Queen’s Speech

Lord Londesborough Excerpts

Monday 16th May 2022 Lords Chamber

[Lord Londesborough (CB)]

My Lords, the spectre of stagflation is a stark reminder of the need to generate real economic growth, especially in challenging times. This, of course, is the only way to finance government spending in the long term so, as I listened to the Queen’s Speech last week, I was looking out for a coherent economic strategy to underpin the very first line of the Address—

“Her Majesty’s Government’s priority is to grow and strengthen the economy”—


but, amid the sea of 38 Bills in the new parliamentary programme, I am afraid that I struggled to detect such a strategy.

The Prime Minister’s call “to turbocharge the economy” is rather hollow without a fully firing economic engine. Indeed, it has echoes of the much-vaunted “oven-ready” Brexit deal which, it turned out, lacked some very basic ingredients or, some might say, a functioning oven.

As the noble Baroness, Lady Kramer, pointed out, to boost living standards in real terms, we need sustained growth in productivity—something we have not seen in more than 10 years. Since 2010, the UK’s productivity as measured by GDP output per hour has grown by just 4%, according to the OECD. Let us put this in context. France saw an 8% gain in productivity over the same period, Germany almost 10%, the US more than 10%. Current UK productivity lags both France and the US by a deeply troubling 15%.

I ask the Minister what lessons, if any, the Government are drawing from other countries and how that might inform their policy in such a crucial area. We must urgently solve the productivity puzzle, not just to generate real economic growth at home but for global Britain to compete effectively in world markets. Our current exports are down by almost 20% on pre-pandemic levels. In business, which is my background, we are taught to turn threat into opportunity. Although the recent slide of sterling against the dollar will add to imported inflation, it makes British exports that much more competitive in Asia, the Middle East and the Americas. We need to seize such opportunities.

Above all, we need a more qualitative approach to economic strategy. The Prime Minister says,

“jobs, jobs, jobs is the answer.”

Aside from his questionable syntax, I fear that he misses the point. The UK economy has generated plenty of jobs—unemployment sits at just 3.8%—but it is delivering low growth and record trade deficits.

Ask employers: they will tell you that there is little point in creating more jobs if you cannot fill existing vacancies. There is an acute shortage of both skilled and unskilled labour across the country, and that is damaging economic growth. By improving the productivity of our workforce, pay rises are earned and reflect increased output, rather than being inflationary. Yes, many factors impact productivity, including business investment—which, in the UK, has fallen to critical levels—infrastructure, technology, education and training and, now, working from home, but that is why you need a joined-up approach, a coherent strategy.

I have time to touch on only one of these factors, which is education: educating and training our workforce of the future. Back in his Autumn Statement, the Chancellor told us that per-pupil funding will return to 2010 levels in real terms by 2024, so we are talking about 14 years to return to where we were in 2010. Over this period, public spending on health will have increased by over 40%, compared with a nominal 2% for education. That is not investing in our future. We should take a leaf from the private sector, which lives or dies on productivity, profit and loss, return on investment and, above all, competition. Government policy should align itself far more closely with those factors in order to generate real and sustainable economic growth.

Economic Crime (Transparency and Enforcement) Bill

Lord Londesborough Excerpts

2nd reading
Wednesday 9th March 2022 Lords Chamber

[Lord Londesborough (CB)]

My Lords, as we know, Russia’s invasion of Ukraine has triggered the fast-tracking of this Bill to address the burgeoning and multifaceted industry of economic crime. If this Bill is viewed as a quick fix to address the UK’s shameful and enabling embrace of corrupt oligarchs, we should note that the so-called London laundromat has also been exploited by kleptocrats across a wide range of nationalities, not just Russians.

The British sense of fair play is an expression we hear less of these days. That is not hard to understand when you read the Treasury Select Committee’s somewhat embarrassing but honest sizing up of economic crime in the UK:

“It seems that it can reasonably be said to run into the tens of billions of pounds, and probably the hundreds of billions.”


The actual cost to the UK economy of serious and organised economic crime is conservatively estimated at £37 billion per year. That is more than three times the expected increase in revenues generated by the new rise in national insurance contributions.

Given the urgency, this Bill is necessarily narrow in scope, with a focus on the registration of overseas entities and land and property ownership. However, as we know, UK service firms and their clients have been involved in a whole range of enabling activities across numerous sectors, including banking, private company investment, consulting and advisory services, estate agency, sportswashing and lifestyle management.

This Bill seeks to address the troubling issue of unexplained wealth given that we have become a magnet for rich businessmen from poor countries with abnormal levels of wealth. I include Russia as a poor country; last year, its GDP per capita was just over $11,000 and it was ranked 85th in the world. This year, it is likely to fall below 100th, yet it boasts 117 billionaires; that is the fifth-highest number in the world. My point is that you do not need to be a forensic economist to spot unexplained wealth.

I witnessed this at first hand 15 years ago. A Russian media company launched an unsolicited takeover offer for an information business that I was running at the time. The offer was way in excess of the fair market value and the company conducted zero due diligence. We resisted after discovering that our suitor had powerful political connections in both Moscow and Beijing, and had a seemingly bottomless war chest despite never having generated a penny of profit in its history. The most unedifying site was the long line of British advisers, lawyers and accountants acting on its behalf. I see much in this Bill aimed at the sources of dirty money but little to address the enablers.

Turning to the Bill’s specifics, I have four brief points to make. First, as many noble Lords have already pointed out, shortening the transition period for overseas companies to register their beneficial owners from 18 months to six months is inadequate. I suggest that three months strikes the right balance between urgency and the important aspect of allowing bona fide beneficiaries the time to register.

Secondly, fines need to be proportionate and a deterrent. The average property transaction value for oligarchs in the UK is around £15 million, so fines of £500 or £2,500 a day are insufficient. I suggest that, for the first day of contravention, a fine of around 1% of the property value would be more appropriate.

Thirdly, I am an entrepreneur, not a lawyer, but the drafting of the overseas property legislation seems to need tightening up. I believe that individuals would still be able to hide their true identities through nominee agreements with professional service firms. Closing the “no person of significant control”, or PSC, loophole is another key priority.

Finally, as many noble Lords have pointed out, enforcing the new rules of the Bill requires proper resourcing. Our spending for national agencies fighting economic crime is around £850 million per year, set against the money laundering cost to the UK economy of perhaps as high as £100 billion. No wonder conviction rates have been so low.

This Bill is far from perfect but I will support it, mindful that the Government are planning to bring in a second economic crime Bill in the next parliamentary Session that should—indeed, must—address the many other issues of a complex and menacing industry.