Energy Storage Capacity

Lord Fox Excerpts

Tuesday 5th April 2022 Lords Chamber

[Lord Callanan (Con)]

As I responded to my noble friend earlier, more storage is not the answer to high prices at the moment. It benefits the system in the longer term. Sadly, in energy policy, nothing happens in the near future and everything is long term. The noble Lord is aware of the £9.1 billion package of support that the Chancellor announced to try to mitigate the effect of high prices at the moment.

[Lord Fox (LD)]

My Lords, the success of offshore wind was driven by the contracts for difference structure that has caused private money to pour into the sector. The Government have recently passed the Nuclear Energy (Financing) Act, which looks at the RAB model. What models are they now looking at to finance storage because, without companies knowing how they will make money from building storage facilities, they will not build them. It is really important that the Government step forward now to explain how this will work financially. What are the plans to deliver a structure that will finance this?

[Lord Callanan (Con)]

The noble Lord is correct and, as I said earlier in response to the noble Lord, Lord Oates, we had a call for evidence last year and we will announce our analysis and the results of that shortly.

Exports: Support for Businesses

Lord Fox Excerpts

Thursday 31st March 2022 Lords Chamber

[Lord Callanan (Con)]

I am obviously very sorry to hear of my noble friend’s experience. I will certainly take that back to the department to see what we can do to alleviate those difficulties. There is clearly some disruption at some ports, et cetera, and we are attempting to smooth the flows of paperwork and export requirements needed to trade with the EU at the moment. I know that a lot of colleagues across government are working to try to reduce those delays.

[Lord Fox (LD)]

My Lords, I am sure that the Minister will agree that businesses in areas such as conference organisation, music and theatre, which rely on people travelling from this country to countries in the European Union, are suffering great confusion and difficulty in moving their people to the right place in time. Having agreed with that, can the Minister tell your Lordships’ House what the Government are doing to smooth the path for what are mostly small and medium-sized businesses that rely on moving their people efficiently and friction-free across Europe?

[Lord Callanan (Con)]

I am of course aware—we have discussed this before—that there were difficulties for travelling musicians and others, which principally revolved around the different visa requirements of different EU member states, but I know that DCMS in particular has been heavily engaged in working with member states to work out exactly what the visa requirements are and to publish them on the UK government website to provide support to businesses that are struggling, exactly as the noble Lord says. I think that the situation is a lot easier than it was last year.

Subsidy Control Bill

Lord Fox Excerpts

3rd reading
Monday 28th March 2022 Lords Chamber

[Baroness Blake of Leeds (Lab)]

I will start by sharing our concern at the information the Minister gave regarding the devolved authorities. We look forward to being involved in ongoing consultation and discussions as time goes forward. I echo the comments already made by the noble and learned Lord, Lord Thomas, and the noble Lords, Lord Wigley and Lord Dodds, on this issue.

I think it is fair to say that this Bill might not have been noticed by as many people as the more high-profile Bills that are going through the House at the moment, but everyone who has been involved in it recognises the significance of the work undertaken and just how deep the implications are for how public money will be spent for years to come. As we made clear from the outset, we agreed with the Government’s core principles in this area, including introducing greater flexibility through the removal of pre-notification requirements. However, as we have stressed throughout the debates on this Bill, with power comes responsibility. It is for this reason that we have focused on increasing the transparency obligations on public authorities, as the Minister just outlined. We are talking about large sums of public money, which must be easily accounted for and deliver real value for money. Unfortunately, we have had too many examples recently where we cannot claim that that is the case.

However, we are very grateful to the Minister and to the Whip, the noble Baroness, Lady Bloomfield, for their genuine engagement on these matters. Although we did not achieve everything that we would have liked, we believe the Bill is much improved as a result of the substantial package of concessions brought forward on Report.

I would like to echo our profound thanks to everyone involved through the Bill team. Our access to officials has been particularly helpful; they have been very open. It has enabled us to delve into the detail and discuss potential ways forward, whether legislative or non-legislative.

Despite good progress being made in most areas, there are significant concerns in others—particularly, as we have already highlighted, in relation to the involvement or otherwise of the devolved Administrations and the substantial financial and practical barriers imposed on SMEs and others if they wish to challenge individual subsidies. A particular concern of the business community is the lack of clarity in the guidance around the decision-making on when subsidies will be awarded.

We will have a review, as is outlined in the Bill, of some of these matters in three years’ time, and we hope the Government will act quickly in response to the findings. Until then, we hope public authorities will make the most of this new framework. In particular, I am appreciative that the Government listened to all the arguments about focusing and directing money towards areas with economic deprivation. This is a welcome shift from the Government across this area.

Another regret is failing—just—to pass the amendment to improve the Bill’s green credentials. We hope all levels of Government will continue to have regard to the fight against climate change. Pursuing a net-zero strategy is not just a statutory duty but a moral one. I firmly believe we have missed a trick by not more firmly linking net-zero obligations to the awarding of subsidies.

All that remains is to thank all colleagues who took part during the Bill’s various stages—particularly, as has been highlighted, the noble Lords, Lord Fox, Lord Lamont, Lord Ravensdale and Lord Wigley, the noble and learned Lord, Lord Thomas, and the noble Baroness, Lady Sheehan. I would like to pay tribute to my noble friend Lord McNicol. Unfortunately, he cannot be with us today, but I think we all recognise the amount of work he put in. I would like also to add my thanks to all the staff, clerks and doorkeepers in the normal manner. I end by thanking sincerely Dan Stevens, the officer in our office, for his unfailing patience, support, and clarity of thought and purpose, and for helping us to put down the improvements sought.

[Lord Fox (LD)]

My Lords, it is genuinely pleasing to see the Minister looking in a substantially better state than he did at the end of Report. I am pleased that he is back up and at the Dispatch Box.

As the Minister has repeatedly told us throughout the process, this Subsidy Control Bill is a consequence of the TCA. The Minister also claimed that it was rare for such controls to exist in other countries around the world, and said it would be a permissive regime, the antithesis of the regime it is replacing. So it is something of a legislative experiment as it goes forward.

Since its introduction, as has been stated, improvements have been made, and the Bill leaves your Lordships’ House much improved. My noble friends, Her Majesty’s loyal Opposition and some important voices from the Cross Benches and Conservative Benches have helped to make these improvements, along with the work of the Minister and his colleagues.

But noble Lords would expect me to say that it remains a flawed Bill. As was highlighted, it is more transparent—but a £99,999 subsidy need not be reported, and that remains a very large sum of money that can be passed from government to business without a report. It invests some powers to the CMA, but insufficient authority. I align myself with the comments of the noble Baroness, Lady Blake, on the subject of the burden on SMEs and the absence of any net-zero quantity.

The biggest uncertainty hanging over the Bill, as far as we can see, is this: if it is permissive, what will it permit? True to the nature of this Government, they have delivered a Bill that is not designed to deliver a strategy—almost the opposite. By permitting authorities to deliver subsidies or subsidy schemes in their area of control, essentially independent of schemes in adjacent areas, they are creating the potential for huge confusion and conflict, with money flowing from the richest areas back into their own communities to ensure that they remain the richest areas. The failure to grasp the need to map deprivation systematically could well render this system very divisive.

My noble friend Lord German used the Welsh example, but I will use an English one, because the Minister is the English Minister. As we know, EU funding in Cornwall over the seven years from 2014 to 2020 was nearly €600 million. This was based on a realistic assessment of the relative poverty of that county. The proof of this Government’s subsidy scheme, system or control, and of their promises, will be how much UK money flows into Cornwall.

As the Minister mentioned, there was the whole devolution issue. I will not repeat all the arguments, but the Government’s mantra of repeating over and again “It is a reserved issue” does not represent negotiation, nor is it designed to win the hearts and minds of those who sit on the edge of the unionist/separatist divide—quite the opposite; to then include agriculture, which is a devolved issue, in the Bill made matters substantially worse. We heard from the Minister that these were the issues driving the absence of legislative consent. Despite the many improvements we have seen, we on these Benches remain very concerned about the effect this Act will have on the union, but I will pass from this critique and move on to the Oscars ceremony part—the Minister can be assured that I do not mean that part of it.

I again thank the Minister. He showed remarkable fortitude during the Bill’s passage, along with his Whip, the noble Baroness, Lady Bloomfield, who showed the customary availability and relatively good humour. Those in Bill team itself were, as usual, authoritative and helpful. I thank them, as set out by the Minister.

During the debates, the noble Lord, Lord McNicol, and the noble Baroness, Lady Blake, the noble Lord, Lord Ravensdale, the noble and learned Lords, Lord Thomas and Lord Hope, as well as the noble Lord, Lord Lamont, made significant contributions that helped to shape the Bill. On these Benches, my noble friends Lady Sheehan, Lady Randerson, Lady Humphreys, Lord German, Lord Bruce and Lord Purvis offered wisdom and experience. In the office, making sure that the whole thing held together, we must once again thank Sarah Pughe, along with Dan in the Labour office, who helped to drive us along.

So the Minister will have his Act. Whether it is indeed a subsidy control regime remains to be seen. I think many of us still suspect that it is actually a mechanism for central government to parachute schemes into areas of its choice, unchallengeable by devolved authorities, local authorities or indeed the CMA.

Subsidy Control Bill

Lord Fox Excerpts

Lords Hansard - Part 2 & Report stage
Tuesday 22nd March 2022 Lords Chamber

As emphasised earlier, we will continue to work closely with the DAs in developing different streamlined routes. This will include inviting DA officials to sit on expert working groups for each route we are developing. The DAs will, of course, also be able to suggest areas that future streamlined routes might cover, and we will undertake to consider any proposal extremely carefully.

[Lord Fox (LD)]

I apologise to the Minister and thank him for giving way. I am struggling a little with why the Government want to hoard the right to create streamlined subsidies to central government. I can assume only that it is because it gives the Government the ability to parachute schemes into Scotland, Wales and Northern Ireland—which might not be seen by those devolved Administrations as something they would have—and, because they are streamlined schemes, they cannot be challenged. Is that the reason the Government are not prepared to let devolved authorities have streamlined subsidy schemes for themselves?

[Lord Callanan (Con)]

No, I think the noble Lord is being unfair; the operation of these schemes is entirely optional. We will consult the devolved Administrations closely before making any such schemes. I only just said that we will seek to involve DA officials and others in expert working groups for each of the routes we are developing.

[Lord Fox (LD)]

I am sorry to prolong this, but is the Minister now saying that, for a streamlined scheme that is presented by central government and could be taken up by, for example, organisations and companies in Scotland, the Scottish Government have the option of not allowing that to happen? That, I think, is what the Minister just said.

[Lord Callanan (Con)]

They could choose not to use the scheme if they wished, but it would be a UK-wide scheme. They would be consulted on the development and involved in the expert groups that put them together.

I will move on to Amendment 58, also tabled by the noble and learned Lord, Lord Thomas. This amendment sets out a new route for subsidies given in devolved primary legislation to be considered by the courts, by allowing the relevant law officer to refer the question of whether a Bill is compatible with the principles in Chapter 1 of Part 2 to the Supreme Court. It also removes the requirement for the promoter of the legislation to consider the subsidy control principles and other requirements, and the ability of the courts to consider whether the provisions of Parts 1 and 2 of Chapter 2 have been properly applied, thereby removing the ability of an interested party to challenge the subsidy in the general courts on that basis.

I am of course very grateful for the interest taken by the noble and learned Lord in this clause and for his engagement on it with me and my officials. I believe that both he and I share an objective to ensure that these provisions reflect our constitutional and legal institutions, as well as our obligations under international law. Schedule 3, as it stands in the Bill, accomplishes those objectives.

It is important that the subsidy control requirements apply to subsidies in devolved primary legislation, and that these subsidies are not immune from challenge by interested parties. This is both for consistency with other subsidies and to ensure compliance with our international obligations, particularly under the trade and co-operation agreement with the EU. However, it is also important that the unique constitutional status of the devolved legislatures is respected. That is why we have tailored the provisions in Schedule 3 specifically, and there is no mandatory referral to the subsidy advice unit for these subsidies.

I must therefore reject the amendment tabled by the noble and learned Lord for two reasons. First, it would not meet our international obligations under the TCA, which requires us to make available a route to challenge in a court or tribunal for interested parties, on grounds of compliance with the substantive subsidy control requirements. This amendment would, effectively, remove that route.

In response to the noble and learned Lord, Lord Hope, on the intention of paragraphs 6 and 7, it is those interested parties that may challenge, for example, another public authority or another business, as long as they meet the test set out in Clause 70. The promoter would normally be the government Minister, or the person making an amendment to the Bill, and this is defined in paragraph 2 of Schedule 3.

The second problem with the amendment is that it would have the effect of asking the Supreme Court to consider questions of fact. It is my understanding that the High Court or Court of Session is the appropriate forum to consider these questions in the first instance, followed by the relevant appeals court, and, as relevant, the Supreme Court as the ultimate arbiter for questions of law. Creating a route for the law officers to refer a question to the Supreme Court implies that any challenge to a subsidy in devolved primary legislation would be a constitutional question, as it is comparable to the route for referring devolution issues under the devolution settlements. While the Bill affects the exercise of responsibilities of all public authorities in the UK, I do not consider that this is a constitutional question.

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[Lord Hope of Craighead (CB)]

My Lords, this group of amendments gives me an opportunity to express my appreciation to the Minister and his team for the work they have been doing under the legislative consent process. The Constitution Committee studied the working of this process for much of last year and in its report, Respect and Co-operation, expressed the concern that the process was not working properly—indeed, we heard quite a lot of evidence from the devolved Administrations that they were dissatisfied with the way it was working.

My impression has been that since late autumn of last year the working of the system has very much improved, and the remarks made by the Minister at the beginning of his reply on the last group of amendments tend to confirm that a great deal of work has been done behind the scenes to try to make the process work. I am therefore much encouraged by what he said, both in private conversations and in the Chamber.

I have one particular to request to make. When we come to Third Reading, I wonder whether the Minister would provide the House with a report to explain why, if it is the case, that consent Motions have not been passed by the devolved legislatures. It would be helpful to know what the sticking points were and why the Government were not prepared to give ground to the devolved legislatures to obtain their consent. It would inform the House. It would also enable us to understand how the process is working and to appreciate that the Government have been working as hard as they could to obtain consent and that there were genuine reasons for their inability to obtain it. I would be grateful if the Minister could do that when we come to Third Reading. I make that point now so that he can take it into account when the time comes.

[Lord Fox (LD)]

Your Lordships will remember that I made a very long speech on the DPRRC’s reports and I would like to think that it was the power of reasoning within that long speech that led to these very welcome amendments from the Government. I suspect, however, that it is the reputation of the DPRRC and the rigour of its work that caused these changes to be made. For that, we should be grateful and pleased. It is a shame that the Government had to go through this process to do it, but it has happened.

We on these Benches also welcome the announcement made by the Minister on financial stability issues and bringing in the PAC and Treasury Select Committees confidentially on that. That is a common-sense approach, and it goes a long way to solving any issues.

On defining subsidies and schemes of interest and of particular interest, we are disappointed that the definitions are not brought into the Bill, but I hope that following the consultation process the Government will come back and, either formally or informally, inform the Front Benches and those others involved in the Bill of progress, so that when the regulation is made, we will in a sense have been brought into that process. This is a good set of amendments that we broadly welcome.

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[Lord Fox (LD)]

My Lords, as the Minister has set out, this group includes a number of concessions around the transparency issue. Again, we should thank him for coming some of the way towards the arguments that surfaced in Committee.

We welcome the reduction in the reporting threshold from £500,000 to £100,000. We recognise that that is some way short of the level that many external organisations were calling for and indeed that we wanted, but we also understand that it is a big step for the Government and they have come a long way towards where we think it should be.

I put my name to Amendment 20, tabled by the noble Lord, Lord McNicol, and I am looking forward to hearing his proposal. I am still not 100% convinced by what the Minister said, although he worked hard to explain to us why it would not be an issue. I think some of the points he made were right—sorry, acceptable; I am sure they were all right.

On the Minister’s first point about multiple payments to different branches, if they all have the same parent company, I start to get concerned about that issue. However, the biggest point was that if nefarious activity is going on and a £99,999.99 subsidy is being paid out by this mythological nefarious authority, the Minister said that that would no doubt surface. I am not sure how it would do so, given that there is no reporting requirement, unless that extra penny is forthcoming. Apart from sleuthing, submitting freedom of information requests and citizens’ activity, how does the Minister expect this information to surface—or indeed is he going to have an investigative unit at his side, ready to swoop on such nefarious organisations? I am interested to hear how this disclosure or uncovering process will work.

Other government amendments mean that the declaration of subsidies scheme is being improved in time terms, and that is also very welcome. The Minister was talking about a review process. I think he would be wise to maintain a rolling review in the department to be able to surface any issues and problems. This is a new process and a lot of different organisations will be trying to bed into it. The sooner that any misunderstandings or misapprehensions are understood, the sooner the department and the Government can do something about it.

In closing, I have a personal request. I probably should really understand this but I still do not: could the Minister clarify the rules regarding the declaration of subsidies awarded within subsidy schemes? I have heard different wordings at different times throughout the process, so perhaps the Minister could clarify once and for all how and if individual subsidies awarded under subsidy schemes will or will not be reported.

Overall, we are pleased with the amendments in this tranche. The Minister has moved on transparency, but we hope he will keep that situation under review with a view to more transparency in future rather than less.

[Lord McNicol of West Kilbride (Lab)]

My Lords, this group of concessions, as the Minister has outlined, is significant because of both the number of amendments and, more importantly, their text and practical effect. We are grateful to the Minister and the Bill team for their engagement on these issues over many weeks now; our discussions have been very useful, and although we have not achieved everything we wanted, as the noble Lord, Lord Fox, said, the new subsidy control scheme will be far more transparent than the Bill initially proposed. There are 31 amendments in this large group, 30 from the Government and one from me. I still think mine is a good amendment but I understand the Minister’s points, which we will come on to in a second.

The main issue is that we remain somewhat unconvinced of the Government’s argument in relation to the £100,0000 threshold. Given that many public authorities already have to publish details of spending at much lower levels—in many cases, it is £500 for local authorities—the £14 million cost quoted by the Minister to take the transparency threshold down from £100,000 to £500 would be well spent because that transparency would then sit across the whole of the subsidy controls and subsidies issued. However, an 80% reduction, coupled with the universal requirements across different subsidy types, is a clear step in the right direction.

To be fair, the noble Lord, Lord Fox, has already stolen a lot of my thunder in relation to Amendment 20. The points he made were absolutely spot on so I will not repeat them; I look forward to the Minister’s response. I tabled Amendment 20 in an attempt to deal with the potential for public authorities to award multiple payments that fall under the £100,000 disclosure threshold. As the Minister outlined in his opening remarks, there are a number of possible reasons why a subsidy may be given at that level. The noble Lord, Lord Fox, is right: it is the final one of those three points, about a nefarious reason why an individual in a local authority would encourage a local authority to give multiple awards under the reporting threshold. A fundamental question still sits there: how will we and, more importantly, businesses and organisations that are or could be affected by a subsidy, challenge it if we have no sight of it?

We would be delighted if the Minister accepted this amendment but he explained in his opening remarks why he will not. If the Government are not willing to accept it, can the Minister outline any other safeguards that could be brought in to check this possible kind of behaviour? He did not touch on safeguards in outlining the three points; his response was that the Government do not expect this to happen or do not believe that it could happen. I hope that the Minister can also confirm, because this is important, that the ministerial delegated powers to amend the transparency thresholds will not be used before—I would prefer that they were not used at all, but especially before—the CMA and other interested parties are able to see the new system in operation. We appreciate that any future increases are subject to a cap but it would make a mockery of the process and the concession package if any of the thresholds were increased before the new system was up and running and had been tested and checked by the CMA.

One area not subject to amendments today but which we see as incredibly important is the process around MFA subsidies. At present, beneficiaries in receipt of MFA subsidies must maintain paper records, which not only increases the bureaucracy involved but goes against the grain of the general transition to paperless record-keeping. We do not believe that moving this system to a digital process would require any amendments to primary legislation, so can the Minister commit today to looking at the available options for digitising the MFA process, either as part of the department’s existing subsidy database workstream or as a stand-alone project?

I will touch on one final point about the move on upload from six months to three months. Again, I fully support this. The sooner this information is uploaded on to the database, the better for all, but we still have concerns about the right to appeal against a subsidy that a business or an organisation could be affected by. That is limited to one month; the Minister and the department have not moved that to six weeks or two months. I have some concern that we could have gone a bit further. With the reduction from six months to three months, we could have increased the ability for someone—or an organisation—adversely affected by a subsidy awarded to a competitor to challenge this by giving them a little more time. I understand the Minister’s argument about wanting the subsidy to be in place, agreed and unchallengeable, before the business will spend it, because it then has certainty. None the less, we could have given a bit more time to those who could possibly be adversely affected by it to make a challenge. With that, I again thank the Minister for the 30 amendments—it is just a shame that he could not go one more and make it 31.

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Moved by

[Lord Fox]

47: Clause 55, page 30, line 40, after “State” insert “or the CMA”

[Lord Fox (LD)]

I rise on behalf of the noble Lord, Lord Lamont, to move Amendment 47 and also speak to Amendments 48 to 50. I had never expected to be the noble Lord’s stunt double but I do not regret it at all. As on many issues, the noble Lord and I agree that the role of the CMA requires boosting so that, as he said at Second Reading, it can police the control of the regime. It is a shame that he is not here to speak on his own account as he would do so with much more vigour and verve than I, but we both see these amendments as analogous to the independence that was given to the OBR and the Bank of England. If the Government genuinely want to control subsidies, as the title of the Bill suggests, there should be greater independent enforcement instead of what is a pretty weak SAU.

I have a number of direct questions to channel from the noble Lord, Lord Lamont, before I speak on my own account. It is worth noting that on 7 February, the Minister said that

“the Bill does not, of course, replace our gold-standard mechanisms … for managing public money”.

The noble Lord would like to know: to what mechanisms was the Minister referring? I am looking forward to the answer to that question as much as is the noble Lord himself. As the Minister highlighted at the time, and as is the view of the noble Lord, Lord Lamont, balancing the current budget while having national debt on a declining trend does not deal with the micro issues such as distortions of competition caused by subsidies. That is clearly true. I wonder on my own part why the Minister brought that up. The final point is that the Minister went on to say that

“public authorities … take their statutory obligations seriously … we expect the vast majority of public authorities to comply with these requirements”.—[Official Report, 7/2/22; col. GC 382.]

The interpretation of that is that public authorities, including the Government, are to police themselves. This is not an enforcement mechanism; it is incredibly weak.

For my own part, I would say that this is strong criticism from a former Chancellor of the Exchequer and hits at the heart of the Bill. To that end, I think that we deserve a serious and studied answer from the Minister, which I am sure we will get. This centres around the self-policing, public reporting mechanism that, essentially, has been adopted. What we have are amateur regulators and citizen detectives. It is clear that this is not the way to police something as important as a subsidy regime.

In addition to the amendments from the noble Lord, Lord Lamont, I am delighted to support Amendment 55 in the name of the noble and learned Lord, Lord Thomas of Cwmgiedd. Throughout this and previous debates, his dedication to the cause of trying to bring some structure to this legislation should be commended by us all. In many ways, this amendment sits somewhere between the positions of the noble Lord, Lord Lamont, and the Government. As we would expect from the noble and learned Lord, Lord Thomas, it also addresses some serious devolution issues. I am really looking forward to hearing him set out how this amendment will solve some of the problems we have encountered throughout our debates.

A lot of those problems are based around the asymmetry that both the noble and learned Lord, Lord Thomas, and my noble friend Lord Purvis raised on a previous set of amendments. There is an asymmetry here: the Secretary of State in London can call in the CMA, whereas the authorities in Edinburgh, Cardiff and Belfast cannot do the same thing. This is at the core of the problem that people have. When we hear, in response to the request by the noble and learned Lord, Lord Hope, what the stymie on getting legislative consent is, I suspect the problem—one of the central issues—will be a version of that. Addressing that would go a long way towards bridging the gap to getting legislative consent, which I hope is the Minister’s objective.

That said, I will speak no longer and look forward to the noble and learned Lord, Lord Thomas, explaining his Amendment 55 much better. I beg to move Amendment 47.

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I will speak to Amendment 55. I first thank the noble and learned Lord, Lord Hope of Craighead, and the noble Lords, Lord Wigley and Lord Fox, for their support. The amendment has two purposes, one of which has been outlined by the noble Lord, Lord Fox, dealing with the position of the CMA. The second is to deal with the position of the devolved Governments and legislatures.

I ought to deal first with the position of the CMA. Although I co-signed amendments with the noble Lord, Lord Lamont, before Committee, the amendments he put down did not include two of them; I am not sure why. I have restored them all, because it seems to me that, on analysis, if the Bill is to be regarded as a serious attempt to uphold the rule of law and not as a piece of window dressing to satisfy our international obligations, we need to look more carefully at the position.

There are three methods of enforcement. The first is to have transparency and force disclosure. We know of the force that has; the effect of sunshine as a disinfectant is well recorded in history.

Secondly, there is the need for the CMA to investigate. It seems to me that without the CMA having powers of investigation, you do not have a properly independent system of enforcement compliant with the rule of law. It cannot be right to leave enforcement to those giving subsidies. You must have someone independent and objective in making the investigation. That is a requirement of the way in which all investigations are carried out; they have to be independent and impartial. I simply do not understand why the CMA cannot be allowed to conduct investigations that it thinks should be carried out, not merely those that the Secretary of State wants carried out or that are referred to it. Of course it will carry out the investigations referred to it by the Secretary of State independently, but it does not have the necessary power to do it where it thinks it is in the interests of enforcement.

For a similar reason it seems clear that, as was proposed in the amendments in Committee, the CMA ought to have powers of enforcement before a CAT—this is where it differs slightly from the amendments put forward by the noble Lord, Lord Lamont. Again, independent powers of enforcement are essential. The Secretary of State will have some powers, as will those who say they are injured as a result of what has happened. But that is essentially, to take an analogy with the ordinary enforcement system, a system of effectively private prosecution. My experience of private prosecutions has always been that, unless they are funded for extraneous and charitable purposes, such as is done by the RSPCA, or there is money in it by obtaining a conviction for those who are businessmen interested in getting a private prosecution, it is unlikely that there will be private enforcement. There is no doubt that this kind of enforcement action is extremely expensive. Therefore there is a real risk that there will not be much effective enforcement and that such effective enforcement as there is will be directed only at what I would call big money cases. Having a justice system that deals only with big money cases is recognised to be no just system at all.

The noble Lord, Lord Lamont, put it very pithily by creating Juvenal: “Quis custodiet ipsos custodes?” It seems to me that that summarises it in four words. There must be someone independent, both to investigate and to bring a matter before the courts if necessary, who can ensure that the Secretary of State and others uphold the rule of law. That is all I wanted to say about the position of the CMA.

On the second purpose of the management, I can deal with that briefly. It is an important question even at this hour of night, because it raises the issue of equality between our nations. I spoke at length about this when proposing the amendments in respect of seeking the consent of the devolved authorities and giving them certain powers, but this is an egregious example of inequality. Whereas the Secretary of State qua Minister responsible for England and the giving of subsidies in England can refer matters dealt with by, say, the Welsh, Scottish or Northern Ireland Governments to the CAT, there is no equality the other way round. That seems a fundamental flaw in this part of the Bill. It could be remedied by an undertaking by the Secretary of State that, if he was asked by the devolved Governments to make a reference, he would do so, and I very much hope that the Minister will be able to give such an undertaking.

What is important about these issues of equality is that they matter in two respects: first, that there is equality, but also that there is seen to be equality, and the equality between the nations is fundamental to the union. Secondly, there is the purpose of the amendment relating to the devolved authorities—this differs from the amendments in the name of the noble Lord, Lord Lamont. It seeks to make clear that the devolved Governments will always be interested parties for the purposes of appearance before the CAT. Again, this could be clarified. It would be far better if this was done in legislation, but at least it could be taken some way by the Minister making this clear.

I am sorry to have spoken at such length at this hour of night but these are important points of principle. They go to the rule of law and the position of the CMA, but also go to the equality between our nations and the survival of our union.

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[Lord Callanan (Con)]

I thank all those who have contributed to the debate. It has been a good discussion, both tonight and in the previous discussions we have had on the regime as a whole and the subsidy advice unit. I particularly enjoyed the contribution from the spokesman for my noble friend Lord Lamont. This is a trend that should perhaps continue on other subjects on which my noble friend feels strongly.

[Lord Fox (LD)]

Have I been fired as the Minister’s speechwriter?

[Lord Callanan (Con)]

If the noble Lord is going to write my speeches, he might as well write them for my noble friend Lord Lamont, as well. The answer to the question of my noble friend Lord Lamont, through his spokesman, is the Green Book and Managing Public Money guidelines; I suspect as an ex-Chancellor he knows that very well indeed—probably better than we do.

Government Amendments 52 and 53 to Clause 65 have been tabled to address your Lordships’ concerns regarding the frequency of the CMA’s monitoring reports under Clause 65. Instead of mandating a report within five years of the implementation of the regime, the amendments require an initial report after only three years, subsequently followed up by a further report after another three years. Subsequent reporting will then revert to a five-year cycle.

I hope noble Lords will agree that the publication of these two initial reports will be sufficient to keep Parliament and the public informed of how the new subsidy control regime is functioning, and to assist in setting best practice going forward. As a result of these changes, I have also tabled two consequential amendments to clarify how these new initial reports will interact with other provisions in the Bill. These are Amendments 54 and 63.

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I turn to Amendment 56 tabled by the noble Lord, Lord McNicol, supported by the noble Lord, Lord Fox, on the question of whether subsidies given under the scheme should be subject to challenge in the CAT. We debated that extensively in Committee, and the House will be pleased to know that, given the lateness of the hour, I will not repeat the arguments I made then. But this does not mean there is absolute protection for a subsidy purportedly given under the scheme. An interested party can argue that a subsidy does not in fact meet the terms of the scheme and can challenge it as a stand-alone subsidy. I therefore hope that the noble Lord will be able to withdraw his amendment. I would like to move my amendments and hope others will not press theirs.

[Lord Fox (LD)]

My Lords, I thank the Minister for his answers, although many of them are disappointing. On Amendment 56, it would be helpful if the Minister could write on how that challenge would work. I am looking particularly at where a scheme has been approved and a number of businesses granted subsidy under that scheme. What happens if I want to challenge not the scheme but the validity of that particular business getting that particular subsidy? It is not clear to me, under the rules, how that works, so could the Minister write a letter to me and the noble Lord, Lord McNicol, clarifying that?

On Amendment 55, repeating the mantra that it is a reserved issue is almost exactly the opposite of what we were calling for: having some sensitivity in the nature of the Bill. It is a reserved issue but it trespasses into areas that are devolved and, as my noble friend Lord Purvis illustrated, agriculture is one such area—there are others. The absence of sensitivity is the disappointing thing.

The noble and learned Lord, Lord Thomas, the noble Baroness, Lady Bryan, the noble Lord, Lord Wigley, my noble friend Lord Bruce and the noble and learned Lord, Lord Hope, all made valid points about reaching across that barrier, but there seemed to be no such reaching from the Minister. I hope he will have time to reflect on this and can come back at Third Reading with something a little more conciliatory than “This is a reserved issue” because that is really not good enough.

The criterion on which I was allowed to act as the spokesperson of the noble Lord, Lord Lamont, was that under no circumstances should I press Amendment 47 so, as a man of honour, I beg leave to withdraw the amendment.

Amendment 47 withdrawn.

Subsidy Control Bill

Lord Fox Excerpts

Lords Hansard - Part 1 & Report stage
Tuesday 22nd March 2022 Lords Chamber

[Lord Ravensdale (CB)]

My Lords, starting with the government amendment to Clause 18, I must thank the Minister for listening to my concerns in Committee and for responding by putting forward this amendment, which addresses my concerns with the impact of Clause 18 on the levelling-up agenda and meets the intent of my original stand part amendment. I must also thank the officials for the work they put into drafting and finding an acceptable way forward and for engaging with me throughout the process. I thank the noble Baroness, Lady Blake, the noble Lord, Lord McNicol, and the noble and learned Lord, Lord Thomas, for all their support throughout.

The Government have proposed a comprehensive amendment in Amendment 14, which will ensure that subsidies that target regional disadvantage are exempted from the prohibition on relocation of economic activities. It will address concerns from stakeholders I worked with in the Midlands Engine, home to many of the most deprived regions in the UK, that this would be a constraint on supporting disadvantaged areas; and it will address concerns from local authorities and other disadvantaged regions. I believe it will prove an important part of the Government’s toolkit in levelling up, through allowing productive relocation activities that reduce economic disadvantages within the UK as a whole.

I also welcome the clarification, provided through Amendment 2, to the equity rationale in Schedule 1 to the Bill, that it covers subsidies aimed at regional economic disadvantage. This whole package of amendments goes a long way to address concerns expressed by noble Lords in Committee. However, there is always more that can be done.

I very much support Amendment 9 in the name of the noble and learned Lord, Lord Thomas of Cwmgiedd, to which I have added my name. It addresses an issue in that the way the common principles are drafted can be viewed through a local context; there is nothing in the Bill to define what a disadvantaged area is, as opposed to an advantaged area. If national direction is absent, there is no means via subsidy control to steer intervention to those areas that need it most. The amendment seeks to set objective criteria to define a deprived area, which would resolve this difficulty. It would also give legal certainty for business on which areas would count as deprived, and hence work to drive investment into those areas.

The other way this could be approached is through streamlined routes. A streamlined route or routes could be created, through the mechanism in the Bill, to provide national direction on funding into deprived areas. This could be on the basis of the same economic indicators as in the amendment of the noble and learned Lord, Lord Thomas, where any one of several markers of deprivation is present. Again, the legal certainty that comes from this route would then help direct business investment into the deprived areas. There would be a clear definition of what a deprived area is, and therefore the areas of the country for which support would be available through the streamlined routes. Obviously the streamlined route would not prevent subsidy in a non-deprived area. It would just mean that the giving of a subsidy in a non-deprived area would be more complex, require more scrutiny and therefore help direct investment into deprived areas.

I would be most grateful if the Minister could give some clarity on a couple of things. First, to echo the request from the noble and learned Lord, Lord Thomas, can the Minister provide some reassurance that the Government will provide some specification or objective criteria of what a deprived area is within guidance? Secondly, can he provide some detail on the government programme for streamlined routes and how these will feed into the levelling-up agenda?

In concluding, I was delighted to see the appointment of Professor Sir Paul Collier to the Government’s levelling-up advisory council. Several years ago he wrote that what was needed was a shock to expectations, which in itself would provide the momentum required to level up the country. Noble Lords will recall Mario Draghi saying that he would do “whatever it takes” to save the euro. In a similar way, the Government need to take on the challenge of levelling up by stating that they would do whatever it takes to level up the regions. The Bill will be a key part of the Government’s toolkit for achieving just that.

[Lord Fox (LD)]

My Lords, before speaking to this group, I must say that our colleagues, my noble friends Lady Randerson and Lord German have been struck down with Covid, so, although there are amendments in their names, we will struggle on without them. Happily, my noble friend Lord Bruce has been restored from his bout, so at least we are not completely bereft.

I would characterise the purpose of this group of amendments largely as trying to avoid levelling down. I would put it down as damage limitation, and I think many of these amendments go some way towards that process. On Amendment 1, in the name of the noble Viscount, Lord Chandos, having dealt with the dual meaning of the word “equity”, I agree with him that this is a really important principle that ought to be enshrined in the Bill. It is not too late, and I hope the Minister can once again reflect on the wise advice of the noble Viscount and bring something back when we get to Third Reading.

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[Lord Hope of Craighead (CB)]

My Lords, I will say a word in support of Amendment 5 in the name of the noble Baroness, Lady Bennett of Manor Castle. Her list of small projects reminds me of the position of the many small islands around the coast of Scotland, in the Northern Isles, the Western Isles and the Inner Hebrides.

About 15 years ago I spent a week on the island of Fair Isle, which lies midway between Shetland and Orkney. It is too far away from the mainland and from those islands to have any electricity supply provided from outside; when I went there it was largely reliant on diesel generators, which were expensive and wasteful and could not run all the time. People had been relying on the diesel generator coming on at, say, six in the evening to fire up their cooking utensils and so on, but just before we got there someone with funding had been able to put up a wind turbine. It was there, and I remember the thrill of the islanders when it was put into operation and provided a reliable source of electricity which was available all day because it did not involve wasteful use of diesel oil.

That would fall well within the small projects in proposed new sub-paragraph (2)(d)(v); it is just one example of the value of these small projects to small islands such as that. I do not know how many like Fair Isle there are still relying on diesel generators, but anything that can be done by introducing and supporting projects of this kind to stop them using carbon fuels and relying instead on the renewables listed here would be of great value. Of course there is a climate change aspect to it, but it also has a real practical value for the communities themselves—otherwise, they are driven to spending money on carbon fuels, which we would all like to stop having to use.

Subsidy schemes for small projects have a real value in these remoter communities that cannot be linked into the grid around the mainland or some of the larger islands which can have their own generating facilities. The list is very interesting and valuable, and I hope the Minister will pay attention to it.

[Lord Fox (LD)]

I rise to support briefly Amendments 3, 51 and 61. On the point made by the noble and learned Lord, Lord Hope, and our Green friend, I was not aware that this scheme excluded small projects. What it will exclude is us finding out about them as they will all come in under the threshold and will not be reported. I hope that the Minister can perhaps come back and report on them; we will not find them in the database.

We have heard fantastic speeches on Amendments 3, 51 and 61. I will not repeat them but want to pre-empt a little what the Minister’s response might be. I have a hint of that; I suspect that he is guided by his feelings about Ukraine. Since its invasion, the mood will have changed, and that will be his line. The Russians are indeed committing atrocities in Europe as we speak, and it is terrible, but the climate crisis is not standing back while this happens. With this amendment, we are asking the Government to walk and chew gum at the same time. Yes, we have to deal with the consequences of the war and we understand how hard that is, but we have to do that within the context of attacking the net-zero challenge. Unless the Minister can officially announce that global warming is performing a ceasefire, this amendment has to be there for us to meet both the important things that this country has to face right now.

[Baroness Blake of Leeds (Lab)]

My Lords, I am grateful to the noble Baroness, Lady Boycott, for tabling her amendments and sorry that she cannot be here to move them today; I am grateful that my noble friend Lord Whitty stepped into the breach much more than adequately. I want also to recognise the contribution of the debate and the importance of getting on to the front foot with its urgency on such a range of different issues. Obviously we have the climate emergency, but we have to mention Russia’s illegal invasion of Ukraine and the West’s urgent discussions about how to lower its dependence on Russian oil and gas.

These discussions are happening at the highest possible level. For some, I fear that they will give a convenient excuse to promote activities that will cause significant environmental damage if unchecked, whether that is firing up coal-fired power stations, resuming fracking, or indeed Shell’s announcement just this morning that it will look again at the Cambo field. For many, the focus is on the acuteness of the energy security issues that we are facing, which have come to the forefront, and the ever greater need to develop energy self-sufficiency; that means focusing on the climate imperative together with security issues, regeneration and the new green jobs that will come along.

Following COP 26, the UK remains a key player in driving implementation of the various agreements reached. What hope do we have of ensuring that other countries follow through on their commitments if we do not play our leading role in this global fight? Another aspect is that we know the Government want a degree of flexibility for public authorities at every level, but we do not see anything in Amendment 3 that takes that flexibility away. The Minister has been keen to use the example of Welsh steel during our discussions on this matter. If, when conducting the so-called balance test, the Welsh Government decide that the short-term economic benefits outweigh the costs of emissions, they will be able to award the subsidy. However, as a general principle, public money should be used for public good, and what greater public good can there be than preserving our planet for future generations?

Now is the time for us to double down on our commitments to renewables and nuclear rather than being swayed by those who are seeking to turn back the clock. I finish by picking up on the comments of my noble friend Lord Whitty about pressing Amendment 3 to a vote. If he does indeed decide to do so, we will support him.

Trade with the European Union

Lord Fox Excerpts

Monday 21st March 2022 Lords Chamber

[Lord Grimstone of Boscobel (Con)]

My Lords, first, I thank the noble Lord for referring to the hard work being done by officials in the department. As to Northern Ireland, the Government’s absolute priority is to protect stability and the peace process. We believe that there is a deal to be done with the EU that protects the sovereignty of the UK and the integrity of the EU single market. This would deliver the stability that business and communities in Northern Ireland need. I know this is a subject very close to my right honourable friend the Foreign Secretary’s heart.

[Lord Fox (LD)]

My Lords, the Minister talks about exports and I am sure he would like to recognise the challenge facing our energy-intensive industries. They are competing internationally on an entirely different playing field, as the cost of their energy is substantially higher than that of their competitors. Will the Minister recognise that and undertake to once again go back to the Chancellor before this week’s Statement to make sure something is done about it?

[Lord Grimstone of Boscobel (Con)]

My Lords, I absolutely recognise the issue that the noble Lord refers to, and we have the energy-intensive industries scheme to help certain industries. This is important, and I believe the longer-term solution is more renewable energy in this country; we are working very hard to achieve that.

Commercial Rent (Coronavirus) Bill

Lord Fox Excerpts

3rd reading
Tuesday 15th March 2022 Lords Chamber

[The Minister of State, Department for Business, Energy and Industrial Strategy and Department for International Trade (Lord Grimstone of Boscobel) (Con)]

My Lords, it is a pleasure to lead this Bill on Third Reading. As we are all aware, this legislation supports the Government’s important aim of mitigating the impacts of the pandemic. The Bill does this by protecting certain rent debt and establishing an arbitration scheme, which has been designed to balance the impact on both landlords and tenants. It has therefore been gratifying to see the level of support for the Bill across the House.

Turning first to the government amendment, I am grateful to the noble Earl, Lord Lytton, and the RICS for sharing their experience and considering the practical applications of the Bill’s provisions. I said on Report that I would consider and return to a point about the extent to which arbitration bodies may have immunity. This technical amendment follows that consideration.

Section 74 of the Arbitration Act essentially protects an arbitration body from incurring liability in relation to a function of appointing an arbitrator. Amendment 1 would provide that Section 74 also applies where approved arbitration bodies exercise their function of removal of arbitrators under the grounds listed in the Bill. The bodies will thereby have immunity for things done or omitted in the discharge of this function unless they act in bad faith. I beg to move.

[Lord Fox (LD)]

My Lords, this amendment is testament to the power of remote control over this Bill by the noble Earl, Lord Lytton, and we on this Bench welcome it. I am interested that the Minister was able to announce on Report that a large number of arbitration organisations had already been recruited to take part in this important activity. To that end, I am surprised that they did so without some assurance of immunity as now offered by this amendment; I would be interested to hear what the expectations of those organisations were, given that it is only now that that immunity is emerging. With that small question, we will support the amendment.

[Lord Grimstone of Boscobel (Con)]

My Lords, in answer to the noble Lord, Lord Fox, what I said on Report was that 12 bodies had indicated an interest in applying for this. The process of approval is under way and, no doubt, this clarification will come to light and be welcomed by them during that process.

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[Lord Lennie (Lab)]

My Lords, I thank the Minister for his customary courtesy and thoroughness in handling this somewhat uncontentious Bill. In fact, the Bill has been so successful that the hundreds of thousands of cases which were presumed to require arbitration are now down to either the thousands or the hundreds. They are certainly a reduced number and that is a credit to the Bill.

I place on record my appreciation for the contributions of the “Covid 2”—namely my noble friend Lady Blake and the noble Earl, Lord Lytton—who both provided detailed research, experience and commitment during the passage of the Bill, latterly from afar.

Finally, I thank the noble Lord, Lord Fox, in particular for his detailed understanding of the complexity of the Bill. I also thank the Bill team for their work and efforts in getting this Bill in shape. While we still do not know what the term “viable” means and whether there will be a sufficiency to arbitrate, time will tell—time which I have now run out of.

[Lord Fox (LD)]

My Lords, this has been a short process, but an interesting and important Bill. It is important for those businesses which found their entire business model cancelled by something over which they had no control. It is important that we find a way for those businesses to secure their future by sorting out the past. I think the Minister would agree with me that the overriding principle of this Bill has been to ring-fence the debt and then, through an arbitration process, share in the impact of that debt. I am pleased to see that the Minister is nodding as I say that.

The Minister has been sensitive to the advice he has got, and I am very pleased that the Government were able to agree with the Welsh Government on how this Bill would apply in Wales.

There was a period at Report when the number of Bill officials outnumbered the number of Peers two to one. Having heard the list that the Minister has just totted off, I can see that not all of them were there even then—but thanks to the Bill team for the hard work that it put in, and thanks to the Minister and the noble Baroness, Lady Bloomfield, as well as the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake. Because of Covid and dentists, we found ourselves depleted several times during this process, but I also thank my noble friend Lord Shipley—and, back in the Whips’ Office, keeping the legislative process on track, Sarah Pughe.

[Lord Grimstone of Boscobel (Con)]

My Lords, I thank noble Lords for their generous input on the Bill throughout its passage through your Lordships’ House. It has been a pleasure to lead on a Bill that has seen such wide-ranging support alongside rightful close inspection. I beg to move.

Economic Crime (Transparency and Enforcement) Bill

Lord Fox Excerpts

Report stage
Monday 14th March 2022 Lords Chamber

[Lord Coaker (Lab)]

My Lords, I want to say a few things about this group of amendments, and in particular to speak to my Amendment 62. As the Minister knows, we are generally supportive of the amendments in this group. The Government, to be fair, have moved in several areas, and that is to their credit. Once again, I thank the Minister and his ministerial colleagues for their engagement over the course of these last few days with respect to this Bill. It has been most helpful.

Earlier today, the Minister outlined several reasons for opposing a reduction in the transition period from six months to 28 days. In the spirit of compromise, we therefore tabled an alternative provision of 90 days for the transition period, and that is the subject of my Amendment 62. He will also know that this amendment is supported by the body representing accountants, which has said that it believes three months is a reasonable figure for the transition period. I shall not go over all the arguments on the length of the transition period that we have had today and at Second Reading, as the Minister will be very well aware of them. Noble Lords are worried that this will allow people to avoid the new rules and regulations and be able to circumvent them.

Furthermore, given the potential lengthy process that needs to be followedbefore Part 1 of the Bill can be formally commenced, we believe that there is also a case for accelerating the registration period. As I again said to the Minister, the commencement period is subject to the Secretary of State’s decision for Part 1, so there is no clarity as to when that will actually start. If there is a six-month transition period and six months until it is commenced, that will be a year. Therefore, we seek clarity from the Minister, even at this late stage, about the implementation of the measures in the Bill, not only with respect to the commencement date, but to some of the other issues. Can the Minister say anything further?

We would, of course, be delighted if the Minister were able to accept the amendment, but if he is to hold firm, would he be able to make certain commitments so that we would be clear on the steps that the Government are taking to ensure Parliament is appraised of the progress between this Bill receiving Royal Assent and the next, more substantial piece of legislation to be introduced—namely the Bill that has become known as economic crime Bill 2? We want to know something about the effectiveness of the measures within this Bill and the way forward to the next Bill.

Can the Minister confirm the scope of the next Bill? Will that be broad, and will there be an opportunity to amend some of the measures in this Bill as we move forward to the next Bill? As we know, many noble Lords have raised the issues within this Bill of the fact that there has not been proper scrutiny. It may well be that many of the points that noble Lords have raised will actually come to fruition, but we need some assessment of that from the Government so that we can then inform our deliberations with respect to the economic crime Bill 2.

Also, as I say, there is a general belief that, although we are allowing the Bill to pass because of the emergency we face, there are still significant weaknesses and omissions within it. There is, therefore, a need for the next Bill to be brought as soon as possible—that is absolutely crucial—rather than at some time in the future. Can the Minister give any assurances to the House as to when he expects the next economic crime Bill to come before your Lordships in order to discuss that? There are a number of questions for the Minister, and I look forward to hearing the answers to them to determine whether we wish to test the opinion of the House or not.

[Lord Fox (LD)]

Very briefly, my Lords, we thank the noble Lord and congratulate him on tabling this amendment. We on these Benches still remain concerned about the cumulative delay of transition and commencement—or the potential cumulative delay—so we are pleased that the Minister has another chance to respond to that particular concern. We also share the concerns of the noble Lord, Lord Coaker, about the speed with which ECB 2 arrives in your Lordships’ House.

[Lord Callanan (Con)]

I thank both the noble Lords, Lord Coaker and Lord Fox, for their extremely constructive engagement over the course of the weekend and over the course of a number of meetings and chats today. I really am very grateful for their constructive attitude and for their willingness to be open to the arguments that we have deployed in why we genuinely do not think that reducing the transition period further is a runner, for a whole variety of reasons we have discussed—I will not go into detail now. But I am grateful—I want to put that on record—for the support of the Opposition parties in accepting this as emergency legislation that we want to get through as swiftly as possible and passed down to the other place.

I also note their interest in seeing a rapid introduction of the measures of this Bill and their focus on ensuring its effective implementation—and also their interest in a wider range of issues that can be covered in the Bill. The forthcoming legislation on economic crime will, as I have said previously, provide for significant reform of the powers of the Companies House registrar. These will directly interact with the provisions of this Bill, enhancing further its effectiveness—for instance, by providing greater powers to query and act on the information on the register. I would be happy, therefore, to commit the Government that this House will have the opportunity to review the effectiveness of the current legislation in that wider context of our discussion on the new powers. I am also committed to the rapid implementation of the measures in this Bill, and I would also be happy to commit to updating the House on the Government’s progress on this within six weeks of this measure achieving Royal Assent.

I can reassure noble Lords that the further economic crime Bill that the Government intend to introduce in the next Session will be a broad one. We will, of course, consider and carefully examine any amendments put forward in either House which serve to strengthen our frameworks for tackling economic crime. As my honourable friend the Minister for Small Business, Consumers and Labour Markets—who I am pleased to see at the Bar of the House—said in the other place last week, we are committed to bringing forward the next economic crime Bill early in the next Session.

I hope that has provided sufficient reassurance for the noble Lord and that, therefore, he will feel able to withdraw his amendment.

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Moved by

[Lord Fox]

27: Clause 18, page 11, line 18, leave out paragraph (b)
Member’s explanatory statement
This amendment removes the ability of the Secretary of State to exempt an individual from the requirements to register their overseas entities on the grounds of the economic wellbeing of the United Kingdom.

[Lord Fox (LD)]

My Lords, the arguments have all been made in the previous stage, when the Minister stood up and said that the Government were prepared to accept what was then Amendment 43; I was delighted. It is now Amendment 27, which I beg to move.

[Lord Callanan (Con)]

My Lords, I am happy to confirm and accept the amendment from the noble Lord, Lord Fox, also signed by the noble Lord, Lord Coaker, which was originally Amendment 43. It removes an exemption from reporting where this is in the interests of the economic well-being for the UK. As I said in Committee, I have listened carefully and we have engaged on this. In reflection of this and, as has been said, in the interests of working together to progress this vital legislation collaboratively and swiftly, the Government are happy to support this amendment.

Economic Crime (Transparency and Enforcement) Bill

Lord Fox Excerpts

Committee stage
Monday 14th March 2022 Lords Chamber

[Lord Fox (LD)]

My Lords, this is the first time I have spoken today. I will make a couple of points from the Front Bench that reflect on the other groups as we debate them.

We on these Benches share the hopes of the Government and, indeed, Her Majesty’s loyal Opposition to get this Bill on to the statute book as quickly as we can. For that to happen, the Government seem to be moving on a number of issues, which will be helpful. For our part, we have had to suspend the level of scrutiny that this Bill would normally attract. That has been difficult for us because, as we heard at Second Reading and have already heard in debate on the first group, much could be done to improve and extend the Bill.

As such, and as we have already heard from the noble Lords, Lord Vaux, Lord Cromwell, Lord Cormack and Lord Empey, there are a number of solid assurances that the Minister can give us—he hinted without necessarily assuring in his response to the previous group. We would appreciate an undertaking from the Minister that, when we return to this topic on the second part of this Bill, or ECB 2 as we now have to know it, there will be a frank assessment from the Government as to the operations of ECB 1, and a chance to debate and modify ECB 1 in the light of that frank assessment.

Further, the four planned elements of ECB 2 were set out by the noble Baroness, Lady Williams, at Second Reading. They indicate a fairly narrow—indeed, dangerously narrow—focus for that Bill. A commitment from the Government that they will enable that Bill to be broadened, and that some of the issues we have already heard and some more that we will hear later will be added to the curriculum of that Bill, will be very important.

This is a large group of amendments; noble Lords will be pleased to know that I will not take them one by one and summarise them all. There are a number of amendments from the Government, which we welcome, but I will briefly highlight Amendment 24 in the names of the noble Lord, Lord Vaux and Lord Cromwell. We have heard from them so I will not reiterate their speeches. We believe that this important issue is possible and do not see why it is not something the Government could easily incorporate in the current form of the Bill.

I will primarily speak on my noble friend Lord Clement-Jones’s Amendment 53, to which the noble Baroness, Lady Chapman, and I have added our names. We have heard today and at Second Reading that this is the issue that hits at the heart of the problem we face, and the scale of the infiltration of stolen wealth that has come into the United Kingdom. It is why the kleptocrats have been so comfortable here: they have been feather-bedded by a welcoming committee of enablers, anxious to claim new clients and get some of the money. For some so-called enablers—indeed, most of them—that temptation was outweighed by their moral and practical concerns. We should note that clearly. Unfortunately, for others, such as the sorts that the noble Lord, Lord Vaux, identified, the temptation has been too great. A significant minority of practitioners have taken the “ask no questions and tell me no lies” philosophy to doing business.

This amendment would really do no more than reinforce what should be happening already, but it restates it in a different way. Within each of these enabler services, there needs to be a senior partner or director who signs off on the due diligence and is accountable to the law for doing so.

In closing, I note a briefing from the Law Society that arrived in my inbox this morning. It expressed concern about this amendment. The pressure group said that the amendment appears to extend a duty of due diligence to all stages of client take-on and transactional/advisory work. Its concern was that it would

“create a significant burden on professional services such as law firms that would be difficult for them to meet”.

In other words, this due diligence would be too hard to do. That tells us that there is work to be done in this area.

[Lord Coaker (Lab)]

My Lords, this is yet another group of amendments with contributions from across the Chamber that signifies some of the problems we have in fast-tracking this part of the Bill. Many noble Lords, including my noble friend Lord Sikka, have put forward sensible amendments that would improve the Bill, but we cannot accept them because we are in a rush to get it through. They are common-sense amendments. I take very much the point that the noble Lord, Lord Empey, made: if we are not careful we will have a situation where we pass the Bill and, in a week or a couple of months’ time, there will be an oligarch, a kleptocrat or whatever you want to call them—somebody living off dirty money—on the front pages of the papers parading themselves as having got round what the Government have only just passed.

Of course, that is the whole purpose of the amendments that so many noble Lords have put forward: to say to the Government that they have to address some of this. If they cannot address it in this Bill, which clearly they will not be able to do because it is emergency legislation—we all accept the crisis in front of us—let us have a cast-iron guarantee that the second economic crime Bill will come quickly to address these various issues and that we will be able to come back to them. Those are the reassurances that so many of us are looking for from the Government. I do not think that is too much to ask.

As my noble friend Lord Rooker pointed out, with his normal passionate use of the English language, we do not want a situation where people—I cannot remember who he referred to—parade around saying, “Look, we’re cleverer than the regulator.” That undermines democracy and Parliament. It undermines all of us. That is how serious it is when people flaunt their ability to circumvent the law. That is not in our interest, whatever the crisis we face. I know that the Minister would accept that.

I am grateful to all noble Lords who have tabled amendments in this group, which cover a variety of non-trust provisions relating to the register of overseas entities. I should give my noble friend Lady Chapman’s apologies. She cannot participate in proceedings for personal reasons, but she tabled Amendment 23, which, like Amendment 24 in the name of the noble Lord, Lord Vaux, seeks to accelerate the reporting of changes in beneficial ownership, for reasons ably supported by my noble friend Lord Eatwell. Again, this seems absolutely common sense; it does not seem to be a point of argument.

The Government are keen to stress that the vast majority of entities that apply to join the register will be entirely above board. We accept much of that. However, under the current provisions, a shell company could be registered under certain ownership on day 1, with new appointments to the board made on days 2 and 3, but it would be required to report that only 12 months later. That is clearly not acceptable or sensible. As my noble friends Lord Sikka and Lord Eatwell, the noble Lord, Lord Vaux, and others said, something should be done about that. The Government should see what changes they can make.

There are legitimate questions about enforcement, but do the Government agree that there should be a general principle that entities need to be proactive in reporting changes? The Minister should accept Amendment 23, or indeed Amendment 24, but if not, he should commit to giving this further thought as the Government begin to draft the next piece of legislation.

We are also sympathetic to other amendments in the group, including Amendment 3 from the noble Lord, Lord Agnew, and Amendment 53 from the noble Lord, Lord Clement-Jones, supported by my noble friend Lady Chapman and the noble Lord, Lord Fox, which tries to start to deal with enablers. On so-called enablers, it would be helpful to understand what steps, if any, the Government have taken since Russia invaded Ukraine. As this is an emergency piece of legislation, what emergency action have the Government taken with respect to enablers? There have long been stories of lawyers and estate agents who purposely avoid asking their clients probing questions because they know that the answers would preclude them from doing business with them. It is time to say, “Enough is enough and we will seek you out and do something about it.”

We know that some individuals have sought to urgently offload their UK-based interests and, if they are seeking to rush sales through, we would hope that estate agents and others were already querying the reasons for that. In addition to any steps that might have already been taken, what steps do the Government plan to take over the coming days and weeks to deal with that problem? This series of amendments asks various questions, but ultimately seeks to tighten up a Bill that is in all our interests.

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[Lord Callanan (Con)]

Of course, we are constantly looking at these matters. The Treasury is implicitly engaged in pursuing crackdowns on the so-called enablers that the noble Lord has mentioned, and the anti-money laundering regulations exist. This register, which is a transparency measure, is designed to provide information to the public, HMRC and other law enforcement agencies that can then take the appropriate action under the other provisions. However—before the noble Lord, Lord Fox, gets up—I totally agree with the noble Lord that we need to look again at whether the anti-money laundering statutes are appropriate. It is not for this legislation, but I am sure it is something we will want to look at in detail before we get to the next Bill, because it is a complicated area of law. If we do not, I am sure the noble Lord will wish to table his amendments again then.

[Lord Fox (LD)]

Each time the Minister speaks on this, I do not hear him acknowledge that there is a problem. In order for there to be a solution, there has to be an acknowledgement that there is a problem. So, does the Minister agree with me that there is a problem with unscrupulous enablers currently operating in the City and the United Kingdom? Unless the Minister agrees, I do not think that we can have much hope of a solution.

[Lord Callanan (Con)]

I am happy to agree with the noble Lord. If there is one firm of accountants or one legal practice that is turning a blind eye to these provisions, there is a problem with which we need to deal. Nobody wants to see that; we want to give the UK a reputation as the best place in the world to do business and to crack down on the small minority of the legal profession that are abusing their position and facilities—of course we would want to do that.

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There are, of course, cases where designation orders are appropriate and we have seen many of them in the last weeks, particularly in the last few days. But I do not accept that it is appropriate or necessary for Ministers to have a power to freeze someone’s funds simply because they are being “considered” for sanctions. That would be an unacceptably broad power which would be quite impossible to reconcile with the rule of law.

[Lord Fox (LD)]

My Lords, it is a pleasure to follow the noble Lord, Lord Pannick. I am glad that he had the opportunity to say what he had to say; I was surprised that he did not speak on Second Reading, for that very reason, so I am glad he has now had a chance—

[Lord Pannick (CB)]

I am very grateful to the noble Lord. I had an unavoidable other professional commitment, and the Second Reading took place at very short notice.

[Lord Fox (LD)]

It did indeed, and I am glad that the noble Lord has had the opportunity to speak.

Once again, we have a huge number of varied amendments lumped into the same group, which I think is a side-effect of the process we are travelling through. I am going to focus on two themes. I am not going to interpose myself between lawyers on the subject of Amendment 92, but I look forward to the Minister’s response to the comments of the noble Lord, Lord Coaker, and my noble friend Lady Kramer.

I will turn to Amendments 56, 61, 80 and 83 in the name of the noble Baroness, Lady Chapman, and signed by myself. I will be brief because I do not think we have to speak for very long on this. The noble Lord, Lord Coaker, has been eloquent in this vein already in the unfortunate absence of the noble Baroness, Lady Chapman.

During Second Reading we heard a chorus of disapproval on the six-month transition period, and there is a good reason for that. The noble Lord, Lord Coaker, was clear on those reasons, as were other speakers, including the noble Baroness, Lady Jones, and the noble Lord, Lord Sikka. We have to focus on what the Government are seeking to achieve and how they are going to achieve it. While that number is very important, the second number, introduced by the noble Lord, Lord Coaker, may be even more important, and it is the one covered by Amendment 97 in my name. It seeks to bring commencement forward to the First Reading of this Bill in the Commons. When I tabled that amendment, I was thinking of the National Security and Investment Act, which did just that.

In one of the meetings that the Minister kindly invited me to, he set out a number of reasons why that commencement date is, in Government’s view, not popular. The longer the Minister’s explanations were, the more alarmed I became, because it is clear now that the commencement date is subject to the pace of the slowest moving IT project. That is a matter of great concern, and certainly should be to your Lordships’ House.

In looking at the six-month transition period, we cannot isolate it from the commencement period, as the noble Lord, Lord Coaker, wisely stated. What the Minister has to think about and convince your Lordships of is how these two times work together. Can they be concurrent? Indeed, can commencement start without the whole system being in place? In other words, can there be some flexibility in how parts of the Bill come in? That would be controlled through statutory instruments, which the Government have control over.

Commencement is one thing, statutory instruments are another and the transition period is a third. They all add up to either a long time or a medium amount of time. The Minister needs to explain the formula the Government have in mind, because at the moment it seems to be a blank number. We do not really know when the terms of this Bill will be in place.

[Lord Callanan (Con)]

I am mindful that several noble Lords, including the noble Baroness, Lady Chapman of Darlington, and the noble Lords, Lord Fox and Lord Sikka, have tabled a number of amendments in this group. I will start with Amendment 34 in the name of the noble Lord, Lord Foulkes, who I see is not in his place. I will speak to it alongside Amendments 58 and 67 tabled by the noble Lord, Lord Sikka, as they cover the same subject of retrospectivity and the subject the noble Baroness, Lady Jones, raised earlier.

These amendments seek to extend the scope of the definition of overseas entities registered as the proprietor of a relevant interest in land by removing the registration dates currently stated in the Bill. This has obviously been an area of interest in both Houses. The Government, of course, agree that the register should be as comprehensive as possible. However, there is no benefit to be gained from removing the dates as suggested, as I explained to the noble Baroness, Lady Jones, earlier. Doing so would instead create legal uncertainty. Due to the way information was collected prior to those dates, the land registries would have no way of reliably and consistently identifying properties owned by overseas entities and those that are not. It was not compulsory in England and Wales, for example, to register the jurisdiction of ownership before 1 January 1999. As such, the Land Registry would have this information only where the overseas entity had voluntarily supplied the information itself.

The amendment would result in inconsistent application, as the information needed to enter restrictions on disposition on to relevant titles is not readily available before these dates. They were not just dreamt up arbitrarily; these dates are put in for good reason. The result of removing the reference to the registration dates would be that only those entities that could be identified as being overseas entities could be brought properly into scope. Others that could not be so identified would not be.

This situation would also introduce significant uncertainty for buyers. There would be no way of providing absolute legal certainty as to whether an entity should or should not be in scope for those properties registered before 1999 in England and Wales, and before 2014 in Scotland. Third parties who were in the process of or considering purchasing a piece of land in the UK registered before those dates could not be sure whether they were engaging with an overseas entity that was in scope of the Bill, and which could become non-compliant at any time. The existing clauses are therefore essential for the register to be effective and operable, and to provide certainty as to which overseas entities are actually in scope of the requirement to register once the register goes live.

Finally, I remind the House that the agents who support property transactions are, as we have said earlier, all covered by the provisions of the anti-money laundering regulations. If there are properties with titles held by overseas entities going back further in time, when those entities next come to sell or lease those properties, the agents involved will be obliged to conduct appropriate checks for money laundering.

I turn now to Amendments 56, 57, 61, 62, 80 and 83 on the transition period. I thank the noble Baroness, Lady Chapman, and the noble Lords, Lord Fox and Lord Sikka, for their amendments to shorten the transition period as proposed. Of course, as the noble Lord, Lord Fox, has just said, I am aware that speed of implementation of the register and of the transition period has been the focus of much debate in both Houses so far. The Government have already reduced the transition period from the initially proposed 18 months to six months.

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[Lord Callanan (Con)]

The noble Lord will know from his time in Government that the law officers provide confidential legal advice to Ministers. I can only say to him that I am personally satisfied that this six-month period is appropriate. We are taking a severe step with this legislation; we are retrospectively interfering with property rights. Whether the legislation has been flagged in advance—I think David Cameron first promised it in 2015—does not, as I understand it, alter the legal case that somebody who wished to purchase expensive legal help to challenge the legislation would be able to do so under the Human Rights Act. I can do no more than assure the noble Lord that the officials and I are acting under the legal advice that we have received about the appropriate period. I can assure him that I wish to bring this in as quickly as I can. He will be aware that the Government originally proposed a period of 18 months. Following fairly significant political pressure, we have taken further advice and have managed to reduce it to six months. I am seriously concerned that, if we reduced it further, we could be subject to legal challenge. I am happy to speak to him outside the House.

[Lord Fox (LD)]

My Lords, I assume that the noble Lord, Lord Faulks, has had the answer he required. To come back to implementation and commencement, it is not clear what the trigger for commencement would be. Can the Minister be clear on what the trigger for commencement will be and, having stated that, can he perhaps undertake to maintain a dialogue with your Lordships’ House on how reaching that trigger is getting along and when we might expect the commencement of this Bill?

[Lord Callanan (Con)]

I totally understand the point the noble Lord is making. I cannot give him a precise date; all I can say is that I am keen to commence this legislation as quickly as possible, but there are number of steps that we need to take. We need to publish and implement a number of statutory instruments on the back of this. Companies House needs to put the systems in place; it has already been given the funding for that. The computer systems need to be set up and the register needs to be activated. I am very happy to maintain a dialogue and keep the House informed, but the ultimate answer to the question of when the legislation will be commenced is: as soon as we possibly can.

[Lord Fox (LD)]

Given that your Lordships’ House has demonstrated that it can process statutory instruments at an insatiable rate, my point that the rate-determining step is an IT system in Companies House is entirely correct. Would the Minister confirm that?

[Lord Callanan (Con)]

It is a number of different things. There are administrative procedures to be put in place; the IT system is of course important—I am hesitant to give assurances on when a government IT system might operate. It is not a hugely complicated system, but it needs to be done and to be put in place. Of course, we also need to go on to the next step, namely the economic crime Bill which will follow this one and will give Companies House the right to query the information that has been provided, as I outlined to noble Lords earlier. However, I am very happy to keep the House informed as to commencement dates. I am sure a lot of people will be writing to me about it and will be using the devices of the House to table Questions to ensure that my feet are held to the fire on this one.

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Moved by

[Lord Fox]

43: Clause 18, page 11, line 18, leave out paragraph (b)
Member’s explanatory statement
This amendment removes the ability of the Secretary of State to exempt an individual from the requirements to register their overseas entities on the grounds of the economic wellbeing of the United Kingdom.

[Lord Fox (LD)]

My Lords, Amendment 43 is also signed by the noble Lord, Lord Coaker. During Second Reading, I spoke at length on this issue, so noble Lords will be pleased to know that that allows me to be brief in Committee. The amendment is clear, but I shall briefly explain its purpose. Frankly, it is one of the simpler amendments we have before us.

Clause 18 deals with exemptions. Subsection (1) gives the Secretary of State the power to write to a person to exempt them from this part of the Bill if said Secretary of State is satisfied that one of three conditions is fulfilled:

“(a) in the interests of national security … (c) for the purposes of preventing or detecting serious crime”—


I do not think any of your Lordships would find that an unacceptable condition—but

“(b) in the interests of the economic wellbeing of the United Kingdom”.


First, what does that mean, and secondly, why is it there?

The Minister heard not just my words but the compelling words of the right reverend Prelate the Bishop of Leeds, my noble friend Lady Kramer and others who explained—and I hope the Minister understood—why Clause 18(1)(b) is the wrong message to be sending, particularly at this time. I explained this issue to some members of the general public—people who do not actively engage in the sport of politics—and asked them what they thought. Their reply was, “Isn’t that the approach that got us into this trouble in the first place?” Quite. That is the message that the clause is sending.

This part of the Bill is designed to deliver transparent information that can be used by authorities, potential business partners and others to avoid trading with kleptocrats, thieves and money launderers. Hiding that information unnecessarily cannot be good for the economy. Why would a Secretary of State want to do that in these conditions? Amendment 43 removes that power from the Bill, and I beg to move.

[Lord Callanan (Con)]

My Lords, it might be helpful for the Committee, before it debates this amendment, if I set out that of course I am aware of the strength of feeling on this issue and am very grateful for the engagement with the noble Lords, Lord Coaker and Lord Fox, and others on it over the weekend and the past few days.

As I indicated earlier, we are keen to progress this vital legislation collaboratively and swiftly, and I again pay tribute to the Opposition for helping us to do that. Therefore, if I tell the House that the Government are prepared to accept Amendment 43 tabled by the noble Lords, Lord Fox and Lord Coaker, should they wish to re-table it on Report, perhaps that would enable a more speedy consideration of this group.

[Lord Coaker (Lab)]

It would be appropriate to thank the Minister for agreeing to accept the amendment in my name and that of the noble Lord, Lord Fox, so I put that on the record, and we will come back to it on Report.

[Lord Fox (LD)]

I said it would be swift, but I had not calculated that it would be quite this swift, so I thank the Minister for meeting us in this way and making this move; it is much appreciated. With that, I beg leave to withdraw Amendment 43. I will bring it back on Report.

Amendment 43 withdrawn.

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[Lord Faulks (Non-Afl)]

As a fellow member of the Constitution Committee, I endorse what the noble and learned Lord said. This is one of the points that we as a committee regularly make: it is one thing to have the Sewel convention in primary legislation; it is another to have it in subordinate legislation. We very much welcome this as a matter of practice.

[Lord Fox (LD)]

Never has the noble Lord, Lord Callanan, received such glowing praise, in my experience, and here am I to heap more of it on. These amendments are very welcome, as is the legislative consent from the Scottish Government. I have one point that I am sure the Minister will be able to confirm: I hope the Government will be able to continue the level of consultation the Minister could show through the regulation-making process and the statutory instruments.

[Baroness Smith of Basildon (Lab)]

I can add to the Minister’s embarrassment. We are pleased to see these amendments brought forward. I have two questions. I think I understand why it is different, but it might be helpful if the Minister could put on record why one amendment refers to the Department of Finance in relation to Northern Ireland yet in the other, for Scotland, it is Scottish Ministers. It seems slightly odd. Secondly, has formal engagement begun already and, if not, when will that start? Overwhelmingly, we thank the Minister and hope that this is a sign of things to come.

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[The Minister of State, Home Office (Baroness Williams of Trafford) (Con)]

My Lords, I thank both noble Lords for their points on this amendment. The Government are as one with the noble Lord, Lord Clement-Jones, that agencies must not be limited in their efforts to investigate wrongdoing and protect the public from harm. He has tabled an amendment which touches on this very concern.

The noble Lord will be aware of the significance of the amendments that the Government have introduced to reform the cost rules as applied to UWO cases. Protection from costs mean that the court only has discretion to award costs against an enforcement agency, as he knows, if it acted dishonestly, unreasonably, improperly, or not on grounds that appear to be reasonably sound. The UWO procedure is an investigative tool and is not determinative of civil rights or obligations. It is used to obtain information about the ownership of certain property that may not otherwise be available to an enforcement agency.

Existing case law—as the noble Lord has pointed out, in magistrates’ courts through Part 5 applications—enables them to routinely adopt a position that they will not order costs against law enforcement where the agency has acted honestly, reasonably, properly and on grounds that reasonably appeared to be sound. However, this does not occur in High Court cases, where the costs involved are often much higher and for which protection is now given in the Bill in relation to UWO cases. The Government will ensure we are doing everything appropriate to ensure law enforcement agencies are equipped to take on corrupt elites, and their costs liabilities are appropriately mitigated. I hope that gives the noble Lord the comfort that he needs.

[Lord Fox (LD)]

I just have a question. In the context of this Bill, the choice of UWOs was regarded by many as curious because it was a niche activity until such time as it was plunged centre stage by this Bill. There is a whole range of other things. In choosing to deal with cost protection for one element, there seems to be an imbalance. My noble friend used the words cost protection regime. Would the Minister acknowledge that there is scope for going away and spending time on a review of the overall cost protection landscape and coming back with something that is joined up rather than piecemeal—which is what we have got here?

[Baroness Williams of Trafford (Con)]

Yes, I think I was clear in my opening remarks that I am not at odds with the noble Lord, Lord Clement-Jones, at all. The noble Lord, Lord Fox, is absolutely right that, in the longer term, we should look across the whole cost landscape. What I am trying to say is that, in protecting agencies incurring costs in Part 5, it unintentionally removes the current clauses relating to Part 8. I am trying to differentiate between Part 8 and Part 5 of POCA. It is utterly unintentional, I am sure, but I hope that helps the noble Lord.

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[Lord Thomas of Cwmgiedd (CB)]

My Lords, I rise briefly to support the amendment from the noble Lord, Lord Agnew. Over the years, one has seen concentrations move as to what parts of the criminal justice or investigation system matter. It is important to appreciate that this will be expensive, but we must have a system that, as regards the resources we give to justice, is open and transparent. There is no way this can be done without a proper annual report. Too often have I heard, “Oh, we can have an efficiency here or an efficiency there; we’ll do a little bit less of that or find incentives somewhere else”. No, that is not good enough for the task that faces us, and our nation, in ensuring the reputation of the City of London. I therefore warmly support the view that we should have a proper economic and financial analysis of the tools needed.

[Lord Fox (LD)]

We are in danger of reaching the end of this in unanimous agreement, so I shall introduce a little rancour in responding to the amendment from the noble Baroness, Lady Neville-Rolfe. When she read the Hansard report of the Second Reading, she will have seen a strand going through a number of speeches that said the purpose of the Bill must be permanent rather than a “here today, gone tomorrow” sort of purpose—a fashion. Her notion of sunset clauses hits counter to that. She is right that regulation has to be fit for purpose and that there should be reviews, and I welcome her joining the chorus for reviews that has been going throughout both the Second Reading and the Committee stage. I think the first opportunity for a review of the performance of ECB 1 and the regulations that make it work will probably be when we get to ECB 2. Thereafter, an annual review is a good idea.

We have heard from many noble Lords about progress on the subject of strategic litigation. I hope the Minister is able to confirm that this small amount of momentum will be able to pick up over the next few months as we go forward, perhaps focusing on my noble friend’s Private Member’s Bill.

A few moments ago the noble Lord, Lord Faulks, asked the noble Baroness, Lady Williams, whether UWOs were going to be a minority sport or something pursued in number. She has left, leaving the noble Lord, Lord Ahmad, to explain how it will be paid for. Unless there is money to pay for it, it will remain a minority sport. The noble Lord, Lord Agnew, and the noble Viscount, Lord Waverley, clearly encapsulated the point that none of this can happen unless the investigating and prosecuting forces are both skilled and resourced to deliver it. That is why I was pleased to co-sign Amendment 95 from the noble Lord, Lord Agnew. I look forward to hearing from the Minister how much money will be forthcoming and when.

[Baroness Smith of Basildon (Lab)]

My Lords, this seems an appropriate group on which to end Committee. It seems almost as if we have gone full circle, as there has been a similar theme throughout the debates at Second Reading and in Committee.

This group of amendments brings two things to the debate. When I spoke first today I made the point about the tension between us recognising the inadequacies of the Bill, with the comments made about ECB 2—which has now become part of the common language of your Lordships’ House—alongside acknowledging the necessity of the legislation. However, it also shows the determination—I am distracted by someone talking—of your Lordships’ House to make sure that the legislation is effective.

The only way we can do that is through the kinds of reviews that have been talked about, to ensure that, when we come to ECB 2, we will use the information—both the positives and the negatives as regards whether this legislation is working—to ensure that we can plug the gaps and take on other issues. I hope to see Companies House issues in the next legislation as well. On the issues we have been talking about—the resources needed, the commitment needed and the reports to Parliament—unless we have those reviews and assessments in place, we will not be able to do what needs to be done in ECB 2 or to plug any gaps we find here. Some kind of assessment, perhaps on the timescales envisaged in the amendment—an annual review to Parliament seems a very sensible way forward—are absolutely essential.

The only thing I disagree with the noble Baroness, Lady Neville-Rolfe, on is the importance of getting regulations as quickly as possible. I hope that, alongside those regulations, we will see some kind of impact assessment. Unless the Government know at least in part the impact that the regulations will have, there is no point in tabling them. We would not want to delay essential regulations in waiting for that but it is important that we have more information at all times.

I will flag up something that I raised in an earlier debate and which the Whip who was answering for the Government did not respond to. We hope that, when we come back on Report, we will have a commitment that we will see ECB 2 in the next Session of Parliament. We also want an assurance that that will be early in that Session. We have seen already that there is huge expertise in your Lordships’ House and that, when we have proper time for debate, we have better legislation. One of the saddest things about this Session of Parliament is that we have only just had the Second Reading of the Elections Bill. We have weeks to go and we are trying to cram a quart into a pint pot, and, having been here at two and three o’clock in the morning, I do not think that is a great way to make laws. I hope that we will see something of this importance very early on in the next Session of Parliament, which will enable this House to use its expertise to have proper debates and make a proper contribution.

All that remains to be said is that we want to have reviews in whatever form they take. These reviews and assessments will be absolutely essential if we are in any way serious about making this work.

Economic Crime (Transparency and Enforcement) Bill

Lord Fox Excerpts

3rd reading
Monday 14th March 2022 Lords Chamber

[Lord Coaker (Lab)]

I start by thanking various people—including my family, who put up with me being on the telephone most of the weekend, often to the Minister. It was worth it in the end, as they say.

On a serious note, I thank everyone. This is a fast-tracked Bill, and that puts pressure on everybody. It is important to thank people at this time; it is a courtesy of the House but an important one to thank the staff, the clerks, the officers of the House and everybody who has enabled us to function in the way that we have and to put this extremely important legislation through the House. We are passing legislation which impacts on millions of people’s lives in this country, across Europe and beyond, and in thanking each other for doing that, we all ought to reflect perhaps a little more than we sometimes do on the enormity of the work that we do and the responsibility that we have. The people we are thanking should realise that they have made things possible in the Parliament of the United Kingdom, and that is something to remind ourselves of.

I also thank my colleagues: my noble friend Lady Chapman—who as we know has had to give her apologies for personal reasons today, and we wish her well—my noble friends Lord Kennedy and Lady Smith, and Dan Stevens in our office, who has worked tirelessly to keep us informed about the importance of different parts of the legislation.

I also thank the noble Lord, Lord Fox, and his colleague the noble Baroness, Lady Kramer, and others, for the work that they have done with us; and the many noble Lords across the Cross Benches who have taken the trouble to send me information, talk to me and give me the benefit of their expertise and knowledge. I have been very grateful for that; I hope that it has improved the contributions that we have all made to the House and in the end will improve the legislation that we take forward.

I thank the Minister again, as I did earlier, and his colleagues on the Front Bench for the co-operation that they have given us. Obviously there have been debates and discussions, but we have all had at the forefront of our minds the need to get the legislation through, and this has been a template for how to do that. I ask him to pass that on to all his colleagues. This is something important for our country.

This economic crime Bill 1—as we are calling it—needs to be improved, but we should remind ourselves that the bit that needs improving is not the emergency part. We should remind ourselves that we have passed an emergency Bill that allows us to do what we all want: to take effective action against dirty money within London—perhaps it should have been done before, but at least we are doing it now—and send a message to President Putin that he cannot act with impunity on the invasion of Ukraine. We stand united to try to deal with that. On the sanctions part—the real emergency part of the Bill—we all remain united. The message should go out clearly from this House of Lords back to the House of Commons and from us to the people of Ukraine, and to Russia itself.

As the Minister said, we will be moving from this economic crime Bill to an economic crime Bill 2. I am very grateful for the concessions he made. He will know the disquiet in the House about certain measures in the existing Bill, but he said that he would take that on board and reflect on the opinions expressed. It will allow us to take forward economic crime Bill 2 early in the next Session and build on the work we have done by putting improvements into it. Looking at various Cross-Benchers and around the House, I know that we will end up with a big economic crime Bill 2, which in the end will deliver the sort of legislation we all want to tackle the dirty money in our country.

I thank everyone again. It has been a pleasure and a privilege to be involved with this and I thank the Minister again for that.

[Lord Fox (LD)]

My Lords, as the noble Lord, Lord Coaker, reminded us, this is an emergency Bill. Your Lordships’ House has expedited it swiftly. In that regard, we should be pleased with how much scrutiny we have been able to pack into such a short time. The fact that there were 62 government amendments and two other amendments on Report indicates that quite a lot of work has been done, not necessarily all by us. I commend everybody who has participated in this, on Opposition Benches and the Benches opposite, towards a process where—I hope—Ministers believe that this is a better Bill than the one we received.

Looking forward, much hope is vested in the subsequent Bill. It is clear that the Government should expect that, when it comes, the level of scrutiny will be much higher and normal service will be resumed in the amount of time we expect to be available to give a quality look at it. In the meantime, we await the statutory instruments needed to drive this Bill and look forward to the six-week review on how commencement is moving forward.

I join the noble Lord, Lord Coaker, in thanking the Ministers—the noble Baroness, Lady Williams, and the noble Lords, Lord Ahmad and Lord Callanan—and their various Whips who have been here at different times. I particularly commend the Bill team. It is quite clear they must have lost an awful lot of sleep and weekends to get where we did; now all they have are a couple of dozen statutory instruments to sort out—so no pressure. I thank them very much for their hard work and thank the private offices of the noble Lord, Lord Callanan, and others.

I also thank the Opposition Front Bench—the noble Lord, Lord Coaker, and the noble Baroness, Lady Chapman, and her able sub the noble Baroness, Lady Smith. Of course, I give particular props to the home team of my noble friends Lady Kramer, Lord Thomas and Lord Clement-Jones, and of course Sarah Pughe, our legislation adviser, without whom everything would be incoherent.

In sending the Bill back to the Commons, we should remember that it is not an anti-Russian Bill. It is an anti-oligarch Bill and an anti-kleptocrat Bill. Of course, some of those criminals come from Russia. We should also turn the fire of this legislation on kleptocrats from Belarus and other such places and, in due course, on criminals from all around the world. This is against not the people of Russia but the criminals who have robbed the people of Russia, and we should remind ourselves of that. We look forward to the next phases of legislation in this area.