Economic Crime and Corporate Transparency

Lord Cromwell Excerpts

Committee stage
Thursday 27th April 2023 Grand Committee

[Lord Macdonald of River Glaven (CB)]

My Lords, against the extraordinarily high rate of fraud offending, we have to set the fact that fraud is the most under-prosecuted offence within this jurisdiction. There is no doubt about that, and no doubt that people in the country understand it, are aware of it and are extremely angry about it, particularly victims of this crime. I would hazard a guess that virtually everybody present knows at least one person who has been the victim of a fraud that has not been prosecuted; I know several. That is a lot of people who are not getting justice—on both sides of the transaction, I might say. I therefore welcome this amendment but I am disappointed that SMEs have been carved out, largely because, on the Government’s own figures, no less than 99.9% of businesses in the UK are SMEs. That is a significant statistic when we are considering the size of this carve-out and the impact it is likely to have on the Government’s objectives.

Some comparisons have been made with the Bribery Act 2010, specifically Section 7, and the “failure to prevent” offence in that legislation. Similar arguments about SMEs were made during the debates that led to that legislation, including the claim that if SMEs were included within it then that would impact on their ability to export. I am sure these are the sorts of arguments the Government have in mind when excluding SMEs from this legislation—that somehow it would be too burdensome for SMEs, some of which, to most of us, are very large companies indeed. So it is germane that in 2015, the government survey of SMEs and the impact of the Bribery Act on them found that nine out of 10 had no concerns or problems whatever with the Act, and that 89% felt it had had no impact on their ability to export.

As the Committee has heard, when your Lordships’ House undertook post-legislative scrutiny of the Bribery Act, it concluded that there was no need for any statutory exemption for SMEs from the Act. The Law Commission similarly received submissions arguing that SMEs should be excluded from corporate liability reform. It disagreed and did not recommend any statutory exemption for SMEs. Furthermore, government research on SME adoption of preventive procedures in relation to the Bribery Act found that the average cost for an SME was £2,730, with medium-sized enterprises spending an average of £4,610. These are tiny figures that could not conceivably justify exclusion of SMEs from this legislation on the basis that it would be too burdensome for them. Points have already been made about the extent to which the Government are encouraging the placing of public procurement contracts with SMEs, and that is also highly significant.

Since the noble and learned Lord, Lord Garnier, has raised the question of prosecutorial discretion—it seems only yesterday that he was Solicitor-General, but that may be a sign of my age as much as his— I say in support of him that the amendment as drafted places a great deal of discretion at the disposal of prosecutors. The defence set out under new subsection (3)(b) is:

“It is a defence for the relevant body to prove that, at the time the fraud offence was committed … it was not reasonable in all the circumstances to expect the body to have any prevention procedures in place”.


That is a potential carve-out that would deal with any problem or concern the Government have that the amendment’s impact might be disproportionate on SMEs. For all the reasons I have set out, I do not believe that it would be. I believe the real effect would be to leave whole swathes of business activity completely unaffected by this legislation so that, in effect, fraud would continue—disgracefully, in my view—to be an under-prosecuted offence.

[Lord Cromwell (CB)]

The noble and learned Lord, Lord Garnier, referred earlier to making feeble jokes. Anyone who was here on Tuesday heard my feeble joke for this year, so the Committee will be relieved to know that I am not going to make any more.

I agree with all the previous speakers that the idea of creating a legal cliff edge, with whole, untouched schools of fish swimming in the sea below the cliff, is both problematic and fundamentally pointless. I agree with the noble Lord, Lord Agnew, and the noble Baroness, Lady Morgan, about enablers; we will be coming to that issue later, and it is a real concern. To me, it is rather like saying that SMEs do not need to worry about health and safety or do not need cyber security, and only the big firms do. Both those assertions are patently nonsense, but that seems to be the flavour of what we are faced with here with this cliff edge. I hope the Committee enjoyed my analogy about the fish.

[Lord Sandhurst (Con)]

I apologise for not speaking to the Bill at Second Reading. I was unable to take part because I could not commit to be at both the start and the finish that day. I hope noble Lords will forgive me. I declare my interest as a member of last year’s Select Committee, chaired so ably by my noble friend Lady Morgan, who is sitting beside me.

I shall speak to all the amendments in this group, which are directed globally at the failure to prevent fraud. Some of what I will say now will be relevant to what I will say in respect of Amendments 91 and 94, when I shall be much briefer. It is much easier to get the whole thing over at this point.

Amendment 84A is a start, but I am afraid it is an inadequate start. I wonder, with all respect, whether the Government actually read carefully and understood our committee’s substantial report. The committee heard a welter of evidence from everyone across the whole gamut. It was absolutely plain to us that a vast amount of fraud is happening and nothing is being done.

Security Threat to UK-based Journalists

Lord Cromwell Excerpts

Tuesday 21st February 2023 Lords Chamber

[Lord Sharpe of Epsom (Con)]

My Lords, the noble Lord’s question is really more for the Foreign, Commonwealth and Development Office, but I will make sure that it is reflected back to my colleagues in that department. I would imagine that extensive conversations and negotiations are ongoing on this subject.

[Lord Cromwell (CB)]

My Lords, I welcome the Government’s robust declaration of protection for UK-based journalists from threats from overseas, but I am puzzled by their equally robust refusal to protect UK journalists from threats via abuse of our own legal system through the use of SLAPPs by parties overseas, despite cross-party support to do something about it. Can the Minister explain this apparent and ugly contradiction to the House?

[Lord Sharpe of Epsom (Con)]

My Lords, these debates have been rehearsed at considerable length over the past few weeks on the National Security Bill. I have nothing more to add. Obviously, SLAPPs are outside the scope of that Bill, but I am sure that we will come back to this subject frequently.

National Security Bill

Lord Cromwell Excerpts

Committee stage
Monday 16th January 2023 Lords Chamber

[Lord Purvis of Tweed (LD)]

There are a few, but 25 members of the Home Office are going to be monitoring this database, and a fair amount of their time might be taken up with David Cameron’s and Tony Blair’s international activities. What was the reason for differentiating from the Australian scheme?

We have heard concerns about the British Academy, universities, INGOs and NGOs, trade, and those seeking contact with FDI and the ABPI. It will render the work of our Prime Minister’s trade envoys that much harder when any interaction with an entity from a country with which we are seeking a better trading relationship now has to register in advance their contact with a trade envoy, not only for perfectly legitimate activities but for activities encouraged by the Government. We have also heard the concern from the ABPI that it will have to register the preparation and planning of meetings beforehand.

At the start of Committee, I indicated that our Benches did not see this part of the Bill as having been properly prepared. The details have not been consulted on and we believe that the Government should pause it. We said at the start of Committee that it may find a better home in the Economic Crime and Corporate Transparency Bill, if it is being reworked. It may be that we move for this to go to a Select Committee for further consideration or to be taken out of the Bill. We do not want to disrupt the Government’s moves to improve national security or to weaken the ability of our country to have national security. We also do not want to weaken our interaction with trade, investment and human rights, or—I say this as someone with no faith—our proper interaction with many faith groups, which will now have to register all of this activity within the Bill.

I hope that the Minister will say today that the Government are going to think again, pause and come back, not just by saying that more information will follow but with a commitment to consult on the specific schemes and work with us to bring back workable solutions.

[Lord Cromwell (CB)]

My Lords, I apologise for not having participated in this debate earlier but, like other speakers, I have been provoked by listening to the contributions. The speeches tonight appear to be about either excluding certain categories or, in the case of the noble Lord, Lord Clement-Jones, trying to include a category in the scope of the Bill. The fact is that, if you start to specify organisations or types of organisations, you will include every organisation in the country, whether a business or arts organisation, a charity, a political party or any other group of people, because any organisation can host people who seek to bring influence of one form or another. It is the behaviour, not the organisation, that is the problem here. To suppose that registering organisations will defeat covert practitioners from seeking to exert influence is naive to the point of being dangerous. As many have suggested, the solution is to go away, redraft and come back with a shorter Bill that does not try to include every organisation, not only in this country but in every other country—any one of them could host a malign influence.

[Lord Sharpe of Epsom (Con)]

I thank noble Lords for their important amendments in this group and for the extensive and interesting debate. I would be very happy to meet the noble Baroness, Lady Hayter, and others from other political parties, as she wishes. As soon as the reply to her letter is written, I will circulate it.

I assure the Committee that I have heard the strength of feeling on this issue and the calls to remove the political influence tier completely. I will be taking this back to the department to agree the next steps required to address these concerns ahead of Report, while balancing the need for a mechanism that protects us all from malign foreign influence in the UK. At the risk of upsetting the noble Lord, Lord Carlile, further information will follow.

I should say this: there should be no doubt that those who comply with the registration requirements under FIRS, by being clear and open about whom they represent, are supporting the resilience of the UK and its institutions in the face of state threats. There is no suspicion around those who register with the scheme; they are doing the right thing. However, as I said earlier, this has been an extremely valuable debate and I am grateful for all the thought and expertise that went into these contributions. I reassure the noble Lord, Lord Wallace, that we are not singling out the Dutch; we are merely citing an example. This is about foreign influence.

I start by addressing the amendments tabled on the political influence tier of the foreign influence registration scheme. I have listened carefully, and several interesting points have been made. I have heard the concerns raised about the unintended consequences of the political tier, and the Government will consider these points carefully ahead of Report.

Today, we have heard calls to remove this part of the Bill and focus instead on amending existing lobbying laws. These laws have been designed to be suitable for the supervision of domestic lobbying where British citizens and residents have a right to participate in the political process, but they are inadequate for foreign influence, where the impact of undue influence presents a greater risk to our democracy, and therefore greater regulation is required.

This is reflected internationally, and it is not unusual for countries to have distinct lobbying and foreign influence provisions. For example, the US has a Lobbying Disclosure Act as well as foreign agent registration requirements. Similarly, the Australians have a lobbying register that is separate from their foreign influence transparency scheme. I hope that that goes some way to answering the queries on this from the noble Lord, Lord Purvis.

The United Kingdom is well behind these countries in understanding the impact of foreign influence, and both tiers of the scheme are required to rectify this. FIRS will allow the Government and the public to understand better the scale, nature and extent of foreign influence on our democratic institutions.

I refer noble Lords to the multiple calls in the other place at the point of the Bill’s introduction for a scheme to require transparency around political influence activities. Members of the other place have signalled their agreement that political transparency is essential. We also heard from the director of regulation at the Electoral Commission, who said in oral evidence:

“Any registration scheme that brings more transparency around who is seeking to influence those involved in our democracy can only be to the benefit of the confidence of voters.”—[Official Report, Commons, National Security Bill Committee, 7/7/22; col. 44.]


I know that noble Lords will agree that the British people need to be able to trust the institutions that serve them. It can only be right that the UK public and our democratic institutions are protected from covert foreign influence and better informed as to the scale and extent of foreign influence in our political affairs. I emphasise to noble Lords that the public, and Parliament, should know when these foreign political influence activities are taking place. Transparency is a source of strength. That is why we have included provisions in the scheme to make certain information public.

Those who register under the scheme will be playing an important role in supporting our efforts to strengthen the resilience of our democratic system and political institutions. While we are keen to work with business and other sectors to ensure a workable and easy-to-use scheme, the regulation of foreign communications or disbursements should not of itself be controversial for the reputable end of industry.

I reassure the Committee that the registration requirements will not be burdensome. Registering will require filling in a short online form. The scheme will not prohibit any activities carried out by foreign entities or on their behalf where these have been registered in line with the scheme’s requirements. We intend to consult widely and convene expert panels to produce targeted and practical guidance. That will be published ahead of the scheme going live to ensure that the public and business are clear on the requirements.

The noble Lord, Lord Anderson, asked about NGO workers abroad. The scheme will require the registration of political influence activities where they are to be carried out within the UK at the direction of any foreign power or foreign entity, or where they are to be carried out by a foreign entity itself. Where the activities do not take place within the UK, they will not be caught by the scheme. I think this also answers the question from the noble Lord, Lord Carlile, about the Ukrainian situation.

Police National Computer

Lord Cromwell Excerpts

Monday 24th October 2022 Lords Chamber

[Lord Sharpe of Epsom (Con)]

The process was subject to all the usual Cabinet Office rules. I do not know how much external consultants were paid; I will find out.

[Lord Cromwell (CB)]

My Lords, will the Minister confirm—I think he has been trying to tell us—that Fujitsu has an unassailable monopoly on this contract?

[Lord Sharpe of Epsom (Con)]

No, it does not have an unassailable monopoly. It obviously has a long history with the police national computer. When the police national computer finally breathes its last, its monopoly effectively does the same.

Immigration (Restrictions on Employment and Residential Accommodation) (Prescribed Requirements and Codes of Practice) and Licensing Act 2003 (Personal and Premises Licences) (Forms), etc., Regulations 2022

Lord Cromwell Excerpts

Tuesday 7th June 2022 Lords Chamber

[The Duke of Somerset (CB)]

My Lords, I should like to add my voice to support this Motion to regret. The strong impression given by these regulations is that they have been developed entirely for the benefit of government and others, such as landlords and businesses, who have to check other people’s status. The needs of those with biometric residence cards or permits are not being treated with due consideration.

Apparently, 2.5 million non-EU citizens are being stripped of their right to use these cards to prove their right to work and rent, and that is a huge number. This contrasts starkly with the identity document validation technology, which is of course, by right, available to British and Irish citizens to prove the status digitally. Generally, they will do this by an identity app on their phone, which then allows them to use the physical passport in the many cases where digital proof does not work, or where a checker does not wish to use the IDVT process.

Why this disparity? What about the lack of privacy implicit in the digital-only system? Why are these people being treated as second-class? For that is what they perceive and many of us perceive them to be.

We have heard, and we all know, that technology fails. We are all familiar with the error messages that are normally infuriating, but when a process is vital—say, to secure a job or a house to live in—the risk of losing that opportunity is very real. That is why so many people prefer physical documents, including the devolved Governments, businesses and the status seekers themselves.

We have heard a little about the Ukrainians. They are also in this mess, arriving from a country at war. This Government are actively arming Ukraine brilliantly but have been pretty slow to accept its fleeing citizens. They are not English-speaking and, incidentally, many have had their dogs removed by the Home Office when they have full documentation for them, just to add to the difficulties they are suffering.

Can you imagine the further distress suffered when messages such as “service is currently unavailable” pop up on the portal website? I trust the Minister will tell the House why because the inadequate impact assessment really considers only the effects on those checking others. It ignores the needs of those being checked. I believe it certainly will have an impact on businesses, charities and local authorities, contrary to the statement in the Explanatory Memorandum.

There is nothing inherently wrong with digital but it needs backing up with physical documentation. I know the country voted for Brexit and the hard border controls that go with it, but the people we are considering this afternoon have a right to live and work here so can we not welcome them decently, humanely and with proper regard for their welfare, mental as well as physical?

[Lord Cromwell (CB)]

My Lords, I rise with a depressing sense of déjà vu. We had exactly the same discussions about EU citizens during the Brexit debates and it forces me to come to exactly the same conclusion, which I do not think anyone has mentioned so far. I suspect this resistance to physical proof derives from an almost fetishistic resistance to the idea of anything that feels like an ID card, despite the fact that every Member of this House in the Chamber right now is wearing one. I ask the Minister: is that what the impasse is? Does it feel like ID cards coming in by the back door and there is resistance to that? I would be very grateful for her clarity.