Criminal Finances Bill
Margaret Hodge ExcerptsTuesday 25th October 2016
(7 years, 9 months ago)
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Mr Wallace
I will make some progress and Members will doubtless be able to make their points throughout the debate.
Many of the criminals who profit from such activities live in plain sight, untouched by law enforcement agencies. They reap the benefits by money laundering—moving, hiding and using the proceeds of their crimes to fund their lifestyles and enable further criminality. It is estimated that the annual amount of money laundered globally amounts to $1.6 trillion, while the National Crime Agency assesses that many billions of pounds are laundered into or through the UK as a result of international corruption.
We should be rightly proud of the UK’s status as a global financial centre. This is one of the best places in the world in which to do business, but we must recognise that the size of our financial sector and open economy and the attractiveness of the London property market to overseas investors make this country unusually exposed to the risks of international money laundering. That is why this Government are taking action—to combat money laundering, terrorist finance and corruption—here and overseas. We are sending a clear message that we will not stand for money laundering or the funding of terrorism through the UK.
Dame Margaret Hodge (Barking) (Lab)
I am extremely grateful to the Minister for giving way. I agree with the content of his remarks, but I wish to pursue further the issue that has been raised by the hon. Member for Belfast East (Gavin Robinson). Does the Minister agree that transparency is absolutely key to trying to tackle some of the corruption and money laundering that take place? If he does agree, why is he not using this Bill to ensure that the overseas territories and Crown dependencies, which come under our jurisdiction, publish publicly available registers of beneficial ownership?
Mr Wallace
Yes, I absolutely agree that transparency is one of the steps along the path of tackling both corruption and money laundering. That is why, at the anti-corruption summit in May, the Prime Minister basically reaffirmed that commitment. Even before that, we had worked with the overseas territories and Crown dependencies to ensure that, hopefully by the end of this year or into next year, there will be transparency, registers, of which a considerable number will be public, and automatic information exchange between our tax authorities and those of our dependencies. In that way, we will be able to have access to information about people hiding tax from us, and our law enforcement agencies will then be able to set about tackling the matter.
This Bill is part of that process. A key element of that approach will be ensuring that we work with the private sector to make the UK a more hostile place for those seeking to move, hide or use the proceeds of crime.
Dame Margaret Hodge (Barking) (Lab)
This speech represents two firsts: I am the first non-lawyer to speak from the Back Benches; and I think I am the first to acknowledge the role played both by our former Prime Minister and by the right hon. Member for Brentwood and Ongar (Sir Eric Pickles), who was the anti-corruption tsar, in providing leadership on anti-corruption. They should both be acknowledged today as their work led to what we are considering. I agree with everyone who has spoken today that the Bill is extremely important. Whether from the National Crime Agency or HMRC, the estimates of the billions of pounds that are laundered through the UK or lost to public services because HMRC is unable to collect them make this an important measure. I fear, however, that the rhetoric that many have been given to this afternoon does not reflect the reality, so I hope that the Minister will able to respond to the points that I raise.
Others have mentioned the omission of tax havens, and the failure to take action on the overseas territories and Crown dependencies, which act as key jurisdictions in support of tax evasion, tax avoidance and corruption, is a grave error. I hope that the Minister will reflect on that during the Bill’s proceedings and see whether we can introduce some amendments. The Government’s failure to mention such territories makes them complicit in facilitating the very corruption that they say they want to tackle through the Bill.
Mr Jim Cunningham (Coventry South) (Lab)
I agree with my right hon. Friend and previous speakers that, were something done about the overseas territories and Crown dependencies, that would give the Government more credibility. They have committed to report annually on tax avoidance in some of these overseas tax havens—for want of a better term. Does she agree that, if they are going to negotiate with other Governments to get them on board, they should do something about the overseas territories?
Dame Margaret Hodge
Indeed. I would also add that the Brexit provisions might also lead to increased activity through the overseas territories and tax havens, so there are several dangers.
A number of Members have mentioned the evidence that backs up the importance of the Bill, but I want to point out two or three facts that have not yet been raised. The World Bank reviewed 213 corruption cases from a 30-year period between 1980 and 2010. Shell entities were involved in 70% of them, and UK Crown dependencies and overseas territories were second after the US on the list of those who provided shell entities. That is clear evidence of the importance of the role played by the Crown dependencies and overseas territories. Do we always have to wait for another leak to understand that? We will keep on getting them—the Mossack Fonseca leaks and the Panama papers will be just one in a stream. If we look at the information we garnered from the leaks, over 200,000 corporate entities were exposed, more than half of which were registered in the British Virgin Islands. I ask the Minister to consider that.
I also came across the African Progress Panel, which found that citizens of the Democratic Republic of the Congo were deprived of some £1.35 billion—twice their health and education budgets combined—due to the sale of mining contracts to five anonymous BVI companies. Those assets were sold at about one sixth of their commercial value, enabling the secretive offshore companies to sell them on and secure profits of more than 500% of the original moneys they paid. Again, desperately needed resources were lost to the poorest countries in the world.
If we are really to tackle the corruption, evasion and avoidance that occur in jurisdictions over which we have ultimate control, we must have the transparency that a number of Members have asked for this afternoon.
Mr Wallace
I have listened carefully to what the right hon. Lady said. Will she not concede that since the lead-up to the London anti-corruption summit in May, the Crown dependencies and overseas territories have agreed to establish a central register of beneficial ownership and a data-sharing system with the UK enforcement agencies that will give us access to those data almost in real time, and that that goes a long way to meeting some of her concerns? I recognise that the Scottish National party would like this to be public as well as shared with our law enforcement agencies, but it still goes some way on this issue. On the other side, the unexplained wealth orders for politically exposed persons will allow us to grab the money should they put it in this country and live in the nice houses that they sometimes seem to live in.
Dame Margaret Hodge
In my view, and indeed the British Government’s view, publicising those registers of ownership is crucial. We decided to do that for ourselves, so why are we not using our powers to enforce it on the Crown dependencies and overseas territories? There are multiple reasons why we have decided to do it for ourselves, and I shall mention two of them. First, for many of the poorer countries, getting their agencies up to speed so that they can pursue people and know what questions to ask is tough, and public registers make it much easier for those people to be interrogated. Civil society should interrogate them, and the registers make it much more likely that the type of activity that I mentioned in the DRC is revealed.
Secondly, we are talking about a very reactive response; if a register can be interrogated only by the international agencies that are allowed to have access, people will have to know that there is something they are after before being able to discover whether or not there is information about beneficial ownership that is relevant to a criminal activity or to aggressive tax avoidance and so on. Such an approach presupposes a degree of intensive resources and knowledge that will not necessarily be in place. Although one of course welcomes the creation of these registers, having them made public is central to making them work.
The Minister should listen not to my words on this, but to those of the former Prime Minister, who was absolutely clear, year on year, when talking about these issues, that the openness and transparency of these registers was what mattered. In 2013, he said to the Crown dependencies and overseas territories that they had to rip aside the “cloak of secrecy” by creating a public register of beneficial ownership. In April 2014, he wrote to the overseas territories, saying that
“beneficial ownership and public access to a central register is key to improving the transparency of company ownership and vital to meeting the urgent challenges of illicit finance and tax evasion.”
He also expressed his hope that overseas territories would follow suit to
“consult on a public registry and look closely at what we are doing in the UK.”
On a trip to the Caribbean in September 2015, he said:
“Some of the British Crown Dependencies and Overseas Territories are making progress in this direction. And others, frankly, are not moving anywhere near fast enough. I say to them all today, including those in this region”—
the Caribbean—
“if we want to break the business model of stealing money and hiding it in places where it can’t be seen: transparency is the answer.”
When we established our own public register here in the UK, David Cameron said that
“there are also many wider benefits to making this information available to everyone. It’s better for businesses here, who’ll be better able to identify who really owns the companies they’re trading with. It’s better for developing countries, who’ll have easy access to all this data without having to submit endless requests for each line of inquiry. And it’s better for us all to have an open system which everyone has access to, because the more eyes that look at this information the more accurate it will be.”
I simply say to the Minister that I really do agree, in this instance, with the former Prime Minister and I hope the current Government will listen carefully to his wise words.
Joanna Cherry
The right hon. Lady is, as one would expect, making a very powerful speech. Does she agree that the Government can be comforted by the thought that extending this transparency to the tax havens would be a very popular move with the public, as YouGov polling shows that more than two thirds of people think that the Government should take such action? Research published by Oxfam shows that there are high levels of support for extending this transparency across the political spectrum.
Dame Margaret Hodge
I, too, have seen that survey. Any action that the Minister takes will be warmly welcomed by the public across the whole of the United Kingdom—by people of all ages and all genders. This is a really important bit of work, and I hope that the Minister will take it seriously.
I am concerned about the action taken so far. I am concerned that in December 2015 when we had the Overseas Territories Joint Ministerial Council, the Government failed to persuade those territories to implement public registers. I am concerned that, in March 2015, the Cayman Islands and the British Virgin Islands refused to meet Ministers from the Foreign Office and the Treasury. I am concerned that they failed to meet the Financial Secretary’s request that they adopt registers by November 2015. I am concerned that—as I understand it—they have ignored letters from UK Ministers. I am deeply concerned that tax is not even on the agenda for the forthcoming meeting of the Overseas Territories Joint Ministerial Council. I hope that the Minister can address that point. We do have the powers, and, as was mentioned in a previous intervention, we have used them before. The Government must act.
If the Minister could at least tell us that he will set a timeline, at the end of which, if matters cannot be resolved in a collective and collaborative way with the overseas territories and the Crown dependencies, the Government will use their power. That would go a long way to settling some of our concerns today. I hope that he can at least consider that as a possibility for taking the matter forward.
May I briefly comment on some of the other provisions in what is a warmly welcomed bit of legislation? On the unexplained wealth orders, it is particularly welcome that they will be applicable no matter where in the world the offence takes place. May I ask the Minister two questions? If the money comes from an overseas territory —a developing country, for example—will there be a notification to that country of the setting of an unexplained wealth order? Again, our enforcement agencies will be more capable than some others in pursuing laundered money.
Mr Wallace
I can get an exact answer to the right hon. Lady’s question. Just around that, though, we have started to sign memorandums of understanding with a number of countries—we signed one in August with Nigeria—to help them recover their assets, without barriers between here and there, and to assist them, both in their country and here, with tackling crime. Once they find their assets, we will get them back to them as soon as we can.
Dame Margaret Hodge
I am grateful to the Minister for providing that information. Will he explain why the orders do not apply to politically exposed people inside the European economic area? Will he look again at that issue, because there may occasionally be a relevant instance where that is important?
Mr Wallace
That is quite straightforward. We are unable under EU law to discriminate against different members of the EEA in relation to the UK citizen. What we do for the UK citizen we also have to do for other members of the EU.
Dame Margaret Hodge
I wish to raise two other issues. One arises from a debate held in the House on March 2012, initiated by the hon. Member for Esher and Walton (Mr Raab), on what is known as the Magnitsky-style amendment. The argument there arose from the horrific and brutal killing of Sergei Magnitsky—a Russian lawyer who was tortured and murdered because he uncovered a huge $230 million tax fraud in Russia. Allegedly, $30 million of that found its way laundered into the UK, according to evidence given to the Home Affairs Committee.
The hon. Gentleman proposed something similar to an amendment enacted in America—he and I would support such an amendment during the proceedings on the Bill—that would have ensured that foreign individuals involved in corruption and human rights abuses had their assets frozen, be denied right of entry to this country and be publicly named and shamed. Again, although that is slightly different to other provisions in the Bill, I think that there is strong cross-party support for introducing a Magnitsky-style amendment into UK legislation.
I hope that the Minister will look favourably on such an amendment. I have looked at the details, and a particularly disturbing aspect is how many UK banks were involved in laundering the alleged $30 million into the UK, according to evidence given to the Home Affairs Committee. They include Barclays, HSBC, NatWest, Bank of Scotland, RBS, Citibank, Bank of America, Lloyds TSB and the Bank of Tokyo. I hope that, from that horrific tragedy, we can introduce an important change in our legislation.
Finally, I want to talk about the corporate failure to prevent tax evasion, which other hon. Members have spoken about. I welcome the Bill as the first attempt to place responsibility for tax evasion not just on individuals but on corporations. However, this is a very small first step towards making those who are responsible for devising, advising and facilitating evasion and avoidance accountable for their actions.
Before we go over the top on saying what a great change the Bill represents, we should realise that it will apply only where a criminal offence has been successfully prosecuted against an individual or where an individual adviser has committed an offence when working for a corporation. It does not cover negligence by the corporation. It will not make the corporation responsible for the crimes of its staff. It does not cover aggressive tax avoidance. Unlike my Front-Bench colleague, I think that that is where the important bit of action must be taken if we are to ensure that we get the resources into coffers according to people’s wealth and their profits and incomes.
The Bill simply asks that reasonable procedures are in place, which is a risk-based and proportionate exercise, so it does not represent a fail-safe procedure. As I think through some of the instances we heard about during my time chairing the Public Accounts Committee, where we felt that corporations were misbehaving, I do not think that it would cover PricewaterhouseCoopers and all the stuff that it was doing in Luxembourg, where it was clearly selling schemes in an industrial way that had no other purpose than to avoid tax. We had a discussion earlier today about Heathrow. I do not think that it would cover Heathrow, which has managed to avoid paying a heck of a lot of tax on massive billion-pound profits that it has made. I do not think that it would cover Google. I do not think that it would cover—this is really important—the fact that when we interviewed advisers about the tax advice they give to corporations and individuals, they said that they would give advice so long as there was a 50% chance that it was not challenged by HMRC. The reverse of that is that there is a 50% chance that it will be challenged by HMRC, but given the size of the task and HMRC’s limited resources, it takes a long time to catch up with such schemes and does not have the resources that some of the big accountancy firms, advisers, banks and lawyers et al. have. That will be caught not by the first welcome but small measures that are being taken.
From all the work that we did in the PAC, the only thing that I can think would be caught is probably HSBC’s actions. The non-executive director, Rona Fairhead, gave evidence to us, sought to blame the whistleblower in that instance for being a thief—I thought that that was pretty awful—and blamed the front-line staff for doing what was obviously expected of them by the organisation for which they worked. She, as a non-executive director earning £500,000 a year at HSBC, felt that she did not have any responsibility to ensure corporate governance. The measure might catch that sort of instance, but it is very limited, and as we examine the Bill, I would welcome opportunities to extend that important first step in ensuring corporate liability as well as individual liability and accountability for actions that have been taken. I warmly welcome the Bill and I hope that the Minister can take the further steps that I have suggested.
Home Affairs and Justice
Margaret Hodge Excerpts(9 years, 1 month ago)
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Margaret Hodge (Barking) (Lab)
There is an enormous gap between the recently published figures on net migration and the ambition set out by the Conservative Government. The right hon. Lady has now been the Secretary of State for five years, and she owes it to the House and the public to say by how much she expects to reduce net migration over the coming Parliament.
Mrs May
I suggest that the right hon. Lady looks at the Conservative party manifesto, which made it clear that the Government’s ambition to reduce net migration to the tens of thousands remains. The reason we say that is simple. We recognise that uncontrolled immigration has an impact on people’s lives, on public services and on jobs, and helps to hold down wages at the lower end of the income scale. Indeed, the hon. Member for Dagenham and Rainham (Jon Cruddas), who was in charge of Labour policy before the election, said that the migration policy of the Labour Government was a covert wages and incomes policy. That was precisely its impact. So we recognise the impact of immigration, and that is why we continue to set ourselves that ambition and why we wish to build an immigration system that works in the national interest, is fair to British subjects and legitimate migrants, but is tough on those who flout the rules or abuse our hospitality.
Now that we are no longer encumbered by a coalition, we can take stronger action. We can create an immigration system that is tougher, firmer and fairer. We will introduce a new immigration Bill, which will ensure that we can remove those with no right to be in the UK more quickly, create a fairer labour market for working people and deny illegal immigrants access to public services. We will take the radical step of making illegal working a criminal offence, to make Britain a less attractive place for people to come and work in illegally. That will provide a firmer legal foundation for seizing the earnings of illegal workers as the proceeds of crime. We will also create a new enforcement agency to crack down on the exploitation that fuels illegal immigration.
We will further reform the immigration route for migrant workers and consult on the introduction of a levy on work visas under tier 2 of the points-based system to fund the development of skills. If we are to close the skills gap more quickly, we must reduce our reliance on foreign labour. We will also introduce a requirement that all public-facing public sector workers must speak fluent English. We will act to tighten up access to our public services and protect them against abuse by people who are here illegally. We will build on measures introduced in the Immigration Act 2014 to provide a more immediate impact and extend into previously unregulated public service areas. We will deny financial services to illegal immigrants, building on the existing power to prevent them from opening a bank account, and we will make it easier for landlords to evict illegal migrants from rented accommodation.
In addition, we will build on our reforms to speed up the removal process by extending the power introduced by the Immigration Act 2014 to require individuals to leave the UK before bringing an appeal against a decision in all human rights cases, except where there is a real risk of serious, irreversible harm as a result of the overseas appeal. This power is already making a difference, with over 800 foreign criminals deported since July 2014, and our new Bill will take those reforms even further. We will also create a power to require that foreign national offenders are tagged when released on bail by an immigration tribunal.
Finally, I want to turn to a subject that cuts across many of the home affairs and justice issues I have mentioned. Time and again, we have seen how the current framework of human rights law as applied by the European Court of Human Rights has led to rulings that have prevented us from removing dangerous foreign criminals from Britain. That has been the case in too many other instances, helping rapists, murderers and illegal immigrants rather than their victims or the law-abiding majority. Where we can, we have taken action. Even under the coalition, we legislated to deal with abuse of article 8 of the European convention on human rights—the right to a family life—by requiring the courts to have regard to Parliament’s view of the public interest in such cases, as set out in the Immigration Act 2014.
But the time has come to look at our human rights laws. We will bring forward proposals for a Bill of Rights to replace the Human Rights Act. This would reform and modernise our human rights legal framework and restore common sense to the application of human rights laws, which has been undermined by the damaging effects of Labour’s Human Rights Act. It would also protect existing rights, which are an essential part of a modern, democratic society, and better protect against abuse of the system and misuse of human rights laws.
In the last Parliament we made significant strides forward in reforming the police and our immigration system and passed important legislation to counter terrorism. The programme of legislation I have set out today will build on that work. It will ensure that we can go further and faster with police reform and ban harmful new psychoactive substances; challenge extremism which threatens lives, families and communities; crack down on illegal working and continue to build an immigration system that is tougher and fairer; and reform and modernise our human rights law. This is a programme that is on the side of working people and which helps us to create a safer and fairer Britain. It is the programme of a Government for one nation, and I commend it to the House.
Margaret Hodge (Barking) (Lab)
Thank you for calling me, Mr Deputy Speaker, and I welcome you to the Chair, as you oversee our proceedings.
We have just emerged from a long general election campaign, during which immigration featured as a hugely important and sometimes toxic issue. In Barking and Dagenham, immigration has been at the heart of politics for more than a decade. Indeed, in 2006, voters in my constituency were so angry with all mainstream politicians that they chose to protest and elected 12 British National party councillors to the local authority. Focusing on the issue of immigration has therefore been central to my constituency work for many years, and I am thankful that the good people of Barking and Dagenham worked with me to expel and keep out the heinous politics of the BNP by denying it any democratic mandate.
My work and experience, however, leaves me depressed by the Government’s failure to learn the lessons of the past and frustrated by their approach, as set out today and in the Queen’s Speech. Although some proposals enjoy cross-party support, the Government’s overall approach continues to be based on a false prospectus, which is that we can somehow dramatically cut net migration, either by yet more domestic legislation or by some fantasy renegotiation of free movement in Europe. Despite the failure to deliver a reduction in net migration over the past five years, the Government continue to promise to do so during this Parliament. Yet all the facts show, unambiguously, that they will fail to deliver on their ambition, and the worst thing is that they know that now. Their pledge on numbers is hollow. They are delivering on rhetoric; but failing to realise the reality, and by so conning the British public they are further eroding any remaining trust people have in their political leaders.
Recent figures show net migration rising yet again. Standing at around 300,000, it is at almost its highest level ever and is more than 100,000 higher than the 2013 figures. Despite endless Acts of Parliament, a stream of bureaucratic reorganisations and all the tough talk, net migration is high and rising, and that is not just down to free movement of labour in Europe. Yes, net migration from the EU was up by nearly 50,000 during the year to September 2014, but net migration from outside the EU went up by almost the same number—54,000.
Migrants do not come to Britain to scrounge benefits. Many come to study, which is a good thing, as it brings much-needed income to our universities, strengthens our research and development capability and helps the next generation establish lifelong friendships and relationships that will support our international interests and strengthen UK security over decades to come. Most migrants come because they have secured a job, and we need their skills both to enable growth and to maintain our public services. Fewer than one in five comes to Britain to look for work. Even if we could stop those jobseekers at our borders, net migration would still be running at more than 200,000.
The truth is that people crossing national borders are a feature of the modern world. In the same way that capital crosses borders in a globalised economy, so people cross borders in a globalised world. Just as the Chinese are likely to provide the capital to build British nuclear power stations, and the Indians provide the capital for the Jaguar plant in the midlands, so people from other countries staff our hospitals and work in our industries. We cannot and will not buck that trend. I remember when we thought that we could cut the net migration numbers by toughening up the regime on asylum seekers. We did that, and then the numbers seeking work permits grew. We tried to close that route too, and then people tried to come in through the student visa route. The Government have now tightened up that avenue, potentially damaging our educational sector. Is the next step to get tougher on visitors and damage our vibrant tourism sector?
People come to Britain because we are a tolerant and open society and we have a successful and growing economy with plenty of opportunities. It is a good place in which to live, work and bring up a family. Migration will continue to happen and we should stop pretending that we can stop it. The dishonesty at the heart of the Government’s policy is what is impacting on people’s views. That dishonesty is breeding mistrust of politics and the political class. When the Government promise to cut the numbers and then fail, people lose trust in politicians and politics. What we really need from the Government is strong, open and candid leadership, which changes the conversation about immigration and talks about the reality of globalisation and the movement of people. Why are Ministers so frightened of telling the truth? Doing so should not stop us doing the things that we can and must do. Here again, the Government have failed to deliver over the past five years. It is the lack of control of our borders, more than the numbers coming in, that angers people and fosters suspicion and hostility.
When we examined those issues in the Public Accounts Committee, we were horrified by the sheer incompetence we found time and again. Some 50,000 people whose applications to remain in Britain had been rejected had disappeared into the community. Some 29,000 applications for asylum, which dated back at least seven years, remain unresolved, with many people still waiting for the first decision on their case. More than 10,000 foreigners who had been in prison have not been deported despite a tenfold increase in the staff who were supposed to be tasked with delivering the deportation of foreign national prisoners. Indeed we uncovered the fact that one in six foreign national offenders who had completed their sentences had absconded and disappeared into the community.
Let us get those things right and deliver the basics. That requires more than tougher rhetoric, or yet more Home Office legislation. It means simply delivering effectively and efficiently. That is how the Government can establish confidence in the immigration system and in how we control our borders. Getting a grip on the bureaucracy will achieve far more than passing more legislation in this House of Commons.
I welcome the cross-party consensus on the difficult issue of how we ensure fairness to everybody in the rationing and allocation of public resources. I first challenged the old orthodoxy in 2008 and I know from my work in the constituency that if we introduce the principle that people should contribute to a society and earn their entitlement before accessing the public goods that have to be rationed, whether it is social housing or benefits, we would be seen as being fair to everybody, be they recent immigrants or families who have lived in the UK for generations. Such an approach helps to lance the boil that so easily turns fear of the impact of immigration into racism and hostility to people of different races, creeds and colour.
I support the Government’s intention to develop that principle. We would all do well to understand that only 6% of EU migrants claim out-of-work benefits and many of them have earned that entitlement by working and living in Britain for many years. That does not absolve the Government of their responsibility to ensure that there are enough school places, GPs and hospitals and public transport facilities to meet the needs of everybody in our communities, including migrants and their families.
The Conservatives’ record over the past five years has been abysmal. While the Government wasted their very limited capital creating free schools in areas where there are a surplus of school places, they refused properly to fund new primary and secondary schools in areas such as mine, where there is huge pressure for more places.
The Government will not build a one nation Britain if they do not transform their approach to immigration. Honest explanations, not empty rhetoric, are what will unite Britain. Efficient administration, not pages of legislation, are what will convince people that the Government are in control. Investment in our public services, so that immigrants do not become the scapegoats, is what will help us build a united Britain where communities gain strength from their diversity.