Economic Crime and Corporate Transparency Bill

Debate between Lord Sharpe of Epsom and Baroness Blake of Leeds

Report stage
Tuesday 27th June 2023 Lords Chamber

[Baroness Blake of Leeds (Lab)]

My Lords, I start by acknowledging the great progress that has been made on the failure to prevent process through the debates in the House of Commons. There was significant movement there, which we of course welcome.

I say at the outset that if the noble and learned Lord, Lord Garnier, is minded to divide the House on Amendments 110 and 125A, he will have the support of these Benches. There are very good reasons for that, as have been outlined in the debate today. The statistics, particularly the 0.5% figure, are startling. Surely, we all need to take this incredibly seriously if, as the noble Baroness, Lady Morgan, said, we are serious about tackling the wider fraud issues, which seem to be growing daily. The numbers of people we all know personally who are affected by this shows the sheer extent of the problem.

I will make the very strong point that the issue of costs and burdens on SMEs has been overemphasised. If these processes are tightened in the way proposed, those very businesses will themselves be protected by the action taken on other companies. In particular, I completely support the extension to the money laundering provision in Amendment 125A.

We have had a really good debate throughout our proceedings on these measures. It would be so disappointing if, at this final stage, we did not go the full distance we can at this point, recognising, as we know, that more will need to be done in the future. We have the opportunity now and we should seize it.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank all noble Lords for their contributions to today’s debate on corporate criminal liability and for their continued engagement on this subject. These conversations have been robust and constructive and have helped the Government immensely in the development of the clauses —developed, I say to the noble Lord, Lord Vaux, without any reluctance at all.

I turn to Amendments 135 and 125G on senior manager liability, tabled by my noble and learned friend Lord Garnier. As he has noted, senior managers hold a higher level of responsibility than ordinary employees in conducting business because they take important decisions on the corporate policy, strategy and operation of the company. The extension of the identification doctrine to senior management in Amendment 104, which I spoke to previously, recognises this. To reflect the heightened responsibility of a senior manager in the actions of a corporation, powers are available already to prosecutors to hold a senior manager liable where a company conducts an economic crime offence.

Under the fraud, theft and bribery Acts and the money laundering regulations 2017, senior officers, including managers, are liable if they consent to or connive in fraud, theft, bribery or money laundering regulatory breaches. This extends as far as the senior manager knowingly turning a blind eye to offending, extending beyond the usual law on accessory liability for other crimes. If a senior manager is guilty of the offence and liable, they can be proceeded against and punished accordingly, including by imprisonment.

Additionally, in the regulatory space, the senior managers and certification regime is in place to improve good corporate behaviour and compliance in the sectors regulated by the Financial Conduct Authority and Prudential Regulation Authority, placing specific requirements on senior managers to encourage positive corporate behaviour.

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[Baroness Blake of Leeds (Lab)]

Amendment 128 in the name of my noble friend Lord Coaker has a straightforward, clear ask: within a year of the Bill passing, the Secretary of State must publish a report on economic crime and investigation. It must include the performance of the framework for investigating crime, et cetera, and an assessment of the roles of the Serious Fraud Office in particular. Important elements mentioned in the amendment include the adequate resourcing of staff and the strategy for fees, which we have discussed elsewhere.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank the noble Baroness, Lady Blake, for speaking to the amendment in the name of the noble Lord, Lord Coaker, and my noble friend Lord Agnew of Oulton for his amendment. These amendments seek to add further parliamentary scrutiny on economic crime matters.

However, I have been clear throughout the previous debates on this topic that it is the Government’s view that there is already more than sufficient external scrutiny in the areas outlined by the noble Lords. These amendments are therefore duplicative, and if accepted would lead to agencies and government departments being caught in resource-intensive reporting requirements that would have no real benefit to parliamentarians, detracting from their core roles of tackling economic crime. I have noted what my noble friend has said, and the Government are of course more than committed to doing the things he suggests.

Amendment 128 in the name of the noble Lord, Lord Coaker, would require the Government to issue a report on the performance of agencies and departments in tackling economic crime. I am aware of the strength of his feeling on the resourcing, performance and co-ordination of operational agencies. I hope that the sessions we have facilitated for him with Companies House and the Serious Fraud Office will have gone some way to reassuring him on this.

I can also reassure him and the House that the Government are ensuring that the response to economic crime has the necessary funding. The combination of 2021’s spending review settlement and private sector contributions through the new economic crime levy will provide funding of £400 million over the spending review period. The levy applies to the AML-regulated sector and will fund new or uplifted activity to tackle money laundering, starting from 2023-24.

In addition, a proportion of assets recovered under the Proceeds of Crime Act 2002 are already reinvested in economic crime capability. Under the asset recovery incentivisation scheme—ARIS—receipts paid into the Home Office are split 50:50 between central government and operational partners, based on their relative contribution to delivering receipts. In 2021-22 this resulted in £142 million being redistributed to POCA agencies. That should provide the necessary reassurance on resourcing and funding. Given what I hope to have shown is a significant amount of reporting, external scrutiny and indeed funding and resource, I ask the noble Baroness, on behalf of the noble Lord, Lord Coaker, not to press Amendment 128.

Economic Crime and Corporate Transparency Bill

Debate between Lord Sharpe of Epsom and Baroness Blake of Leeds

Committee stage
Thursday 11th May 2023 Grand Committee

[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.

[Lord Sharpe of Epsom (Con)]

I thank noble Lords for their brief comments. In answer to the noble Lord, Lord Fox, about when the powers in the Bill will be brought into force, obviously I speak with authority only for the Home Office measures in the Bill. Certain measures in the Bill that are necessary to issue codes of practice will come into force on the day of Royal Assent, as will some of the money laundering reporting measures that we discussed previously in Committee. It is our intention for some of the remaining measures to be brought into force in autumn. This is subject to obtaining Royal Assent before summer.

The operalisation of these powers is a priority for the Government and our law enforcement partners. That is why we have taken steps to provide pre-commencement consultation for a number of measures in the Bill, to facilitate it coming into force as early as practically possible.

Some of the Companies House reforms will require consequential changes, including secondary legislation and guidance. Certain reforms, such as identity verification, will also require system development following Royal Assent. Some changes will be implemented almost immediately but others will take longer. We cannot commit to precise dates at present but work on implementing the measures is already under way at Companies House. Companies House is an executive agency of the Department for Business and Trade and there are various governance mechanisms to hold the agency to account on those reforms.

As I mentioned previously, these amendments are technical. They are designed to ensure that the Bill is effective and to make changes following amendments debated previously in Committee.

Before I wind up, I thank all noble Lords for their participation in the Committee, in particular the Front Benches. It has been a lively, extremely interesting and well-informed Committee. It will certainly improve the Bill over the course of its passage through Parliament. I thank my officials for the constructive spirit in which they have engaged with all interested Peers. From a personal point of view, I also thank them for guiding me through some fairly tricky questions. I hope that noble Lords are satisfied with the amendments.

[Baroness Blake of Leeds (Lab)]

My Lords, I asked—

[Lord Sharpe of Epsom (Con)]

My profuse apologies to the noble Baroness, Lady Blake. I am assured that all discussions have taken place with the devolved Administrations and that they are all content with it.