Oral Answers to Questions

James Daly Excerpts

Monday 20th March 2023 Commons Chamber

[Mr Speaker]

I call Neale Hanvey—not here.

[James Daly (Bury North) (Con)]

In 2021, only about 10% of rape allegations were referred by the police to the Crown Prosecution Service. The figure is even lower when we take into account other sexual offending. Has my hon. Friend ever received a satisfactory explanation from the police for such a lamentably poor referral rate?

[The Parliamentary Under-Secretary of State for the Home Department (Miss Sarah Dines)]

My hon. Friend is right to raise this really important issue. The nub of the issue is that historically police officers have not developed a new way of dealing with rape in a modern, digital world, among other things. I am pleased to say that the Government are investing extra money in education in this field. For example, the Government are supporting the National Police Chiefs’ Council and the College of Policing to design and pilot a new rape and other sexual offences investigative skills development programme for police officers, to make sure they know how to deal with victims. Chief Constable Crew, down in Avon and Somerset, is doing similar work.

Illegal Migration Bill

James Daly Excerpts

2nd reading
Monday 13th March 2023 Commons Chamber

[James Daly (Bury North) (Con)]

After that extraordinary contribution, which mirrored a number of contributions we have heard, let me first say something about the irony of those on the Opposition Benches criticising rhetoric and incendiary language. So far, we have had one Member describe the Bill as “fascist” and one describe it as “racist”—we have gone through the whole gamut of left-wing clichés. I am not bothered, Madam Deputy Speaker; it does not concern me what any single Opposition Member thinks about what I believe and what I stand for. But it does concern me when they slander my constituents and millions of people throughout this country who have legitimate concerns about small boats and their social consequences. We are spending £6 million a day—the total is £3 billion and rising—on hotels, and we are expected, as a Parliament and a Government, simply to do nothing. I believe that this legislation is needed.

Let us get to the heart of the Bill, rather than the rhetoric that we have heard from Opposition Members. Let us see whether the British people disagree with this. The Bill makes provision for an annual cap on the number of people admitted to the UK through safe and legal routes. Who disagrees with that? Nobody. Numerous countries, all over the world, have an annual cap. Would it not be nice for this place, just for once, to take some responsibility for immigration policy—not to subcontract it to a court or somebody else, but to decide the type of immigration we need and where we need it?

Let us talk about capacity—this is never addressed by the Labour party. In my area, we have no housing, we have no doctors’ places and we have no school places. This is something the Labour party just simply wants to ignore. Migration policy is related to a number of different factors, but it is an eminently sensible policy that the people of this country support. Let us go on to the next one that is such an outrage, which is promptly removing those with no legal right to remain in the UK. That is a principle, and there is a legitimate debate to be had about how successful we have been, but how can we argue about that as a principle? There will be a legal duty on the Home Secretary to remove people within a reasonable and practicable time, and a 28-day period to allow that to happen. How on earth can that be unreasonable? This is a policy that responds, and it is what we should have.

In the current system, we have the ironic situation with the Home Office where we have doubled the number of case workers and have lost productivity. We need some targets, and we need people to be held accountable. What this Bill is about, which Opposition Members do not want, is holding each and every single one of us accountable for what we believe in terms of immigration policy and it is about how that immigration policy can be put in place in a reasonable, sound and fair way for every single person in our country.

Illegal Migration Bill

James Daly Excerpts

Tuesday 7th March 2023 Commons Chamber

[James Daly (Bury North) (Con)]

I warmly welcome the legislation. Will the Home Secretary confirm that running through it is the central theme that the only route to asylum in the UK is a safe and legal route, with an annual cap on the number of refugees? The annual cap is the crucial point. This is democratic accountability. Migration must be based on the country’s capacity and capability to house and support people. We cannot have open borders, whatever the other side pontificates. May I ask my right hon. and learned Friend when we will vote on the migration cap? I welcome her statement, as it is exactly what my voters want—well done to the Home Secretary.

[Suella Braverman]

My hon. Friend speaks a lot of sense. The British people did not vote for 40,000 people to arrive here on small boats. They did not vote for our immigration laws to be broken. They voted for representatives to serve in this place to speak up for them. That is why I urge every Member of this House to get behind this Bill and stop the boats.

Manchester Arena Inquiry: Volume 3 Report

James Daly Excerpts

Monday 6th March 2023 Commons Chamber

[Suella Braverman]

The hon. Gentleman asks about changes to the counter-terrorism system and in particular the refresh of our world-leading counter-terrorism strategy, CONTEST, which is being updated to protect the public from new and emerging threats to our way of life. As I say, we expect to publish the updated version of CONTEST later this year. We want to ensure that it achieves its aim of reducing the terrorism risk to the UK, so that people can go about their lives freely and with confidence. It is based on prevent, pursue, protect and prepare, and we must ensure that it is fit for purpose so that the public are kept safe from terrorism.

In terms of support for the families, they have been frankly heroic in the ordeal that they have been through in voicing their concerns, giving evidence and dealing with the tragedy of this horrendous incident. They have been very powerful. Their evidence has informed the recommendations and the conclusions, which will inform the practice of MI5 and all our security agencies, and for that I am grateful.

[James Daly (Bury North) (Con)]

Olivia Campbell-Hardy, from Bury, was 15 years of age when she went out that evening and did not come back. She was a beautiful, wonderful person. Today we have the third volume of the report, which says there was

“a significant missed opportunity to take action”

on the part of MI5. We have also had previously highlighted the shocking failures of the venue’s owners, the security contractors and the emergency services. Some of those who died—not all of them—could still be alive today, and I would like to know about accountability. Too often in this place, an apology from an organisation seems to be enough. Well, it is not. People died as a result not only of the actions of this bomber, but because of the gross negligence of some of the bodies I mentioned. Who is being held accountable, who will be responsible, and will that information be passed on to the families?

[Suella Braverman]

As the inquiry’s report makes clear, the responsibility for the events of 22 May 2017 lie with the bomber and his brother. Responsibility rests with them. When it comes to whether lives could have been saved, the Government are of course incredibly sorry—I understand that sorry is a weak word for the people directly affected, and our thoughts remain with them—but Sir John Saunders is also clear in his conclusion:

“It remains quite impossible to say whether any different or additional action taken by the authorities could have prevented the Attack. It might have done; it might not have done.”

He also says that it is

“very hard to say what would have happened”

if the bomber

“had been approached under Prevent or the Channel programme.”

It is difficult to make those clear, direct causal connections. However, as I have said before, he does not shy away from saying that there was a significant oversight and there were failings in the process. There are no words that will provide solace to the families affected, but I hope that they can gain confidence from knowing that huge seriousness is attached to this report and we are doing everything in our power to make sure that the lessons learned will be applied in the real world.

Police Conduct and David Carrick

James Daly Excerpts

Tuesday 17th January 2023 Commons Chamber

[Suella Braverman]

I want to do what works, which is why I have taken very seriously what the Met commissioner has said about the process relating to police misconduct hearings and disciplinary processes. I have been clear that where there is a role for Government, we will act, but it is important that we look carefully at the issue. That is why the review I have just announced will cover issues such as the legally qualified chairs, to ensure that they are striking the right balance and making the right decisions. It is important that we ensure that the trends in the use of misconduct sanctions and the consistency of decision making in cases of sexual misconduct, other violence against women and girls and such offences are appropriate. Those are the kinds of things we need to look at very carefully.

When it comes to the Metropolitan police, as I have said, the Met commissioner has instituted a new anti-corruption and abuse command specifically to look at any other risk factors and any other issues relating to this kind of incident. An extra 100 officers were drafted in to use covert tactics to identify officers who act in a corrupt or predatory manner, including those who abuse their positions in the police. I am encouraged by those early commitments by the Met commissioner, and I think we need to get behind him so that we can radically improve the system.

[James Daly (Bury North) (Con)]

I think Sir Mark Rowley’s statement yesterday was pathetic. It was a statement of the blindingly obvious, and anybody can say sorry for what has gone on. This is an absolute scandal, and I wish to support what the Mother of the House has just said. In no comment that has been made has there been any suggestion of the accountability of anybody else in the Metropolitan police over many years for this man’s conduct. His egregious behaviour was known—there were seven or eight allegations regarding his behaviour—yet nothing was done. We have had excuse after excuse after excuse. We can worry about the future, but there are people in the Metropolitan police who enabled this man to continue being a threat to women and girls, and they should be sacked.

[Suella Braverman]

It is important to note that David Carrick’s initial vetting to join the Metropolitan police took place in 2001, prior to the introduction of national standards on vetting, and prior to the regime that has been in place since 2017, which was introduced to ensure consistency in decision making. My hon. Friend rightly expresses frustration with the situation, and I agree. It is incredibly frustrating to be here yet again after another tragedy. But I would just gently push back. I have confidence in Sir Mark Rowley. He joined the leadership of the Met recently, and he has not hesitated in accepting the enormity of the problems that the Met police currently face. He has presented a plan and is already taking tangible action to deliver on it. He understands that there is a problem with confidence in the Met police, and challenges and problems with standards and performance. He is honest and frank about those challenges and does not shy away from fixing them.

International Day for the Elimination of Violence Against Women

James Daly Excerpts

Thursday 1st December 2022 Westminster Hall

[Caroline Nokes (Romsey and Southampton North) (Con)]

It is a pleasure to serve under your chairmanship, Ms Elliott. I will start where my hon. Friend the Member for Thurrock (Jackie Doyle-Price) finished: by talking about the pointy-elbowed, middle-class privilege that allows me to stand here and say that still, in 2022, we cherry-pick which victims we think are innocent and which we do not. That is why there is massive media coverage of some cases and not of others. We like our victims to be young, blonde and white, do we not? When police community support officers of my age are killed, it makes barely a headline, as in the case of Julia James. The murders of young women such as Bibaa Henry and Nicole Smallman, whose photographs were taken by police officers, do not gain the same number of column inches as the murder of Sarah Everard. When women such as Raneem Oudeh and her mother are murdered while the police are ignoring their calls for help, we must wonder what cultural element came into that.

It is important that we stand up in this House and are prepared to use our pointy-elbowed, middle-class privilege to highlight that, in this country, on International Day for the Elimination of Violence against Women, we need to get our own house in order. We need to be prepared to legislate for things such as public sexual harassment. Let us face it: countries such as Morocco have managed to legislate for that, but we still have not.

I have high hopes for my right hon. Friend the Member for Tunbridge Wells (Greg Clark) and his private Member’s Bill. I pay full credit to police forces such as Nottinghamshire police for collecting statistics on misogyny as a hate crime, but we need that to be rolled out to more police forces across the country. In this place, we have done some great work and every year the hon. Member for Birmingham, Yardley (Jess Phillips) stands up in the Chamber on International Women’s Day and reads that great long list—which is not getting shorter—of those women who have been murdered over the previous year. At her behest, a couple of weeks ago I met, virtually, Carole Gould and Julie Devey, the mothers of Ellie Gould and Poppy Devey Waterhouse—young women murdered by their partners. Carole and Julie have set up a new organisation, Killed Women, specifically to make sure that we listen to the victims and consider the aftereffects for those families who have lost a loved one in horrific circumstances. We all need to listen to those stories and understand the very profound impact that ongoing violence against women is having in this country.

I will speak very briefly of the work that the Women and Equalities Committee is doing on this subject. I pay tribute to you, Ms Elliott, for having been a guest in a recent session. We are looking at sexual harassment, misogyny, violence against women, and sexism in all its forms across a variety of areas in this country, whether in schools, colleges and universities—I pay tribute to my hon. Friend the Member for Thurrock for the great work she did on that before she left the Committee—or in the music industry, where black women are overly sexualised. We know from the case of Child Q that black children are—I am not sure if this is even a word—adultified and treated as adults when they are still children. That still happens way too often. We heard of the horrors of being a young black woman in the music industry—they were truly horrific in the same way as the sexism in football that we heard about.

Similarly, we hear time and again about how women at university are treated appallingly and how, in too many cases, the institution does not stand up for them. I will highlight Bristol University—apologies to the hon. Member for Bristol South (Karin Smyth) for referring to her city again—because it did not support a young woman who spoke to me yesterday on this subject. When she went to the police, she was told that she had to think of the mental health of the student she was accusing of sexually harassing her. That, to my mind, is absolutely unthinkable. How are we going to empower and encourage young women to have the courage to come forward, speak of their experiences and press charges when they are being told to consider the impact on the individuals they are accusing? We know that 97% of the accusations made are truthful.

I want to pay tribute briefly, in 50 seconds or less, to—

[James Daly (Bury North) (Con)]

Will my right hon. Friend give way?

[Caroline Nokes]

That will not give me an extra minute. I pay tribute to former Ministers who have worked so hard on this issue, some of whom are sitting in this room today, including Ministers from across the Home Office who worked so hard on the tackling violence against women and girls strategy and on finally getting the Domestic Abuse Act 2021 on the statute book. My message to all of us is that there is more that we can and must do. We have to keep pressing forward. If we do not do that, we will not be able to look around the globe and wring our hands in horror at the actions that we see elsewhere, when our own house needs to be in much better order.

--- Later in debate ---

[James Daly (Bury North) (Con)]

I have the honour to serve on both the Home Affairs Committee and the Justice Committee. For the best part of 20 years before coming here I was a criminal defence solicitor—a witness to the depravity of male violence against women in all its forms—so I shall confine my remarks to the criminal justice system.

There is always a temptation to sugar-coat some of the figures, but we should not do that; we should be honest. The charge rate for rape in this country is a national scandal—a national disgrace. It is 1.7%, so when we talk about conviction rates we are talking about 68% of 1.7%. In the year ending March 2022, the police recorded the highest annual number of rape offences ever: 70,330. Charges were brought in just 2,223 cases, meaning that only one in 100 rapes recorded by the police in 2021 resulted in a charge, let alone a conviction. How can that be? As my right hon. Friend the Member for Romsey and Southampton North (Caroline Nokes) said earlier, for that to be anywhere near correct we would have to state that 99% of cases were simply untrue, which is nonsense. We have to face up to the reality that we have to have a system that delivers more charges to put more people before the court and properly prosecute and take seriously these incredibly serious matters.

But it gets even worse than that; it is not simply about rape convictions. This week the Home Affairs Committee heard from Professor Alexis Jay, who was the author of an independent report into child sexual abuse involving scandals in various places. The inquiry cost £187 million and took seven years to come to its conclusions. Professor Jay said that agencies such as the police had reduced the priority placed on investigating child sexual abuse, and that the focus had gone to other important areas. We have got to a situation where a report has been required and the situation is worse than when it started. Professor Jay went on to say that there has been a general view—this is now; not seven years ago—that children in care were not worthy of protection, especially girls. That is now. So we have no cases going through.

In terms of other offences of violence, we are not simply talking about rape here. The prosecution rates for other offences of harassment and the like are just as dire as the ones that we see for rape. We therefore get to some fundamental questions about what we are as a country and what the criminal justice system exists for. A factor that was very clear to me during my time in private practice was that if somebody was suffering from mental health problems, addiction or homelessness, there was not a chance that their case would be referred by the police to the Crown Prosecution Service for prosecution. They were viewed to be unworthy and unreliable with their evidence. Our system is as bad as I have described: the more vulnerable a victim someone is, the less chance they will have to access not only justice within the criminal justice system, but support and counselling services. It is non-existent.

Opposition Members and Government Members have made some very valid points on the fact that there is no housing, as is the case in my area. Victims of domestic violence are stuck in the house—there is nowhere for them to go. In my area, there are limited refuge services. There is no safe space for women to go. How have we got to this situation?

In terms of practical solutions, we have a criminal justice system. This is unfair on the Minister, in a sense—it should be a Minister from the Home Office or the Ministry of Justice answering this debate—but we have to make these points very clear. We have to get to the heart of the matter. The relationship between the police and the Crown Prosecution Service has to be straight- forward.

If a woman comes in and makes an allegation that somebody has done an appalling act to her, they should be charged with that offence. It is not for the police or the Crown Prosecution Service, in my view, to decide what is right and what is or is not a proper allegation. That person should be put before the court and prosecuted. If they are not, we are creating a system where people are being told that they are untruthful before even entering the system. I can only speak from looking at this myself. Why would someone want to put themselves through this system, when the person will be months on bail and years going through the court system, and it is only 1.7% of the people who actually do the offence in the first place who even get to that point? It is a scandal of prolific proportions and it is getting worse and worse.

There are wider cultural questions but, putting it bluntly, we have to take this seriously. We have to make sure that young girls are not scared to go out in Bury or other areas on a Saturday night. If they contact the police, people need to be charged, held to account and sent to prison. Unless that happens, men will continue to act in this barbaric way against women and we as a country will continue to hang our head in shame at the situation we are in.

Oral Answers to Questions

James Daly Excerpts

Monday 14th November 2022 Commons Chamber

[The Minister for Crime, Policing and Fire (Chris Philp)]

There is no need for smoke and mirrors when the police budget this year is £1.1 billion higher than last year, and there is no need for smoke and mirrors when on completion of the police uplift programme in just a few months’ time, there will be more uniformed police officers on our streets than at any time in this country’s history.

[James Daly (Bury North) (Con)]

T7. What steps are the Government taking to increase charging rates for offences of rape, serious sexual offending and harassment against women and girls?

[The Parliamentary Under-Secretary of State for the Home Department (Miss Sarah Dines)]

I thank my hon. Friend for his serious question, and I know he works hard in Bury North to talk about the issue. The Government are committed to tackling violence against women and girls. We are taking action through the rape review and the tackling violence against women and girls strategy and tackling domestic abuse to improve the police’s response to these crimes. Charge volumes for rapes are up 8%. It is not enough, and there is a lot more to do, and we are working hard with schemes such as Operation Soteria in the hope that these good practices will progress throughout the country.

Asylum Seekers Accommodation and Safeguarding

James Daly Excerpts

Monday 7th November 2022 Commons Chamber

[Robert Jenrick]

The hon. Gentleman is wrong to suggest that the UK Government pressurise any individual to falsely identify as a child. It is the people smugglers who do that; we are doing everything we can to clamp down on it. I have been to Western Jet Foil at Dover to meet the Border Force staff who try to make those assessments. At times, up to 20% of the adult males who arrive at Western Jet Foil claim to be under 18, when clearly the number is substantially less than that. We have already changed the law, which I think the SNP voted against, to change the way in which those tests are administered, and if we need to make further legal changes, we will.

The hon. Gentleman is right to say that it is wrong that many children, in particular unaccompanied children, are in hotel accommodation. I want to change that. The way to do that is to encourage more local authorities throughout the United Kingdom to accept those individuals and to help them into private or state foster parenting arrangements. We have put in place a significant financial package of about £52,000 a year per foster carer per child to ensure that can happen, plus a £6,000 up-front payment to the local authority to help to accommodate that. The financing is available, so I want to ensure that more local authorities step up. If he can encourage those run by his SNP colleagues in Scotland to do so, I would be happy to support him.

[James Daly (Bury North) (Con)]

The question for my right hon. Friend is not how many hotels we can book, but how we can stop the increasing number of migrants coming across the channel this year. We have seen more than 10,000 adult males from Albania aged 18 to 40—that is between 1% and 2% of the population—coming to the United Kingdom. We will not have enough hotels in the country if they continue at that rate. What is his view on the agreement that was entered into on 18 November 2002 between the German and Albanian Governments, which allowed Germany to deport Albanians who did not arrive in the country with a valid residence permit? That would allow us to take quick action to take people out of the country who should not be here.

[Robert Jenrick]

My hon. Friend raises an extremely important point. We want our asylum system to be available to those who truly need it—those who are fleeing persecution, war and human rights abuses around the world. We should not be a harbour for those who are essentially economic migrants coming from safe countries such as Albania. We need to change that. We have now negotiated a return agreement with Albania and 1,000 Albanians have already been returned home under that. I now want to see—I know my right hon. Friend the Home Secretary shares my view—a fast track whereby Albanians who do not meet our asylum criteria have their cases processed quickly and are swiftly returned home. It cannot be right that we are seeing thousands of Albanians making this crossing and essentially taking advantage of the welcome and hospitality afforded to them here in the UK.

Western Jet Foil and Manston Asylum Processing Centres

James Daly Excerpts

Monday 31st October 2022 Commons Chamber

[James Daly (Bury North) (Con)]

So far this year, 12,000 Albanians have entered the United Kingdom through small boat crossings of the channel, and 10,000 of those are adult single males. As commander Dan O’Mahoney told the Home Affairs Committee, the main driver of that activity is the strength of organised Albanian criminal gangs in the north of France and the transfer of that behaviour to the United Kingdom, together with the determination of people to work on the black market. There is no reason for these people to be here. We should follow the route of other European countries and ensure that they are returned immediately to Albania. What discussions has my right hon. and learned Friend had with her Albanian counterpart to address this important issue?

[Suella Braverman]

I could not agree more with my hon. Friend. He identifies exactly the problem we are dealing with, and it needs a multifaceted approach that includes deploying and operationalising our returns agreement with Albania and ensuring we take robust action against the many people coming here from Albania with illegitimate aims.

Economic Crime and Corporate Transparency Bill (Fourth sitting)

James Daly Excerpts

Thursday 27th October 2022 Public Bill Committees

[Alison Thewliss]

Q Thank you, that is useful. As one of the organisations under the OPBAS umbrella, how do you feel that is going with anti-money laundering supervision because there has been some criticism of that regime and its efficacy? Looking at the 2019-20 figures, I understand that you cancelled 10 memberships and issued 39 fines totalling £117,000 to members. What does that stand at now, and is it an effective deterrent?

Mike Miller: I do not have the up-to-date figure with me today, but I can come back to the Committee with that in writing. Generally, in OPBAS, we are obviously very supportive on the need to have professional bodies for oversight of regulation for anti-money laundering. There is obviously a Treasury consultation going on into the potential restructuring of OPBAS. We have been working closely with it to ensure that our members are represented, but also so that it will be the most effective oversight that it can be.

ICAEW is the largest supervisory body in that space. We are very proactive in taking a risk-based approach. We cover a lot of firms, and it is necessary that a lot of those inspections are carried out based on where we assume there is a higher level of risk of illicit financial transactions. Whether that should be changed is obviously something that we will come back to in the consultation.

We have been speaking regularly to Treasury and other groups. They are collecting intelligence to try to determine, I think, some concrete proposals before they put it out to consultation, but we are very supportive of OPBAS. We continue to work closely with it and have a strong supervisory body in place for the PBSs.

[James Daly (Bury North) (Con)]

Q Under the Bill exemptions from the main money-laundering offences would apply in two sets of circumstances. One is when a regulated business ends a business relationship with a client or customer and hands over property worth less than £1,000 for that purpose. The second is where a regulated business is dealing with property for a client or customer and prevents access to property of equivalent worth. Do you have any view on those exemptions and how they would potentially affect your profession?

Angela Foyle: I am not so sure the first one will affect us, at £1,000. The second one may facilitate certain activities for our insolvency practitioners, particularly where they are appointed in circumstances where they know that there has been some form of fraud—be that tax fraud or what is often called “fresh air invoicing” or invoice discounting fraud, where there is a set amount of money that is known to be tainted—because, currently, all of the assets of the insolvent entity can often be tainted, and defence against money laundering applications have to be made for each and every transaction done. By having that, they will be able to ringfence certain amounts that they know to be tainted—they would obviously do investigations to ensure that they have got that amount correct—and then deal more quickly with creditors and others with the remainder of the funds. In that sense, we certainly welcome that amendment. It is one that we raised with the Home Office, alongside the banks and, I believe, the Prison Service may have wanted it as well.

[James Daly]

Q Time might mean that you will be not be able to answer this question as fully as you might wish. However, on where we are now, and where the Bill will take us, the general view that we have heard from witnesses is that it is good—maybe as a starting point to go forward from. In a few sentences, will you explain how you think the Bill will affect your profession, for good or for bad?

Angela Foyle: There are a number of areas in which it will affect us. We are very much in favour of the changes to Companies House, I must say, and of giving additional powers to it. We are incredibly supportive of that.

One example that we can give relates particularly to the misuse of registered offices. All the firms have found instances of people effectively putting their address as offices of accounting firms, presumably to give them credibility. In some cases, that is linked to using names similar to either regulated or existing lawful businesses. Again, that is clearly intended to facilitate fraud. Currently, it can take months to get people off that address, but with the additional powers, we are hoping that that can be done much quicker.

Similarly, with other misuses, such as the inability to contact businesses, there is also the identification of directors to ensure that you are dealing with the people that you think you are. Even if those perhaps could be strengthened in some ways, I think there is a lot that is positive in the Bill. It is a staging post, but it is a really important one.

Mike Miller: I agree with Angela, particularly on the point about Companies House. We are definitely behind the reasons for and the principles of the Bill; we are very supportive of all that it seeks to do. We have been saying for quite a while that some of these measures are overdue, particularly those on Companies House, as Angela mentioned. We have proposed some tweaks for a few areas, particularly around verification, as we have touched on before. There is going to be a two-tier verification in the sense that Companies House will be responsible in some way or another for the verification of those that are registered in the UK. For overseas entities, that is a bit more of a challenge, because they require legal verification and we currently think that the legislation is such that it does not really allow a reputable business to take on the level of risk of a new client unless they have a particularly established relationship.

We have made some recommendations to our members that they need to exercise extreme caution taking on new clients solely for the purpose of verification. That is so the system works; it is not so that they avoid it. It is so that it does not, first, stop people being able to do business in the UK when they rightly should be able to, and secondly, so that if the larger, more reputable firms do not offer that service, then it becomes something that is picked up by those that we may not necessarily want to offer that service.

We have also recommended a couple of areas where we think it could be strengthened, particularly around notifying Companies House of a change of auditors, so there is a two-pronged approach. That is so that companies themselves, for example Angela’s firm, knows that they have been assigned as an auditor, to make sure that is correct and they audit the company, and for Companies House to make sure that a company is audited as it should be. We think that would reduce the likelihood of discrepancies coming in, going forward. However, overall, we are generally supportive.

[James Daly]

That is very helpful. Thank you.

[Dame Margaret Hodge (Barking) (Lab)]

Q ICAEW represents what proportion of the accountancy profession, do you reckon?

Angela Foyle: I do not know the proportion, but there are about a hundred and something thousand members.

Mike Miller: Yes, about 110,000 members. I am not sure of the proportion.

--- Later in debate ---

[James Daly]

On a point of order, Ms Bardell. As a result of Mr Tugendhat’s question, I had better declare an interest: I am a practising solicitor.

[The Chair]

Thank you very much. That will be put on the record.

--- Later in debate ---

[Alison Thewliss]

Q We have heard an awful lot about deficiencies in the register in terms of the information that is on there and the practical difficulties that that causes for companies who wish to interrogate the information for their own due diligence. Is that an issue you have come across?

Peter Swabey: Yes, I think it is. It is an issue in a couple of ways. We just heard about the challenges in correcting deficient information. There are a number of plcs that have reported that their registered office address has been used for companies of whom they have never heard. If you are a plc with a large number of subsidiary companies, that could quite easily be overlooked by people. As somebody said in the last session, that is then used to give credibility to the potentially fraudulent company that is being set up. Being able to fix that more quickly is certainly an advantage.

[James Daly]

Q One of the things we have talked about with every witness—you will probably give a similar answer, Mr Swabey—is that we all want to see Companies House resourced to be able to carry out the requirements in the Bill. One witness this morning made reference to the sheer volume of companies and legal entities that are registered at Companies House on a daily basis. If one of the consequences of the Bill is that registration at Companies House takes longer because people have to go through the regulations and comply with other duties, is there any consequence to that?

Peter Swabey: I think it makes it a little more difficult for some people. I am a company secretary, so I would argue that you simply have to plan it all a bit better, and perhaps think about some of that a little more in advance. It will mean that some corporate transactions that you can currently deal with very quickly by simply having a meeting in a room and agreeing that so-and-so and so-and-so are the new directors will now have to go through a process. We are all hoping that, as promised, Companies House will manage the verification process for new directors expeditiously so that that will not hold things up unduly, but it is an additional factor to bear in mind.

[James Daly]

Q In layman’s terms, and very briefly, if I want to register a legal entity and I employ you or somebody else to do that, what information is submitted to Companies House?

Peter Swabey: You have to name the directors. You have to give some sort of evidence that the directors are real people who you know, so some piece of personal information about them. That might be their eye colour or their national insurance number. Nobody actually checks that, by the way. You just have to fill the box in. You have to have a registered address for the company and a few other details, but it is a relatively simple process.

[James Daly]

Q So such a process—light-touch regulation at its finest—is certainly open to fraudulent activities.

Peter Swabey: I think it is fair to say that at the moment it is nothing like as secure as any of us would like it to be, and the Bill is a big step forward in tightening that up. I would still like to see it go further in some ways.

[Dame Margaret Hodge]

Q It is the beneficial ownership that is revealed to Companies House, not necessarily even all the directors, as I understand it. The way you are talking, you obviously deal with big companies. The whole purpose, which I think we all share across the room, is that we want SMEs and the growth of new companies. The idea that every SME will have a company secretary is not really a viable alternative. That means it is really important that we can have faith in the company service providers, who are the people who check the data. Given the way the Bill is constructed, do you think you would have such faith, in particular given all we know from the Panama leaks onwards?

Peter Swabey: It is really important to make sure that the hoops through which those authorised company service providers go before they become authorised are significant, to make sure that we can have confidence in that.

--- Later in debate ---

[The Chair]

It is a very important question, but unfortunately we have to stick to Members asking witnesses questions. However, I am sure that you can put those questions to our esteemed Members in other forums.

I will move on to James Daly now, because there are a couple of other Members who are keen to ask questions.

[James Daly]

Q Catherine, thank you very much for giving evidence; what you have said is very helpful. You have investigated these matters and looked into them. You have talked about Companies House, which is a central part of this legislation, and we have talked with other witnesses about what needs to be done there.

However, I just wanted to ask about money laundering. To make a very straightforward point, you obviously need a bank. If you have got a fake financial institution, or a legal entity set up for criminal purposes, you need a means of transferring money, either out of that body or into it. Could you talk about any thoughts or experience that you have, including regarding anything that you have investigated, that touches on that point and on what we can perhaps do to address it?

Catherine Belton: I think it goes back to this issue of LLPs and how these limited liability partnerships have really become, over the last two decades, the vehicle of choice for Russian money laundering schemes in particular—at least the ones that I have studied.

There was the “Moldovan laundromat”, which used LLPs based in the UK, including in Scotland, to move $14 billion out of Russia in illicit cash in the space of four years. That was part of a much bigger process through Danske Bank; I think the total volume of illicit Russian cash coming through Danske Bank was in the realm of $200 billion in just over a decade. That is obviously enormous amounts of cash.

However, it just goes down to the weakness of LLPs and the system that we have created, in which you can have companies established that do not even need to have any real business in the UK; they do not pay taxes here and therefore they did not have to file any accounts. They were not really having to file any beneficial ownership, either. That really means that there has been a huge gap in our legislation. Obviously, the Companies House reform will hopefully provide for more disclosure of beneficial ownership, but there are still so many ways for people to get around it, because Companies House really does not have proper funding to check whether beneficial ownership is being reported properly.

Obviously, the banking system is now under much greater pressure to investigate the source of funds, but while the banking system has become a much more complicated place for people to move illicit money through, the same demands are not placed on hedge funds or private equity funds. There are much less stringent requirements on those types of entities to disclose who their clients are and where the money is coming from. We only have to look at who the major backers of Brexit were. Hedge funds and private equity funds were major donors during the Brexit referendum, and we really had no clue where they were getting the money from.

[The Chair]

Catherine, we really want to hear from you and make sure that all our other members get to ask questions. We have two other members after James who want to ask questions, so please keep your responses as brief as possible, with all the information that is possible to get across.

[James Daly]

Q On top of all the very important points that you have made, I think one of the things that I am left with from your evidence, Catherine, is that we have to ensure that the information-sharing links between Companies House and financial institutions are strengthened. Companies House was described as being a passive organisation at the moment, but what you are saying is that that has to change and there has to be a close link with financial institutions, so that these relationships are attacked throughout the criminal justice system. Am I right?

Catherine Belton: Yes, that is exactly right.

[The Chair]

Thank you very much.

--- Later in debate ---

[Alison Thewliss]

Q The Government have talked up the benefits of being able to incorporate companies fast. Do you think there needs to be a bit more grit in the system to allow for scrutiny, rather than speed?

Professor Jason Sharman: I think so. For me, it is telling that in jurisdictions for which incorporations are their lifeblood, such as the British Virgin Islands, it is much slower to incorporate. It takes close to two weeks to incorporate in the British Virgin Islands, and it takes about $1,000. The British Virgin Islands get half of their Government revenue from incorporation fees. They have a real interest in making sure their company registry works well. No one likes red tape and filling out forms, but the idea that you might have to spend a couple of hours instead of 15 minutes, or £50 instead of £12 is, to me, not unreasonable.

[James Daly]

Q Thank you for that, Jason. You have given an example already, but I was wondering about the international context. We have Companies House. Can you give me an example of the equivalent in European countries or America and the difference you perceive between our Companies House and theirs?

Professor Jason Sharman: I feel sorry for British Companies House, because it has been given a lot of work without the resources to carry it out. The mismatch between what is expected of an institution and the resources it has to achieve those ends is greater. Company registries are passive, archival organisations.

[James Daly]

Q That was my point, really. We have accepted the point about resources, but Companies House was described by one of the directors we heard from as a passive organisation in respect of these issues. I just wondered whether in other jurisdictions, say France or Germany—and I don’t know the answer to this question—they have that view of their equivalents, or do they view theirs as a proactive organisation that has to investigate the things we are talking about?

Professor Jason Sharman: No. The UK is typical.

[James Daly]

Q Forgive my naivety, but it usually takes a company or a legal entity about 15 minutes to register with Companies House. The intention behind that is for money laundering purposes. I am assuming—forgive me if I am wrong—that when Fred Bloggs and Co. was set up, the people who did so had to then open a bank account in the name of Fred Bloggs and Co. in order to transfer the money to this jurisdiction. Is that correct?

Professor Jason Sharman: Yes and no. Generally, yes, but if you want to own property, you never have to touch the banking system. If you want to own a yacht, you can set up the shell company and earn, just like that. You can break sanctions and own property with a shell company, even without a bank account.

[James Daly]

Q Just in general, using the banks as an example, should we be looking to put in the Bill requirements for them to play their part in the partnership to tackle money laundering?

Professor Jason Sharman: Again, banks have had these requirements to establish the beneficial owners for a while. I think this is good, but it is the enforcement that is key there.

[Dame Margaret Hodge]

Q Following on from that, I completely take the point about enforcement, but would a failure to prevent power make any difference, assuming it was enforced?

Professor Jason Sharman: I probably differ from many of the other people who have spoken in that I am not a fan of failure to prevent. I think that the goal of these laws is to make life hard for bad people without making life hard for good people at the same time. To the extent that you have really onerous regulation or weaken the presumption of innocence, that is something of an own goal or collateral damage. Before you put people in jail, you should be pretty serious about it. There should be a mental intention there—a mens rea.

I am not really comfortable with the strict liability. There is strict liability in anti-bribery, which means I have to do pointless anti-bribery training every year for the University of Cambridge. It does not do me any good and it does not stop corruption, but it is one of the things that Cambridge feels it has to do because of the strict liability. Again, it is a cost to society that is not included in legislation or in regulatory impact assessments.