Economic Crime and Corporate Transparency Bill

Debate between Lord Agnew of Oulton and Baroness Noakes

Consideration of Commons amendments
Monday 11th September 2023 Lords Chamber

[Lord Agnew of Oulton (Con)]

My Lords, I rise briefly in support of my noble friend Lord Faulks on this amendment. I am particularly grateful to him; I was involved in the earlier amendments, but I realised that it needed a premier division lawyer rather than a second division entrepreneur to get this through.

In our discussion with Ministers, we were often told that the enforcement agencies did not want this; that seemed disingenuous to me. I now have some information. For example, law enforcement agents have shown a strong appetite for cost protection and civil recovery. The chief capability officer of the Serious Fraud Office told the economic crime Bill committee that the SFO would like to see this, while the head of the National Economic Crime Centre told the same committee that they found cost protection “an attractive proposal”. I do not think that is a searing insight. Spotlight on Corruption has identified 60 high-risk cases, with the potential of £1 billion of frozen assets, and the chilling effect is palpable among them.

I respectfully disagree with the Government on this. I am grateful to my noble friends the Ministers who have spoken several times to all of us, but I think they are on the wrong side of logic.

[Baroness Noakes (Con)]

My Lords, I have some very real concerns about the impacts of the new failure to prevent offence on small and medium-sized entities. If my noble and learned friend Lord Garnier’s Motion E1 is agreed to, I think it could be very significant. I believe that the other place was wise to restrict the offence to larger companies only. Setting the threshold at the micro-entity level would still leave very many small and medium-sized entities within the scope of the offence.

I did try to find out how many companies would be affected. My noble friend the Minister said 450,000 companies would be brought within the net of the offence. According to Companies House statistics, around 3.1 million active companies filed accounts last year. Of those, 1.6 million were for micro-entities, and would therefore be excluded, but 1.4 million were for small companies that took advantage of the audit exemption. That, very broadly, is the group of companies that would benefit from the changes made by the other place; it is obviously rather more than 450,000. Whatever the number, there will certainly be regulatory costs for those companies, whether 450,000 or 1.4 million. My noble friend the Minister has given his estimate of what those costs will be. I have never placed much faith in estimates made by Governments of the direct costs of regulatory burdens that Governments try to impose. I generally put a multiplier against them to arrive at a more realistic figure.

However, I believe the most important cost is the opportunity cost that is imposed by regulation. Every time a new regulation is imposed, the people who run small businesses have to spend time away from thinking about their core activities, which should be wealth-generating. Every moment spent thinking about whether they have reasonable prevention procedures in place, or implementing those procedures, is a moment spent not thinking about how to grow the business or how to make it more profitable. Large companies have specialists to cope with all this. Small businesses often have no one beyond the proprietor of the business itself, but they are the very people who are supposed to be spending their time growing their businesses, thereby helping the UK economy to grow—and my goodness me, do not we need growth in our economy?

The cumulative effect of incremental regulation on individual businesses is huge, as any small businessman will tell you, but the cumulative opportunity cost for those businesses of missing out on that growth, and the impact that will have on UK plc, simply cannot be ignored when we are looking at any form of legislation that imposes burdens on businesses. I urge noble Lords to accept the pragmatic solution that the other place has put forward.

Critical Benchmarks (References and Administrators’ Liability) Bill [HL]

Debate between Lord Agnew of Oulton and Baroness Noakes

3rd reading
Tuesday 2nd November 2021 Lords Chamber

[The Minister of State, Cabinet Office and the Treasury (Lord Agnew of Oulton) (Con)]

My Lords, I would like to make a few short remarks. The Bill builds on the Financial Services Act 2021, which gave the FCA powers to oversee the orderly wind-down of a critical benchmark, such as Libor. In particular, it allows the FCA to ensure the continued publication of a benchmark, using a synthetic methodology. The Bill plays a vital role in supporting a smooth and orderly wind-down of the Libor benchmark, by providing legal certainty for contracts that rely on Libor beyond the end of this year, and a narrow immunity for the administrator of Libor, where it is publishing synthetic Libor as required by the FCA.

It has been a privilege to have engaged in these discussions. I thank noble Lords for their rigorous examination of this highly technical Bill, both in formal debate and in the various technical briefing sessions that I have held. I am confident that the Bill has been thoroughly examined by the House. All those involved have brought significant experience and insight to this process.

I am particularly grateful to my noble friends Lady Noakes and Lord Blackwell for raising this important issue during the passage of the Financial Services Act earlier this year. Once again I put on record my thanks for their work on this matter.

In our discussions, we have covered the issue of the FCA’s methodology for the synthetic rate. We have considered the importance of legal certainty, which the Bill delivers, and we have highlighted the work that the FCA is doing on the wider Libor transition. This includes its work to ensure that synthetic methodology is fair and aligned with the global consensus.

We have talked about the work that the FCA has been doing alongside the Bank of England and the industry-led risk-free rate working group. This will support and encourage a voluntary transition away from Libor prior to the end of this year wherever possible—an effort which has been successful in significantly reducing the number of contracts that will need to rely on the synthetic rate both here in the UK and globally. Throughout, your Lordships have had a particular interest in protecting consumers and maintaining the integrity of UK financial markets.

As we have discussed, the UK has one of the most open, innovative and dynamic financial services sectors in the world. As the home of Libor, we have a unique and crucial role to play in minimising global financial stability risks and disruption to financial systems from the wind-down of Libor. The Bill forms part of a significant programme of work by the Government and the regulators to support the global market-led transition away from Libor. It supports the integrity of financial markets and consumer protection. In doing so, it underlines our reputation as a custodian of a global financial centre.

I conclude these brief remarks by thanking the Economic Secretary to the Treasury, his officials, and the clerks in the Public Bill Office, who have worked so diligently to support the passage of this Bill. I also thank FCA officials for the technical briefings that they have provided. I beg to move.

[Baroness Noakes (Con)]

My Lords, as I was so kindly namechecked by my noble friend, I will just say that I thank the Government very much for responding to the real concerns expressed by the financial services industry in respect of tough legacy Libor contracts. The Bill does not deliver everything that the industry wanted but it delivers a great deal, and I am very grateful to the Government.

Global Minimum Corporate Tax Rate

Debate between Lord Agnew of Oulton and Baroness Noakes

Wednesday 14th April 2021 Lords Chamber

[Lord Agnew of Oulton (Con)]

I am not sure whether the noble Lord is referring to the move by the American Government to put forward their own propositions on international tax reform, but it is important to clarify that the US Government are following the G7 work that has been done on pillars 1 and 2. It is rather good news that they are engaging in a much more front-footed way than happened under the previous Administration.

[Baroness Noakes (Con)]

My Lords, I hope that my noble friend will agree that the suggestion from the US that the minimum tax rate might be as high as 21% has no chance of global agreement. However, do the Government think that there is any level at which a global deal might be done?

[Lord Agnew of Oulton (Con)]

I can only speculate on what that might be, but the important thing is to try to get as much harmonisation on rules for large multinational companies. That is why we were always keen on pillar 1, which ensures that the profits of large digital businesses are taxed in the countries where they make their sales. It is important because, as one of the largest economies in the world, we believe that these international companies should not be able to just come here and take all the advantages of the infrastructure that British taxpayers are contributing to the creation of.