They would have to register ownership if selling, and that way we either get their ownership details immediately or, if they do not sell, we get it at the end of the transition period but in a way that still protects legitimate owners. We are urgently looking at this idea and giving it some serious consideration, but we need to get the drafting right and legally watertight, so that it is workable, effective and achieves what we want to achieve. Officials are working on this at the moment and I hope to get the proposal to noble Lords for consideration before we reach Committee.

Although the register will not be operational immediately, we expect the measures to have an immediate dissuasive effect on those who are intending to buy UK property with illicit funds. I can assure the noble Lord, Lord Faulks, that work on implementing the new register will begin as soon as we have achieved Royal Assent, and we will look to have the new register in place as soon as practicably possible—as soon as this House is able to consider and pass the relevant statutory instruments, and when some of the other measures are put in place. I should also add in response to many of the comments that all conveyancers and estate agents are already required to assess transactions for money-laundering risks and to alert authorities about suspicious activity.

I turn to the question from the noble Baroness, Lady Bennett, on the retrospective application of the register. It will apply retrospectively, thereby compelling overseas entities to register if they have property bought since January 1999 in England and Wales and December 2014 in Scotland. Those dates have been selected because they relate to when jurisdiction of incorporation was originally required by Her Majesty’s Land Registry and the Registers of Scotland when registering title documents for land. This information has never been recorded by the Northern Ireland land registry, so we are unable to make any retrospection apply there.

As set out in the Bill, if a foreign company does not comply with the new obligations, every officer in default can face criminal sanctions, including fines of up to £2,500 per day or a prison sentence of up to five years. We have also included a power to make secondary legislation that can allow the registrar to impose financial penalties for non-compliance without the need for criminal prosecution. Critically, non-compliant overseas entities will face significant restrictions over dealing with their land. That is important because by their very nature, it might be difficult to impose criminal penalties on people who are overseas. But a restriction on them being able to deal with and dispose of their land will be particularly important because that will in effect prevent sales and render the property worthless.

I thank noble Lords and others who have made insightful and important points on the importance of robust supervision and the need to tackle the so-called professional enablers. Those noble Lords include the noble Baroness, Lady Bennett, the noble Lords, Lord Londesborough and Lord Cromwell, the noble Baroness, Lady Chapman, the noble Lords, Lord Faulks, Lord Carlile, Lord Thomas and Lord Rooker, and others.

The UK supervisory regime is comprehensive. The UK regulates and supervises all businesses most at risk of facilitating money laundering, including accountants, estate and letting agents, high-value dealers, trust or company service providers, the art market and so on. We strengthened the money laundering regulations in June 2017, thereby bringing UK legislation in line with the latest international standards. This includes requiring estate agents to carry out due diligence on both buyers and sellers of property.



To be very clear to the noble Viscount, Lord Waverley, any money obtained through corruption or criminality is not welcome in the United Kingdom, including that linked to Russia or other countries. That is why we are at the forefront of global action, spanning the operational, policy and diplomatic communities to target the money launderers and enablers who underpin corrupt elites and serious and organised crime.

[Baroness Kramer (LD)]

I am sorry to intervene, but perhaps the Minister could explain why, if there is such an effective system in place, we have a problem today. Surely there is a flaw.

[Lord Callanan (Con)]

This is what we are attempting to address in this legislation. We are trying to make the system as transparent as possible, to improve the action on unexplained wealth orders, et cetera.

National Living Wage

Baroness Kramer Excerpts

Monday 17th January 2022 Lords Chamber

[Lord Callanan (Con)]

Of course, we are here discussing the national minimum wage. As the noble Baroness is aware, benefits, universal credit, et cetera, are a separate issue—it is important, but it is a separate issue. On increases in the national minimum wage, since it was introduced in 2016 it has given the lowest earners the fastest pay rise in almost 20 years, something this Government are very proud of.

[Baroness Kramer (LD)]

My Lords, some 9,000 employers across the United Kingdom pay the real living wage as calculated by the Living Wage Foundation. From April it will be 40p more an hour than the Government’s national living wage. What steps are the Government taking to persuade more employers to pay the real living wage, which virtually everyone accepts is much closer to reality in assessing the cost of living, especially at a time of inflation?

Office of the Whistleblower Bill [HL]

Baroness Kramer Excerpts

2nd reading
Friday 25th June 2021 Lords Chamber

Moved by

[Baroness Kramer]

That the Bill be now read a second time.

[Baroness Kramer (LD)]

My Lords, perhaps it would help to start this debate by explaining why I regard whistleblowers as crucial to a healthy society. To quote Stephen Kerr, the former Conservative MP and first chair of the APPG for Whistleblowing:

“Whistleblowers are the first line of defence against crime, corruption and cover ups.”


Indeed, the APPG’s first meeting coincided with breaking news of the Gosport War Memorial Hospital scandal, including stories describing how whistleblowers were ignored and silenced.

The scandals exposed by whistleblowers range from care homes, the NHS, policing, the Prison Service and transport projects to financial institutions—many of those, unfortunately—and many private companies. Research by the chartered institute of fraud has found that 42% of all internal fraud is identified by whistleblowers. But before anyone thinks all is well, the sad history of many scandals is that early warnings are ignored when they should be regarded as the canary in the mine and many whistleblowers pay such a personal price that others who want to speak out are deterred. That has to change. I see whistleblowers as a citizens’ army, not just exposing wrongdoing but significantly deterring it.

The first phase of the work of the APPG for Whistleblowing focused on providing a platform for whistleblowers to describe their experiences and recommend reforms. The lived experience of so many whistleblowers, shared in their testimonies, was a legacy of inaction and retaliation when they spoke out. This came with devastating professional and human consequences, with many seeing their lives turned upside down. Despite moves to increase the role of regulators and enforcement authorities, it remains the reality for so many whistleblowers. The APPG’s 2019 report outlined a 10-point plan to improve this situation, from a legal definition that includes all whistleblowers to proposing new ways to support individuals and protect them from retaliation. Crucially, it recommended the creation of an independent office of the whistleblower with real power to act.

In its second phase, the APPG has been talking to regulators. My assessment—the APPG has not yet concluded its work—is that most regulators regard their role in dealing with whistleblowers as very limited by law. Anyone who trawls through the various regulators’ websites will quickly find that the rules for each regulator not only differ but rarely meet the obvious expectations of whom they can hear and what they can do. This situation is confusing and chaotic, and must be improved. Every regulator will tell you how important whistleblowers are. I am sure the Minister will take the same view. I am here today because of the gap between these assertions and the reality facing those who become whistleblowers. Behind every new scandal is a legacy of vital early warnings being ignored and the whistleblowers who bravely put their heads over the parapet being left out to dry and overlooked.

I think we all agree that regulators work hard to try to ensure that the confidentiality of whistleblowers is protected, but we know that such protection often fails because the individual has already spoken internally or is one of a few privy to the necessary information. Regulators regard what most of us would call retaliation against a whistleblower as outside their jurisdiction; indeed, I have never heard of a regulator intervening in an employment tribunal case even though this is where most employees who speak out end up. Most regulators engage with whistleblowers through a call centre staffed by people trained to handle and pacify complaints, not experts capable of spotting wrongdoing. Some regulators act with alacrity. Others pay little attention to what they regard as complaints by troubled people. Interestingly, many of them greeted with sheer relief the idea of the office of the whistleblower to sort through this complex and difficult area, provide them with clarity, help whistleblowers with tailored support and help them as regulators to get on with their jobs. That is why it is important that we ensure that the office has sufficient powers to carry out this role effectively. I am particularly keen that it has the scope to examine, consult and act on knotty and difficult problems.

Who is a whistleblower? Surely it is not just a worker, as you would assume from current law. It could be a client, a supplier, a relative or a contractor, all of whom may need support and protection.

How do you deal with retaliation when it involves a real inequality of arms? It pits little people against well-funded organisations with access to the finest legal expertise and the patience to drag out a case for years. This week in the London central tribunal, as I drafted this speech, there were three whistleblowers that I know of in hearings whose current phase of litigation was costing from £24,000 for a preliminary hearing to £145,000 for a liability hearing—just a fraction of what their final legal costs will be. Dr Raj Mattu, a whistleblower who has permitted me to use his name, was a leading cardiologist fired after he exposed tragic levels of excess deaths at Coventry hospital. He spent £1.48 million clearing his name. When he was totally cleared, he was awarded £1.22 million; he still ended up facing huge bills. If the Minister says, “Well, this is the old world. It does not happen now”, I refer him to the case of Dr Beatt, which was resolved just a year ago. He was awarded £870,000; I do not yet have permission to tell people his costs but let me just say that the pattern is consistent. These costs are prohibitive and skew the system in favour of employers and organisations. We must level this playing field to enable more people to come forward.

How do we compensate whistleblowers whose professional life is effectively ruined by the informal blacklist that follows them for life? I got a lovely email from a whistleblower who has found his career reduced from senior professional jobs—on a par with, or even senior to, many of the people in this Chamber today—and who can now only find work driving a delivery van. How do we deal with confidentiality agreements, the UK equivalent of American non-disclosure agreements, which are part of nearly every settlement agreement and mean that both politicians and the public are in the dark about both the number of whistleblowers fighting to save their careers and what, if anything, has happened to counter the wrongdoing they have exposed? Is the Public Interest Disclosure Act 1998—the key piece of legislation—capable of revision, or does its place as a narrow subset of employment law mean that more overarching legislation is needed? The answer can be found through the work of an office of the whistleblower.

One objection always raised in opposition to creating an office of the whistleblower is the cost it would take to set up and run. To that I say this: the money lost through scandals and corruption far outweighs the cost it would take to run this office. But in pounds, shillings and pence, the financial penalties from one successful prosecution of financial abuse would pay for the office for years—a good example is the £45 million fine from the Lloyds Reading fraud case.

The current chair of the APPG on Whistleblowing, Mary Robinson MP, is very supportive of the Bill, and I thank WhistleblowersUK and Protect for their support. Many MPs are now exercised by the issue and, as we come out of the pandemic, whistleblowers will be crucial in addressing waste and fraud that has occurred in the Government’s Covid programmes. That is not an attack on the Government; it is making sure that people who took advantage of those programmes are identified and dealt with.

We need quick progress to ensure a proper and effective framework for whistleblowing so that corruption and fraud can be stopped in their tracks, while ensuring that those who speak out are protected and supported. I note that just two weeks ago Paul Scully MP, a Minister for BEIS, said:

“It is right and proper that we review the whistleblowing framework”.—[Official Report, Commons, 8/6/21; col. 846.]


An independent office of the whistleblower can drive and support the change we need and ensure that we build a better, fairer society for all. I beg to move.

--- Later in debate ---

[Baroness Kramer (LD)]

My Lords, it has been a superb debate. I will be exceedingly brief and will not repeat the many arguments, examples and illustrations from all around the House in support of an office of the whistleblower. I just say that I am rather sad at the Government’s response, because the fundamental core of our argument is that all the assertions of what takes place and the lived reality of what takes place are two entirely different experiences. We need something such as the office of the whistleblower to ensure that the gap is bridged. I appreciate the opportunity to exercise and discuss these key issues today and, as a consequence, I beg to move.

Bill read a second time and committed to a Committee of the Whole House.

Greensill Capital

Baroness Kramer Excerpts

Wednesday 14th April 2021 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan)]

I thank the noble Baroness for her questions. She will be aware that the Prime Minister has asked Nigel Boardman to conduct a review that will look into all the decisions that were taken around these developments and the questions of supply chain finance, which was the original point of the question that was posed. I say to the noble Baroness that I think it is a good thing that there is some cross-fertilisation between civil servants and the private sector. It is wrong for people to have experience purely in the public sector. These are long-standing arrangements. It has happened under Governments of all political persuasions.

[Baroness Kramer (LD)]

My Lords, I hope very much that the Minister will rethink his response to the noble Baroness, Lady Smith. But my question is focused on the UQ itself. There are many press reports that the British Business Bank is now taking a look at the loans that Greensill made under the CBILS programme, but what investigation is going on to understand how on earth a company with as many red flags as Greensill was accredited to the CBILS programme in the first place? We all know that the British Business Bank told us, when we questioned why there were such long delays in many of the challenger and alternate lenders getting approval to make loans under CBILS, that it was a very thorough accreditation process, so we need some proper answers to that. Can he also tell us whether Greensill was put at the front of the queue for getting accreditation, along with any other companies that came with recommendations from Government or Conservative Party members, in the same way as the VIP system for procurement of PPE worked earlier in the year, which the Government have acknowledged?

[Lord Callanan (Con)]

The noble Baroness makes a number of allegations that are not supported by the facts. Greensill’s applications for accreditation to both CBILS and CLBILS were assessed independently by the British Business Bank on the basis of the separate criteria for those schemes, which were designed to be accessible to a range of lenders in accordance with the goal of supporting lending to businesses impacted by Covid-19. A number of similar companies went through the same process and were also accredited to the schemes.

Trade Bill

Baroness Kramer Excerpts

Report stage & Report: 3rd sitting (Hansard) & Report: 3rd sitting (Hansard): House of Lords
Wednesday 6th January 2021 Lords Chamber

Moved by

[Baroness Kramer]

27: Clause 6, page 4, line 16, at end insert—
“( ) In order to provide the Secretary of State with the advice, support and assistance under subsection (1), the TRA must within six months of its establishment publish a strategy for its engagement with stakeholders, including, but not limited to—(a) representatives of climate change and environmental groups,(b) businesses,(c) small businesses,(d) trades unions,(e) consumers, and(f) each of the devolved administrations.”

[Baroness Kramer (LD) [V]]

There are many issues to cover this evening. I am moving Amendment 27, in my name and those of my noble friend Lord Purvis of Tweed and the noble Baroness, Lady Bennett of Manor Castle, which is designed to ensure that the TRA engages with and listens to a wide range of concerned stakeholders as it does its work and does not disappear into its own bubble. Appointing representatives of stakeholder groups to the TRA does not achieve the purpose of wide engagement—I wish it did—but the responsibilities of TRA members prevent them from advocating even in areas where they are specialists. The role of TRA members is to assess the procedures followed by the TRA against its rules and mandate. I have no objection to the appointment of the diverse and widely experienced range of members to the TRA as proposed in Amendments 47 and 48, but it will be an unsatisfactory body if it does not hear from a wide range of voices as it seeks to make its determinations.

Amendment 27 would require the TRA both to develop an engagement strategy and publish it. I drafted a suggested list of stakeholders with which the TRA must engage but the list is deliberately not limited. It would make sure, for example, that small businesses, unions and consumers were heard but also climate change and environmental groups, all of whom will contribute to the TRA’s understanding of the implications of its decisions, and those decisions will genuinely matter. I beg to move.

[The Deputy Speaker (Baroness Henig) (Lab)]

I call the next speaker, the noble Lord, Lord Purvis of Tweed.

--- Later in debate ---

We have had applicants from a wide range of backrounds and all areas of the UK, and I assure noble Lords that appointments are being made on merit. As I said earlier, being beholden to a narrow and ambiguous set of criteria to appease certain interest groups would be unhelpful and open to interpretation and misinterpretation. I hope that these explanations have reassured noble Lords and that the amendments can be withdrawn.

[Baroness Kramer (LD) [V]]

I will be brief. I was disappointed by the speeches of the noble Viscount, Lord Younger, the noble Baroness, Lady Noakes, and the noble Lord, Lord Lansley. I heard that the TRA should engage with one stakeholder group only: producers. It was an outdated and out-of-touch view of the role of trade within the UK economy. If the Government pursue this path, it will be one to rue. I hope that the Government go away and think again, but I will not press Amendment 27. I thank all noble Lords who spoke in support of the very constructive amendments in this group.

Amendment 27 withdrawn.

Trade Bill

Baroness Kramer Excerpts

Report stage & Report: 2nd sitting (Hansard) & Report: 2nd sitting (Hansard): House of Lords
Tuesday 15th December 2020 Lords Chamber

Moved by

[Baroness Kramer]

15: After Clause 2, insert the following new Clause—
“Investor-state dispute settlement
(1) The United Kingdom may only become a signatory to an international trade agreement if the conditions in subsections (3), (4) and (5) are satisfied.(2) The Secretary of State may not lay a copy of an international trade agreement before Parliament under section 20(1) of the Constitutional Reform and Governance Act 2010 unless the conditions in subsections (3), (4) and (5) are satisfied.(3) The condition under this subsection is that an international trade agreement must include a commitment by all parties to the agreement to pursue with other trading partners the establishment of a multilateral investment tribunal and appellate mechanism for the resolution of investment disputes.(4) The condition under this subsection is that legal proceedings brought against the United Kingdom under investment protection provisions included in an international trade agreement must be heard by the courts and tribunals system of the United Kingdom.(5) The condition under this subsection is that the provision in subsection (4) ends for any international trade agreement when a multilateral investment tribunal and appellate mechanism for the resolution of investment disputes is established under that trade agreement.”Member’s explanatory statement
This new Clause would ensure that there is a commitment by all parties to a trade agreement to pursue the establishment of a multilateral investment process to adjudicate on investor disputes.

[Baroness Kramer (LD) [V]]

My Lords, I will speak to Amendment 15 in my name and that of my noble friend Lord Purvis of Tweed. It is in essence very similar to Amendment 19 in the name of the noble Lord, Lord Stevenson of Balmacara. Great minds, as it were, think alike. I should give notice that, given the breadth of the agreement, I am minded to press the matter to a Division, unless the Minister concedes.

If anyone thinks for a moment that dispute resolution in a trade deal is a minor issue, I would point them to the impasse in the UK-EU trade negotiations. A trade dispute resolution goes to the very heart of any trading relationship, and that sits behind these two amendments. Traditionally, disputes under a trade agreement have been adjudicated through arbitration schemes—which are generally labelled investor-state dispute settlement, or ISDS—rather than a court system. To say that this has become problematic is an understatement. Decisions have a history of being inconsistent, they award compensation that can undermine domestic law, they typically act in secret, and they cannot be appealed.

ISDS arrangements are no longer fit for purpose. They have led to public suspicion and, frankly, hindered the drive to increase global trade; they were a major reason for the collapse of the TTIP negotiations. For this reason, during its time in the EU, the UK was instrumental in pushing for the replacement of ISDS with a multilateral investment tribunal and appellate mechanism—the appellate part being very important—thereby removing any suspicion of bias and providing for appeal. The EU has been clear, even with the UK’s departure, that it intends to pursue this change, and it has been introduced in a number of its revised and latest trade agreements, notably, but not exclusively, with Canada.

I would argue, and I think many others were arguing, that the UK needs to remain at the forefront of this change. I am afraid that I am unclear whether the terms that the EU has agreed with Canada over dispute resolution have been replicated in our trade deal with Canada. Perhaps the Minister will enlighten me. The EU-Canada deal gives us a template. It will appoint 15 judges to hear cases on a rotational basis: five from the EU, five from Canada and five from among third-country nationals—in other words, neutrals. The rules ensure transparency of proceedings and clear standards of investor protection. But they also limit the grounds on which an investor can challenge a decision made by a state. For example, a challenge cannot be made simply on the grounds that profits are affected.

Amendment 15 would ensure that in all future trade agreements, the UK agrees with its trading partners at least on the principle of moving to such a mechanism for dispute resolution—it would be even better if it actually achieved it, but at least the principle is agreed. Amendment 15 also ensures that in the interim, until the new system is in place, the UK does not depend on arbitration systems to resolve trade disputes but is heard in the courts and tribunals of the UK. Amendment 19 follows a similar path of logic.

Effectively, these amendments stop the abuses associated with ISDS. I suspect that future speeches will provide some significant illustrations of the problems that have occurred. These amendments provide an incentive and create an opportunity to achieve the goal of a multilateral tribunal system. For that reason, I beg to move.

[Lord Lansley (Con)]

I am very pleased to follow the noble Baroness, Lady Kramer. We are grateful to her and to the noble Lords, Lord Purvis and Lord Stevenson of Balmacara, for raising this important issue. Since we touched on these issues in Committee, events have moved on a bit, which allows us to further explore the Government’s approach. I do not support the amendments, but they create a very good opportunity for the Government to tell us more about their approach to investor-state dispute settlement in the negotiation of international trade agreements.

I say to the noble Baroness, Lady Kramer, just to put Canada in context, that the Government did lay the Canada-UK agreement last Thursday, which I have had a chance to look at. What it effectively does, across a wide range of chapters, is incorporate the EU-Canada partnership agreement. But in this respect, on investor protection, it says that this is not to come into force. It says there will be a period of time during which the United Kingdom and Canada will review what their investor protection arrangement should look like, and, if they agree within something like a three-year period, they will replace what is in the current EU-Canada agreement.

Although the noble Baroness, Lady Kramer, said that the EU-Canada agreement is a model, it is not the model she is looking for in her amendment. The tribunal is a bilateral investor protection arrangement, with judicial members from the two parties plus independent members, but it is not multilateral. What it does say, in Article 8.29, is that both parties agree—and here the words are reflected in her amendment—

“to pursue with other trading partners the establishment of a multilateral investment tribunal and appellate mechanism for the resolution of investment disputes.”

Clearly, Canada has done that; it has put into the United Kingdom-Canada rollover agreement the opportunity to consider a multilateral investment court system. But we are not signed up to one, and we will have to see what the Government’s approach will be. The EU and Canada have not actually brought this into force—it has not been ratified—so we have not seen anything final.

Having a multilateral investment court system depends on the consent of parties around the world, and they have not signed up to it. The New Zealand and Australia Governments resisted ISDS in the context of the CPTPP, or TPP 11 as they call it. That makes it difficult for us, in New Zealand and Australia agreements, to invite them to do more than they have already done. On the other hand, Japan has remained consistently supportive of ISDS provisions, and that, I suspect, is probably a simple reason why the EU-Japan comprehensive economic partnership agreement does not have an investment chapter.

I am afraid that the conditions for an amendment to the Bill that sets such a prescriptive approach to international trade agreements on investor protection do not exist. With too many of our leading partners—including, for example, Japan—we would have no agreement that would allow us to sign an agreement if this provision had been in statute. That is especially true where the United States is concerned. Japan does not have a difficulty with ISDS, not least because it has not been a respondent country to a claim. As it happens, only on five occasions have Japanese companies pursued ISDS claims against other countries. When we come to discuss this with the United States, the difficulties are legion because, when I last looked, the United States had 190 claims against other countries and ISDS procedures reported to UNCTAD and was the respondent to 17 claims. It not only adheres to ISDS provisions but uses them a lot. Therefore, it may be difficult to persuade the United States to adopt a multilateral investment court system. The other difficulty is that it would prevent us from pursuing our bilateral investment treaties in the way we have. We may want to continue with that, and assuredly we will. We have over 100 of them, and I do not think we want to let them go, until and unless there is a multilateral investment court system in place.

It would be interesting to know from my noble friend the Minister if the Government have a plan to pursue a multilateral investment court system, as has been the EU’s approach in its negotiations. If so, I would agree, but that does not mean we should have a prescriptive measure in statute that means we cannot agree an international trade agreement with another country, except in the circumstances in which this is incorporated, not only for us but for the other parties. It is an interesting opportunity, but I fear I cannot support Amendment 15.

--- Later in debate ---

[Baroness Kramer (LD) [V]]

I thank everybody for a superb debate. The noble Lord, Lord Hendy, as always, put the case so powerfully. I thank my noble friend Lord Purvis for following up on the Canada agreement, and the noble Lord, Lord Stevenson, for his recognition that Amendments 15 and 19 are essentially the same. He was a little kinder, providing a little wiggle room for ISDS, under very limited circumstances, in his amendment, but I think he has become convinced that even that degree of wiggle room is probably best removed. I very much appreciate how supportive he has been.

I say to the noble Baroness, Lady Bennett, that we all have so many amendments to read that she may have missed the fact that, other than that little extra leeway for ISDS in Amendment 19, Amendments 15 and 19 take exactly the same tack and frequently use the same language—we derived our language from the same source. If she wants to look herself, if she looks at new subsection (5) in Amendment 19, she will see that the language on the international trade agreement in Amendment 19 is essentially identical to that in Amendment 15. Both amendments look, in the interim, to use the UK courts system.

I say to the noble Lord, Lansley, that I think he actually made a very powerful argument for passing this amendment. He pointed out that, in negotiations with the United States, it will be exceedingly difficult for the UK to object to ISDS language unless it is provided with some weapons, and this amendment is such a weapon. If Parliament makes it clear that it will require commitments to move to a multilateral agreement, that is a position on which the UK can take a stand. Without the amendment, we will face ISDS language in the US trade agreement, if that is ever concluded.

I was a banker in the United States for many years. It is a very litigious country, and I am also well aware that the clients that I dealt with, which were large multi- nationals, viewed ISDS as a weapon. That is often not the attitude in the UK or many other countries across the globe. Just as, internally in the United States, the law is frequently used to add advantage for a company against its competition, ISDS is regarded as a tool to gain advantage over domestic companies in other countries, and it is used effectively by very well-resourced legal departments. We would really regret signing a trade agreement with the United States that could not contain the traditional format of an ISDS arrangement.

The noble Baroness, Lady McIntosh, and, I think, the noble Lord, Lord Lansley, cast doubt on the new arrangements in the EU-Canada deal. I suggested that it provided a template, and my noble friend Lord Purvis was kind enough to expand on that issue and explain that what starts out as a bilateral arrangement is expandable into a multilateral arrangement, which strikes me as a very positive and sensible way to go. It is not yet in place, but that is because the complexities of putting a new system in place are not minimal. A big hurdle was passed in April this year when the ECJ ruled that the multilateral court process anticipated in the CETA agreement was in keeping with EU law. I understand that the first judges will be appointed sometime early next year. That is moving ahead, but it is not an instant process—indeed, the agreement itself anticipated a temporary arrangement while the new scheme was more fully developed.

I think this is a key issue. We really need to put down a marker that ISDS is simply unacceptable. The multilateral court system is one that we have supported and promoted and it very much fits with the UK’s traditions. This is our opportunity to affirm that and ensure that our negotiators have that tool in hand when they step into trade negotiations. For that reason, I will, if I may, divide the House.