Asylum: UK-Rwanda Agreement

Lord Fox Excerpts

Monday 22nd January 2024 Lords Chamber

[Lord Fox (LD)]

My Lords, it is a great pleasure to speak in this debate, where we have heard many excellent, informed and expert views on this issue. As a member of the International Agreements Committee—as the noble Baroness, Lady Kingsmill, pointed out—I will try to move our focus back on to the report and the two Motions.

As the noble and learned Lord, Lord Goldsmith, and his predecessor as chair, the noble Baroness, Lady Hayter, set out, if we needed a demonstration of the shortcomings of the CRaG process, this is indeed it—albeit the first time it has ever reached your Lordships’ House. As a member of the committee, I realise how little time CRaG gives us to scrutinise something as important as this treaty. Nevertheless, thanks to our colleagues, the committee and the tireless work of the clerks, advisers and administrative team, we produced this report, which I and all the other members of the committee wholeheartedly support.

I will address an element that came up from, I think, the noble Lord, Lord Sandhurst—although I may have inferred something that he did not mean. There seemed to be an inference that because we did not comment on something, we agreed with it—a sense of “silence is assent”. I undertake that, as a committee, we adopted a very specific focus: we did not seek to determine the morality of the Rwanda deportation concept; we did not analyse the applicability and cost-effectiveness of the scheme; we did not examine whether the central deterrence theory has any validity; and we did not probe how, in conjunction with the Bill—I look at the noble Lord, Lord Wolfson, in saying this—it affects the constitution and our international reputation.

As your Lordships will have gleaned from the excellent speeches from my noble friends, we on these Benches believe that the Rwandan scheme is a politically partisan, immoral proposal that is neither cost-effective nor achievable. We think the deterrence theory is unproven and, in any case, too high a price for breaking the constitution and dragging our international reputation through the mud. But no, this report did not look in those directions. The committee took a simple approach of examining the journey from the memorandum of understanding to the treaty, via the Supreme Court judgment. It tested the claims made by the Government for the treaty. As the only parliamentary committee doing such scrutiny, I am delighted that the noble and learned Lord, Lord Goldsmith, has laid this Section 20 Motion. This is our only power under CRaG, and I am pleased that we are seeking to apply it.

In mid-November, the Supreme Court found that the Rwanda policy, as expressed through the MoU, was unlawful. As we have heard, the basis for the ruling was that Rwanda is not a safe country in this context. The Supreme Court was clear—so clear, in fact, that it revealed a range of institutional, legal and procedural measures that needed to be in place to render the country safe enough for the Rwanda policy to be lawful. As the Secretary of State, James Cleverly, says in the policy statement document, the Government produced a policy that

“carefully considers and responds to the Supreme Court’s judgment”,

adding that the policy statement

“should be read alongside the treaty”.

During his evidence to the committee, the Home Secretary repeatedly took the line that because the words in the treaty meet the requirements of the Supreme Court, Rwanda will be a safe location to achieve the Government’s ends. As he said,

“Once the treaty has gone through the legitimate democratic process, in Westminster and Kigali, we can legitimately say that their”—


the courts’—

“concerns have been addressed”.

As an aside, I would ask, as others have: if his confidence really was that strong, why is the Bill necessary? If, as he suggests, the Supreme Court’s demands have been satisfied by the treaty, why turn the constitution on its head to keep judges away from making a ruling? But that is a debate for another day.

The committee’s report does not question the integrity or the willingness of the Rwandans to deliver on this treaty. It does, however, review in detail what needs to be done in Rwanda—on the ground, not just on paper, but actually existing and operating. We can see from the evidence presented to the committee that much needs to be achieved to meet the terms of the treaty—much to be achieved, therefore, to meet the Supreme Court’s criteria for a legally safe process.

While giving evidence to the committee, Secretary of State Cleverly was unable to put a timeframe on the achievement of those activities. He did not furnish a copy of the law that must be passed in Kigali. He was generally very light on detail, but he asserted that it could all happen quite quickly. In paragraph 45 of the report, the committee set out 10 paramount legal, practical steps that have to be implemented to properly meet the terms of the treaty. As your Lordships will have seen, this involves passing laws, setting up new processes and appointing and recruiting a wide range of people, as well as training them. None of this is trivial, or indeed routine.

Given the importance to the legality of the scheme of these 10 measures, James Cleverly was asked to confirm that the Government would not ratify this treaty until they were satisfied that the agreement had been fully implemented. Given what he had said moments before, his answer was quite curious and a little surprising. I make no apology for quoting the Secretary of State’s words, because they perhaps demonstrate a little lucidity for a moment.

James Cleverly said:

“We have a process that we are running through. They”—


the Rwandans—

“have a process that they are running through. The point is that we will not operationalise this scheme until we are confident that the measures underpinning the treaty have been put in place; otherwise, the treaty is not credible”.

I repeat his words for emphasis. He said that

“we will not operationalise this scheme until we are confident that the measures underpinning the treaty have been put in place”.

Clearly, he has some doubts, but never mind. I suggest that there is very little difference between waiting for the conditions to be operationalised and meeting the conditions of this Motion. Both require evidence that the treaty’s requirements are in place and operational on the ground; the difference is that this Motion expects Parliament to be involved in that process. We, as noble Lords, should always protect Parliament’s role in making decisions such as this.

If the Secretary of State’s confidence is demonstrated, it will not in fact take very long; he said that it might not take very long. If that is the case, we will not have to wait long for this process to be operationalised. I must say, as many of your Lordships have set out, there is a strong belief that the Home Secretary may have understated the scale of the challenge and underestimated the time it might take for all these things to happen. None of the evidence we received suggested that the 10 criteria set out in the report can be realised with any degree of speed.

Leaving aside the moral, financial and constitutional issues surrounding this treaty and its accompanying Bill, focusing instead on the necessarily narrow grounds adopted by our committee, there is more than enough reason to delay the ratification of the treaty until the conditions for its lawful operation are in place. We support the Motions in the name of the noble and learned Lord, Lord Goldsmith, and will take that support through the Lobby if he chooses, as I hope he will, to move them.

Investigatory Powers (Amendment) Bill [HL]

Lord Fox Excerpts

Committee stage
Wednesday 13th December 2023 Lords Chamber

I repeat: we support the Bill. As the noble and learned Lord, Lord Hope, the noble Lord, Lord West, and I have said—I am sure that the noble Lord, Lord Fox, and others will say the same—we are seeking some clarification and certainty on some of its provisions so that it is fit for purpose and delivers what we all want it to.

[Lord Fox (LD)]

My Lords, I rise to speak to the amendments in my name in this group. First, I shall make some brief and broadly supportive comments regarding the amendments proposed by the noble and learned Lord, Lord Hope, and the noble Lords, Lord West and Lord Coaker.

As we have heard, all these amendments are designed to tighten up or clarify the triple lock and the changes introduced in the Bill. As your Lordships know, the triple lock relates to circumstances where UKIC and law enforcement may obtain and read the communications of MPs, et cetera; we will talk about the “et cetera” in a minute. Currently, the usual double lock is supplemented by an unqualified requirement that the Secretary of State may not issue the warrant without the Prime Minister’s approval.

As we heard from the noble and learned Lord, Lord Hope, the report from the noble Lord, Lord Anderson, explores the circumstances in 2020 when the Prime Minister was hospitalised and the triple lock was therefore rendered unavailable. The noble Lord recommends the use of a deputy for the purposes of the triple lock when the Prime Minister in unable to approve a warrant in the required timescale, particularly through incapacity, conflict of interest or an inability to communicate securely. As we heard from the noble and learned Lord, “unable” has been substituted with “unavailable” in the Bill. I really am not sure why—perhaps the Minister can explain why—but that is a different context. In his normal, forensic way, the noble and learned Lord explained the difference between those words; that is why I was happy to sign Amendment 51A, which reverts back to the originally recommended “unable”.

The amendments in the name of the noble Lord, Lord West, are more probing but interesting. We will be interested to hear how the Minister responds to them; I look forward to that.

Amendment 47 in the name of the noble Lord, Lord Coaker, seeks to limit the number of Secretaries of State who can be designated in that deputy role. This seems a reasonable suggestion. Others may want to change the list, but a senior group of Ministers should be listed; surely having three or four of them on that list should be sufficient to deal with the issue.

The noble Lord, Lord Coaker, spoke to Amendment 55A. There are elements of reporting there that are reflected in my Amendment 55, which I will come to shortly.

I will now speak to Amendments 50, 54 and 55 in my name. Amendments 50 and 54

“would require that members of a relevant legislation who are targets of interception are notified after the fact, as long as it does not compromise any ongoing investigation”.

Amendment 55 seeks to ensure that the Investigatory Powers Commissioner reports annually on the operation of surveillance warrants and safeguards in relation to parliamentarians. This should include records in the annual report of the number of warrants authorised each year to permit surveillance of the Members of relevant domestic legislatures. This would ensure transparency, at least over the rate at which the power is being used.

Before talking a little more about this, it is worth recapping the history of political wiretap legislation. I am sure there are others who know it better than I, but it was helpful for me to understand the context. As we have heard, the IPA permits the interception or hacking of parliamentarians or the Members of other domestic legislative bodies via this triple-lock system, whereby the Secretary of State can issue a warrant with the approval of the Prime Minister, as per Sections 26(2) and 111(3). Until October 2015, it was widely understood that the communications of MPs were protected from interception by the so-called Wilson doctrine. This protection extended to Members of the House of Lords in 1966, and was repeated in unequivocal terms by successive Prime Ministers. Tony Blair clarified in 1997 that the policy

“applies in relation to telephone interception and to the use of electronic surveillance by any of the three security and intelligence agencies”.—[Official Report, Commons, 4/12/1997; col. 321W.]

Despite this clear and unambiguous statement that MPs and Peers would not be placed under electronic surveillance, an October 2015 decision by the Investigatory Powers Tribunal held that the doctrine had been unilaterally rescinded by the Executive. We pick up from there, so it is an interesting evolving power and we are part of that evolution in this Bill.

This evolution has also coincided with the meteoric rise in electronic communication that now offers the possibility of vastly more information being unearthed than was the case with a simple wiretap back in the Wilson days. First, there are clearly times when this sort of interception is necessary, and that is why the triple lock is such an important safeguard. But I have a couple of modest suggestions contained in these amendments. I must say now that I am in a state of deep trepidation, as not only has the noble Baroness, Lady Manningham-Buller, given me notice that she is on my case but she has actually moved five Benches closer than she was on Monday, so my boots are shaking.

These amendments would introduce a post-notification procedure to inform parliamentarians where they have been affected by targeted surveillance powers, but only if it does not compromise any ongoing investigation. Clearly, they would have to be deemed innocent or beyond suspicion for that notification to happen. I agree that it would be unfortunate, to say the least, if, for example, the announcement of any investigation revealed confidential sources that led to the initial investigation. I had hoped that my wording implied that, but I will be very happy to work with the noble Baroness on improving the wording on Report if she deems it necessary.

We got to the fourth group of amendments to the Bill without my raising the European Convention on Human Rights. Now is the time. Happily, I am sure that the Minister has been reading up on this for other reasons, and he will no doubt be familiar with this important bastion of freedom. I refer in particular, in this case, to Article 8: the right to respect for private and family life, home and correspondence. I feel sure that most surveillance interventions would meet the terms of Article 8, which are summarised as:

“There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others”.


As I say, it is unlikely that the activities we have been describing will break that.

In the unlikely event that they do and there is a misstep, in order to bring a case under the Article 8 right it is necessary for a person to know that their privacy was breached in the first place, hence Amendments 50 and 54. I refer the Minister to two Article 8 rights cases heard by the European Court of Human Rights: Klass v Germany in 1978, which was reiterated in Weber and Saravia v Germany in 2006.

Amendment 55 is a bit simpler. It would ensure that the Investigatory Powers Commissioner’s annual report provides information about the operation of safeguards in relation to surveillance of Members of Parliament et cetera, as is already required for journalists. It would mandate that

“information in particular about warrants … considered or approved”

that are targeted at MPs et cetera is included, further to the requirement to provide information on general targeted interception and hacking warrants. I believe that is not a controversial ask, and I hope the Minister agrees.

I would like to use these amendments to do some probing as well as changing words, by confirming the “et cetera” part of MPs et cetera. My understanding, which I am sure is correct, is that as things stand that includes Lords and elected Members of the devolved authorities. But our democratic system is changing and evolving as we go. We now have very powerful elected mayors with very large electorates—much larger than any MP’s. I wonder whether there is an argument that they too should be included within the triple-lock umbrella going forward. I have one additional question in this vein. Once out of office, do all these individuals no longer attract triple-lock protection? Are ex-First Ministers, ex-MPs and ex-Prime Ministers all no longer subject to the triple-lock safeguards?

This sort of legislation breeds suspicion. The two measures I propose here are sincere attempts to help tackle some of these suspicions and create sufficient transparency to allay the fears that there is widespread and extensive activity of this type—assuming, of course, that this activity is indeed a rare occurrence.

[Baroness Manningham-Buller (CB)]

My Lords, the noble Lord, Lord Fox, is quite safe; I am not going to come and hit him, but I am going to try to demolish a few of his arguments.

I will start with the word “transparency”, which appears again in some of the amendments in the name of the noble Lord, Lord Coaker. The work of the security and intelligence agencies can never be transparent. It is in the interests of those agencies that as much as can safely be known of what is done in their name is known, which is why my organisation sought law in the 1980s. But there will always be things that cannot be made public because, if they are, we might as well pack up and go home.

Appealing as the amendments in the name of the noble Lord, Lord Fox, might be on the surface, for a start, telling people that they have been subject to interception would require us to alter earlier parts of the IPA because it would be illegal. To do so would also risk sources and methods. Of course, they would not be itemised, but let us consider a speculative case of a Member of the other House who has a relationship with a young Chinese lady. Let me emphasise strongly that this is not based on any knowledge of anything. Indeed, when I was director-general of MI5, we still operated the Wilson doctrine. Somebody in that MP’s office approaches my former colleagues and raises concerns with them. A warrant is obtained, signed by the Prime Minister, and subsequently it becomes clear that the concerns of the individual in the office—the source of the information—were absolutely justified. Now, we cannot tell that individual at any stage whether he or she is acquitted of any wrongdoing or ends up care of His Majesty’s jails. We cannot at any stage tell him because it risks sources and methods.

[Lord Fox (LD)]

I do not think I was saying that.

[Baroness Manningham-Buller (CB)]

No, this is what I want to establish. Just saying that he has been intercepted will lead that person to wonder how, so we cannot act covertly if there is any danger of sources being revealed or future operations being compromised.

Additionally, it raises the question of why Members of legislatures should have the privilege of being told that they have been subject to interception when members of the public never are. It is wrong, as it was, to treat parliamentarians as a particularly special case. Of course, such cases are highly sensitive, hence the triple lock; hence, I suggest, the rarity of this, but I think Amendments 50 and 54 are potentially damaging. I will shut up now.

--- Later in debate ---

Before I conclude, the noble Lord, Lord Coaker, asked me a specific question about a Mail on Sunday story about the Defence Intelligence situation. The Ministry of Defence did provide some analytical capability to augment capacity in government departments during the pandemic. This was done through established government processes: military aid to the civilian authorities—MACA—which allows for military support to government departments in exceptional circumstances, such as the pandemic. My noble friends in both DSIT and the MoD would be happy to follow up on any further questions on that.

[Lord Fox (LD)]

I am anticipating the Minister sitting down shortly. I remind the Minister that I asked a specific question on directly elected regional mayors, their rise, and the role that they play in democracy, which is so different to when the IPA was originally conceived. The Minister may not have an answer now, but a written answer would be very helpful.

[Lord Sharpe of Epsom (Con)]

I am happy to acknowledge that the noble Lord is right: their powers have expanded, as have their influence and celebrity over the years. I do not have an answer now, but I will come back to the noble Lord on that.

The objective of these clauses is to provide greater resilience in the process. It is critical that we do not undermine this from the off. I therefore hope noble Lords feel reassured by the explanations given, and the information set out in the draft code of practice, which is the appropriate place to set out the detail of this alternative process.

--- Later in debate ---

[Lord Murphy of Torfaen (Lab)]

My Lords, when I started life in politics a long time ago—50 years or so ago—when the general public, or people who had political ideas, thought about the security services they were generally criticised because they were spying on people who should not be spied on, such as political activists and all the rest of it. By the time the noble Baroness, Lady Manningham-Buller, and myself worked together with the intelligence and security agencies, the criticism that would come was whether the intelligence services had not done enough to protect us. That is the way in which things have changed over the last 40 or 50 years, so we have to be very careful how we balance this idea of accountability on the one hand and inevitable secrecy on the other. How do we do it?

There are reports by the Investigatory Powers Commissioner and the intercept commissioners. When I had to intercept, I was overseen by a commissioner every year. I had a meeting with him—a former judge—on whether I did this or that right, and on whether this or that was important. I come back to the point I have made in the last two days of Committee about the Intelligence and Security Committee itself. That is the vehicle by which Parliament holds the security services accountable. My noble friend Lord Coaker has been making that distinction all the time: the services being accountable to Government for what they do is very different from being available to Parliament.

Of course, details of who has been tapped and details of intelligence operations cannot come here, to this House or the other House—of course not. However, they can go through the committee which both Houses have set up, which meets in private, is non-partisan, and which has Members of both Houses who have great experience on it, to deal with these issues. That is why I appeal to the Minister—we had the debate on the issue on Tuesday—to think again about using the ISC to answer some of the issues that my noble friend Lord Coaker quite rightly raised.

[Lord Fox (LD)]

My Lords, I shall be brief. Just on the subject of suspicion, which I think I raised it, I was thinking—perhaps I did not articulate it well—that it was at the political-class level. It is not hard to construct a suspicious scenario where a Westminster-based Executive are hacking an Edinburgh-based politician—I am sure that suspicion would apply there. However, the noble Baroness is right about the public.

The amendment in the name of the noble Lord, Lord Coaker, is important, not because this sort of thing needs to go into primary legislation, but because his point around emphasising public understanding and support which has come out is really important. He picked out the fact that a number of officeholders have worked hard at generating a positive profile for the services, and for that they should be thanked and congratulated. I would add GCHQ, the public profile of which probably did not even exist a decade or so ago. I have several very sad friends who can hardly wait with excitement for the annual GCHQ quiz to arrive. Things like that essentially draw attention to the nature of the work that such organisations do. I laugh at those friends but then I cannot solve it and they can, so perhaps they are the winners there. Those sorts of things do not shed light and throw open the doors on the things the noble Baroness and others fear should not be public, but they create an ambience around those services which is important.

Nobody has mentioned the amendments in the name of the noble Lord, Lord Sharpe, which I guess is exactly what he wanted, and I have nothing to add to them either.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank the Committee very much indeed for the points raised in this short debate, which eloquently explained the fine balance that needs to be struck in this area. As this is the last group, I take this opportunity to thank all the men and women in all the security services, who do so much to keep us safe.

Investigatory Powers (Amendment) Bill [HL]

Lord Fox Excerpts

Committee stage
Monday 11th December 2023 Lords Chamber

As I said to the Minister, we accept the changes the Bill is bringing forward; it will improve the situation. There are much-needed amendments in this group and the others we will discuss, but the clarifications I have asked for should help those who seek to interpret the Bill, and, indeed, those who will use the increased powers in it. With that, I beg to move.

[Lord Fox (LD)]

I rise to speak to Amendment 2 and several others in this group in my name. This amendment probes the extent to which paragraphs (d) and (e) of proposed new Section 226A(3) depart from current privacy laws. Like the noble Lord, Lord Coaker, we seek clarification. Also like the noble Lord, as far as we are concerned the purpose of this Committee is to probe, get information and understand how the Government interpret some of the measures in the Bill.

Bulk personal datasets represent the largest part of the Bill, and this amendment primarily probes the differences in the definitions in the Bill and those set out in Schedule 10 to the Data Protection Act 2018. The Bill creates a new and essentially undefined category of information where there is deemed to be low or no reasonable expectation of privacy: so-called low/no datasets. This is a departure from existing privacy law, in particular data protection law. With regard to low-privacy bulk datasets, the relevant circumstance, in Schedule 10 to the DPA, is that

“information contained in the personal data has been made public as a result of steps deliberately taken by the data subject”.

This is a different standard from the expectation of privacy in the new BPD category, whereby information is considered low privacy according to

“the extent to which the data is widely known about”

and if it

“has already been used in the public domain”.

As your Lordships will observe, there is a big difference between those two definitions. For example, whereas facial images from public CCTV may be considered low-privacy BPD under the Bill, they would be considered personal data and possibly subject to sensitive processing under the DPA. As the Minister knows, this is a contentious area of law, and a real-life example is Clearview AI’s database of 30 billion facial images harvested from social media platforms for highly facial recognition searches. Some could have been classified as low privacy, as the photos have already been made public by the individuals, but the Information Commissioner’s Office found Clearview AI in breach of the DPA.

Similarly, a database of all public Facebook or other social media posts could be argued to be a low-privacy database, despite the fact that it will be a comprehensive database of billions of people’s social networks, sexual orientations, political opinions, religion, health status and so on. Under the DPA, much of this data qualifies as sensitive personal data, incurring extra protections when it comes to retention and processing, regardless of whether the information can be considered to have been made public.

The DPA would still apply to the intelligence agencies in processing—at least, that is our view, and we would like to like the Minister to comment on that—but under the Bill as drafted the contradictory standards would also apply. How do these two standards work together? I assume the department has looked at the likelihood of possible challenges to this new category of data, and indeed the likelihood of such challenges being successful, so it would be helpful if the Minister could enlighten us in that regard.

Schedule 10 to the DPA sets out circumstances in which the agencies can conduct sensitive processing of personal data revealing racial or ethnic origin, political opinions, religious or philosophical beliefs or trade union membership; data concerning health or sexual orientation; biometric or genetic data that uniquely identifies an individual; and data regarding an alleged offence by an individual. Does Schedule 10 apply in the case of data identified as “low” or “no” by the Bill?

An example highlighting the potential divergence is data that has been hacked and then leaked out. While not deliberately made public, as per the DPA requirement, it is arguably public and available in the public domain. What is the Minister’s view as to how the Bill regards that sort of data in a low/no context? To test this, the amendment seeks to strengthen the condition in proposed new Section 226A(3)(b) by aligning it with the test in the Data Protection Act for sensitive processing. Data protection law is currently constructed according to the sensitivity of information rather than the individual’s expectations of privacy concerning personal information. As we know, expectations differ greatly from reality, and from person to person. The central questions this poses are: why does the new Bill deviate from Schedule 10 to the DPA, and how will the DPA and the IP work together using the new definition of this Bill?

We are debating a small number of quite large groups today which, unfortunately, means that quite a number of my amendments appear one after another. I will speak as briefly as I can, but I am afraid there is quite a lot of detail coming up. I will speak first to Amendments 4, 5, 6 and 7. Amendment 4 probes the purpose for which bulk datasets will be used by the intelligence services. Amendments 5 and 6 probe the circumstances in which an authorisation is urgent and therefore not authorised in advance by a judicial commissioner. Amendment 7 would require the person granting an authorisation in urgent cases to immediately notify the judicial commissioner that they have done so.

These amendments are similar in purpose and spirit to Amendment 3 from the noble Lord, Lord Anderson, which I have co-signed and support. The basic explanation from the Government for proposed new Part 7A has been that these datasets are needed to train tools using machine learning and that they already exist and are being used in the commercial world, but the Part 7 process makes them difficult for the intelligence services to use. If training AI tools is the stated prime mover for Part 7A, the inclusion of urgent data as one of the three types of data clearly indicates it is also needed for ongoing investigations.

In that regard, proposed new Section 226BC refers to a “relevant period” of three working days between the acquisition of the urgent data and the granting of full judicial approval, giving the relevant service three days to work with data and information that might eventually be ruled out of bounds by the judicial commissioner. All the amendments are intended to understand how Part 7A is to be used in operations, rather than tool training, and what urgent circumstances are envisioned that would negate the need for prior JC approval of an authorisation.

Amendment 4 seeks to restrict the application of Part 7A powers to training and learning functions of the intelligence services, meaning that operational purposes would be excluded. This is designed to get the Minister to explain the operational needs which define an urgent need.

Amendment 5 removes the ability of a person to grant an authorisation if there is an urgent need. Clearly, this gives the Minister a chance to justify why such data might be operationally needed. Amendment 6 provides a definition of what might be considered “urgent circumstances”. The Minister might want to contribute a different definition, but we feel the definition of “urgent” should be included in the Bill. Amendment 7 provides an additional safeguard by requiring a JC to be notified immediately where an authorisation has been granted in an urgent case. This essentially creates an opportunity to close the potential gap between when the data is deployed and when the JC rules on its admissibility—but not, of course, removing the gap entirely.

--- Later in debate ---

[Baroness Manningham-Buller (CB)]

My Lords, I do not know whether I can help the noble Lord, Lord Fox, on his question of urgency. One of the things that the Security Service and the other intelligence agencies do is deal with matters of life and death, of imminent terrorist threats, of states pursuing one of their dissidents. There is many an occasion when moving at vast speed outside the hours when IPCO is available is necessary and proportionate. I am out of date, so it is hard to give lots of current examples, but many a time there is an urgent need to move fast to try to save life.

On the point from the noble Lord, Lord Murphy, about the ISC—we will come on to look at these amendments in more detail—as far as my service is concerned, we did not need to get used to the ISC in that we had been demanding its creation for a number of years, with resistance from the Prime Minister of the day until it actually came into being. And when it did, we very much welcomed it.

I have hardly had more pleasure since I have been in this House than from the amendment in the name of the noble Lord, Lord Fox, on seeking to forget stuff. Like some noble Lords, I have difficulty in remembering things—I am sorry, I should speak only for myself—but if I was legislated to forget something, it is almost certain that I would be capable of remembering it.

[Lord Fox (LD)]

That is exactly the case.

[The Parliamentary Under-Secretary of State, Home Office (Lord Sharpe of Epsom) (Con)]

My Lords, I am grateful for the contributions to this debate, which have been very interesting. I thank all noble Lords for the points raised. I shall do my very best to address all of them and apologise in advance for going into significant detail. I also thank everyone in the Committee for their broad support for the Bill.

I will start with the low/no privacy factors on bulk personal datasets, which I will henceforth call BPDs, and the various amendments relating to the test set out in Clause 2, to be applied when an intelligence service is considering whether a particular dataset is one that can be retained, or retained and examined, under new Section 226A in the new Part 7A. This test requires that regard must be had to all the circumstances, and that particular regard must be had to the factors set out in new subsection (3). The list of factors is not exhaustive and other factors may be considered, where relevant.

Schedule 10 to the Data Protection Act is related to Section 86 of that Act, which is concerned with sensitive processing of personal data by the intelligence services. Schedule 10 sets out a list of conditions which must be met for such processing to be lawful for the purposes of the Data Protection Act. There is a risk that applying these words here, in a different context and for a different purpose, may be seen to create a link, albeit fallacious, between the type of datasets that will be retained and examined under new Part 7A and sensitive processing under the Data Protection Act. For that reason, their inclusion here risks doing more harm than good, as the noble and learned Lord, Lord Hope of Craighead, noted.

In any case, the safeguards in new Part 7A are already sufficient to ensure due regard for privacy. Every dataset proposed to be retained, or retained and examined, must be individually authorised. In addition to the test at new Section 226A, as new Section 226B makes clear, an individual authorisation may be granted only if it is both necessary and proportionate.

The factors have been chosen because they are most relevant to the context in which the test will be applied and have been drawn from existing case law. They provide a guide to the decision-maker in reaching a conclusion as to the nature of the dataset. Furthermore, a form of prior judicial approval will apply to all authorisations so that there is independent oversight of the conclusions reached.

Amendment 1, tabled by the noble Lord, Lord Coaker, seeks to replace factor (b) with language drawn from Schedule 10 to the Data Protection Act 2018. Factor (b) is concerned with the extent to which an individual has made public the data in the dataset, or has consented to the data being made public. The Government do not consider the amendment necessary. I am sure the noble Lord’s aim is to improve the safeguards in the Bill, and he has drawn inspiration from existing precedent to do so in an effort to bring consistency across statute. However, the amendment fails to achieve that aim, and risks creating an unclear and unnecessary link between this Bill and the Data Protection Act, which I have already explained. I will return to the Data Protection Act in due course.

Amendment 2, tabled by the noble Lord, Lord Fox, probes the inclusion of factors (d) and (e), relating to publicly available datasets that are already widely known about or are already used in the public domain—for example, in data science or academia. As I mentioned, the test in new Section 226A is one in which

“regard must be had to all the circumstances”.

The removal of factors from new subsection (3) would not, therefore, fundamentally change the test; it would mean simply that the decision-maker would not be bound to have particular regard to the absent factors. This amendment would, in fact, result in less transparency in the considerations the intelligence services apply when assessing expectation of privacy in relation to Part 7A authorisations.

The Government consider it important that particular regard is had to these factors. I know that noble Lords particularly enjoy the example of the “Titanic” manifest. It is a useful example of where such factors would be relevant, as it is a dataset that is widely known about and widely used, and contains real data about real people who would, unfortunately, no longer have an expectation of privacy. I also point to the helpful example in the independent review by the noble Lord, Lord Anderson: the Enron corpus. This is a large dataset of emails that came into the public domain following the investigation into the collapse of the Enron Corporation. Although initially sensitive, the dataset has been available in various forms for almost 20 years and is widely used in data science. It is right that such datasets are in scope of the new regime.

The noble Lord, Lord Fox, asked specifically about the extent to which these factors depart from existing privacy laws. The law concerning the reasonable expectation of privacy is likely to develop over time, and new Section 226A is intended to be sufficiently flexible to accommodate future changes. Rather than departing from the law, new Section 226A is intended to ensure that the intelligence services can continue to apply the law as it develops.

On Amendment 3, I thank the noble Lord, Lord Anderson, for tabling this helpful probing amendment. I am afraid the Government do not think it is necessary in order to achieve what we understand the intended effect of the amendment to be. The amendment does, however, provide an opportunity to better explain the difference between what the Bill calls “individual authorisations” and “category authorisations”. An individual authorisation will authorise the retention, or retention and examination, of a dataset under the new Part 7A being inserted into the Investigatory Powers Act—which I will henceforth refer to as the IPA—by this Bill.

All datasets that are to be retained under Part 7A must have an individual authorisation. Individual authorisations are subject to prior approval by a judicial commissioner unless the dataset described falls within an existing category. A category authorisation will not authorise the retention, or retention and examination, of a dataset. Instead, it is a mechanism through which a judicial commissioner’s permission may be sought in order to depart from the normal rule on prior approval, but only in respect of datasets that meet a particular description.

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Turning to Amendment 9, I am sure noble Lords were as surprised as I was to hear that the noble Lord thinks that the intelligence services ought to “forget” intelligence they have gathered, creating a clear risk that could jeopardise national security and be contrary to their statutory functions, as well as Article 2 of the Human Rights Act, on the right to life.

[Lord Fox (LD)]

If the Minister and indeed the noble Baroness had listened to what I said, they would know that I do not think it is forgettable; I just wanted the Minister to confirm that point.

[Lord Sharpe of Epsom (Con)]

Thank you; point taken.

Section 226D provides a mechanism to achieve what I understand the intent of the amendment to be. It is clear that remedial action must be taken if it is discovered that Section 226A does not apply or no longer applies to part of a dataset authorised under Part 7A. Anything in the process of being done must be stopped as soon as possible, and that part of the authorisation is treated as cancelled. The effect of that part of the authorisation being treated as cancelled is that the data to which it relates must be deleted unless there is some other lawful basis for its retention. It may well be that it is appropriate for the intelligence service to continue to retain the data. That is why subsection (3), in effect, puts that part of the dataset back into the decision-making machinery in Section 220 of Part 7 of the IPA—so that such a decision can be made. We provide a fuller explanation of that in the draft code of practice for Part 7A, at paragraphs 4.26 and 5.39.

In conclusion on this amendment, if the noble Lord is suggesting that any actionable intelligence that has been identified while the agency was operating on the basis of that retention and examination being lawful under Part 7A should not be acted on, I am afraid I must playfully suggest that it is he who ought to forget his amendment.

I turn now to the various amendments on reporting on BPDs, including several that seek to amend the provisions set out in Clause 2, under Section 226DA, which require the heads of the intelligence services to provide an annual report on Part 7A to the Secretary of State. The first amendment proposed by the noble Lord, Lord Fox, Amendment 11, seeks to mandate that certain statistical information in a given year—specifically, the numbers of authorisations sought and granted—be provided to the relevant Secretary of State. This amendment is not necessary or appropriate. First, those Secretaries of State who are politically accountable for the intelligence services will have in place arrangements to that end and may demand of the relevant intelligence service any additional information he or she feels necessary. This may go beyond the level of detail the noble Lord has proposed be included in the annual report and may be more frequent. This is not a matter for the Bill, because the exact information the Secretary of State requires may evolve over time. Secondly, if this sort of specific reporting requirement is found to be necessary or desirable, it is more appropriate for inclusion in a code of practice, rather than being in the legislation. Indeed, the draft code of practice for Part 7A sets out some relevant details under paragraph 7.4.

I turn now to Amendments 10 and 12, proposed by the noble Lord, Lord West, and I take this opportunity to reassure him and the noble Lord, Lord Murphy. On behalf of the Security Minister, we thank them for their valuable work on the ISC and for the constructive engagement with the Bill Committee to date. I am pleased to see the noble Lord, Lord West, in his place today, and I am glad that he is on a more or less even keel.

The amendments the noble Lord has tabled would require the intelligence services to provide the same annual report that they provide to their Secretary of State, on the operation of Part 7A, to the ISC and the Investigatory Powers Commissioner. I do not believe that this additional requirement would provide the enhanced oversight of the regime that the amendments purport to provide. The annual reporting requirement is a formal statutory mechanism by means of which the Secretaries of State will receive information from the intelligence services about their use of Part 7A on an annual basis. This is a mechanism intended to ensure effective political oversight by the Secretary of State.

The ISC is a committee of Parliament. Oversight by the ISC is neither of the same nature as, nor a replacement for, the oversight of the Secretary of State. The ISC, as a committee of Parliament, already has a long-standing and well-established role in the oversight of the intelligence services to which these provisions will apply, and that role will continue here.

Sending the annual report to the Investigatory Powers Commissioner will not increase the level of independent oversight provided, for the following reasons. First, the Investigatory Powers Commissioner will be required to keep this new regime under review, as he does with the current Part 7 regime, and he will continue to report annually on his findings. Secondly, the information these amendments seek to include in the annual report is already information that the draft code of practice will require the intelligence services to keep, as is clear from paragraphs 7.1. and 7.2. The commissioner, and anyone acting on his behalf, has access to all locations, documentation and information systems as necessary to carry out a full and thorough inspection regime. The intelligence services are legally obliged to provide all necessary assistance to the commissioner, or anyone acting on his behalf, including by providing documents and information.

The noble Lords, Lord Fox, Lord Murphy and Lord West, asked about the continued engagement with the ISC. On both the policy proposals informing the Bill and the Bill itself, through a combination of ministerial, operational and official engagement, we have maintained continual engagement, which includes recent sessions with the Security Minister and the agency heads. As I said earlier, we are grateful to the committee for its engagement and scrutiny of the Bill. We will continue to involve it throughout the Bill’s passage, and I am more than happy to take the noble Lords’ comments back to the Home Office and make sure they are widely understood.

Amendment 13 would see the intelligence agencies notify the Investigatory Powers Commissioner every time an individual authorisation is granted in reliance on a category authorisation. I have already set out the distinct processes for individual and category authorisations under new Part 7A. As I set out earlier, categories will be authorised only with the prior approval of a judicial commissioner. IPCO inspectors will then be able to review the individual authorisation granted in reliance on a category authorisation during their regular inspections of the intelligence services throughout that time. Category authorisations will expire at 12 months and will then need to be renewed and that decision reapproved by a judicial commissioner.

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Moved by

[Lord Fox]

20: Clause 11, page 30, leave out lines 38 and 39
Member's explanatory statement
This amendment is intended to probe the legal basis for surveillance of the type of data described in new subsection (3A)(e).

[Lord Fox (LD)]

My Lords, Amendment 20 is intended to probe the legal basis for surveillance of the type of data described in new Section 11(3A)(e). This amendment would prevent public authorities—councils, police forces, intelligence agencies, government departments including the DWP and HMRC, the Gambling Commission, the Food Standards Agency, and many more—having “lawful authority” to obtain and use communications data from a telecommunications or postal operator solely because the information is available to the public or a section of the public even if only on a commercial basis.

Communications data is defined in the IPA as data that may be used to identify, or assist in identifying, the sender, recipient, time, duration, type, method, pattern, or fact of a communication, along with the system used to make a communication, its location and the IP address or other identifier of any apparatus used. The broad list of public authorities able to obtain communications data is set out in Schedule 4 to the IPA.

Clause 11 of the Bill before us now amends the Section 11 IPA offence of unlawfully obtaining communications data from a telecommunications or postal operator. Whereas the IPA currently defines an offender as,

“A relevant person who, without lawful authority, knowingly or recklessly obtains communications data from a telecommunications operator”,


this Bill would add a list of examples to the Act of what constitutes lawful authority.

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I believe that I have set out clearly the Government’s position in respect of these important areas. Again, I thank noble Lords for prompting this debate, but I respectfully ask that they do not press their amendments, for the reasons I have set out.

[Lord Fox (LD)]

My Lords, this has been a really worthwhile part of our debate, and I thank those who have tabled amendments and the Minister for his response. I was particularly interested to hear both the substance of and response to the amendments of the noble Lord, Lord West of Spithead. I think it best that we spend some time reviewing this in Hansard in deciding what, if anything, needs to come back. With that said, I beg leave to withdraw Amendment 20.

Amendment 20 withdrawn.

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Debate on whether Clause 16 should stand part of the Bill.

[Lord Fox (LD)]

My Lords, in opposing that Clause 16 stand part of the Bill, I shall also speak to the clause stand part notices on Clauses 17 and 20.

This is one part of the Bill that has attracted a huge amount of external interest and deserves some positioning to understand why external parties might be suspicious of what they see. We should recognise that one of the most important security features available to protect personal information, both on a device and in the cloud, is end-to-end encryption. That encryption technology ensures that only users, and not the companies which provide the cloud services, can access their personal data and communications. Computer scientists and cryptographers have argued for many years that there is no safe way to decrypt one person’s messages without compromising the whole system’s security infrastructure. As soon as a backdoor, as it is called, is created to scan private messages, a security vulnerability is created that can be exploited by bad actors as well as good actors. I assume that that was why the Online Safety Bill left things hanging, waiting for a technological breakthrough, though I was not party to the processes of that Bill.

I remind your Lordships that once the company has created a backdoor key for encrypted systems, even for a single user in a single case, and certainly for any mass scanning, it has created a vulnerability that can eventually be abused by bad actors as well as law enforcement. I also remind your Lordships that the Home Office already can and presumably, on occasion, does require companies to weaken their security apparatus in the interests of law enforcement and national security.

To a great extent, the proximity of this Bill to the debate in the Online Safety Bill, has not helped matters: sensitivities were raised during that debate, and this is a chance for the Minister to try to calm them. As I mentioned earlier, the impending arrival of the Data Protection and Digital Information Bill is also putting people’s nerves on edge. There is a deal of management required here.

End-to-end encrypted messaging service providers were vociferous in their concerns during the passage of the Online Safety Bill, yet Section 121 of the Online Safety Act remains. However, Ministers clarified that Ofcom could only require scanning once it becomes technically feasible to do so—that is, when the technology is invented and allows scanning without violating encryption. But Ofcom retains the power to order service providers to use their “best endeavours” to develop that technology.

It is not surprising that some of those same encrypted message service providers were raising flags when it came to some of the clauses in the Bill. The IPA, as it stands, already enables the Home Office to instruct service providers to remove electronic protection for communications of interest to the police or security services by issuing them with a technical capability notice—a TCN. This effectively empowers the Home Secretary to require the removal of end-to-end encryption on those services across any number of suspects and criminal offences. Currently, for the Home Secretary to issue a TCN to a service provider under the IPA, they have to satisfy a number of considerations, which your Lordships will be pleased to hear I am not going to list. Even if the answers to all those conditions is positive and leads to a TCN, a process of checks and balances sits alongside the request, including informal and formal consultation between the Home Office and a service provider before the TCN is issued, oversight by the independent judicial commissioner assessing the request’s proportionality and, of course, recourse for the service provider to request a review of the TCN, allowing it and the Home Secretary to make representations to the judicial commissioner and the technical advisory board for assessment. Crucially, the service provider is not required to start acting on the notice until the review process is concluded.

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Finally, as noble Lords will have seen, the Government have tabled Amendments 33 and 42 to clarify that the route of judicial redress to the Investigatory Powers Tribunal applies to notification notices. Amendments 40 and 41 ensure consistency across the language used throughout the IPA. I trust that noble Lords will welcome and support those amendments and I ask them, respectfully, not to press their own amendments.

[Lord Fox (LD)]

My Lords, I thank the Minister for an admirably comprehensive response. That was what we were looking for—perhaps not everyone, but certainly our Front Benches. There is a lot to get our heads around, so we will take this away and look into it.

There are a number of observations I would make. First, the Minister emphasised co-operation, collaboration and discussion. Of course, the legislation does not look like that, so it would help if the Government could find some confidence-boosting measures, be they from the code or the draft annexe, or something that enables the Government to signal their continued intention to co-operate and collaborate.

The Minister talked about an interconnected data world—that is exactly the point the operators are making. Because of that interconnection, a hiatus in delivering a service in the UK could also be a hiatus in delivering that service to the rest of the world, given that everyone is using the same service. That is one of the points that was not picked up by the Minister at the time. That interconnectedness is the very issue that some operators have: if they are prevented from doing it in one place, how do they do it elsewhere?

The issue of corporate entities is interesting. What the Minister described was something I used to call “corporate veil”, and I am interested to know how robust that is in corporate law. With corporate veil, it became very difficult, even at court level in the United States, to break down the corporate entities and their interconnections. For no other reason than making an observation, I am interested to see how that works. I certainly see why the Government are putting it forward in their legislation.

There is a lot for us to digest, which we certainly will, between now and the next stage; it gives us something to get our teeth into over Christmas. That said, I beg to withdraw my proposal that Clause 16 stands part of the Bill.

[The Deputy Chairman of Committees (Baroness Fookes) (Con)]

I am afraid that the noble Lord is not in a position to do that. This is a clause; one votes for it or against it.

Strikes (Minimum Service Levels: Border Security) Regulations 2023

Lord Fox Excerpts

Wednesday 6th December 2023 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise to move my fatal amendment on the border security minimum service levels regulations. I will be very brief in doing so, in the interests of progressing the business of the House, particularly given the fine balance of our numbers. I am not going to repeat all my previous statements and arguments but, for the record, that does not mean that I am in any way withdrawing any of them.

I agree with virtually everything that the noble Lord, Lord Coaker, just said about these being, in some ways, the strictest of the regulations before us today. Some 70% to 75% of staff are losing the right to strike; in many smaller places, there is effectively no right to strike. We are taking that right away from people. However, that would really be a stronger argument for my fatal amendment. In that context, the regret amendment does not really achieve anything, as I have said before. I will, however, just reflect on one comment that the Minister made, repeating statements that the Government have often made before. If the Government are committed to conciliation for national disputes, this is a kind of rhetorical question, but it is worth asking. Can the Minister confirm how he can speak for future Governments, because these are the regulations we are laying now?

[Lord Fox (LD)]

My Lords, this is perhaps the most curious of the three statutory instruments aimed at particular sectors. I say that because it seems that the Government have chosen to pick a fight with one of the groups of public sector workers with which, to my knowledge, they do not currently have a full-blown dispute. Perhaps there is one coming; perhaps that is why Robert Jenrick has just resigned. He must know something that we do not. Given the choice of sectors, why did the Government choose to accelerate this one over other public services which are currently in trouble? It seems strange. Clearly, as other speakers have said, it is not a very long measure, and noble Lords will be happy to know that my speech will be shorter.

At the heart of this, as we heard from the noble Lord, Lord Coaker, the intent of the measure is that the strike-day service from Border Force should be no less effective than on a non-strike day, and services should cover all the areas normally running—port and airport services, passport services and so on—as the Minister has set out. I do not need to explain that when the minimum service level is no less effective than the everyday service level, that basically means almost everybody is required to go to work. In this case, the estimate from the TUC is that 70% to 75% of the employees of Border Force on a normal day will be required to attend on a strike day.

Investigatory Powers (Amendment) Bill [HL]

Lord Fox Excerpts

2nd reading
Monday 20th November 2023 Lords Chamber

[Lord Fox (LD)]

My Lords, it is a great pleasure to follow the noble Lord, Lord Coaker. I look forward to a fascinating and intimidatingly expert debate. Before commenting on the Bill, I feel that it is important to contextualise what we are discussing today.

Many of us enjoy books that depict the intelligence services. In the main, the George Smileys who appear within their covers are practising in a world that is very far from the lived experience of most people in this country. However, the reality is very different. The work of the intelligence services impacts very many people’s lives in the UK. It is not just bombs and guns but drugs, people trafficking and other exploitation, financial and cybercrime, extortion and many other crimes. The perpetrators are Governments, terrorist organisations, criminal gangs and lone individuals. Crime and terror merge and are socially unjust activities that prey on the weak. The victims are most often the vulnerable and those with the least ability to resist. Within this depressing tapestry, we rely on our intelligence services to help keep us safe and we need a police force that can cope with the complexities of those crimes. Liberal Democrats wholeheartedly support the services that seek to do this and we welcome this debate.

We also believe that these vital tasks have to be balanced against the freedoms and liberties at the heart of our country’s values. Every new power must be weighed in that balance and the noble Lord, Lord Coker, just explained that from his perspective. As we have heard, this Bill proposes some specific amendments to the original Investigatory Powers Act 2016. I was not involved in the scrutiny of the Bill at that time; that fell to my noble friend Lord Paddick, and the noble Baroness, Lady Williams, was in the ministerial chair, so it is a new set of eyes looking at this legislation.

I remind your Lordships’ House of some of the key priorities that my noble friends here and my colleagues in the Commons applied to the 2016 Bill. The first of these is that there should be no weakening of encryption. The second is the vital role of judicial authorisation and the third is that, when it comes to the bulk collection of information or mass surveillance, British residents have a right to expect privacy. These principles were central to our response to the last Bill and will be to this.

Today’s Bill, as we have heard, is the product of deliberation over years. Your Lordships should particularly thank the noble Lord, Lord Anderson, for his work on it. However, given the time taken to get this far, it is very disappointing that the Government chose to introduce the Bill in such a rush that it gave just eight working days for parliamentarians and civil society to prepare for the specific scrutiny of it. If the Government were seeking to ensure that they took people with them, this is a way to antagonise them. There are already comments about haste being an effort to railroad people.

I am afraid my speech today is quite a long one because I did not have time to write a short one. I turn to the Bill. As the Minister set out, the original Bill established a set of protections under Part 7; this Bill introduces two new levels of security, Parts 7A and 7B. Part 7A is introduced in Clause 2 and concerns bulk datasets, as we have heard, with

“low or no reasonable expectation of privacy”.

These so-called low/no datasets may be in three types, each with slightly different rules.

I have enjoyed helpful discussions with the Minister’s department and for that I appreciate his facilitation and engagement. During those discussions, the basic explanation has been that these datasets are needed to train tools using machine learning, that they already exist and are being used in the commercial world, but the Part 7 process makes them at best clumsy and at worst impractical to be used by the intelligence services. I take those points. Furthermore, the introduction to Part 7A includes a requirement for approval from judicial commissioners. Had it not, this discussion would have been much harder.

If training Al tools is the stated prime mover for Part 7A, the inclusion of urgent data as one of the three types of data clearly indicates it is also needed for ongoing investigations. I can imagine why urgent data might be needed, but it is the investigators who will define the urgency. Additionally, new Section 226BC refers to a relevant period of three working days between the acquisition of the urgent data and full judicial approval. Yet, after three days, the judicial commissioner may decline to permit the use of the data that has already been employed in an investigation using rapid Al-enabled analysis.

Taken together, I have my worries. There needs to be a duty to immediately notify the judicial commission. Secondly, there should be guardrails helping define “urgent” and finally we need to discuss how information discovered using data that is subsequently ruled ineligible is, shall we say, unremembered. Without these, the use of low/no datasets in this way for operational issues is concerning.

I have gone into this in some detail because I see it as a serious operational concern but also because I wanted to illustrate the sort of scrutiny the Government should expect from these Benches throughout this debate. There are other examples as we go through the Bill, but I will refer to those only broadly now. Clause 5 introduces a second new category of approval, Part 7B, this time for datasets held in third party assets to which the intelligence services have access. As far as I can deduce, this brings into the orbit of the IPA data which was previously not included and mandates both Secretary of State and judicial commission levels of approval. Unless I learn otherwise, that is a good starting point.

That said, we will seek to initiate explicit discussion around the use of medical, genetic and genomic data and how this can be protected. Here I note that anonymised data can be relatively easily reassigned, so anonymity in health databases is no actual protection. This is important on several levels, not least for public confidence in the digitisation and legitimate use of this very important information.

Part 2 allows the deputisation and delegation of some of the powers to broaden the number of people responsible involved. I just ask whether the Minister believes that this heralds a massive increase in workload.

In Part 3, I thank the Minister for his explanations around Clause 11, which I shall read carefully, and I will be coming back for some more details about how that will work in practice. Clause 14 creates a new condition for the use of internet connection records by the intelligence services and the NCA. Broadly, this removes the need for exact times when seeking connection records, substituting time ranges. This seems acceptable, as long as the Minister can assure your Lordships’ House that this will still require Secretary of State and judicial commission approval.

Part 4 moves into the area of retention notices and away from issues covered by the report of the noble Lord, Lord Anderson. I believe that Clause 15 is focused on bringing inbound roaming on foreign SIM cards into the frame, so I would appreciate details of how this will work. For example, if I am in the UK using a SIM that I bought in Dubai from a UAE-based telecoms provider, how does the intelligence officer proceed?

Clause 20, as we have already heard from the noble Lord, Lord Coaker, is one that has already raised eyebrows in the industry. Proposed new subsection 258A requires telecoms operators to inform the Secretary of State if they propose to make changes to their products or services that would negatively impact existing lawful access capabilities. In reality, this can include changes in encryption, a topic which has recently been on a rocky journey through the passage of the Online Safety Act. This Bill proposes a number of changes, building on the current regime set out in the 2016 Act, that relate to decryption of private messages for law enforcement purposes. In short, we believe the amendments would, or at least could, grant the Home Secretary more extensive powers to intervene in, and in some cases block, communications providers’ operational decisions, including enhancing privacy settings for users, with potential knock-on implications for end-to-end encryption on those services for everyone. I think more debate will be needed in this area.

There are other issues of timing, the possible length of a review, extraterritoriality and the level of judicial commission oversight at the notice level. I am sure I will be told by the Minister that this is a narrow interpretation, but it is an interpretation that has legs outside your Lordships’ Chamber. How will this power be used and what are the implications? Will we perhaps see British law officers beating a path to California to serve these notices? In a sense, how far does this go?

Finally, Part 5 invokes some interesting questions, some of which the noble Lord, Lord Coaker, has already asked and we will surely want to probe. We will want to introduce a requirement that the Investigatory Powers Commissioner is informed of, and records in their annual report, the number of warrants authorised each year to permit surveillance of Members of relevant domestic legislatures. For now, perhaps the Minister could tell your Lordships’ House what the process is for gaining permission to intercept and examine the Prime Minister’s communications.

We will also be probing two other important areas on which there is no time to expand today. The first is specific protections to avoid either cementing or introducing systemic bias against certain sections of the community from the AI models of the future that will be built as a result of this legislation. The second is the use of facial recognition technology on the back of the tools created using the low/no databases, a point that the noble Lord, Lord Coaker, raised.

To conclude, we are concerned that the Bill could push legislation further past the point of balance that we started to discuss. We need to ensure that judicial oversight extends right through the activities enabled by the Bill, and there should be no weakening on the encryption issue. I hope the Minister views this critique in the spirit of constructive support that I have sought to invoke, and I look forward to the rest of the debate and the further stages of the Bill. As he can see, our work will be built on the foundation that British residents have a right to expect privacy.

Economic Crime and Corporate Transparency Bill

Lord Fox Excerpts

Consideration of Commons amendments
Wednesday 25th October 2023 Lords Chamber

[Lord Fox (LD)]

My Lords, I thank the noble Lord, Lord Sharpe, for his comments. It is good to see the noble Lord, Lord Johnson, here as well, because together, along with other colleagues, they have done a good job in bringing forward this important Bill, the objectives of which we all shared from the outset.

The debate we have had right across your Lordships’ House has not been party-political but about practicalities and aspirations for how this Bill will work when it finally gets Royal Assent. Thanks to this debate, there have been improvements as we have gone through the process. All noble Lords who have participated, not many of whom are here today, have added value to that process. That value has been recognised by Ministers, the ministerial team and indeed the departmental team in the way the Bill has changed during its progress through this House.

The noble Lord, Lord Sharpe, said that he hoped this would be the last time the Bill goes through this House, and I think he can see that it will be. But I hope it is not the last time we discuss its effects and what it seeks to achieve. Parts of the Bill are designed completely to overhaul the way Companies House operates. How that works, whether it works and the extent to which the abuses endemic in the system can be cracked down on will be a really important facet of the Bill.

Enforcement is very much within the remit of the noble Lord, Lord Sharpe, and the Bill’s effective enforcement is key to whether we succeed in bearing down on economic crime. All your Lordships support the enforcement agencies in their work, and in any opportunity we have to come back—whether through the secondary legislation opportunities provided in the Bill, or to review things going forward—enforcement will be vital to success.

I am happy that the noble Lord, Lord Sharpe, mentioned the two issues the noble and learned Lord, Lord Garnier, and the noble Lord, Lord Faulks, set out. The extent to which the extension of this measure to smaller and medium-sized companies can be reviewed is an important point; it was noted during debates many times and I am pleased that the Minister took the opportunity to reiterate the position. I hope that in due course, the review of whether the rules need to extend to smaller companies does indeed happen, and we are able to see whether it is necessary.

Cost protection is a wide and important issue when looking at this aspect of economic crime, as is whether enforcement can be cost-effectively delivered when large, wealthy concerns are in the crosshairs of the authorities. I welcome the review; we look forward to its results and to having the opportunity to debate it when the time comes. In the meantime, your Lordships can be satisfied that they have more than thoroughly scrutinised the Bill, which leaves this House in a better state than when it arrived.

[Lord Coaker (Lab)]

My Lords, the noble Lords, Lord Johnson and Lord Sharpe, have done an excellent job in improving the Bill; there are no two ways about that. It is probably incumbent on me at this point to remind noble Lords that the “failure to prevent” amendment was put into the Bill in your Lordships’ House, as were the protection from costs orders and the associated compromises. It would be remiss not to mention that.

Having said that, it is of course a little disappointing that the Government were not able to make further compromises, in particular the compromises that were moved in the other place by not only Dame Margaret Hodge but by two prominent Conservative Members of Parliament, Sir Robert Buckland and Sir Robert Neill. So there is clearly still concern around some of these issues, but it would be churlish not to recognise the progress that has been made and the fact that the Government are going to keep much of this under review. It will be interesting to see the results of that review in terms of how the legislation operates and whether it operates in the way the Government expect. It is important that Ministers keep on top of that to make sure that the legislation does what is expected of it. I have every confidence that the noble Lords, Lord Sharpe and Lord Johnson, will do that. I agree very much with the noble Lord, Lord Fox. Indeed, that has been a consistent refrain throughout the passage of the Bill, both in the other place and this place.

I will finish with this remark. The Bill is an important step forward, but the enforcement of it is everything. If laws that have been improved are not enforced, much of the debate and discussion we have had will not be as valuable as it should be. If the noble Lords, Lord Johnson and Lord Sharpe, can reinforce to their officials and the various agencies involved that enforcement is everything, as the noble Lord, Lord Fox, said, we will all be reassured.

I thank the noble Lords, Lord Sharpe and Lord Fox, and other noble Lords who have been involved in the Bill, including the officials. We have a piece of legislation that is much improved from where we started, and I look forward to its implementation.

Economic Crime and Corporate Transparency Bill

Lord Fox Excerpts

Report stage
Tuesday 27th June 2023 Lords Chamber

[Baroness Altmann (Con)]

My Lords, briefly, I congratulate the Government on bringing forward the amendments; they will enhance the operation of the Bill. However, while we debate what could cover so-called crypto assets, I want to put on record my concern that by calling them “assets” and by not banning them from conventional financial markets we are potentially encouraging economic actors and criminals who demand payment in these untraceable types of so-called money. There is a danger to both our financial system and society if we continue to try to suggest that they are, in any way, conventional media of exchange.

[Lord Fox (LD)]

My Lords, I reflect back the point made at the beginning by the Minister—in fact, made in triplicate—that this has been a co-operative approach. In fact, I was one of the people who raised the issue of crypto assets at the beginning. There was good consultation with the team involved, and the Government brought forward a number of amendments in Committee and on Report.

As the Minister acknowledged, the issue is going to have to be flexibility going forward, and the ability to make changes and to understand how criminals are using crypto assets and other assets to commit fraud will be very important. Having the ability to come back to Parliament and make those changes will be key to the success of this Bill. In that respect, anything that improves flexibility, as I think these amendments do, will be very helpful.

--- Later in debate ---

[Lord Garnier (Con)]

My Lords, I thank my noble friend the Minister for his patience and tolerance in listening to my arguments over and over again—

[Lord Fox (LD)]

I am sorry, but it was the amendment of the noble Lord, Lord Sharpe, that was being moved.

[Lord Garnier (Con)]

We both seem to be making as many mistakes as each other.

--- Later in debate ---

Let me end where I began, with Ukraine, reminding the House how important it is that we support Ukraine in every possible way. Latest figures show that more than 9,000 civilians have died and more than 8.2 million people have fled the country. The cost of reconstruction efforts is estimated to be more than $400 billion, and the figure rises exponentially. Amendment 107 was tabled to assert the principle that those responsible for, or who have collaborated in, these depredations will be made to contribute to the gargantuan task of reconstruction. We in this House are making it clear, by speeches, by amendments of this kind and by our actions, that we will go on supporting the courageous people of Ukraine by every possible means. I beg to move.

[Lord Fox (LD)]

My Lords, I am pleased to support the amendment in the name of my noble friend. If I do not speak at length, it is not because I do not think it a very important amendment but because I am trying to infect the rest of the House with some brevity—unsuccessfully, I suspect. This is an important amendment and we have seen movement in other regimes. We have seen movement in the United States; we are seeing movement in the European Union; and I think we have seen movement in the House of Commons on the Procurement Bill, to which we have started to see changes in attitude. I hope we will hear from the Minister shortly that the Government are prepared to move, in order that we can bank a step in the right direction along this path. I look forward to hearing what the Minister has to say, and I hope this amendment will not have to be pressed if we hear what we want to hear.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank the noble Lord, Lord Alton of Liverpool, for this amendment, for his constructive engagement throughout the passage of the Bill through this House and, of course, for his typically thoughtful and powerful introduction. I also pay tribute to noble Lords from all sides of the House, and Members in the other place, for continuing to pursue this important issue and engage with the Government on a cross-party basis, not least the APPG on Anti-Corruption and Responsible Tax. I can reassure the noble Lord that the Government are supportive of mechanisms to deprive sanctioned individuals, where appropriate, of their assets, with a view to funding the recovery and reconstruction of Ukraine. More broadly, the Government want to drive further transparency on assets held by sanctioned persons in the UK.

On 19 June, the Government announced four new commitments which reaffirm that Russia must pay for the long-term reconstruction of Ukraine. This includes new legislation, laid the same day by the Foreign Secretary, to enable sanctions to remain in place until Russia pays compensation for damage caused. In this announcement the Government also confirmed that we will lay new legislation requiring persons and entities in the UK, or UK persons and entities overseas, who are designated under the Russia financial sanctions regime to disclose any assets they hold in the UK. The Government are firmly committed to bringing forward this secondary legislation, subject to the made affirmative procedure, and to introducing this measure before the end of 2023, subject to the usual parliamentary scheduling. This will strengthen transparency of assets and make it clear that the UK will not allow assets to be hidden in this country.

Sanctioned individuals who fail to disclose their assets could receive a financial penalty or have their assets confiscated. This demonstrates our continued commitment to penalising those who make deliberate attempts to conceal funds or economic resources. The new power builds on and strengthens the UK’s existing powers around transparency of designated persons’ assets. HMG already use the annual review of the Office of Financial Sanctions Implementation, known as OFSI, to collect and detail assets frozen under UK financial sanctions. Additionally, relevant firms such as banks, other financial institutions, law firms and estate agents have an ongoing obligation to report to OFSI if they know or reasonably suspect that a person is a designated person or has committed offences under financial sanctions regulations, where that information is received in the course of carrying on their business. Those firms must provide information about the nature and amount of any funds or economic resources held by them for the customer.

The designated person reporting measure will act as a dual verification tool by enabling the comparison of disclosures against existing reporting requirements that bite on relevant firms. This will tighten the net around those who are not reporting and are evading their reporting requirements.

On asset seizure, prosecutors and/or law enforcement agencies can currently apply to confiscate or permanently seize assets where someone has benefited from their offending, or the assets have links to criminality, by making use of powers under the Proceeds of Crime Act 2002. Importantly, the new measures will also give His Majesty’s Government the ability to impose fines. Overall, this designated person reporting measure will be focused on strengthening the UK’s compliance toolkit while giving options for penalising those who seek to hide their assets.

The noble Lord’s amendment includes a specific provision which would require the designated person also to report assets which were held six months prior to the designation. The Government are still fully developing the non-disclosure measure and I can assure the noble Lord that we are carefully considering this suggestion. Although not retrospective in terms of regulating or criminalising conduct that occurred before the measure came into force, requiring designated persons to provide a snapshot of their assets at a historical point in time is necessarily more onerous than a forward look requirement. The Government will need carefully to consider the design of the measure and the proportionality and additional value of so-called retrospective reporting to ensure that it is operationally deliverable and legally robust. This will include working with relevant law enforcement agencies to determine how such information would be used.

Before laying these regulations, the Government will complete their ongoing evaluation of possible operational or implementation challenges to help ensure the successful delivery of this measure. For example, investigating non-compliance will require significant resources from the enforcing agency. We want to ensure that it has all the capability, skills and resources to succeed.

I note the interest in and strength of feeling on this issue. The Government will continue to work collaboratively and constructively with interested parties in the lead-up to bringing forward the legislation, including on reporting assets which were held prior to a designation. We will continue to engage with the civil society organisations that have campaigned for this measure, and I would be happy to work with the noble Lord, Lord Alton, and other parliamentarians to keep them informed of progress ahead of it being formally introduced.

Again, I am grateful to the noble Lord for bringing this issue forward for debate and for the continued interest and engagement of many stakeholders. I hope that, given the reasons I have outlined and the action the Government are already taking, he will consider withdrawing his amendment.

Economic Crime and Corporate Transparency Bill

Lord Fox Excerpts

Committee stage
Thursday 11th May 2023 Grand Committee

[The Lord Bishop of St Albans]

I am sorry I have been unable to engage more fully and consistently with this Bill, but this amendment prompted me to come here when I had a few minutes. I was recently speaking to someone I met at a social gathering. In the course of the evening, we were talking about a whole range of things, and he was talking about the fact that he had been defrauded of some money and how it is now materially affecting his retirement. His comment was: “I feel so embarrassed, because I’ve always tended to think it was simple people who didn’t understand financial matters who were likely to lose money. I’m highly literate, I’ve done all the right things, but I’ve been defrauded”. This is having a big effect.

Also, as we are becoming increasingly cashless and more and more transactions are online—it looks like that will be the trajectory for quite some while—there is far more potential for these sorts of frauds. For example, I note that fraud on lost and stolen cards had increased by 30% by 2022 and card ID theft, where a criminal opens or takes over a card account, had almost doubled in the previous year. In other words, this crime is getting worse.

It is in everybody’s interests that we encourage people to use what is, for most of us, a great convenience being able to pay with our cards—but we need to make sure that people have confidence. The statistic that the noble Lord, Lord Coaker, gave us—that one in 15 adults has been a victim—is particularly interesting. In other words, it is now widely assumed among groups of ordinary people chatting that this is a very real problem. There is a good side to that—hopefully, we are being far more cautious and savvy—but, nevertheless, that will not encourage people to invest and use some of the financial services that we might hope they will as they plan their retirements.

I just want to add my words of encouragement and ask the Government whether they can give us some idea about whether this amendment, or something similar, might be a way forward. It would give people confidence if they knew that there was clear and simple way to find redress when they were a victim of fraud. Also, could this be built on in some way, not least because the proceeds of property recovered under this future Act could then be directed towards compensation?

[Lord Fox (LD)]

My Lords, I thank the noble Lord, Lord Coaker, and the right reverend Prelate the Bishop of St Albans for their words. I am not going to try to add to the issue of individuals; instead, I note that we should remember that this also involves businesses. The Home Office survey said that one-fifth of businesses have been hit by fraud. Such fraud can be existential to those businesses—at the very least, it is a tax on growth because money that is stolen is not reinvested in that business—so this matters.

In earlier debates, we have talked about the other side of this: stemming the cause of fraud. We have talked about the failure to report as well as the facilitation issue. The Government seem much more interested in picking up on the failure to report side than on the facilitation side. I ask the Minister to go back and find a middle way between what was being proposed by the noble Baroness, Lady Morgan, and her committee and what we have now, which is nothing—that is, to find some sort of code of conduct with teeth that starts to address the facilitation issue. It is through facilitation that this fraud is happening, in many cases. At the same time as addressing questions about compensation, we must go back and find effective ways of preventing this happening.

With noble Lords’ indulgence, I will slightly broaden the scope of my speech because, over the course of the last day or so—since we debated this issue—the United States has repatriated seized assets to Ukraine. Can the Minister ask his officials to have a look at how that was achieved? Which international laws were used to facilitate that repatriation? In previous Committee debates, we have discussed freezing and seizing, so it would be very useful for your Lordships to know more about this before we get to Report; it is an issue that we remained concerned about. Although I realise that the United States is a different legal domain, it sits in the same international climate of law. Therefore, it would very much help our deliberations if the Minister was able to talk to the department’s officials and get some sort of readback as to how this seizure and repatriation to Ukraine was achieved.

Otherwise, Amendment 106D is a good way of trying to find out where the Government sit on compensation, although I would open it up to include business compensation as well. Perhaps there are also issues around the insurance industry that the Government should be thinking about.

--- Later in debate ---

[Lord Sharpe of Epsom (Con)]

My Lords, these government amendments concern commencement and cut across several clauses. Amendments 106F, 106H and 107A are consequential on the regulation-making powers introduced by the new clause headed, “Fraud offences: supplementary”, which is one of the Government’s new clauses introducing a failure to prevent fraud offence. Amendments 106G and 107B, and the proposed new clauses to be inserted by Amendments 109 and 110, replace Clause 191 with a new commencement clause and a separate transitional provision clause. The clauses are being separated into two to make the commencement provisions easier to follow and avoid having one long and complex commencement provision.

They include a number of small, technical changes to ensure that the commencement provisions in the Bill work as effectively as possible and bring the devolution aspects of the commencement powers into line with previous similar legislation. They also bring into force, on Royal Assent, procedures in the Bill about the codes of practice which will govern the strengthened information order powers. This will ensure that those powers can quickly start to be used. Certain money laundering reporting measures are also being commenced on Royal Assent: the exemption for “exiting and paying away” and the new defence against failure to report, which we debated earlier in Committee. That will give certainty to businesses about their reporting duties as soon as the Bill is passed.

I hope noble Lords will support these amendments. I beg to move.

[Lord Fox (LD)]

My Lords, I will speak very briefly—I am sure the Minister will be glad to know that. I am intrigued by Amendment 109 because it complicates the process of bringing the Bill into being quite a lot. There are a lot of moving parts set out in Amendments 109 and 110 for the Bill to start to be effective. The simple question is: from start to finish—from Royal Assent to when everything is working and all parts are moving—what is the Government’s estimate as to long it will take to fulfil all the steps set out in these amendments?

[Baroness Blake of Leeds (Lab)]

I too will speak very briefly. I note the comments about consultation with devolved authorities. Given concerns about the extent of consultation in other areas, can the Minister reassure us that it is adequate, and deemed adequate by the devolved authorities? That is a clear theme running through some of the legislation.

We have discussed—we will revisit it, I am sure—the issue of failure to prevent and the specific mention of large organisations. We understand that keeping it to large organisations will not capture a broad enough spectrum of the businesses that we are covering. Having said that, I recognise that this is a tidying-up exercise. With further amendments we might revisit some of the issues at a future stage, but I would be grateful if the Minister could respond to those comments.

Economic Crime and Corporate Transparency Bill

Lord Fox Excerpts

Committee stage
Tuesday 9th May 2023 Grand Committee

[Lord Alton of Liverpool (CB)]

My Lords, there has been a change of Minister since we discussed this matter last week when we had a curtain-raiser on Amendment 85, which I moved in Grand Committee. It is always good to see the noble Lord, Lord Goldsmith, in his place; indeed, he had to answer the debate initiated in this Room last week by the right reverend Prelate the Bishop of St Albans. He also had to answer the question about how sanctions can be used to deter autocrats and flag British values against the values of authoritarian regimes; we discussed that issue at some length. As one would expect, the noble Lord gave a competent and welcome reply.

I notice, however, that the Minister’s noble friend Lord Johnson is sitting alongside him—

[Lord Fox (LD)]

No, he is not.

[Lord Alton of Liverpool (CB)]

Oh, is he not? I am sorry; I had better put my spectacles back on.

[Lord Alton of Liverpool (CB)]

I apologise to the noble Lord, Lord Evans. It seems that the noble Lord, Lord Johnson, is still travelling back from Hong Kong, but I can see that the noble Lord, Lord Sharpe of Epsom, is sitting in his place. He dealt with our debate last week; no one in this Committee knows more about Hong Kong than he does, having worked there. He will recall the discussions that we had not just on that occasion but on other occasions as well.

The matter was very much on my mind when reading the reports about the visit of the noble Lord, Lord Johnson. I wondered how the imprisonment of more than 1,000 legislators and lawmakers in Hong Kong has been dealt with during that visit, not least the position of Jimmy Lai, who is a British citizen. Indeed, in this very Room, sitting at the back of our proceedings just a couple of weeks ago was Sebastian Lai, his son. I know from our subsequent discussion that he felt deeply that not enough had been done by the United Kingdom in raising the case of his imprisoned father, who might well die in prison. I hope again as I press the Minister, as I did last week, that he will be able to tell us what the response has been from James Cleverly, the Foreign Secretary, and the Prime Minister, to the requests that have been made. Mr Sebastian Lai, who is also a British citizen, and his international legal team should have the opportunity to discuss his case, the role of assets and why no one in Hong Kong has been sanctioned, whereas British parliamentarians have been sanctioned. Despite the sanctioning of the former leader of the Conservative Party Sir Iain Duncan Smith and colleagues such as the noble Baroness, Lady Kennedy of The Shaws, we nevertheless continue business as usual by promoting closer and deeper business links, as the noble Lord, Lord Johnson, has been doing in Hong Kong. How does that link to the need for us to assess the assets that are held in this country by people who have been responsible for the incarceration of pro-democracy legislators and activists, more than 1,000 of whom are currently in jails in Hong Kong?

The main purpose of the amendment that I moved last week and of Amendment 91A before us today is to concentrate on the sanctions regime that has been imposed as a result of the war in Ukraine. I pay tribute to the Government for what they have tried to do, often in exacting circumstances, after the war erupted, but when I went to see the noble Lord, Lord Sharpe, and a member of his Bill team to discuss this last week, he was very straightforward in saying that there is nothing new in Amendment 91A and that it entrenches the current situation. It could be said to be sending a signal, but legislation is about more than semaphore and sending signals. Will the Minister say what is new in this amendment that is not already on the statute book?

Britain’s sanctions regime is broken, which is why some of the players who have been involved in the appalling events in Ukraine have been getting away with murder. Brave people have been laying down their lives defending not just their own country but our shared values of democracy and freedom. From the outset, we must recognise that our sanctions have always been held back by murky layers of financial secrecy in this country, which is why we need more than what is in Amendment 91A and why I hope that the noble Lord, Lord Sharp of Epsom, in particular, will continue to engage with those who spoke in favour of the amendment that I moved last week—they included the noble Lords, Lord Coaker and Lord Leigh, my noble friend Lord Fox and the noble Baroness, Lady Altmann. I therefore hope that Amendment 85 in its fullness, or something like it, will be put in place of Amendment 91A when the Bill comes back on Report.

It feels like every week we get a new story about this oligarch putting his wealth “in the hands of his young children” or that oligarch shrouding his UK assets behind so many shell companies and opaque trusts that we simply cannot track them down. I mentioned Roman Abramovich as a particularly high-profile example. The so-called oligarch files which were leaked earlier this year revealed how he was allegedly able rapidly to move at least $4 billion of his wealth away from law enforcement by transferring the beneficial ownership of several secretive trusts to his children just before he was slapped with sanctions by the Government.

We do not need to take a much closer look at the network of professional enablers who make this type of wrongdoing possible to see what is involved. There are accountants, lawyers and bankers who wilfully subvert our sanctions regime in exchange for tainted roubles. This is all absolutely legal. We have built a financial services sector in which people have been able to play an interminable game of cat and mouse with law enforcement, where the official owner of a given asset—if we can identify who that is in the first place—can change with little more than a stroke of the pen and no questions asked. Now we are finding that those same people—oligarchs, kleptocrats, call them what you will —know the rules of this game and its loopholes better than we do.

Accepting that our existing sanctions policy is not fit for purpose is important, but right now we can and should find a way to make sure that what sanctioned Russian assets we have managed to identify and freeze are taken away from these oligarchs and put towards Ukrainian reconstruction efforts. As it stands, if the war in Ukraine were to end tomorrow, we would have little choice but to hand back £18 billion of frozen assets to their dubious owners, with no questions asked. This is the distinction between freezing and seizing. We simply cannot allow that to happen. Ukrainian schools, hospitals and homes need to be rebuilt in their thousands and scores of unexploded bombs and mines need to be cleared to do so.

The question for us is whether this amendment goes anywhere at all towards achieving that. The cost of rebuilding the country could top £1 trillion, according to recent estimates. Ukraine’s death toll is 60,000 and rising, with millions more people displaced. Under international law, Russia has to pay for the damage that it has caused, yet so far it is the British taxpayer who has forked out £2.3 billion in military support and another £220 million in humanitarian aid. Secrecy and inertia are enabling this—two main reasons why our sanctions regime is not working and why we need to do more than what is contained in this amendment.

I have sympathy with the Government. The sanctions regime relating to Russia was hastily constructed, as I suggested at the outset of my remarks, in the wake of a conflict that has shocked the world. The seizure of assets that belong to individuals is certainly a complex issue. The rule of law, due process and property rights should all be considered, as I discussed with the noble Lord, Lord Sharpe. This is exactly why the Government must not miss the opportunity in this Bill to make a difference, without violating any of these principles.

Our allies have already put wheels in motion. The European Union is looking to seize €300 billion of frozen Russian central bank reserves and €19 billion in oligarch assets that it holds, while Canada has made good progress on a law to allow the seizure of frozen assets. What study have we made of what is happening elsewhere in the world? Should we not emulate those pieces of legislation and ensure that we act in concert? If the Minister thinks that I am asking the UK Government to go it alone on these things, I can assure him that he is mistaken. I recognise that we have to do this with others, but others seem to be ahead of the game. As it currently stands, I do not feel that this amendment is the way we should proceed. I look forward to hearing what the Minister has to say in response.

[Lord Fox (LD)]

My Lords, it is always a pleasure to follow the noble Lord, Lord Alton. Briefly, I am trying to get a sense of the proportion of this amendment. The noble Lord set a high expectation bar, whereas the Minister seemed to set a low one. I think that I heard the Minister say that it clarifies something that already exists, which sounds a little like fiddling around the margins, so it would be helpful if he could explain what this does that we cannot do already and how many cases will be brought as a result of having this power that are currently impossible to prosecute. In other words, what is this actually for, how many people do we expect it to be applied to and what sort of scale of penalty does he envision would be applied? Without that context, we will all leave the Room feeling that it really is fiddling around the margins. If he could give us a sense of scope and scale, he may be able to send us away with a slightly stronger feeling about this otherwise modest amendment.

--- Later in debate ---

[Lord Goldsmith of Richmond Park (Con)]

I have said that there are “proposals”. It is something that has been proposed, but I am not sure that I can use the word “intention”. If there is a way in which those frozen assets can be used to rebuild Ukraine, it is something that the UK Government will look very seriously at—but it is not something that the UK alone will be doing.

[Lord Fox (LD)]

To make the necessary legislation, the Government would need a Bill in which to do it, and this would seem to be the Bill that is tailor made to have those discussions. Could the Minister encourage colleagues to use this Bill as the medium by which the seizure process may be made legal?

[Lord Goldsmith of Richmond Park (Con)]

I thank the noble Lord, but I do not know what the legislative mechanism would look like to make that possible. I am afraid that it is something that I am going to have to—

[Baroness Altmann (Con)]

I thank my noble friend for giving way. I realise that he is in a somewhat difficult position, but I add my encouragement to him to discuss with colleagues the possible amendments that we have laid—

[Lord Fox (LD)]

Amendment 85.

[Baroness Altmann (Con)]

Yes, Amendment 85 would allow seizure of assets with a view, one hopes, eventually to being able to use them to reconstruct Ukraine in this case, but for other purposes as well. It would be an ideal way to pave the way for this to happen.

--- Later in debate ---

[Lord Trevethin and Oaksey (CB)]

My Lords, having spoken briefly to the noble and learned Lord, Lord Garnier, who regrets that he is not able to speak to his amendment, I think I know broadly what he would have said, and I agree with him. I shall try to articulate it briefly.

The point made by the noble Lord, Lord Cookham, about inequality of arms in this area, is critical. It is very strange and troubling that there have been so few applications of this nature since the jurisdiction came into existence, and the reason, unquestionably, is that the SFO, which is responsible for deciding whether to make these applications, is understandably very wary of the cost consequences of losing.

As the noble Lord, Lord Young, said, by definition, the respondents to these applications will be well resourced. They will retain City firms whose partners charge £600, £700 or £800 an hour or more—and, in responding to the applications, which will tend to raise quite tricky points of fact and complex issues of foreign law, they will swiftly run up legal bills that extend to hundreds of thousands, even millions, of pounds. If the principle that the loser pays applies to these applications without qualification, the cost consequences of losing, from the point of view of the regulator or prosecutor, will be a considerable deterrent to making applications, even when there is obviously a good reason to do so.

The points that I am considering in these short remarks may come into focus later on this afternoon when we discuss another amendment. The reason for me making them now is that it seems to me that the information that would be yielded by the amendment in the names of the noble Lord, Lord Faulks, and the noble and learned Lord, Lord Garnier, would be of great value both to Parliament and to those who make decisions in this area in deciding how the regime needs to be restructured so that applications are made when they should be made.

[Lord Fox (LD)]

My Lords, I will speak briefly because we have heard some excellent speeches from the noble Lords opposite.

I just want to say, observationally, that we have debated a number of different groups where inequality of arms has been at the centre. When we talked about SLAPPs, we talked about inequality of resources. We have just talked about whistleblowing, where it is the same issue, and here we are again. In a sense, the Government are in different places with different elements of this. We need to have some sort of integrated response on how all people can be equal before the law because they can afford to do it—in other words, they can afford not to win, which is the issue here. We have our law enforcement agencies, we have perfectly innocent people going about their businesses trying to blow a whistle, and we have people who are trying to report issues publicly but are being SLAPPed. All of these important elements are being blocked through the inequality in access to the courts.

To refer back to this group of amendments, it seems to me that, if this amendment is not the answer, there must be some other answer. I look forward to the response from the noble Lord, Lord Sharpe, because it is quite clear that unexplained wealth orders have failed to deliver on whatever promise they may have had. Perhaps the Minister can explain how many of them there have been and what exactly the barrier has been, as well as what the cost per prosecution would be; that is an interesting point of view.

In the end, this is about inequality of arms. The first point here is that the Government must recognise that this is an issue; they then have to settle down and find ways of working with people who understand the law in order to eliminate that inequality. Otherwise, most of what we are talking about here will not happen.

[Lord Leigh of Hurley (Con)]

My Lords, I am prompted to rise by the words of the noble Lord, Lord Trevethin and Oaksey. I think he was referring to Amendment 106C, which we will come on to later this afternoon and which would extend the costs cap beyond UWOs. In the certainty that my noble friend the Minister will seek to ensure that Amendment 106C is agreed to, let me simply say that the amendment we are debating now, in the names of the noble Lord, Lord Faulks, and my noble and learned friend Lord Garnier, would be complementary and extremely helpful to Amendment 106C.

--- Later in debate ---

In addition to the UWO report that I have mentioned, the next iteration of the Asset Recovery Statistical Bulletin will be published on 1 September. This will provide transparency on the use of the full suite of powers at agencies’ disposal. I hope that provides reassurance to the noble Lords, Lord Coaker and Lord Faulks, and my noble friend Lord Young, and I therefore kindly ask them not to press their amendment.

[Lord Fox (LD)]

The Minister set out some interesting statistics. It is clear that UWOs have been accountable for a very small proportion of the total amount of money recovered. The Minister referred to them as a powerful tool. Is he satisfied that UWOs are reaching their potential, in which case we would conclude that they are relatively insignificant compared to the other tools in the hands of enforcement, or are UWOs failing to meet their potential and not as powerful as they could be? Clearly, they are not generating very much money compared to all the other tools available to the enforcement agencies.

[Lord Sharpe of Epsom (Con)]

I am not sure that the question is entirely valid with regard to generating money. The fact is that, since their introduction in 2017, four of these have been issued in relation to assets with a combined value of £143 million. In October 2020, property worth an estimated £10 million was recovered, following the use of a UWO, as I have already said. As for whether the scheme is succeeding or failing, it is not for me to say. I am unable to do so, because I do not have access to the operational decision-making that goes into issuing them, and so on. These are operational matters.

[Lord Fox (LD)]

I accept that it is not for the Minister to say; who does say whether they are succeeding or failing?

[Lord Sharpe of Epsom (Con)]

I have already said that we will publish a number of reports on this on 1 September, so I would hope for some more clarity then, but I shall endeavour to find out more information and report back to the noble Lord.

--- Later in debate ---

Moved by

[Lord Fox]

102: After Clause 187, insert the following new Clause—
“Home Office review of the Tier 1 (Investor) visa scheme: publication
Within a day of the day on which this Act is passed, the Secretary of State must publish in full the findings of the Home Office review of the Tier 1 (Investor) visa scheme which relate to economic crime.”Member’s explanatory statement
This amendment would require the Home Office to publish findings of their review of the Tier 1 (Investor) visa scheme.

[Lord Fox (LD)]

My Lords, this is a mixed set of amendments. I do not think that we will debate the philosophy of what a fact is, although we may come back to that in a few minutes. I rise to move Amendment 102 on behalf of my noble friend Lord Wallace and to speak to both an amendment in my name and a series of amendments in the name of the noble Lord, Lord Coaker.

Amendment 102 refers to tier 1 investor visas, otherwise known as golden visas. As I am sure the Minister will jump up and tell me, the scheme was closed relatively recently, but that is not the point of this amendment. We know that the scheme allowed individuals with a high net worth into the UK through the investment of large sums. We also know that, during its operation, it became increasingly clear that there was abuse, or the possibility of abuse. Visa beneficiaries under the scheme largely came from Russia, former USSR states and China, more so than from any other third country. It must have been clear to the Home Office and others that the sources of the wealth of many of these applicants were dubious at best.

The scheme was closed in February 2022. When it closed, the Government promised a review into so-called golden visas, because they were clearly an issue and something that needed to be reviewed so that we could find out what went wrong and ensure that future decisions did not make similar mistakes. It was, therefore, an object of some despair when, instead of publishing the findings of the review in full, the Home Secretary published a Written Statement in January this year with a summary of the review’s findings. The Statement told us what we already knew, in fact, but not much more. The scheme had been used by individuals who were, to quote the Statement,

“at high risk of having obtained wealth through corruption or other illicit financial activity, and/or being engaged in serious and organised crime”.

It also told us that this concerned a

“small minority of individuals”

who had obtained visas under the tier 1 investor route but gave no indication of the actual figures on where a risk had been identified. More than 6,000 visa holders were reviewed. What is a “small minority” of 6,000? How many were at risk?

We also know that 10 oligarchs who had been sanctioned as part of the response to Russian aggression in Ukraine used this scheme. How many more applicants with ties to Putin have been given visas that allowed them to embed themselves in the UK economy and UK society? Are any still in the UK? If so, have they gone through the process of acquiring citizenship? The Statement answered none of these questions.

This amendment would require the findings of the review, where they relate to economic crime, to be published in full. It is a review of a scheme that, according to the Home Office, attracted a disproportionate number of applicants from the countries identified as being particularly relevant to cross-border money-laundering risks faced and posed by the UK. As I said, the scheme benefited Russian and Chinese oligarchs above all. Key questions remain unanswered. Parliament needs to know what went wrong so that we can hold the Government to account in future. We are entitled to know more about what the Home Office conducted in this review and the impetus that it gave to various other elements of what we are seeing now. In other words, has anything learned from the review seen its way into the legislation that we are now talking about? If not, why not?

The refusal to publish either this report or the fuller details of Russian penetration into British politics, which the ISC recommended should be published, makes it difficult not to conclude that the Conservative Government have some significant and embarrassing issues to hide, most probably around donations to the party. If the Minister has nothing to hide, I am sure that he will be able to announce the publication of these reports.

As I said, I also want to speak to Amendment 104 in my name, which has, to some extent, a similar motive to the three amendments proposed by the noble Lord, Lord Coaker. Without putting words in the noble Lord’s mouth, I suspect that, like me, he is an enforcement sceptic. He is sceptical not about the need for enforcement but that sufficient enforcement will support the legislation we have spent all this time debating. My amendment is one way of trying to expose the resources and the effect that they are having. I am sure that the Minister will step forward and tell us that the NCA publishes an annual plan but Amendment 104, particularly subsection (3) of its proposed new clause, sets out a rather different set of things that we would need to know but which are not currently included in the annual plan published by the NCA.

I am quite happy to support other ways of doing this, which the noble Lord, Lord Coaker, is probing, but, at the heart of this, Parliament needs to know how effective enforcement is and that the primary agency running the enforcement process has the resources it needs in order to meet the challenges that it faces. Those challenges are getting bigger, harder and more sophisticated every day. This is one way of exposing whether the resources are sufficient and what Parliament needs to worry about in future in terms of delivering support to agencies so that they can actually enforce these things. I beg to move.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I have attached my name to Amendment 102 in the name of the noble Lord, Lord Wallace of Saltaire. I begin by quoting the noble Lord, Lord Evans of Weardale, who chairs of the Committee on Standards in Public Life. Speaking in this Room last year, he said that

“we have clearly, as a matter of policy, turned a blind eye to the perpetrators of corruption overseas using London for business or leisure purposes”.—[Official Report, 13/10/22; col. GC 156.]

The golden visa scheme was clearly a significant part of that issue, as highlighted by the noble Lord.

I begin by paying great tribute to the noble Lord, Lord Wallace of Saltaire, who has been an absolute terrier—no, that sounds too small. A bulldog is better.

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[Lord Sharpe of Epsom (Con)]

I would say that it is the same thing; perhaps we can debate that as well.

The Serious Fraud Office investigates and prosecutes the most complex cases of fraud, bribery and corruption. That is a very challenging remit. It has delivered some outstanding outcomes. For example, last year, it secured the conviction of Glencore for bribery and corruption in five countries, with the company ordered to pay £280 million—the highest ever ordered in a corporate criminal conviction in the UK—as well as eight convictions for five cases of fraud and bribery worth more than £500 million. It consistently recovers some of the largest amounts of proceeds of crime, despite being a fraction of the size of many other national agencies.

It is also important to note the SFO’s role in fighting economic crime globally. In the last financial year, the SFO took steps to assist overseas jurisdictions in their investigations by working on more than 60 incoming money-laundering requests. I think that the statistics answer the question—yes, we have faith, and yes, it is working. I hope that my explanations have provided some reassurance. I therefore ask the noble Lord not to press his amendment.

I turn to the final amendment in this group, Amendment 106EA, again tabled by the noble Lord, Lord Coaker. I come to this amendment last as it seeks to bring into one amendment much of what the other amendments in this group also attempt. I will not repeat myself too much here, especially considering how long I have gone on so far. The amendment would require the Government to issue a report on the performance of agencies and departments in tackling economic crime. However, I can assure noble Lords that this is already being done. As I have mentioned, the Government, regulators and law enforcement already regularly give evidence to parliamentary committees. The National Crime Agency is required under the Crime and Courts Act to publish an annual report and lay it before Parliament, further adding to the available scrutiny of operational bodies. The Government already conduct a range of threat and risk assessments to develop our understanding of economic crime. The NCA’s national strategic assessment assesses the economic crime threats facing the UK on an annual basis. As required under the money-laundering regulations, the UK also conducts periodic national risk assessments of money laundering and terrorist financing, which provide an overview of the risks and likelihood of an activity occurring. We have already discussed in detail the establishment of a fund to tackle economic crime so I will not repeat that debate again.

Regarding the amendment’s calls for a strategy on tackling economic crime, this March, the Government published Economic Crime Plan 2. Through 43 actions, it sets out how the public and private sectors will work together to transform the UK’s response to economic crime. Obviously, the fraud strategy is a part of that overarching economic crime strategy.

As regards the quality of the data in the fraud strategy, which was referenced by the noble Lord, Lord Browne, I have just had a quick flick through and it is more recent than six years. I should also reassure the noble Lord that one of the commitments in the fraud strategy is to improve the quality and collection of data, so this can be regarded as a baseline.

There are numerous ways in which the Government report on their performance with regard to tackling economic crime. This amendment is duplicative of them and therefore unnecessary. I ask the noble Lord to withdraw his amendment.

[Lord Fox (LD)]

My Lords, we are indebted to the noble Lord, Lord Coaker, for his amendments because they have inspired an interesting debate. The Minister has made a spirited defence of the Government’s position on this issue, but the very fact that these questions are being asked—and by a lot of people, not just the people in this Room—indicates that there is a lot of work for the Government to do in order to placate, explain or perhaps improve what is going on out there. The key element, which was highlighted earlier, is the alphabet soup of different agencies all interlinking in what is going on. The Minister has made a big effort in trying to calm nerves but I do not think that those nerves are calmed. Although the amendments will undoubtedly be not be moved, there is work to do; hopefully, the Minister has got that message from the nature of this debate.

I refer back to Amendment 102. Clearly, it ruffled some feathers. I note that in 2022 it was the Conservative Government who saw fit to withdraw this scheme because they felt that there were serious issues. We know that of the 6,000 such issues, a minority were problematic, but we still do not know exactly how many. I want to address the point made by the noble Lord, Lord Leigh that there is some use to encourage inward investment. This scheme clearly went off the rails, but by publishing the report properly, we would know how to encourage it without causing the issues that the Government clearly felt were sufficient to close the scheme. I am comfortable that I was not overstating the problem. The problem was there and the Government identified it, but now we have an issue in that we do not know the full scope of the problem.

In his response on party finance, the Minister referred to national security. The fact that there are issues is well covered. The Minister should know—I am sure that he does—that amendments to the National Security Bill that sought to enhance the scrutiny of the source of political donations have been thrown out by the Commons, so some of the things that the Minister said are not strictly there. There is still an issue between this House and the Commons when it comes to the National Security Bill and party funding, and it remains ongoing. I think that was the issue that my noble friend was anxious to state.

On the subject of the report and the reference to party funding, I remind noble Lords that I said that it makes it difficult not to conclude that there are embarrassing issues to hide because the report was not published. If there is no problem, as I am sure noble Lords believe, there is no reason not to publish the report. It is the non-publishing of the report that causes suspicion. That is the point that I was trying to make.

With that, I beg leave to withdraw Amendment 102.

Amendment 102 withdrawn.

Economic Crime and Corporate Transparency

Lord Fox Excerpts

Committee stage
Thursday 27th April 2023 Grand Committee

Moved by

[Lord Fox]

84AA: After Clause 180, in subsection (1), leave out “which is a large organisation”
Member’s explanatory statement
This amendment, along with consequential amendments to Amendment 84C, would extend the Government’s failure to prevent offence to all relevant organisations regardless of size. Instead of allowing the Government to amend or remove the applicability to large organisations, these amendments would apply the offence to all organisations by default, with the Government able to restrict it to large organisations by affirmative resolution.

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[Lord Fox (LD)]

My Lords, I rise to speak to the amendments in my name. As the Minister has set out, amendments were brought forward in the other place on Report by Sir Robert Buckland and Sir Bob Neill. The Government undertook to produce their own amendments, which they have indeed done. We should recognise that these amendments, on failure to prevent fraud, are a positive move forward, but they are overdue. Without sounding too churlish, had this offence been in place at the time of the financial crisis, the authorities could have had effective prosecutions during, for example, the Libor and Euribor scandals. So, good news, but there are some qualifications, as set out in my amendments.

The government amendments have a considerably reduced scope in limiting it to large businesses, which was certainly not the intention of the Buckland/Neill process in the other place. As we have heard, there is an exemption for small and medium-sized businesses, but it does not address the fact that SMEs are just as much, if not more, at risk of fraud as big companies. It is just as important to encourage them to have the right procedures in place as it is large companies.

Hence my Amendments 84CA, 84CB and 84CC. Together, they seek to amend the Government’s amendments, extending their failure to prevent offence to all relevant organisations regardless of size. Instead of allowing the Government to amend or remove the applicability to large organisations, these amendments would apply the offence to all organisations by default. However, the Government would be able to restrict it to large organisations by a subsequent affirmative resolution, if experience required them to do so.

The Minister said that small and medium-sized enterprises had been excluded to avoid a disproportionate burden on them. It would be useful for him to explain on what basis that assessment has been made and what evidence there is to support that. We have not seen it, so it would be very useful to know. In my view and that of others, the carve-out for SMEs is short-sighted and unnecessary. The Law Commission did not accept arguments for thresholds to apply to failure to prevent offences in its June 2022 options paper and the House of Lords rejected exemptions for SMEs when scrutinising the Bribery Act 2010. SMEs are not excluded from AML or the National Security and Investment Act, so why have the Government taken this view in this case?

There is also concern that this amendment is limited to offences that take place in the UK or have UK victims. If the offence takes place abroad, in cases where a UK company has failed to prevent fraud and there are no UK victims, UK enforcement agencies would have no grounds to pursue the corporate body. This lack of extraterritoriality is not present in already existing FTP, bribery and tax evasion offences. It is unclear why the Government are creating such inconsistencies in the corporate criminal liability framework. Why have they made this carve-out? There is a lot of expertise waiting to speak on this group, so I will stand aside, except to say that I strongly support Amendments 96, 97, 98, 99, 100 and 101.

[Lord Garnier (Con)]

My Lords, I thank my noble friend Lord Sharpe for the courtesy he has shown to me and other noble Lords in holding meetings, along with his officials, to explain the Government’s case on failure to prevent and the adjustment of the law of corporate liability. It has been very helpful to have some understanding of where they are coming from and where they intend to go. It is fair to say that he was more forthcoming in those meetings than he was in providing an explanation for the SME carve-out this afternoon. I thank not only him but the noble Lord, Lord Fox, for tabling his amendments, which I support, and for his mention of the amendments I have tabled.

The amendments that I have tabled are exactly the same, almost to the semicolon, as amendments that I have tabled not only in this Parliament, since the 2019 general election, to Bills dealing with economic and financial crime, but also to Bills that I spoke to when a Member of the other place. I have taken an interest in how we deal with economic crime since I became the Solicitor-General in 2010. I appreciate that that was a long time ago and that my noble friend the Minister probably did not have a particular interest in the subject all that time ago. None the less, I appreciate that many will find what I have to say unoriginal, not least because I have said it so many times before but also because it aligns with what others on all sides of the House and in both Houses have been advocating for some little while.

I will first deal with the SME carve-out, which is provided for in one of the government amendments. I suppose it is fair to say that half a loaf is better than no loaf and that a bird in the hand is better than two in the bush. However, after nearly 15 years, following the banking crash of 2008-09, the subject of economic crime and corporate misfeasance has been if not on the top of everyone’s agenda every day then certainly close to it. For the Government to come up with a carve-out in the way that they have—bear in mind that we are only talking about failure to prevent fraud at the moment—is disappointing.

What we are here required to understand by Amendment 84C, proposed by the Government, is that if a company or business has a turnover of less than £36 million, has a balance sheet total of less than £18 million and has fewer than 250 employees, it should not be caught by the failure to prevent fraud.

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[Lord Sharpe of Epsom (Con)]

I thank the noble Lord for that information; I will come back on that.

[Lord Fox (LD)]

Will the Minister go and count them again?

[Lord Sharpe of Epsom (Con)]

Absolutely; I shall get my abacus out. I turn to Amendment 101 on senior managers’ liability for failing to prevent economic crime, also tabled by my noble and learned friend Lord Garnier.

I agree that it is important that individuals, particularly the most senior ones, do not go unpunished for their involvement in committing economic crimes. Prosecutors already have a range of powers at their disposal to pursue decision-makers who enable or commit criminal offences in a corporate setting. This includes the power to prosecute individuals for substantive offending. For example, last year an individual was jailed for 12 years following a Serious Fraud Office investigation into a £226 million fraud.

Additional powers also exist which enable senior managers and directors to be prosecuted where they consent or connive in fraud, theft, money laundering or bribery. A director or manager who is convicted on the basis of their consent, connivance or neglect can be dealt with accordingly by the courts, including being sentenced to imprisonment. Also, under the Serious Crime Act 2007, a person, including a senior manager, is liable for encouraging or assisting the commission of a criminal offence. That includes fraud, false accounting or money laundering—the offences captured by the amendment tabled by my noble and learned friend Lord Garnier. The individual found to be encouraging or assisting the commission of the offence can be prosecuted in the same way as if they commit the offence itself.

This amendment seeks to extend liability for senior managers on a lower basis for culpability than is normally provided for. It would allow a senior manager who takes a decision to be imprisoned for taking that decision, even if the offence is the action of a rogue employee. That would place a disproportionate burden on corporations and their senior management, which is likely to deter legitimate business from seeing the UK as a fair and safe place to conduct business. This amendment is therefore not appropriate.

The noble Lord, Lord Coaker, asked about extraterritoriality. Our approach is focused on cutting crime in the UK and protecting UK victims. As he noted, the powers have sufficient extraterritorial extent to do this, even if the perpetrators or the organisation is based outside the UK. Other countries can take steps to prosecute fraud under their own law. As for the precise mechanics of how it would work, it would be on a case-by-case basis, so it is pointless to speculate.

The noble Lord also asked for more detail about guidance. As he knows, we intend to publish guidance setting out reasonable prevention procedures before the offence of failure to prevent fraud comes into force. It will give organisations clarity about what they need to do. It is important that we engage and consult the right stakeholders in this process and that we engage further with the organisations this will impact. Once the Bill has received Royal Assent, we will start engaging with law enforcement, prosecutors, relevant government departments, public sector organisations, trade associations for businesses, other organisations in scope and other experts to draft the guidance.

We anticipate that the guidance will follow similar themes to those seen in many regulatory regimes—albeit that in this case they are not requirements—and to guidance for existing failure to prevent offences. This includes regular risk assessments to establish the level and type of fraud risks to be addressed; establishing fraud controls and due diligence processes designed to prevent fraud or spot it in the early stages before the offence is carried out; leadership and training to ensure that employees implement controls and create a culture within the organisation that does not accept fraudulent practices as a route to boosting performance and profits; and monitoring and review to ensure that procedures remain effective. I am happy to hold further discussions on this subject at the noble Lord’s convenience.

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[Lord Sharpe of Epsom (Con)]

Yes, I am happy to give that reassurance.

[Lord Fox (LD)]

My Lords, I think I was right at the very beginning not to speak for long on this set of amendments. Your Lordships filled in for me very adequately and expertly.

The Minister came back with a couple of points that I want to refer to. He explained that aspects of the amendments from the noble and learned Lord, Lord Garnier, were not necessary because there would be duplication. It would be helpful for us to understand that duplication. Perhaps between now and Report he could provide a list of all the prosecutions that have happened with the existing legislation, proving that the new legislation would not be necessary, so that we can understand that his point is correct.

He also talked about the chilling effect on small companies. This legislation is designed to chill fraud. Taking up the challenge set by the noble Lord, Lord Leigh, about his perfectly innocent sweet shop, legislation that excludes that sweet shop will also exclude all the other small companies that are perpetrating fraud. The skill is in the proportionate application of this legislation. To pick up the point made by the noble Lord, Lord Coaker, it is also about the proportionate advice that is being given. Not all companies are getting the same level of advice on how they should approach this legislation. There is no one-size-fits-all approach, as my noble friend Lady Bowles said.

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[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a great pleasure to follow that powerful, comprehensive and, I think, highly persuasive speech from the noble Lord, Lord Alton. I will be extremely brief but, given there was not space to attach my name to this amendment, I wanted to briefly offer Green support. I hardly need to declare my position as co-chair of the All-Party Parliamentary Group on Hong Kong, as the noble Lord, Lord Alton, has already done that, but I will do so for the record.

I just want to make two points. I am perhaps slightly less optimistic than the noble Lord, Lord Alton, who said that if we create this law, the sanctioned individuals will declare. However, this amendment would create a weapon to use against them when they do not. So I would perhaps frame that slightly differently. This really relates to the debate on the previous day in Committee when we talked about SLAPPs. We know the limitations—we have just been discussing the limitations of the resourcing and capacity of our enforcement vehicles. It will likely very often be NGOs and journalists who expose this, but if we bring in the anti-SLAPP rules and this rule, we will see the seizures actually happening and the Bill being effective.

Secondly, through this Bill we are aiming—as we aimed with the previous economic crime Bill—to close lots of loopholes. I assume, however, that not even the Minister will say that, once we have done all this, everything will be fixed and we will not have any future problems. As evidence for that, in August last year the register of overseas entities came in and yet the figures show that little more than half the relevant properties owned by overseas companies have been declared.

We in this Committee are looking at making a difference not just in theory but in practice, and that is what this amendment would do.

[Lord Fox (LD)]

My Lords, it is a great pleasure to support the noble Lord, Lord Alton, on this amendment. I have supported him on a number of amendments in other areas, and I have learned not to do too much research because however much you have done, he will have said it by the time you get the chance to say it.

The Government have recognised the importance of asset seizure. Back in the heady days of March 2022, the then Exchequer Secretary to the Treasury, James Cartlidge—he has of course moved on since then—said that the Government were looking at

“how we can go further to crack down on illicit money in British property, including considering temporary asset seizures beyond the freezing regime that we already have in place”.—[Official Report, Commons, 22/3/22; col. 147.]

However, that is not an easy task, and this is a bit more than closing a few loopholes. Many experts have flagged risks relating to seizing assets—I am sure that the Minister will remind us of that when we come to it—particularly without the necessary proof of criminality. For assets belonging to individual oligarchs, concerns have been raised over the rule of law, due process and property rights. In the case of state assets, objections include sovereign immunity—something that I think I mentioned in a previous debate—and the fear that other states may withdraw their reserves. This is a big issue, as the noble Lord, Lord Alton, mentioned. When we focus on the Russian sanctions, for example, we see that the UK has frozen billions of pounds of Russian assets under the sanctions following the invasion of Ukraine. The Office of Financial Sanctions Implementation—OFSI—has reported that £18 billion owned by individuals and entities associated with Russia’s regime has been frozen since the beginning of that war. Some estimates suggest that more than £40 billion could be frozen or immobilised if further sanctions were put in place.

However, assets frozen under sanctions are passive. Funds frozen under the UK sanctions regime cannot be retrieved or repurposed. In fact, these should be returned at the end of the war if sanctions are lifted. Meanwhile, as the noble Lord, Lord Alton, pointed out, the UK is asking the taxpayer to fund the war effort and, no doubt, the repair of Ukraine if and when we get to that point. So, there is quite a lot at stake.

Amendment 85 is a way of trying to do this and cut through the complication relatively simply and ingeniously —for which I claim no credit. It seeks to strengthen the UK sanctions regime and find a route that allows us to recover these frozen assets, which have been concealed in the past. As we have heard, the mechanism we propose would impose a duty on sanctioned persons proactively to disclose all their assets held in the UK and criminalise the failure to disclose such assets as a form of sanctions evasion.

If a sanctioned person fails to declare all their assets and further assets are uncovered by the authorities, they are guilty of a criminal offence—sanctions evasion. Those undisclosed assets may then be seized under the Proceeds of Crime Act 2002. This seizure would be subject to the same safeguards that courts currently uphold in criminal and civil recovery processes, following due process and ensuring that any deprivation of private property is not disproportionate to the public interest in seizing the proceeds of crime.

Given that sanctions evasion is already a criminal offence in the UK, this amendment would be a straightforward way rapidly to scale up assets that may be susceptible to seizure. Adding a requirement to disclose all assets held within six months prior to designation would also capture assets such as those set out by the noble Lord, Lord Alton. It is for these reasons that we support this amendment.

[Lord Coaker (Lab)]

My Lords, I rise briefly to support Amendment 85 from the noble Lord, Lord Alton, to which I have added my name, and to support the comments of the noble Lord, Lord Fox, and the noble Baroness, Lady Bennett.

As my noble friend Lord Ponsonby said, the question for the Government concerns giving teeth to the sanctions regime in respect to designated individuals. If it is not dealt with like this, what do the Government propose to do? There is clearly a gap, sanctioned individuals are finding ways around the law and we are not able to confiscate or seize the assets we want to seize. Criminalising a failure to disclose as a form of sanctions evasion, so that those assets can be seized, as referred to by the noble Lord, Lord Alton, is a very important step forward. Although this is just one amendment, Amendment 85 is really important.

As I said, if the Government do not believe that this amendment is appropriate, what are we going to do about the situations and individuals the noble Lord, Lord Alton, spoke about, and the huge sums of money, which are beyond the scope of the British state to collect from individuals? We all think we should be able to do something about that.

Just so the noble Lord does not feel on his own in being sanctioned, I am sanctioned as well, so we are in good company, as is the noble Lord, Lord Faulks. We could have a sanctions party here.

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[Baroness Bowles of Berkhamsted (LD)]

My Lords, the amendments in this group were inspired by the work of what we call in shorthand the Fraud Act review committee, chaired by the noble Baroness, Lady Morgan. Several members of the Committee were also on that Select Committee. At Second Reading, several of us spoke ahead of the noble Baroness and stole her thunder, so I am going to—

[Lord Fox (LD)]

Do the same again.

[Baroness Bowles of Berkhamsted (LD)]

In order not to do the same again, I will concentrate mainly on the mechanics of this first amendment, which is a regulatory failure to prevent amendment. Both amendments in the group are targeted at the same issue—that is, enablers or suppliers of services where the perpetrators, the fraudsters, as has already been explained in the earlier group by the noble Baroness, Lady Morgan, are not associated with the company. Largely, they will be customers, so they fall outside many of the provisions of the failure to prevent regime, as has already been discussed.

In the Select Committee, as well as recommending a failure to prevent criminal regime, we saw the benefit of regulators having powers to intervene, and we broadly favoured there being a comparable regulatory failure to prevent regime. We did not actually say that it was a recommendation because, at that stage, from the evidence that we had heard, we were led to believe—I think this is clear in the report—that the Online Safety Bill might provide a similar result. It is now clear that that is not the case, certainly not with regard to the telecoms operators, so I have tabled this amendment. My amendment has been put in what I call a “sunrise” form where the detail comes from the statutory instruments, which would enable the Government to do the right kind of consultation and specifically tailor the regimes. It could also be done in the light of deferring to whatever happens in all the relevant Bills presently going through, because there are aspects covered in the Financial Services and Markets Bill and the Online Safety Bill as well as this one.

The issue that we are aiming to cover is where the services provided by others are used for fraud, not in active participation by the service provider but in the passive sense, and they are not intervening even when they know that their services are being abused. Email, phone and text scams are the notable examples. While banks have been on the front line of defending against scams and are paying compensation where people have been tricked into transferring money—which is also now being legislated for—it is fair to say that we on the Select Committee were shocked by the complacency of the telecoms companies in particular. We were not convinced that enough, or indeed anything, was really being done. It seemed to be deliberate negligence; there is no other way to explain it.

My amendments would enable the Government to confer on regulators a duty and a power relating to failure to prevent and failure to prevent facilitation of fraud. I am sure that the Minister will say that regulators generally have powers concerning fraud in their sectors already; the Law Commission’s report referenced the case of sewage discharges and Southern Water. However, fraud is not generally stated in regulators’ headline duties. For example, it does not appear in the objectives or principles of the Financial Conduct Authority, which claimed in the instances of fraud around the RBS Global Restructuring Group to be powerless to intervene, although fraud was pretty clear, because business lending was outside the scope of the regulatory envelope.