Economic Crime and Corporate Transparency Bill

Lord Browne of Ladyton Excerpts

Committee stage
Monday 27th March 2023 Grand Committee

[Lord Coaker (Lab)]

My Lords, I start by thanking the Minister and his colleagues for their approach to the Bill and for his remarks at the beginning, which were very welcome. We all have an interest in trying to ensure that the Bill works, so I thank the Minister for his comments about that—and I can reciprocate with regard to how the Government have approached this in trying to enhance and improve the Bill. I appreciate what the Minister said about the amendments in this group, and all the various amendments that have been introduced, as we have heard, in a positive way, in seeking to improve the Bill.

I do not intend to speak at great length about the various amendments. I start by thanking the noble Lord, Lord Leigh, for his support of my Amendment 4 and by saying that I very much agree with much of what the noble Lord, Lord Agnew, said on his Amendment 63. Essentially, what we are saying here is that the Bill has a lot within it that we appreciate, accept and think are important steps forward—but alongside that, most of us want to see the Bill having some teeth and the Government explaining to us how the various details are laid out, how the measures will be enforced and how we will see the change of culture that we have just heard about.

I will speak specifically to my Amendment 4. Noble Lords will see that, in essence, we are probing what the Government’s intentions are. Clause 1 has four objectives for the registrar. The amendment in my name and those of my noble friends Lord Ponsonby and Lady Blake seeks to understand whether anything could be gained by inserting a new objective 5. No doubt the Minister will say that objective 4 means the same, which may be why the amendment in the name of the noble Lord, Lord Agnew, is not needed. We are suggesting that there needs to be a more proactive statement in the Bill about what the Government are seeking in terms of the information that the registrar collects and how it is then assessed to see whether it should be shared more widely, particularly with the various enforcement bodies.

The objective I am proposing—I will not read it all out—includes in paragraph (b)

“sharing information about any issues of concern regarding companies with relevant public bodies and law enforcement agencies.”

Why would the Government not put that in the Bill? I suspect they will say that objective 4 deals with that, but I think there is a difference between acting proactively and what the Government have in objective 4, which is

“to minimise the extent to which companies and others … carry out unlawful activities”.

I suggest that is not quite strong enough. It is not about minimising the extent; it is about wherever information comes to light with the registrar that something untoward is happening. Surely there should be an obligation on the registrar to share that with the relevant law enforcement bodies. Minimising the extent is not sufficient; we do not do that with any other law—we do not minimise the extent to which violence takes place, for example. That may be the aim, but overall the intention of the law is to stop it. So I suggest that objective 4 could be strengthened.

On Amendment 63 in the name of the noble Lord, Lord Agnew, the noble Lord can and did speak for himself, but in his proposed new subsection (1B)(b) he is getting at that very point in stating that the registrar must

“share any evidence of unlawful activity it identifies with the relevant law enforcement agency”.

That is exactly the same point I am trying to address in my amendment. It is not about minimising the extent to which it takes place; it is saying that the information should always be shared. Can the Minister outline the Government’s thinking? Is their objective with the registrar that all information that may be of concern should be shared with the relevant law enforcement agencies?

Without wishing to be pedantic about this, can I ask: what is the relevant law enforcement agency with which the registrar should share the information? There is the Serious Fraud Office; there is the City of London Police; there are local police forces; there is HMRC and all sorts of other enforcement bodies. The Government will have given thought to this, but can the Minister explain to the Committee where that information should go and who is responsible for enforcing it? Is there any report back to the registrar? Once the information has been shared, is it then just a matter for the law enforcement body, or does the registrar have an obligation to see where that has got to and what has happened to it? We all know that an issue that frustrates people is not knowing what happens when things are reported and where they have got to. Alongside that, given the significant numbers that the Minister quoted of those that have to register, what are the resource implications for those other bodies in taking that up?

My final point may seem a bit obscure. I am not a great expert on this, but I know from one limited case that I had some experience of that one of the problems was a lack of forensic accountants and the ability to understand what was going on within various company accounts. I was told it was a skill area that is never really talked about. I wonder whether the Government, given their intentions, have given any thought to how they ensure that the necessary skill base is there within police forces and the Serious Fraud Office for crimes that are referred to them to be properly understood and investigated. I am sure that some people are experts in company law and all this, but the problem is that when people say “Follow the money”, sometimes it is pretty difficult to do that. I wonder whether the Minister might say something about how he sees that.

In general, we welcome the Bill and the government amendments before us. I think the amendments that the noble Lords, Lord Leigh and Lord Agnew, have tabled make some very important points. I hope that my Amendment 4 also helps the Government explain to the Committee what their intentions are. If the Bill is to mean anything, it has to be properly enforced.

[Lord Browne of Ladyton (Lab)]

I had not intended to speak on this group, but my noble friend Lord Coaker has drawn my attention to the active verbs in the subsections of Clause 1. I am at a loss to understand why they are used. Why is objective 3

“to minimise the risk of records kept by the registrar creating a false or misleading impression to members of the public”

and not “to prevent companies and others carrying out unlawful activities or facilitating the carrying out of unlawful activities”? It seems odd that the objective is not the complete protection of people who may be duped or defrauded or have their money stolen from them by the devices created here. I appreciate that one cannot guarantee perfection, but it seems to me that by legislating in this fashion we recognise that there will be an element of that, since the objective we set the registrar is only to minimise, not to prevent it altogether.

[Lord Macpherson of Earl’s Court (CB)]

My Lords, I support the amendment in the name of the noble Lord, Lord Agnew. I declare my interest as chairman of C Hoare and Co. I apologise for not being here at Second Reading. I had a good excuse: a very bad dose of flu.

I have two brief points. First, legislation on its own does not change an institution—I worked in the Treasury for 30 years and saw many institutions come and go—but it can be really helpful in supporting the leadership of that institution to change its character and the way in which it works. I believe the amendment in the name of the noble Lord, Lord Agnew, would support the leadership in bringing that about.

My second point draws on my experience of seeing through a lot of reform to financial services regulation. I think it is fair to say that the lesson of the 2000s was that tick-box regulation really does not take you very far; a proportionate, risk-based approach is the answer. I believe that the amendment in the name of the noble Lord, Lord Agnew, very much goes with the flow of better regulation.

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[Lord Johnson of Lainston (Con)]

I appreciate my noble friend’s comments. I do not believe that I suggested at any point that this was not baked into the cake of what Companies House is expected to deliver. I would be delighted to have further dialogue with Members around this but, in my humble opinion, the entire Bill is designed to ensure that the registrar takes a risk-based approach to ensuring the integrity of the information at Companies House. I am very comfortable on that, and the Government are very clear on it. We are wary of having duplicative statements in the Bill because that causes more complications when we are trying to create the enforcement regime and the integrity regime that we want to bring to bear.

On the key clauses and the language therein, I am certainly happy to consult my dictionary as noble Lords suggest. I am sorry that I was unable to bring one with me. It would be unusual for us to be quite so prescriptive in part 3 of the four objectives. I am delighted to have further conversations if noble Lords feel that that would be more helpful in setting the right cultural change at Companies House, but I am wary of being too prescriptive. I hope this is not misunderstood by Members of this Committee, but we want to avoid a box-ticking exercise because that is exactly what criminals like, as they can then navigate the system. We want to allow the registrar and her officers to use their judgment because that will lead to far better outcomes when it comes to achieving the mission that all of us are embarking on together.

[Lord Browne of Ladyton (Lab)]

On a plain reading of this clause, the registrar is being required to promote these objectives, but in objective 4 she is being required not to prevent but

“to minimise the extent to which”

crimes can be committed. What is the problem about setting an objective that she is to prevent, and Parliament is telling her that is the objective we want her to have but recognising of course that perfection is very seldom found in these situations? Why do we set an objective that is less than what we really want? There is no question that Parliament wants these crimes prevented, not minimised.

[Lord Johnson of Lainston (Con)]

I appreciate the noble Lord’s comment. We have discussed this at some length. I am personally very comfortable defining further the usage of “minimise”, but the intention is very clear. This is not about “minimising” criminal activity to a so-called acceptable percentage; it is ultimately to eradicate it entirely. I am sure there are good reasons why this language has been used, in order to enable an element of flexibility and facilitation for this Bill to operate effectively. I am sure noble Lords will sympathise with me when it comes to legal drafting of text, but the assurances around this Bill are that it should do exactly what we want it to do. I ask noble Lords not to press their amendments and I commend Amendment 1.

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[Lord Clement-Jones (LD)]

My Lords, all this is well above my legal pay grade, but the Minister has no doubt heard all the voices; clearly, there are flaws in this new clause. I suggest that he listen to those voices, take advice and not move this amendment and that we should come back to this at a later stage. As the Minister can see, there is considerable appetite around the Room for a proactive approach to the new Companies Act powers and duties, the registrar and so on. However, there are genuine concerns that have been expressed, so I suggest that the Minister takes this away and considers it pretty carefully, given the opinions that have been vouchsafed this afternoon.

[Lord Browne of Ladyton (Lab)]

My Lords, I am fully in favour of this matter being taken away and simplified, if it can be. I just take advantage of this opportunity to do something I probably do not do very often, which is to support the existence of the words “reasonable excuse” as a defence in this strict liability clause. It is a long time since I practised law, but I am certain that there are lots of regulatory and other offences out there that have this defence of reasonable excuse. I am absolutely certain that the statutory provision that makes it a strict liability offence to carry an offensive weapon allows, in its drafting, a defence if you are doing it with reasonable excuse. I do not think that these two things are inconsistent, but this is not clear.

[Lord Ponsonby of Shulbrede (Lab)]

This has been an interesting debate—and a very lawyer-heavy debate —on the juxtaposition of “strict liability” with “reasonable excuse”. I can claim some knowledge here as a sitting magistrate in that I deal with those sorts of things quite regularly, frequently with respect to knife crime and traffic matters. It is a conundrum; it is worth examining further and I hope the Minister will take it further.

The noble Lord, Lord Clement-Jones described this as above his legal pay grade. Talking as a magistrate, I am an unpaid legal practitioner. Nevertheless, the Minister should take up the invitation of members of the Committee to look at this further. I can see that it is open to confusion, and I also take the point made by the noble Baroness, Lady Bowles, about putting other officers in default. I hope that the Minister will take these comments in the spirit in which they were made and that there may be further opportunity for discussion on the points raised.

Employment (Allocation of Tips) Bill

Lord Browne of Ladyton Excerpts

2nd reading
Friday 3rd March 2023 Lords Chamber

[Lord Browne of Ladyton (Lab)]

My Lords, it is a pleasure to support the Bill sponsored by the noble Lord, Lord Robathan, and to anticipate its provisions finally reaching the statute book. In opening Second Reading, he outlined the Bill’s functions with thoroughness and lucidity. I beg to say that the longer I spend in this building the more I realise that we are all on a political journey. I hope that his enthusiasm for and championing of a Bill that makes a real and positive difference to some of the lowest-paid workers in our country is an indication that he has come a long way from where he was in 1997-98, as evidenced by his voting record on the then National Minimum Wage Bill.

I began by saying that it is a pleasure to support the Bill. It is an equal pleasure—a number of noble Lords may repeat this remark—to do so without caveat or reservation. It engages a simple question of equity: money given in tips to serving staff should be theirs without fear of depredation from their employers. This question is particularly acute when the hospitality industry is attempting to regain its feet after the pandemic and is being further buffeted by rising energy prices, the cost of living crisis and, more importantly, labour shortages. This should encourage people to work in the industry, knowing the prevalence of the problem that it addresses.

The Bill is comprehensive in scope, extending the legal right to a fair allocation of tips not merely to directly employed workers but to agency staff and those allocated tips through a third-party tronc scheme. I must admit that I did not know what a tronc scheme was until I read the Bill. Crucially, under Clause 4, it ensures that workers receive tips no later than the end of the month following the month in which they were paid by customers. I also welcome the measures in the Bill giving adequate scope for enforcement, and commend those involved in the Bill’s drafting and ensuring its passage through the other place. I look forward to these legal protections being extended to hospitality workers as soon as possible.

That last point leads me to ask why this has taken so long. The first call for evidence for this legislation was put out by the then Department for Business, Innovation and Skills in August 2015. Since then, we have had five different Prime Ministers, eight Secretaries of State and innumerable reshuffles among junior Ministers. Indeed, not only does the government department that published that call for evidence no longer exist, even its successor department has gone the way of Nineveh and Tyre. This measure has been included in two general election manifestos and four Queen’s Speeches, and has been the subject of two consultations. It is fair to say that, were the staff who are the subject of the Bill to adopt such a laggardly approach to their own work, the allocation of tips would be a purely academic exercise.

This should cause us seriously to reflect on the efficiency of government over the last eight years. The Bill is limited in scope, rights an obvious wrong and has cross-party support. If a measure of such comparative simplicity can take eight years to pass, something has gone profoundly wrong with our lawmaking in this country. I will resist the temptation to reach outside the scope of today’s proceedings to consider the silting effect that the necessity of dealing with Brexit and its consequences has had on our legislative efficiency, but will merely leave it hanging in juxtaposition to my points earlier.

I welcome the Bill and once again commend the work that the unions, other workers’ campaigning groups and parliamentarians on all sides have done in ensuring that it is now likely to reach the statute book. It will have my full support as it passes through your Lordships’ House.

Protection from Redundancy (Pregnancy and Family Leave) Bill

Lord Browne of Ladyton Excerpts

2nd reading
Friday 3rd March 2023 Lords Chamber

[Lord Browne of Ladyton (Lab)]

My Lords, for the second time today, it is a pleasure to support a Bill. I am only sorry that my noble friend Lady Chapman is not here to hear me make the second most enthusiastic speech that I have ever made in your Lordships’ House. It is a particular pleasure to do so as we approach International Women’s Day next week. Noble Lords will be aware of an analysis published by the World Economic Forum which found that the pandemic has slowed the global trend towards gender equality by more than three decades. In that context, this Bill will make a real contribution towards a more equitable working environment for women in this country.

I congratulate the noble Baroness, Lady Bertin, not only on sponsoring the Bill but on making, if I may say so, a profoundly convincing case for it. It was a speech that only a working mother could make, all the more powerful in being made by a Member of your Lordships’ House who has been at the very centre of government in this country. She reminded us that the genesis of the Bill can, in part, be traced back to 2015, and research commissioned by the Cameron Government. She shared some of the findings of that and other research. That research found that, disturbingly, 77% of mothers surveyed had faced some form of discrimination or disadvantage during pregnancy or maternity leave, or when returning to work from maternity leave. More worrying still was the attitude of the employers surveyed. Despite years of equality legislation and attempts to change people’s attitudes, some 70% said they felt a woman should reveal if she were pregnant during the recruitment process and, more egregiously, 25% felt that they were entitled to ask a woman about her plans to have children in future. As we have heard, more recent work undertaken to assess the impact of the pandemic on expectant mothers at work suggests that a quarter had experienced unfair treatment, with this being significantly more probable at the lowest end of the income scale.

In the Second Reading of the Bill in the other place, the Bill’s sponsor invoked the redundancy protection model in Germany—and indeed this same model was commended by the Women and Equalities Select Committee in 2016 when reporting on this same issue. Although a straightforward transposition of the German model into UK legislation is impossible, the Bill as it stands comes as close to extending those same protections into UK law as is possible, while taking into account the divergences between the two countries. I am bound to say that those divergences are significantly to our disadvantage.

As it happens, I have friends in Munich with young children, and, in the margins of the Munich Security Conference, which I attended a couple of weeks ago, I visited them. It is astonishing the degree to which they, their employers and the whole environment benefits extraordinarily from the German attitude to the support of families with children. It is not the only aspect of German employment policy that we could learn from, but we should learn more from it because it is consistent not only with a positive attitude to children, and their growth and development, but with a successful industrial economy in the modern global world.

This legislation will strengthen the Equality Act 2010, which already prohibits discrimination on the grounds of pregnancy and prevents employers laying off new mothers by extending redundancy protections to six months. I shall not labour this point, because it is directly analogous to something that I addressed at greater length in my remarks in the debate immediately preceding this one. However, it is frustrating that repeated commitments from the Government to introduce an employment Bill, of which these provisions were to be part, have failed to materialise. Each year there are somewhere in the region of half a million pregnant women in the workplace. This is not, therefore, a peripheral issue or something artificially amplified by sections of our community but something which will, in some form, affect all of us. Given that we have been promised action on this since 2016, with an employment Bill eventually being included in the 2019 Queen’s Speech before Covid derailed the legislative programme, why has it taken seven years, pricked by the spur of a Private Member’s Bill, for the Government to consent to act on this issue?

My hope and expectation is that the Bill will have universal support as it passes through your Lordships’ House. I do not wish to take up time that could otherwise be filled by the expression of full-throated support by other noble Lords, but I would like to mention the issue of employment tribunals. The Bill today, and the consequent regulations to be made by the Minister, will not apply a comprehensive blanket ban on making a pregnant woman or those on parental leave redundant, but it will markedly strengthen their chances of making a successful claim of unfair dismissal through the employment tribunal system. However, that system is, if not broken, at least hugely dysfunctional.

Figures released by the Ministry of Justice a few weeks ago show that it takes an average of 49 weeks for a case to be heard by a tribunal. It is a grim irony that, as it stands, the average wait for a new mother to receive justice would be longer than her pregnancy. It is worth emphasising that this is simply the time until the first hearing, which in many cases is only the start of an elongated process that is further bedevilled by delay. If the Government wish this Bill to be effective and to really protect pregnant women and new mothers, as I am sure they do, their first priority must be to bring down the tribunal backlog, currently at close to half a million cases. Simply citing the pressures of Covid is not good enough. Waiting times have been lengthening since tribunal fees were declared unlawful in 2017. When the Minister responds, I would be very grateful if this question could be addressed.

I close by commending once again the noble Baroness, Lady Bertin, for the thoroughness and care that she has displayed in bringing this Bill before your Lordships’ House today. She offers us a good opportunity to show your Lordships’ support for it to progress, I hope swiftly, into law.