Illegal Migration Bill

Lord Coaker Excerpts

Committee stage
Wednesday 24th May 2023 Lords Chamber

[Lord Paddick (LD)]

I will apologise to the noble Lord if I am wrong, but my understanding is that the 700,000 is net migration. That is the number of people whom the Government have given permission to come and live here—1,370,000—minus the number of people who have left the UK, so not exactly what the noble Lord has said at all. It is an issue. As the most reverend Primate said, this Bill deals with 45,000 compared with the 1,370,000 the Government have given permission to come here.

Similarly, we support Amendment 148 in that none of the Bill’s provisions should come into force until the Secretary of State makes a statement that this Bill is compatible with the European Convention on Human Rights.

To the Minister, I would say that with noble friends like the noble Viscount, Lord Hailsham, and the noble Lord, Lord Kirkhope of Harrogate, the Government clearly have serious questions to answer. In answer to the noble Lord, Lord Horam, and the noble Baroness, Lady Fox of Buckley, whatever the solution to the overall immigration issue is, it cannot involve this country riding roughshod over its international obligations. As a commander said to me when I presented my solution to a very difficult problem in the police, I do not know what the solution is but it is not this.

[Lord Coaker (Lab)]

My Lords, it is a privilege to wind up for His Majesty’s Opposition. I start by declaring my interest as a trustee of the Human Trafficking Foundation and my work with the University of Nottingham’s Rights Lab. I thank the Minister for arranging for my noble friend Lord Ponsonby and I to visit Western Jet Foil in Dover yesterday and the Manston reception centre to see the work that they do there. I know the Minister will join us in saying to noble Lords that, whatever our debates about policy, the work, commitment, professionalism and dedication of those people who are saving lives at sea and helping people when they come ashore are second to none, and they deserve our praise and tribute.

Having said that, nobody is saying, as we debate the Bill, that there is not an issue about the boats and those coming across the channel in that way. Nobody is disputing that. Nobody is saying that there is no need to control our borders. Nobody is saying there is no need for any of the sorts of policies that we have been debating. What is before us is the way that it is done. What is the policy objective? What is the way of doing it? What is the way of controlling it? From the contributions that have been made, the debate that we have had here is saying that the Government have got it wrong and that not only will it not work—and I will come to the other points in a minute—but that it is not consistent with the principles we hold. That is a perfectly acceptable view to have. It does not mean that you are in favour of as many boats as possible coming across without any reflection on what we might do about it or that we do not care about that; it is saying that it is not the right way of going about it.

Many noble Lords have been Members of the other place, as I have. Nobody is seeking in the slightest sense, as a couple of noble Lords have suggested, to block the will of the House of Commons as it has been expressed. That was defeated by a heavy majority in the vote last week, or whenever it was. That majority included me as I did not think it was right thing to do, but I will not be intimidated by the other place into not saying that this House has the perfect right to stand up, to change the Bill if we think it is wrong, to take out of it things we think are wrong and to say to the other place that it should think again because what it is seeking to do is not right. That is a perfectly reasonable thing to do and is the constitutional position of this House.

My noble friend Lord Dubs is right: sometimes people will pray in aid public opinion one way or another and it changes. I could quote the local election results and some results where one would think that if the “stop the boats” message was working, there would have been different results from those that happened, but I will not make a political point. The point that I am trying to make is that public opinion changes, it moves and sometimes, as my noble friend Lord Dubs reminded us, it is incumbent upon people to say, without being arrogant or out of touch, that in this respect we think this is the right way to go forward, this is the right thing to do.

The other point I want to make is that we are not a direct democracy; we are a representative democracy. That is an important point to make.

Although I signed Amendment 2, which is important, Amendment 4 goes to the heart of this group. The noble Baroness, Lady Chakrabarti, the noble Lords, Lord Paddick and Lord Kirkhope, and the noble and learned Lord, Lord Etherton, deserve a lot of praise for tabling it because it goes to the heart of the Bill. I think that in many ways—I disagree with noble Lords who say that this is not the case—it is unbelievable that we are having to discuss an amendment to a Bill which says that this Bill, which a Government of this country are bringing forward, has to be consistent with the international conventions that we have signed. I would have thought that was a given.

I know there has been a great legal debate about what law means and whether we are a dualist country. I had never heard the word “dualist” until about a week ago. My simple understanding was, and the noble Lords, Lord Hannay and Lord Patten, and others made this point, that whether we are a dualist country or not, when a country signs an international convention, when it agrees with other countries that these are the rules that it is going to abide by, I think they probably think that means that it is going to abide by it whether you are a dualist country, a monist country or whatever country it is, because they believe that the Government of the country that they have negotiated an agreement with have made a binding commitment in terms of how they will proceed. That is the point. The noble Lord, Lord Patten, knows what happened in Hong Kong with the agreement. That is the whole point. The noble Lord, Lord Hannay, has done more of those negotiations. What are we doing with Russia? We are saying to Russia in Ukraine that we are not going to stand by and watch it drive a coach and horses through international agreements and international conventions. We are not going to stand by and watch that happen. I am proud our country is doing that.

That is why Amendment 4 is so important, but it is, frankly, unbelievable, as I said at the beginning, that it has had to be tabled. Is it really the case that our Government are telling the United Nations commissioner, the Council of Europe commissioner and all the other people who have said that this Bill breaks those conventions and things that we have signed, “You are wrong and we are right”? Is that really what we have come to? Is that really the situation that we are in? Are we not concerned about our reputation? The Government will say that it is not the case. I am sure the Minister will get up and say that we are abiding by these conventions and that the Government do not understand why the commissioner has written and that he or she is wrong in writing to us and saying that we do not abide by this convention or that convention. I am sure that the Minister will say that, but why are they writing to us? They cannot both be right. Either they are right or the Government are right, and yet they are saying to the Government that many of the conventions they have signed are being broken by the Illegal Migration Bill. What is our Government saying? Has it really come down to our Government just dismissing it, just a shrug of the shoulders, it does not matter, who cares, we are not bothered? That is no way for a Government to run their affairs. The consequences of doing that are enormous.

I finish by returning to the point about Amendment 4. I think it does us a favour; there might be one or two other conventions, but the amendment lays it out. These are fundamental ways in which countries have come together to say that, when dealing with some of the most difficult situations that we face, including the mass movement of people across borders, no country can do it alone. There must be co-operation, agreement and understanding—and those agreements and that understanding are based on countries believing that what they are told by another country will be adhered to and promises will be kept.

If that is not the case, all this will fall apart and we will have international anarchy. Our country cannot solve the problem of refugees and migration alone; it needs to work with others. That was the basis of the conventions that we signed and of the agreements that we made; our international reputation stands on it and we should keep it.

Former Chief Constables: Gross Misconduct

Lord Coaker Excerpts

Monday 22nd May 2023 Lords Chamber

[Lord Sharpe of Epsom (Con)]

Many noble Lords have raised similar, very good points in recent debates. I shared this opinion with my noble friend Lord Lexden when we met last week. Having said that, there have been four inquiries into this case and all concluded that there was nothing more to do. However, I heard my noble friend Lord Howell’s concerns and will reflect them back to the department.

[Lord Coaker (Lab)]

I join other noble Lords in congratulating the noble Lord, Lord Lexden, and my noble friend Lord Bach, who have been campaigning on these issues for a considerable period of time. The Minister’s answers are simply not satisfactory. The noble Lord, Lord Lexden, has raised time and again the misconduct of Mike Veale, the former chief constable. The Minister simply comes back with a list of regulations, sends up smoke and does not answer the question. This is a really serious matter that deserves the highest priority from the Government, but we are not getting it. When will the Minister give us the answers that the noble Lord, Lord Lexden, is demanding?

[Lord Sharpe of Epsom (Con)]

I hope very soon. The noble Lord is also aware that there are a large number of things that I absolutely cannot say—a point I have reinforced from the Dispatch Box on a number of occasions. That will remain the case until this is concluded.

National Crime Agency Investigation: Javad Marandi

Lord Coaker Excerpts

Wednesday 17th May 2023 Lords Chamber

[Lord Coaker (Lab)]

My Lords, the National Crime Agency investigation into the Azerbaijan laundromat is extremely serious, with an alleged $2.9 billion in stolen money laundered through UK companies. An individual with alleged links to this is also being investigated—an individual who gave three-quarters of a million pounds to the Conservative Party and who got an OBE and access to government Ministers. Can the Minister confirm whether this is accurate? In the other place, the Minister said that the National Security Bill is to be considered again in the Lords on ping-pong, as we know, and we may see it return to us. In the light of this investigation, what amendments are the Government going to support in the Lords, or what amendments are they going to bring forward themselves, in order to deal with this and ensure that we all have confidence that there is no dirty money in our politics and that this issue will be addressed at last?

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

The noble Lord will be aware that I cannot comment on ongoing investigations; no Minister at the Dispatch Box would. With regard to Mr Marandi’s status in the United Kingdom, he is a citizen of this country, as I am sure the noble Lord is aware, and his honours and so on are a matter of public record. As for political donations, UK electoral law already sets out a robust regime of donations and controls to ensure that only those with a legitimate interest in UK elections can make political donations, and that political donations are transparent. It is an offence to attempt to evade the rules on donations by concealing information, giving false information, or knowingly facilitating the making of an impermissible donation. I think this structure is pretty robust already, and a large number of various Bills, strategies and so on have recently been published which contribute to this debate.

Economic Crime and Corporate Transparency Bill

Lord Coaker Excerpts

Committee stage
Thursday 11th May 2023 Grand Committee

Moved by

[Lord Coaker]

106D: After Clause 187, insert the following new Clause—
“Compensation for victims of economic crime
(1) The Secretary of State must, within the period of 180 days beginning with the day on which this Act is passed, publish and lay before Parliament a strategy for the potential establishment of a fund for the compensation of victims of economic crime.(2) Any such fund must comprise the proceeds of property recovered under the Proceeds of Crime Act 2002 in relation to economic crime.”Member’s explanatory statement
This new Clause would require the Secretary of State to prepare and publish a strategy on the potential establishment of a fund to provide compensation to victims of economic crime within 180 days of this Act being passed.

[Lord Coaker (Lab)]

Good afternoon, everyone. I want to make just a few remarks on my Amendment 106D, which is obviously a probing amendment seeking some information on the Government’s thinking with respect to compensation for victims of economic crime. The proposed new clause to be inserted by this amendment would require the Government to prepare and publish a wide-ranging strategy on efforts to ensure that the necessary financial compensation is made available to victims of economic crime, wherever they may be. This could and should be applied to victims of international crimes, of which the war in Ukraine is without doubt an example, but it could also be applied more broadly as a means of providing a measure of justice to the victims of any other kleptocratic regime around the world. As I say, the proposed new clause would provide a mechanism for compensating victims of economic crime in the UK, including thousands of British victims of online scams every year. That briefly sets out the purpose of my Amendment 106D.

I thought it might also be helpful to the Committee for me to read into the record from the Government’s Fraud Strategy. As the Minister will know, it is dated May 2023; it does not state the day so I do not know whether there is a later version but that is where we are. I want to do so in case the Committee has not had an opportunity to read the report. I have not read all of it—I have just dipped into it for the purposes of this amendment—but it is quite staggering when you read the statistics. I will quote the report; I hope that the Committee will bear with me because it is important for those who read our proceedings, as many people do, to see the facts as laid out by the Government.

The report—the Government’s own words—states:

“In the year ending December 2022, 1 in 15 adults were victims of fraud. 18% of those victimised became victims more than once. The sums of money involved are staggering. The total cost to society of fraud against individuals in England and Wales was estimated to be at least £6.8 billion in 2019-20. This includes the money lost by victims, the cost of caring for victims, and the costs of recovery, investigation and prosecution of fraudsters”.


It continues:

“In the year ending March 2021, Action Fraud received victim reports totalling a loss of £2.35 billion … There is also considerable cost to business and enterprise. UK Finance, the trade body for the banking and finance industry, reported that in 2021 its members lost over £1.3 billion to fraud”.


The figures just go on. Clearly, this is a huge problem, as all of us recognise.

Can the Minister outline something for us? Among all the points made in the strategy, I could not find anything concrete and specific with regard to compensation. It would be helpful if the Minister could spell out the current arrangements on compensation for victims of fraud. Given the scale of the problem, which the Government have helpfully just published in their Fraud Strategy, what are their proposals in respect of compensating individuals? I know from speaking to Members of the Committee here and many people, including friends and family, that the cost to individuals is immense. It is not just a financial cost but an emotional one; I know that the Minister understands that. It is important for us to know the answers to these questions.

The other point is what the current rules on compensation are, how much someone could expect to get back, what the Government propose to improve that situation, and the perennial question we keep coming back to: how that will be made real.

I found paragraph 7, on page 4 of the strategy, particularly interesting. The Government say:

“We will ensure victims of fraud are reimbursed and supported”.


Again, we go back to previous questions: does that mean under the current reimbursement regime, or are the Government proposing a new one? How will people be “supported”?

I think the noble Lord, Lord Agnew, will be particularly interested in the next sentence, the first part of which says:

“We will … Change the law so that more victims of fraud will get their money back”.


Where in the Bill before us is this change to the law so that more victims of fraud will get their money back? It may well be in here. I am not trying to trip anyone up; I just could not find it myself. It would be helpful if the Minister could point out where it is. If it is not in the Bill, where will that change in the law be put, when is it coming and what change do the Government propose?

The second part says that the Government will:

“Overhaul and streamline fraud communications so that people know how to protect themselves from fraud and how to report it”.


Again, how will the Government “overhaul” and “streamline” those communications? Added to that, how do people know what their rights are and—a question we keep coming back to—how does an individual citizen take on a bank, financial institution or whoever to assert the rights that the Government say they will give them to get compensation back for the money they have lost through fraud? Those are really important questions.

I will stop there. I could go on and on repeating the same thing in different words, but I think the Minister gets the nub of what I am saying, and I think the Committee would be interested to hear the Government’s views, as well as those of other Members of the Committee. With that, I beg to move Amendment 106D.

[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?

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Migration and Borders (Lord Sharpe of Epsom) (Con)]

My Lords, I thank the noble Lord, Lord Coaker, for this amendment. Of course, the Government take the compensation of victims of economic crime very seriously, as it is crucial for limiting the harm of these ruthless crimes.

The noble Lord referred to the fraud strategy. I will come back to that in a second. Of course, the object of that exercise, as well as going after stolen money, is to prevent it happening in the first place. So this has to be considered in the round. These are obviously anti-crime measures, as well as enforcement and mitigation measures.

I completely agree with the noble Lord, Lord Fox: fraud is an attack on growth and we should bear in that in mind. Fraud and the reimbursement of fraud, as we know, costs the banks many billions a year already under the existing arrangements, which I will come back to. Clearly, somebody has to pay for that and it is not easy for society to bear, never mind the banks themselves.

Asset recovery powers under the Proceeds of Crime Act 2002 already provide the court with the ability to prioritise the payment of compensation orders to victims. We have had extensive conversations on all manner of asset seizures and reimbursements, including on the Ukraine question, to which the noble Lord, Lord Fox, just referred. I have absolutely no doubt that those conversations will continue. We are looking at the situation that he described, which developed, as I understand it, overnight. I do not know the details—we will find out.

The Government are legislating, through the Financial Service and Markets Bill, to remove any regulatory barriers to the Payment Systems Regulator making reimbursement mandatory for victims defrauded through the faster payments system. We are therefore already taking active steps to improve compensation routes and consider that there are already means of redress available.

Having said that, I also point to the fraud strategy, which the noble Lord, Lord Coaker, referred to. There is only one relatively small paragraph on this but if he goes to page 24, he will see that the City of London Police

“are also working with the private sector on a limited pilot to explore whether civil debt recovery and other powers can recover more of victims’ money. As this pilot develops, we will review whether there are further civil enforcement powers that could be applied to fraud”.

I will come back to that in more detail, obviously, but clearly it is very much at the pilot stage at the moment. That is explicit in the text. But the interests of victims are being actively considered via the fraud strategy. Again, there is more to be said on that, which I will do shortly.

As I have said before in Grand Committee, victims’ interests are at the heart of the new powers introduced by Part 4 of the Bill, which will allow applications for stolen crypto assets or funds in accounts to be released to victims at any stage of civil forfeiture proceedings. This will ameliorate the negative impacts of criminal conduct, including economic crime.

More widely, and I have referred to this from the Dispatch Box in the Chamber, victims need to have the confidence and trust to come forward to report fraud and to know that their case will be dealt with. That is why we are providing £30 million to the City of London Police to upgrade Action Fraud, which, as noble Lords will know, has not been widely applauded in this House. The new service will use the latest technology to drastically improve reporting and support for victims and provide far greater intelligence to policing, which will allow greater prevention and disruption at scale. The upgrade is already happening. It will be fully operational in 2024 and we are implementing consistent support for victims across England and Wales by expanding the National Economic Crime Victim Care Unit, to which I have also referred.

Where there are overseas victims in bribery, corruption and economic crime cases, the Serious Fraud Office, Crown Prosecution Service and National Crime Agency compensation principles have committed law enforcement bodies to ensuring that compensation is considered in every relevant case, and to using whatever available legal mechanisms to secure it where appropriate.

The Government are also fully committed to utilising suitable means to return the proceeds of corruption to their prior legitimate owner and/or to compensate victims, in line with international obligations under the UN Convention against Corruption. This is set out in detail in the Government’s Framework for Transparent and Accountable Asset Return.

Of course, the private sector also has responsibility for the protection of its customers, and we are increasing that further. Victims of unauthorised fraud, where payment has been taken without the victim’s permission, are already reimbursed by payment service providers. The contingent reimbursement model code has improved the reimbursement by payment service providers of victims of authorised fraud where a fraudster has manipulated the victim into approving the payment.

On the subject of PSPs, the right reverend Prelate made a good point about consumers becoming more savvy. I recently read in a briefing—I cannot remember whether it comes from the Fraud Strategy or some other current initiative—about the level of information sharing by PSPs, which will enable potential victims to identify the platforms that tend to be the most used. If they can be appropriately savvy when looking at those platforms and, perhaps, a little more suspicious and questioning, that will help enormously in stopping this happening in the first instance. I will come back with more detail on that, because I cannot quite remember under which regime that sits.

On the contingent reimbursement model, in 2021, £583 million was lost to APP scams. According to UK Finance data, the faster payment system was used in 97% of APP scams by volume in 2021. Under the contingent reimbursement model code, which is the voluntary scam reimbursement code signed by several major banks, the level of reimbursement is just over 50% of total APP scam losses for those signatory firms. Following PSR action, we expect that consumers will be reimbursed more consistently and comprehensively.

I realise that there is a lot more work to do on this. Clearly, the picture is fast evolving, as I am sure all noble Lords would acknowledge. There is clear intent on the part of the Government to make sure that victims are front and centre in the current regimes and all future planning. With that, I hope that the noble Lord, Lord Coaker, feels reassured and able to withdraw his amendment.

[Lord Coaker (Lab)]

I thank the Minister for that response. I am somewhat reassured, because I believe he has his own personal commitment to this. However, as with many amendments that we have discussed here, you get the feeling that it needs a bit of a boost a surge of urgency.

There is clearly a lot of good will and a lot of good government policy. There is nothing in particular wrong with the Fraud Strategy, which has some really good stuff in it, but the example that the Minister gave from page 24, which was perfectly reasonable, is a pilot. It does not say, “We will change the law”, but “we will review” what the pilot tells us, whereas, if you go back to the much stronger commitment at the beginning of the Fraud Strategy, it gives you some expectation that something will happen. It does not say, “We will review” but “We will ensure”—which is the sort of language that people want to hear—that

“victims of fraud are reimbursed and supported”.

It does not say, “We will review the law” but

“We will … Change the law so that more victims of fraud will get their money back”.


I get what the Minister said—that it is a pilot and a review, which is good—but a pilot and a review is not the same as what is promised in paragraph 7 on page 4 of the Fraud Strategy. We are talking about colossal sums of money and, as the right reverend Prelate the Bishop of St Albans pointed out to us, people are embarrassed; large numbers do not know what their rights are under the current law and cannot get their money back. That is the reality. The simple question for the Government, who I am sure want to improve it—there is no doubt about that—is: what five practical things will it mean? We cannot change the past, but we could do something about the future.

I also take the Minister’s point that this is about prevention, too. I absolutely accept that; we need double authentication and so on. I thank the right reverend Prelate the Bishop of St Albans for his support and helpful comments in this short but important debate. I also thank the noble Lord, Lord Fox, for reminding us that businesses and enterprises are also subject to fraudulent activity and that this is about them too. That was an important point to make.

To conclude, I thank the Minister for his response but ask him to speak to his department about how we get that surge of energy into the Bill and make what the Fraud Strategy says a reality so that we make a real difference. With that, I beg leave to withdraw my amendment.

Amendment 106D withdrawn.

--- Later in debate ---

[Lord Agnew of Oulton (Con)]

My Lords, I rise because I hope that I might be able to provide some help to my noble friend the Minister, as this is obviously not his area of expertise; this is at the Companies House end.

Right at the beginning of Committee, I tabled Amendment 44. Its explanatory statement says:

“This amendment mandates companies to disclose whether their shareholders are acting as nominees. Nominee shareholders protect the identity of the beneficiary of the shareholding. This measure will help mitigate the risk of abuse through nominee shareholders. Failure to comply would incur a penalty”.


Last night, I met the Minister, my noble friend Lord Johnson, who indicated to me that the Government were sympathetic to this approach. I do not want to put words into his mouth, as he is not here now, but I suggest to the Minister, my noble friend Lord Sharpe, that he talks to my noble friend Lord Johnson to see whether there is any way that we could look at this; that would deal with the specific concern raised by the noble Baroness, Lady Kramer, in relation to freeports.

[Lord Coaker (Lab)]

I was not going to say very much but I have been provoked by what the noble Baroness, Lady Bennett, and the noble Lord, Lord Agnew, have said.

I very much support the thrust of what the noble Baroness, Lady Kramer, said. One wonders why transparency is such a difficult notion for the Government. I suspect that the Minister will send up smoke by saying that we are all in favour of freeports, that they are a great way of generating employment, and so on. It is certainly what I would say if I were him—that freeports are a great thing for creating jobs and that we should not stand in the way of free enterprise, which is developing enterprise zones in some of the most difficult and challenging areas in the country. However, this is not about that—it is about transparency and knowing how this is funded—so I hope that the Minister does not send up smoke. The issue is transparency; the noble Baroness, Lady Kramer, was right to point that out.

I will not repeat the list from the noble Baroness, Lady Bennett, of concessions and allowances made to ensure that businesses can operate—perhaps in an area that they would not operate in—as that is something for the Minister to discuss.

On what the noble Lord, Lord Agnew, said, has the Minister had discussions with the noble Lord, Lord Johnson? Is it right that the Government are considering some concessions? Is that what the Minister is going to tell us—that he is going to go away and talk to the noble Lord, Lord Johnson, about what we have just been informed about? Is there hope for this amendment or will the Minister just reject it? Is it something that we will hear more about as we go to Report? Will we get a government amendment on transparency around this issue, if not from the Minister then from the noble Lord, Lord Johnson?

With those questions, I will listen to the Minister with care.

[Lord Sharpe of Epsom (Con)]

I thank the four noble Lords who have spoken in this debate. I also thank the noble Baroness, Lady Kramer, for her Amendments 106EC and 106ED. Amendment 106EC would require an overseas entity to apply for registration in the register of overseas entities if it is operating in a freeport. Amendment 106ED would require an overseas entity to apply for registration in the register of overseas entities if it is operating in an investment zone tax site. I thank the noble Lord, Lord Coaker, for his eloquent support for freeports.

[Lord Coaker (Lab)]

Can I clarify that I was saying what I thought the Minister would say, not what I think?

[Lord Sharpe of Epsom (Con)]

It was spot on so I suspect that the noble Lord has nobbled my notes at some point.

The economic merits of and progress in delivering freeports and investment zones remain at the heart of the Government’s levelling-up agenda, and good progress is being made. However, that is not quite within the scope of this Bill, so I will focus on the core points raised in relation to corporate transparency and illicit finance. I will endeavour to answer the questions asked of me while noting, as my noble friend Lord Agnew has, that this is not necessarily my specialist subject.

Turning first to Amendment 106EC, I am assured that, throughout the bidding prospectus and subsequent business case processes, freeports were required to set out how they will manage the risk of illicit activity. I will go into this in some detail because it is important and, as I am not a specialist in this subject, I asked for extra detail. These plans were approved by officials in the Border Force, HMRC, the NCA and other relevant crime prevention bodies, including the Home Office, the police, the Department for Transport and DLUHC.

At business case stages, freeports are required to commit to further requirements to mitigate risk. That includes commitments to the OECD’s code of conduct for clean free trade zones and they were required to establish robust local governance structures in place to monitor risk and ensure effective co-operation between relevant bodies with remits to prevent illicit activity. In most cases, that included most of the bodies I have already referenced—the police, NCA, and so on. Those plans were approved by officials who have responsibility for security and preventing illicit activity across government, and they are also required to carry out an annual audit of security each year to ensure that these structures remain effective and the risk mitigations remain robust and relevant. These audits will be reviewed by the Government annually.

Freeport status in no way undermines or weakens existing port security arrangements. Special customs status, which has been noted, builds on, rather than radically departs from, facilitations available elsewhere in the UK, and is available only on specific customs sites within the wider freeport footprint. These are secure sites administered by a specially authorised customs site operator—CSO. CSOs are required to obtain AEO or equivalent authorisation from HMRC, an international gold standard for safety and security, and remain subject to robust ongoing oversight from HMRC. Freeport customs sites therefore uphold the UK’s high standards on security and preventing illicit activity and should not be conflated with some entirely different international free trade zones.

I hope I have been clear that the Government require each freeport governance body to undertake reasonable efforts to verify the beneficial ownership of businesses operating within the freeport tax site. As I have said, freeports uphold the UK’s high standards on security, safety, workers’ rights, data protection, biosecurity, tax avoidance and evasion, and the environment. They are subject to the same legislation and regulation to protect them as the rest of the country. To impose additional requirements on businesses investing in freeport tax sites would directly undermine the objective of freeports: to facilitate investment and regenerate some of the most deprived areas of the UK. The Government therefore do not think it is proportionate to impose this additional cost and administrative burden on freeports compared to elsewhere in the UK, which would also risk acting as a disadvantage for bringing in investment.

I turn to investment zones. The Chancellor announced in the Autumn Statement that the investment zones programme was being refocused to catalyse the development of clusters in areas in need of levelling up in order to boost productivity, growth and jobs. At the Spring Budget, the Government announced eight areas in England that it had identified to co-develop an investment zone proposal with the Government, with a view to agreeing proposals by the end of the year, subject to requirements being met. The Government will work with these places to co-develop proposals, ensuring that the same high standards that are required for freeport tax sites are met for any investment zone tax sites designated.

Given the early stages of policy development on investment zones, it is too early to set out the governance arrangements in any detail. However, I am clear that businesses within investment zone tax sites will need to comply with the same laws and high standards regarding transparency as any other business investing in the UK. I am also afraid that both amendments would duplicate existing requirements on UK-registered businesses. If a business in either a freeport or an investment zone, once established, is a UK-registered company, it is already bound by the requirements to report its people with significant control to Companies House. This information is publicly available on the Companies House register.

It would also partially duplicate the requirements of the register of overseas entities. Any overseas entity owning, buying or leasing land or property in a freeport or an investment zone, once established, would be required to give information about their beneficial owners to Companies House. This information is also available to the public and would help law enforcement track down those abusing freeports for money laundering or other nefarious purposes. In both cases, all information held by Companies House is available to law enforcement, even information which is not publicly available; for example, the information about trusts.

I also draw noble Lords’ attention to the far-reaching impact of the amendments, which refer to “businesses operating” in free ports and zones. A “business” goes beyond companies and similar corporate entities and includes, for example, sole traders; “operating” is also an imprecise term. Let us imagine a truck of goods arriving at a freeport: the amendment would require the freeport governance board to determine the beneficial ownership of the haulage company owning the truck as well as the beneficial ownership of every business whose goods are being carried on that truck. One company may own the truck and another the trailer, both are caught. Under this scenario, even the delivery driver bringing sandwiches to the businesses located in the zone would be impacted by the amendment. I am sure that was not the noble Baroness’s intention and she will say that it could be improved at the drafting stage, but it is worth pointing that out.

Coronation: Policing

Lord Coaker Excerpts

Thursday 11th May 2023 Lords Chamber

[Lord Coaker (Lab)]

We all supported the actions of the police in enabling the Coronation to take place and praised them for it yesterday, but we also said that certain questions arose. I did not ask yesterday who decided that the Home Office was the appropriate authority to write letters to individual protesters warning them of the consequences of the Public Order Act and telling them what it was about. The Minister always makes a great play of the operational independence of the police, and that it is Parliament that makes the law. What happened with respect to the Home Office doing that? Who signed the letters to individual protesters? Is this a new tactic? Can we now expect the Home Office to write letters to protesters, rather than it being a matter for the police, which I thought it would have been?

[Lord Sharpe of Epsom (Con)]

As I understand it, an operation called the Police Powers Unit wrote to five protest groups to inform them of the changes to public order legislation. It is obviously right that people who may fall foul of changes in legislation should be warned. As to who signed it and where that unit sits, I am afraid I do not know but I will find out.

Economic Crime and Corporate Transparency Bill

Lord Coaker Excerpts

Committee stage
Tuesday 9th May 2023 Grand Committee

[Lord Alton of Liverpool (CB)]

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

[Lord Coaker (Lab)]

Specsavers.

[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.

--- Later in debate ---

Moved by

[Lord Coaker]

93: After Clause 187, insert the following new Clause—
“Unexplained Wealth Orders and Vulnerable Adults
(1) The Secretary of State must commission a report each year on Unexplained Wealth Orders where the wealth or property in question was obtained through economic crime.(2) The report must record all cases where Unexplained Wealth Orders have been used in the previous year and revealed cases where property or wealth has been taken from—(a) older people;(b) people living with disabilities;(c) people who use adult social care;(d) adults who lack mental capacity.(3) This first report must be laid before each House of Parliament one year after this Act is passed.(4) Thereafter it must be produced annually.”Member’s explanatory statement
This amendment probes current data kept by the government on property and wealth obtained through economic crime being taken from vulnerable adults.

[Lord Coaker (Lab)]

In the absence of my noble friend Lord Hunt, and with his apologies, I move Amendment 93 in his name. I shall leave the noble Lord, Lord Faulks, and the noble and learned Lord, Lord Garnier, to speak to their amendments, but I agree very much with the points made in Amendment 95.

This is one of those parts of the Bill that we are dealing with in Committee which seems like a very small part of a huge reform that the Government are undertaking with respect to economic crime. However, given that unexplained wealth and the proceeds of crime are an affront to us all, successive Governments—because under the last Labour Government I was involved in the passage of the Proceeds of Crime Act —have singularly failed to ensure that those who benefit from crime do not somehow evade their ill-gotten gains being taken back from them by the state. That is despite the Proceeds of Crime Act and the unexplained wealth orders—and the first part of the amendment would require a report from the Government on unexplained wealth orders.

--- Later in debate ---

[Lord Sharpe of Epsom (Con)]

I am certainly happy to take my noble friend’s concerns back but, as regards targets, that would invite me to stray into operational matters, which I will not do.

[Lord Coaker (Lab)]

I thank the Minister for his reply, although I also share that disappointment. I should have thought that the focus of the noble Lord, Lord Young, speaking on behalf of the noble Lord, Lord Faulks, and the noble and learned Lord, Lord Garnier—as I am speaking on behalf of my noble friend Lord Hunt—was to ask the Government to bring a report, even if that is not the appropriate way of doing it, and say to them that the operation of UWOs is simply not working as they expected. It is perfectly reasonable for a Minister of the Crown, while of course not interfering with the operational independence of the police or any other law enforcement agency, to look at the legislation and see whether it is working as the Government expected. Clearly, it is not, so it would be a perfectly reasonable response to say that nine applications, four cases and the odd bit since is simply not what anybody would have thought acceptable or thought would happen.

This happens with legislation; even if we had the Government of our dreams, laws would be passed that did not function or operate in the way we would want—but that is the purpose of Committees such as this. This is where, to be frank, Ministers listen to what is said and respond that they will take the matter back and that it is unacceptable, rather than come off saying that it is one tool in the box of government in dealing with the issue.

The Minister had a pop at me. I was only using the facts that are available in a government document called Fact Sheet: Unexplained Wealth Order Reforms. If the facts I am giving the Minister are wrong then, frankly, the Government should have updated the facts, because this is what all of us use in these debates. I have not made it up—I have read the Government’s material. The Minister then turns around and says that the noble Lord, Lord Coaker, has not got it right, because the up-to-date figures are X, Y and Z against POCA. It might have been helpful to have the key facts.

Again, I read out,

“the Proceeds of Crime Act 2002 is a complex and technical Act and reform requires careful consideration and consultation”.

Then the Minister had a go at me and laid out four Acts of Parliament that have been done since. Why were they not included in the key facts? It would have been helpful to everyone to understand the way in which it had been reformed to see whether it is now working and functioning as the Government want it to. I do not have five floors of civil servants providing me with a brief that says there are four pieces of legislation which have updated and improved it. The serious point is that, when I and other members of the Committee depend on the government document setting out the key facts in relation to what we are discussing, it should be up to date. That is the only point I want to make.

I do not know whether the figure that I was going to use is out of date. A number of members of the Committee made the point to the Minister that, if it is hundreds of millions that have been recovered over a number of year, that is peanuts. The reason I say it is peanuts—the Minister will correct me if I have got this wrong—is that Fact Sheet: Unexplained Wealth Order Reforms says under the heading “Key Facts”

“Serious and organised crimes … for example”—


and lays out various things—

“are estimated to cost the UK economy £37 billion per year”.

That is not my figure. The key facts document published by His Majesty’s Government says it is £37 billion a year. I should have thought that the response to what are clearly probing amendments about reports would be, “It is £37 billion a year, we are getting a few hundred million there, we are getting £100 million there, £50 million there”. Why are we not making more of a dent into what we all, including the Minister, regard as simply and utterly unacceptable? The Minister will think it is unacceptable that we have that.

Of course, I shall not move the amendments, but I hope the Minister will take back the bureaucratic point about ensuring that the key facts documents that we use in our deliberations are updated. I hope that he will also talk about the point that unexplained wealth orders were brought in as a way for the Government to address the problem, which the noble Lord, Lord Young, and others mentioned, that huge sums of money surround individuals who have no legal way of explaining how on earth they got them.

I shall raise one other point, because it drove me mad when I was a Member of Parliament and before that a local councillor. On estate after estate, on housing area after housing area, it drove people who went to work mad to look down the road and see somebody who did not go to work driving a Ferrari, or something like that. At an individual level, that is exactly what all of us feel more generally about what is happening nationally and internationally, where people are playing the system. The vast majority of law-abiding business men and women and businesses conform to the law, pay their taxes and do their best—but £37 billion a year is lost to fraud. In answer to the noble Lords, Lord Fox and Lord Young, and me, the Minister talked about getting £10 million here and £100 million there. I am pleased that we got that, but it is peanuts compared to the amount of money that we are talking about. I hope the Minister can take that back—

[Lord Sharpe of Epsom (Con)]

As the noble Lord has drawn on the key facts document, it is important for me to provide a bit of clarification. It was published on 4 March 2022 for the previous Bill, not this Bill. Those numbers were correct at the time of publication. On UWOs, they have been applied for—I have said how many times—and two of the applications have been made since the Government reformed the UWO regime last week, which I should have said while I was answering noble Lords. Perhaps that provides a bit more clarity. On the key facts, the three floors of civil servants are in the clear.

[Lord Coaker (Lab)]

On the various facts that the Minister has brought forward, I just went to the latest fact sheets. For example, I have an overarching fact sheet for the Economic Crime and Corporate Transparency Bill. It was updated on 11 April 2023. If that one can be updated, this one can. Are we going to play at dates? All I do is go to the latest available fact sheet. I have another one here, which I shall use in our next debate—and I hope that that was updated on 11 April 2023. So the fact sheet that I cited was from 4 March 2022; I understand what the Minister said. However, these are the latest facts that I have used. What is a member of the Committee supposed to use, if they cannot use a fact sheet and cannot find the latest one? One assumes that it is the right fact sheet. It does not say, “Fact sheet: unexplained wealth order reforms as per a particular Bill”. Oh, I correct myself—it says that at the top. But the truth of this is that what all of us seek to do is to use facts, and all I did was to use the most up-to-date fact sheet. I hope that the one dated 11 April 2023 is the latest one and there is not one from 4 May 2023, which the Minister would be able to correct me about again.

I beg leave to withdraw the amendment.

Amendment 93 withdrawn.

--- Later in debate ---

[Baroness Bennett of Manor Castle (GP)]

We will not get into that one. The noble Lord, Lord Wallace, has been an absolute bulldog in pursuing this issue over a number of years. The reason why I chose to attach my name to this amendment is that I worked with the noble Lord on this issue, during my modest role in what became the Financial Services Act 2021. As the noble Lord, Lord Fox, outlined so clearly, we must be able to diagnose the illness fully if we are to find the medicine we need to deal with it. At the moment, we are not being allowed to see that diagnosis; we are getting a very rough, top-line kind of summary.

As the noble Lord, Lord Fox, said, we know that more than half of the visas issued—some 6,000—were being reviewed in 2022 for possible national security risks. Being told about a small minority does not get us anywhere near where we need to go. We are looking at this particularly in the context of the Russian attack on Ukraine and the current geopolitical situation. More than 200 Russian millionaires bought their way into the UK in the seven years after the scheme was supposedly tightened, before it was finally closed. We have to look at that with respect to security issues as well; we are talking about economic crime here but economic crime and security are surely interrelated. We need to know about those issues.

This amendment deals only with the review relating to economic crime. I am sure that that is because the Bill Office said that anything broader would be out of scope—I have no doubt about that—but it is worth putting on the record that, to learn lessons for the future, we need to assess the impact of the scheme much more broadly. I do not know whether the Home Office report looked at this—I cannot see it—but it would be interesting to see what impact it has had on our current housing crisis and on house prices; surely it has had an impact.

It is also worth highlighting the broader impact of entrenching wealth-based and racialised inequality in the UK. Take the contrast between the 250 family members and dependents of the Russian millionaires who came in versus the fact that so many British people are unable to live in their own country with their foreign spouse or partner because they do not earn enough money to be able to do so. That contrast is really shocking; we should be looking at the impacts of that on our society. These golden visas were a disaster. We can only understand that disaster and seek to deal with its effects if we are open about the Government’s own report.

[Lord Coaker (Lab)]

My Lords, I support much of what the noble Baroness, Lady Bennett, and the noble Lord, Lord Fox, have said. In speaking to my amendments in this group, I start by welcoming the publication of the fraud strategy last week. I know that the Minister has been pushing for it to be published as speedily as possible; its publication is helpful to the Committee.

The fundamental question behind much of what I am going to say is this: how will the fraud strategy published last week answer some of the problems that have been raised—indeed, that I will raise? My Amendments 106B, 106EA and 106EB are clearly probing amendments but they have at their heart the question posed by the noble Lord, Lord Fox: how will the Government bring together all this legislation, statutory instruments, enforcement papers, reforms of Companies House and so on? How is all of that in the landscape of government being brought together, co-ordinated and made effective? It is not an easy question to answer but, looking at all these things, they seem cluttered, to say the least. Even with this Bill, things are cluttered. Some sort of review or report to Parliament to try to do something about that would be helpful. Does the fraud strategy do that? How will the strategy report to Parliament to see whether it has been successful or not?

--- Later in debate ---

There is a well-established government structure that oversees the response to economic crime across the system, thereby ensuring effective oversight of both enforcement and supervision agencies. This is co-ordinated by regular departmental and private public forums, most notably through the Economic Crime Strategic Board, which is co-chaired by the Chancellor and the Home Secretary. So, I hope that the noble Lord, Lord Coaker is reassured—

[Lord Coaker (Lab)]

Does that committee do an annual report? How often does it meet?

[Lord Sharpe of Epsom (Con)]

I do not know. I will find out and write to the noble Lord. For now, I hope he will accept that it is not the role of the Government to set up parliamentary committees and so will not seek to press his amendment.

I turn now to Amendment 106EB concerning the Serious Fraud Office. Once again, I thank the noble Lord, Lord Coaker, for tabling this amendment, which would require the Government to lay in Parliament an annual report on the Serious Fraud Office. The effectiveness of the agencies tasked with fighting economic crime, including the SFO, is of critical importance and of interest to both Houses. That is why the SFO annual report and accounts—these set out much of the information in which the noble Lord is interested—are routinely laid in Parliament.

The law officers of England and Wales superintend the SFO. They oversee the performance of the SFO, including steps that they can take to improve that performance. Through the superintendence process, the law officers identified the need to expand the SFO’s pre-investigation powers, a change that appears in Clause 185 of this Bill. The law officers take steps to ensure transparency, including participating in Attorney-General’s Questions in the other place; publishing summaries of minutes from SFO ministerial strategic boards online; and addressing issues promptly through Written Ministerial Statements.

This is complemented by the work of HM Crown Prosecution Service Inspectorate, which inspects the SFO and publishes its findings alongside a set of recommendations. HMCPSI recently published an inspection of the SFO’s case progression—that is, the organisation’s ability to deliver its cases efficiently and effectively. Given our previous discussions, the tone of the debate and the views expressed, I understand that the intention of this amendment is to probe the Government on the resourcing of the SFO.

The noble Lord, Lord Faulks, made a very interesting point; he may have noticed that I wrote my note on the wrong page when I referred to it earlier. I am coming back to it now; it is an interesting idea and I will definitely take it back. There is a process in place to recruit a new director-general of the SFO. I would imagine that acute matters, human resources and future resources are a part of the remit for that person but the noble Lord certainly makes an interesting point. To go back to a conversation during a debate that the Lord, Lord Browne, and I had last week, my personal point of view is that it is about time we all sat down and started to think about recruitment in law enforcement more generally.

[Lord Agnew of Oulton (Con)]

Given that my noble friend the Minister is going to take the comments made by the noble Lord, Lord Faulks, on recruitment back, I encourage him to look at the report by Andrew Cayley KC, Chief Inspector of the Crown Prosecution Service, who has also done a report recently. Some of the problems in the SFO are case workers not being paid enough, churn and so on, which led to the collapse of the case against G4S. There is big piece of work there that we could be doing stuff with.

[Lord Coaker (Lab)]

What is the Government’s view on whether the SFO is working?

[Lord Sharpe of Epsom (Con)]

Those are good questions; I will come on to them.

Funding and resourcing is a subject that is covered in the fraud strategy. I will not go over the details. At the most recent spending review, the SFO received an uplift to its core budget that is supporting its operations. In addition, the SFO continues to have access to reserve funding to fund specific high-cost cases if needed. This enables the SFO to obtain additional funding for any case that exceeds 4% of the core vote funding for the year.

My noble friend Lord Agnew and the noble Lord, Lord Coaker, referred to the G4S case. Obviously, it is always disappointing when a case has to be brought to an end before it is concluded but, like other agencies, the SFO is right to end an investigation or prosecution when it is no longer in the public interest. The SFO has acknowledged that there were disclosure challenges in the case that was closed earlier this year, R v Morris, Preston and Jardine. The SFO has made good progress on implementing the disclosure changes recommended by Sir David Calvert-Smith and Brian Altman KC in their independent reviews, published last year. The Crown Prosecution Service Inspectorate, the agency that inspects the SFO, has been asked to expedite a planned review of SFO disclosure, which will provide further independent assurance of the SFO’s processes.

Further to that, in Economic Crime Plan 2, which was published on 30 March, the Government set out their intention to explore reforms to the disclosure system to ensure that it supports a fair criminal justice system because cases that are lost on procedural grounds are, as noble Lords have noted, a loss to victims, taxpayers and, of course, society.

The noble Lord, Lord Coaker, just asked me whether the Government have faith in the Serious Fraud Office. The answer is yes.

[Lord Coaker (Lab)]

Is it working?

[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.

Migrants: Housing

Lord Coaker Excerpts

Wednesday 3rd May 2023 Lords Chamber

[Lord Murray of Blidworth (Con)]

I do not recognise the description that the noble Baroness appends to my right honourable friend the Home Secretary’s alleged assertion in relation to the Greek islands. Clearly, those crossing the channel from France, who have hitherto slept on the hinterland of the beaches in northern France, are much better accommodated by quality hotel rooms paid for by British taxpayers, and that is something that we need to address. We need to provide adequate but basic accommodation in order to disincentivise those coming here who seek to take advantage of the generosity of the British people.

[Lord Coaker (Lab)]

My Lords, further to my noble friend Lord Blunkett’s question, surely the Government must have a figure for the number of migrants and asylum seekers that they seek to detain. If the Government have no figure at all—not even a working figure within the Home Office—how on earth do they know how many RAF bases they will need to build accommodation on? How many cruise ships, oil rigs and barges are they going to get if they have no idea of how many people they are going to need to detain?

[Lord Murray of Blidworth (Con)]

The noble Lord well knows that it is not the Government’s practice to share working policy assumptions in relation to these issues. As I said, the effect of the Bill will be to deliver a deterrent effect; fewer people will cross the channel and therefore fewer people will need to be detained.

Police Uplift Programme

Lord Coaker Excerpts

Tuesday 2nd May 2023 Lords Chamber

[Lord Coaker (Lab)]

Well, there you go. I thank the Government for their Statement, and the information they have provided regarding this police uplift programme. This is not, however, year nought of a new Government. It is the 13th year of this Government. Where are the Government pretending to have been for the last 13 years? They cut police numbers by 20,000 and now, having reversed those cuts, want us all to clap them for it and to praise them for this brilliant achievement. Why would we do that?

We all want more police, and we all congratulate them on the work that they do on our behalf. But is it not the case that the last decade and more of police cuts has had appalling consequences, as the Government were warned? Let us look at some of the consequences. Is it not the case that the numbers of arrests and of crimes solved have halved? Is it not the case that since 2015 the charge rate has dropped by two-thirds?

In case the Minister feels that this is just Labour Party propaganda—that we would say that—I quote from three articles in the Daily Telegraph from the last 18 months; there are too many but I chose just these three: “Record low of just 5.8pc of crimes solved”, “Police fail to solve a single theft in more than eight out of 10 neighbourhoods”, and “Police criticised for failing to solve one million thefts and burglaries”. I could go on.

Police cuts have had consequences, particularly as we saw with the complete and utter decimation of neighbourhood policing. How will we see a restoration of this? How will we see a restoration of that visible police presence—crimes investigated, victims supported and criminals prosecuted? How will the police uplift programme deliver that? Instead of fancy phrases about criminals being frightened and so on, the public would have wanted to hear from the Government how the police uplift programme will deal with some of the consequences that they face in their everyday lives in their neighbourhoods.

Following the recent awful findings of inquiries into the police such as that on the murder of Sarah Everard and, most recently, the Casey review, how will the police uplift programme restore trust and confidence in our officers? Does the programme deal with the fact, not mentioned by the Minister, that 8,000 police community support officers were cut—alongside 6,000 police staff, including some of the most specialised officers in forensics, digital and many other such examples?

Of course, anyone would welcome more police officers, but this is not a reform programme. It does not deal with many of the crucial issues facing our police. Boasting about restoring the police numbers that you have cut simply will not do it. What is needed, alongside increased numbers, is a proper programme to restore neighbourhood policing, proper training and accreditation, ensuring that all crimes—including so-called low-level crimes such as anti-social behaviour, bike theft and many others—are properly investigated, with trust and confidence restored. How does the police uplift programme do any of that? We have heard not a word.

The Home Secretary said on TV last week that what has happened over the last 10 years is irrelevant. Does the Minister agree with that, or does he agree with me that it is not irrelevant if you were a victim of theft, rape or violence against women, or if it was your bike, your car or your shed targeted for theft or attack?

I finish with this crucial challenge to the Government: does the police uplift programme deal with the lack of police on the street, on the front line? Does it deal with the fact that 90% of crimes are unsolved? Does it deal with the lack of policing experience, such as in the case of detectives? Does it deal with low levels of public confidence? More police are welcome, of course, but proper reform is needed alongside that, not the populist rhetoric that we have just heard.

[Lord German (LD)]

My Lords, this is obviously a Statement that the Government are pleased to make but, unfortunately, the rhetoric does not lead to change, which is what the public will be looking for. A huge number of questions fall out of the programme and tell you something about the way in which policing takes place in this country.

What we are seeing, of course, is that record numbers of police are leaving the police force while new people come in. Does this record number of police leaving mean that we are basically trading inexperience for experience? In 2021-22, the last year for which figures are available, 8,117 police officers left the profession; that is a 20-year high. Can the Minister tell us whether that figure is reflected in the figures up to the end of March this year and whether, again, we are seeing that change? Clearly, what we need is an experienced profession.

The second thing that the uplift programme shows is the number of people in various age groups within the new police forces around the country. If you look carefully the figures for those aged 55 and over, you see that they represent only some 1.8% of the police force. Has that figure been shared, not in this financial year but in previous years? Is that an accelerating figure, with the number of older police officers declining? At present 38% of the force are aged 45 or over. Was that figure higher or lower in the past?

The other question that needs raising is how police officers are recruited. We have had a series of questions back and forth with the Minister about the way in which police officers are recruited and we know that some 50% of all recruited police officers do not have a face-to-face interview with another police officer. I know that the Minister has replied to my questions and said that this is being altered. I have read what the Government intend to do with the police college and to make that change work, but we certainly need to be reassured that the right people are getting into the police force and we are not seeing the sort of problems that we have seen in the very recent past.

If you want true community policing, what sense does it make to lose all the community support officers that we have had? Since 2015, 4,000 police support officer posts have been lost and since 2019, given that that is the bedrock date that the Minister wants to work from, 1,284 community police officer posts have been lost. The great advantage for those of us who remember the way in which those support officers worked around our communities is that they were seen on the streets; they were what you might call “bobbies on the beat”. They were an essential part of that. As the Minister knows, you do not put one policeman on the beat; you used to put a policeman with a PCSO. So it is two police officers now, because the number of PCSOs has dropped.

The real test of this measure is: will the quality and nature of the service that people get change? Some 275 car thefts per day in the past year went unsolved, and just 3.4% of car thefts resulted in a charge. Also, 574 burglaries went unsolved and only 6% resulted in a charge. The sort of result that people want to see is people being charged and found guilty of the crimes that are being committed against them. Clearly that has not happened. The test for the Government is how community policing is going to work in the future. A recent Savanta poll found that four in 10 UK adults have installed in the past year CCTV, stronger locks, alarm systems or camera doorbells, all of which demonstrates that people are worried about crime and about these crimes being detected, which they have not been as yet.

One thing absent from the Statement is any mention of cybersecurity. Those of us who have been privileged to hear what is happening in this Parliament will know of the battle against those who are trying to burst into the security of our nation. Can the Minister tell us what resource is going to go into the battle of the future against those who are causing cybercrime?

Finally, there is the issue of head count versus full-time equivalents. The Government in the published Statement say that there is little difference—some 1% or 2%. However, 1% or 2% of experienced people who are doing the work that we want to see done is a considerable number. What we are seeing here is a shell without the interior. The interior has to be made to work for the communities of this country and I am not certain that that is the progress which the Government have made.

Economic Crime and Corporate Transparency

Lord Coaker Excerpts

Committee stage
Thursday 27th April 2023 Grand Committee

Overall, I prefer to say to the Minister: please think again. Do not bother with this amendment and come back with better proposals.

[Lord Coaker (Lab)]

My Lords, I thank the Minister for his introduction. Various contributions that have been made show that we should see the Government’s amendments as a starting point, but they have considerable work to do. I have decided that I shall not make the speech I was going to make because that is such an important point.

I support the amendments tabled by the noble Lord, Lord Fox, and the noble and learned Lord, Lord Garnier. I looked again at the report that the noble Baroness, Lady Morgan, brought forward last November, and I have been struck by the point made by the noble Baroness, the noble Lord, Lord Sandhurst, and the noble Baroness, Lady Bowles, about cultural change and how important it is that that is taken forward.

I have two specific questions for the Minister that have not been mentioned in the debate so far. First, I think the Committee’s plea to the Minister is that the Government have an opportunity now to make a real difference through the Bill. As the noble and learned Lord, Lord Thomas, and the noble Lord, Lord Vaux, asked, are we going to miss that opportunity? Are we going to think in a few months’ time, after it has passed, that we had a legislative vehicle by which some of these issues could have been sorted out but this was the Government’s position?

I have been a Member of the other place as well, as have other Members of the Committee, and I know that a Government have not only to look at the votes but to reflect on what is being said. You can tell from the discussions that we all have with our colleagues in the other place that there is a mood for change. To an extent, that has been brought about by what the Government have done but it simply does not go far enough. If the Government set their face against this, whip the votes in the other place and say, “We’re just going to drive this through. We don’t care what the reports have said or what the arguments are. This is where we are”, this will have been a real missed opportunity.

Politically I differ from the noble Lord, Lord Sharpe, but his approach should give this Committee hope. In other Bills that we have debated, change has been brought about by speeches made in Committees such as this one, and indeed by votes lost in the other Chamber.

The Government have to move on some of this—they simply do. I agree that the SME carve-out is flawed and should not be there, and the Government need to move on that; they cannot just set their face against it and say, “Everybody else is wrong and we’re right”. Usually, if everybody is telling you that you are wrong, you are wrong, frankly, whether you are in government or in a family. The Government are being told, in report after report and in interview after interview, by virtually everyone without exception—there may be one—that they have to change. The question is really not whether the amendments are flawed or inadequate or whether a sentence needs changing here or there; government lawyers can sort that out. In Committee the Minister will read out his brief, but between Committee and Report, will the Government at least try to adapt and change and listen to some of the points being made? That is the fundamental question, and that is why I decided that I would not repeat what has been said.

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[Lord Leigh of Hurley (Con)]

Before the noble Lord sits down, will he clarify Labour’s position from the Dispatch Box: that it would be happy with one clause that requires prevention procedures to apply to an extremely large, multinational financial services company, for example, and to a local sweet shop which was incorporated? The noble Lord says that everyone agrees. According to the soundings I have taken from small business organisations, they would not be happy with that.

[Lord Coaker (Lab)]

I said everyone on the Committee —with the possible exception of the noble Lord. I was talking about how people feel about the Bill as drafted, with the carve-out for small and medium-sized enterprises. The noble Lord was referring to something that might include not the small but the medium, and that is a matter for debate, but the general view of the Committee was that the Government’s current carve-out is not acceptable. Where you put the threshold—whether you apply to a little sweet shop at the end of the road with a turnover of a few thousand pounds the same regulation you apply to a multinational company—could be sorted out in regulations, and if we saw them, we could suggest that they take into account the small sweet shop to which the noble Lord referred.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank all noble Lords—too numerous to mention—who have participated in this debate, and I shall try to address all the points put to me, but I apologise if I do not name everybody individually.

I feel I should declare an interest: I have owned and been a director of small businesses, not all of them successful—like my noble friend, Lord Leigh—and to my noble and learned friend Lord Garnier, I declare an interest as a tall man.

I will start with the amendments linked specifically to failure to prevent offences. I welcome the broad support today for the government amendments, which would, I emphasise, cover all sectors, and that includes telecoms companies. I hope that they deliver most of what the other amendments intend. However, I have noted that concerns remain. Obviously, I listened to the debate very carefully, including on the scope and reach of the new offence.

Before I turn specifically to the amendments, I reassure my noble friend Lady Morgan that the fraud strategy really is imminent. She is absolutely right: I am really keen to see it. I say to my noble friend Lord Leigh that his point about accounting principles was very interesting, but the design of the definition of large companies comes from the Companies Act 2006.

I note the wider offence lists put forward in Amendments 96, 97, 98 and 99, tabled in the names of my noble and learned friend, Lord Garnier, my noble friend Lord Agnew, the noble Lord, Lord Faulks, and the noble Baroness, Lady Bennett of Manor Castle. In particular, noble Lords seek to ensure that money laundering is covered by the new failure to prevent offence. The Government have consulted with law enforcement and prosecutors, and we are satisfied that all the priority offences have been included.

We have carefully examined the wider offence list and determined that they are not appropriate to include because they would duplicate existing regimes, cause repetition with other existing offences, are too broad or relate to preparatory offences. It is also worth noting that the Law Commission report published in June 2022 agrees with this. It highlighted that Part 2 of Schedule 17 to the Crime and Courts Act 2013, as Amendment 98 suggests, while a good starting point for considerations, would be too broad.

I turn to the proposed failure to prevent money laundering offence, as in Amendment 99, tabled by my noble and learned friend Lord Garnier. The UK already has a strong anti-money laundering regime which requires regulated sectors to implement a comprehensive set of measures to prevent money laundering. Corporations and individuals can face serious civil and criminal penalties if they fail to do so.

A failure to prevent money laundering offence would duplicate the systems, controls and penalties of the existing regime. Furthermore, it would extend anti-money laundering obligations to organisations with very low risk, which would be disproportionate. Any necessary anti-money laundering measures can be implemented through the existing regime. The Law Commission agreed with this point, noting that any offences to cover breaches of money laundering would create additional positive duties on organisations which would overlap with the duties under the anti-money laundering regime.

The Government’s review of the UK’s anti-money laundering regime, published in June 2022, concluded that existing regulatory requirements allow for businesses to take a risk-based approach to their obligations, meaning their compliance activities can be targeted at areas of highest risk of money laundering and terrorist financing. The review also committed the Government to further analysis and public consultation to identify the best path for reform of the anti-money laundering supervisory regime. Further improvements to the UK’s anti-money laundering framework are therefore best targeted by strengthening and improving the existing regime, rather than by the creation of a new parallel regime. The Government have already committed to undertake further consultation on the anti-money laundering supervisory regime and continue to review the anti-money laundering framework.

Amendment 99 in the name of my noble and learned friend Lord Garnier also proposes a failure to prevent sanctions evasion offence. The UK can already impose a range of criminal and civil penalties against corporations and individuals for breaches of UK sanctions. Powers were strengthened last year when we moved civil penalties for financial sanctions on to a strict liability basis. Introducing a failure to prevent offence would duplicate the existing regime. On the scope of the offences, government Amendment 84B contains a power in secondary legislation to update the list when required.

I turn to Amendments 84AA, 84CA, 84CB and 84CC, on the threshold for the new offence, tabled by the noble Lord, Lord Fox. I thank him for talking me through his concerns last week and I note that most other noble Lords have supported its intention. I will endeavour to set out the Government’s position on this. Our analysis shows that small businesses would be disproportionately affected by the costs of complying with a failure to prevent fraud offence. The total cost to small and medium-sized enterprises would amount to billions of pounds in year one and hundreds of millions in each subsequent year. This would significantly increase the cost of the measure, which is £98.5 million per annum with the threshold included. An affirmative power—

--- Later in debate ---

[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.

[Lord Leigh of Hurley (Con)]

I join the sanctions party. I rise to say that, as this amendment has the support of Cross-Bench, Lib Dem and Labour Peers, I add my support, even if I missed out on adding my name to those proposing it.

--- Later in debate ---

I urge the Minister to see if he can be a little braver, and persuade his ministerial colleagues to do the same, in grasping this opportunity, and to fashion this himself rather than allowing it to be fashioned for him by others later. There is nothing to be lost but much to be gained by grasping this opportunity now.

[Lord Coaker (Lab)]

My Lords, given the time of day, I shall make a brief comment. I agree with Amendments 91 and 94. On Amendment 94, spoken to by the noble Baroness, Lady Morgan, I ask the Minister directly: why would he not ensure that this Economic Crime and Transparency Bill currently before Parliament did exactly what Amendment 94 suggests? It just does not seem logical. If the Minister and the Government do not do it, this will have been a missed opportunity, and we will come back to this issue and ask why we did not do it now. The amendment is reasonable and makes perfect sense and no doubt the Minister agrees with it, but it needs the Government to say, “We’re going to do it”. If it is flawed then the government lawyers can sort it out, but it is a perfectly reasonable amendment and, in my view, the Government should have no difficulty in accepting it. With that brief comment, I will sit down.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank the noble Baroness, Lady Bowles of Berkhamsted, and my noble friend Lady Morgan of Cotes for their amendments on failure to prevent economic crime, and all noble Lords who have spoken in this debate.

I hope that my comments during our debate earlier today will have provided some reassurance on the Government’s ambitions to take action in this area, including the introduction of a new offence of failure to prevent fraud. These amendments obviously cover some of the same ground so I will seek not to repeat myself too much on issues such as the scope and threshold of the Government’s amendments but to focus more on what I understand to be the wider thrust of Amendments 91 and 94.

Before I get on to that, I reassure the noble Lord, Lord Vaux, that the fraud strategy is a couple of hours closer. I remind noble Lords that there is an all-Peers drop-in session on 9 May to discuss the three Bills that are currently under way through Parliament: this Bill, the Online Safety Bill and the Financial Services and Markets Bill. That will bring some of the discussions together, as suggested by my noble friend Lady Morgan. I refute the allegation that the Government are not doing very much. Those three Bills themselves prove that we are indeed intent on fixing many or all of the problems that have been identified—the Government of course take these problems seriously.

I turn to the amendments in this group. The Government’s offence does not extend to services that facilitate fraud—that is, companies whose services are misused by third parties to carry out fraud. Examples include social media and telecoms companies whose services are used to promote fraudulent schemes, as has been pointed out, and banks and crypto exchanges, which fraudsters use to process the payments. If these companies or their employees commit fraud, they will be in scope, but not where their services are misused by others.

The Government agree that companies that facilitate fraud, even if they are not complicit in the offending, must do more to prevent and detect it. In doing so, they can protect their customers and the wider public from fraud, which, as has been discussed at length, causes significant damage to wider society and individuals —we must not forget them. However, we intend for this to be achieved by seeing through existing plans for regulatory and voluntary activity, rather than by creating a new offence which risks duplicating those existing approaches.

Amendment 91, tabled by the noble Baroness, Lady Bowles of Berkhamsted, proposes a regulatory duty to prevent economic crime, enforced by regulators. In relation to organisations that commit fraud, we can achieve a similar effect that incentivises organisations to put fraud controls in place through the Government’s approach: an offence enforced by law enforcement. Our approach allows all sectors to be in scope, not just regulated bodies, and is less resource-intensive for business and the public sector than establishing new regulatory approaches. In relation to the facilitation of fraud, I reassure the noble Baroness, Lady Bowles, that action is already under way to tackle this. I will address some of the sectors mentioned in today’s debate and Amendment 91, which I hope will provide some further reassurance.

The Online Safety Bill will require all in-scope tech companies, including social media companies, to take action to tackle fraud where it is facilitated through user-generated content or via search results. They must put in place systems and processes to prevent users encountering fraudulent content through their platforms and to swiftly remove any such content available through their platform. Without wishing to single out any particular company for attention, I reassure my noble friend Lady Morgan that Airbnb, which she referenced, would of course be in scope.

Additionally, there will be a duty on the largest social media and search engines requiring them to prevent fraudulent adverts appearing on their services. The Bill gives Ofcom, as regulator, robust enforcement powers, allowing it to impose significant financial penalties on services that do not fulfil its duties. Ofcom will publish codes of practice to set out further details on what platforms must do to meet their duties under the Online Safety Bill.

The “failure to prevent” offence operates in a similar way to the Online Safety Bill, by setting out reasonable steps to be taken, with the ability to fine companies that fail to fulfil their duties. Expanding the “failure to prevent fraud” offence in the ECCT Bill to cover facilitation of fraud would create duplication for tech companies, which would have to follow two parallel regimes in relation to facilitation of fraud, potentially creating confusion for businesses.

Noble Lords also raised the role of telecoms companies, including the content of messages passed over their networks. The telecoms industry is already extensively regulated by Ofcom, which is active in encouraging the industry to tackle scam calls and texts, including through regulation and guidance. This includes new measures that will take effect shortly to tackle the spoofing or disguising of UK telephone numbers from overseas. As it should be, the telecoms industry has been an active partner in the fight against scams, with broadband and mobile providers signing up to the Home Office’s Telecommunications Fraud Sector Charter and committing to work with the Government to reduce the use of their networks by criminals.

However, it is important to recognise that telecoms operators are not able to view the content of messages passing over their networks. While they employ sophisticated algorithms to identify and block hundreds of millions of fraudulent or scam messages and calls, the rapid evolution of threats creates challenges to pre-emptive action. This means that a facilitation offence could potentially have a disproportionate effect on the industry and the operation of telecommunications in the UK.

Amendment 91 also references the Financial Conduct Authority. The FCA is working closely with banks and other financial institutions to reduce the role they play in facilitating fraud and to identify further controls that can be put in place to protect the public from scams. In addition, the Payment Systems Regulator is introducing new requirements for financial institutions to reimburse fraud victims, which will create strong incentives to improve fraud controls, as noted by the noble Lord, Lord Vaux.

In respect of the Solicitors Regulation Authority, noble Lords will be aware from Tuesday’s debate that Clause 183 of the Bill already inserts a regulatory objective in the Legal Services Act 2007, focusing on promoting the prevention and detection of economic crime. This measure affirms the duties of the regulators, the Legal Services Board and the regulated communities to uphold the economic crime agenda.

The noble Lord, Lord Vaux, also referenced the Institute of Chartered Accountants in England and Wales. Amendment 91 also references that organisation and other relevant regulators of accountants. As I said, I am aware that several noble Lords have declared their association with that organisation.

As noble Lords will be aware, ICAEW is a professional and supervisory body for chartered accountants. Its work in areas regulated by law—for example, audit, anti-money laundering, local audit, investment business, insolvency and probate—is monitored by oversight bodies such as the Insolvency Service, the FCA, the Office for Professional Body Anti-Money Laundering Supervision, the Civil Aviation Authority and the Legal Services Board. ICAEW has been proactive in the industry fight against fraud, leading the sector in negotiating and delivering the Accountancy Fraud Sector Charter, published in 2021, and is an active member of the counter-fraud community, contributing to all levels of governance across the threat landscape. It is a co-signatory to the Economic Crime Plan and associated actions.

As I set out in our earlier debate, the offence introduced via the Government’s amendments covers fraud and false accounting, while keeping money-laundering responsibilities contained under the existing regulatory regime. That ensures that the offence is targeted, focused on offences most likely to be committed by corporations and where prevention can have the most impact and not duplicative of existing regimes.

I note the wider offence lists put forward under the noble Baroness’s amendment, but—as we debated at length earlier today—we are satisfied through discussions with law enforcement and prosecutors that all the priority offences have been included. There is a power in secondary legislation to update the list when required. We have also touched on the issue of the threshold in the government amendment that means it applies—at least initially—only to large organisations. As I set out earlier, this is to avoid disproportionate burdens on small and medium-sized enterprises and ensure our economy encourages people to open and grow businesses. Of course, we encourage small organisations to take steps to prevent fraud and there are, as I mentioned in an earlier group, existing powers to prosecute small organisations and their employees if they commit fraud, but we need to keep the total regulatory burden in check.

There have been cross-party calls for the Government’s failure to prevent fraud offence both in this House and in the other place, as well as across civil society. The Government have listened and introduced amendments. In addition to the legislative measures proposed, the Government continue to work closely with regulators and wider sectors to tackle fraud and set out the actions expected of industry. I am afraid that the Government therefore view these amendments as duplicative of measures already being taken forward—

Public Order Bill

Lord Coaker Excerpts

Consideration of Commons amendments
Wednesday 26th April 2023 Lords Chamber

[Lord Paddick (LD)]

My Lords, the Minister said that there is only one disagreement remaining. He was, of course, referring formally to what the House as a whole disagrees about; but we on these Benches have opposed police stop and search in relation to protest from day one, as any stop and search power will have a chilling effect on those wishing to exercise their rights to freedom of expression and freedom of assembly. These are fundamental human rights that are even more important to those who feel excluded from the parliamentary process, such as black and other minority-ethnic people. These groups are less likely to be registered to vote, less likely to have the correct form of voter ID even if they are registered to vote, and more likely to be stopped and searched by the police. Black people, for example, are between seven and 17 times more likely to be stopped and searched by the police than white people, depending on whether the power used is with or without suspicion. That is despite the legal safe- guards the Minister referred to.

The Commissioner of the Metropolitan Police, in response to the Baroness Casey Review, accepts the fundamental need to reset relationships between the police and the public, especially on the back of the findings of racism, misogyny and homophobia. Sir Mark Rowley acknowledges the past tendency of the police to impose tactics, rather than collaborate with, listen to and engage with communities. That is exactly what the noble Baroness, Lady Casey of Blackstock, said needed to happen, and the wording of the Lords amendment that we should insist on today is taken exactly from the Baroness Casey Review.

On the one hand, we have the Commissioner of Police for the Metropolis and the noble Baroness, Lady Casey of Blackstock, both pulling in one direction, wanting stop and search to be based on collaboration, listening and engaging. On the other hand, we have this Government pulling in the other direction, rejecting the Lords amendment that would require police forces to draw up a charter on the use of stop and search, in consultation with local communities. This House should insist on the implementation of the recommendations of the Baroness Casey Review and not reject them.

I understand that some noble Lords have been concerned about the precise wording of the amendment. But as the commissioner has found to his cost, not accepting the exact wording of the Baroness Casey Review can result in diverting attention away from actually getting on and doing things instead of debating the meaning of words. However, with other important votes to come this afternoon, and without the support of the Labour Opposition, we appear to have reached the end of the road.

[Lord Coaker (Lab)]

My Lords, I thank the Minister for his response and the noble Lord, Lord Paddick, and many others for the detailed scrutiny and the way this Chamber has tried to hold the Government to account. To be fair, the Government have made one or two changes with respect to suspicionless stop and search, and I will go to them in a moment. But before we do, it is important to reiterate that the Bill is about giving powers to the police that the Government say they need, where—I think it is worth repeating—many of us believe they have the powers necessary to deal with the protests that have caused such alarm in government and beyond over the last few months.

In the last couple of months, it has come down to stop and search without suspicion—for the avoidance of doubt, to deal with protest rather than knife crime, terrorism or serious offences such as those. I welcome what the noble Lord, Lord Sharpe, has agreed to in the amendments to PACE Code A: to require, where operationally practical, to communicate the extent of the area authorised for suspicionless stop and search, the duration of the order and the reasons for it. I think the noble Lord, Lord Hogan-Howe, said that this would be important to include in any change to the PACE code, so I thank the Government for listening and including it, as well as for placing data collection in the legislative framework of PACE Code A and therefore including a breakdown of suspicionless stop and search by age, sex and ethnicity. Can the Minister confirm my understanding of the changes that the Government are proposing?

While it is welcome, it is to say the least a missed opportunity, as the noble Lord, Lord Paddick, said, to respond to the Casey review. If noble Lords refer to page 22 of that review when they return to their offices, they will find that the amendments we put forward, which were supported by the House, are a complete lift from what the noble Baroness, Lady Casey, recommended. My contention is that, given their significance, it was and should have been a real necessity for the Government to put them in the Bill. If things were working with respect to PACE Code A, why was she so insistent that, to restore trust and confidence in the police, this needed to be placed in the Bill? The Government have rejected that, saying that it is fine because of what is in PACE Code A.

Let me share the view expressed on Monday in the other place by David Davis MP:

“why should it not be on the face of the Bill? After all, that would broadcast in clear terms what we want to happen”.

Many noble Lords said this, including the noble Lord, Lord Paddick, and I. That was precisely the point: not to tuck it away in regulation but to say clearly that, such is the significance of suspicionless stop and search related to protest, the Government would put it in the Bill and demonstrate to everyone what they believe should happen. They rejected that for what I consider to be no good reason. It was not only David Davis; Wendy Chamberlain MP said that, in line with the Casey review,

“we need this provision on the face of the Bill”.—[Official Report, Commons, 24/4/23; cols. 550-51.]

The Government say that they absolutely agree with the Casey review and accept its recommendations. Why then do they choose to ignore what the noble Baroness believes is one of the most important things that the Government need to do to restore trust and confidence in the operation of suspicionless stop and search? It is a real missed opportunity and chance for the Government to demonstrate how serious they are about the use of this power and the need to restore that confidence.