Economic Crime and Corporate Transparency Bill

Baroness Altmann Excerpts

2nd reading
Wednesday 8th February 2023 Lords Chamber

[Baroness Altmann (Con)]

My Lords, I welcome the Minister to his place and congratulate him on his introduction. It is a pleasure to follow the noble Lord, Lord Faulks.

I, too, welcome the Bill and believe it will help clamp down on economic crime, money laundering, fraud, terrorist financing and many other ills that our system suffers from. I associate myself with and commend the remarks of my noble friends Lady Morgan and Lord Clarke, and the noble Baroness, Lady Bowles. I also urge the Government to listen carefully to the recommendations of my noble friend Lord Agnew.

I wish to speak to three specific areas which I hope will be strengthened during the passage of the Bill, and I thank the Minister and his department for engaging on them. First, on increasing Companies House fees, Companies House is our first line of defence against economic crime. However, as so many other noble Lords have said, it must be properly resourced to fulfil the new roles being given to it—my noble friend Lord Young also explained that very carefully—otherwise its new powers will be useless. Economic crime is costly and yet the fight against it is vastly underfunded. Some estimates—we have heard many this evening—suggest that £100 billion is lost to money laundering each year and that fraud, the most common economic crime, results in the loss of perhaps an additional £190 billion. That is possibly the equivalent of about 15% of our GDP. I therefore support increasing the fee to set up a company from the ludicrously low £12 to at least £100, as the Treasury Select Committee recommended. Indeed, with the EU average of €300 and with the US at between $570 and $1,400, there seems to be little justification for the current low fee, which is surely an encouragement to bad actors to set up a business here. If someone cannot afford £100, they should not be setting up a company anyway.

Increasing the fees could help provide the new resources that Companies House will clearly need to help identify and prevent economic crime. The benefits were highlighted in the excellent speeches of my noble friends Lord Clarke and Lord Leigh, and the noble Lord, Lord Faulks. Toughening the oversight of existing and new applications is vital, and extra funding will help improve the protection. I also agree with the remarks of the noble Lord, Lord Fox, about toughening the insourcing policy.

Secondly, on whistleblower protection, 42% of internal fraud is detected and exposed through whistleblowers, yet most early warnings are ignored and those who blow the whistle can often end up paying the highest price. From the Panama papers to the Pandora leaks, the FinCEN files or PPE revelations, so many of the scandals we know about have been because of brave whistleblowers acting at great risk to their livelihoods. Yet our current frameworks are failing them. Whistle- blowers have no proper financial protection, and we all know they have pretty bleak employment prospects when blowing the whistle results in them losing their job. That cannot be in the public interest. Indeed, I have personal experience of that, when a good friend who I worked with in my investment banking days in the City suffered stigma and ostracism after reporting financial irregularities—colleagues manipulating market prices to favour their own positions at the expense of their clients. She took the brave decision to expose that, despite the risk to her career, perhaps only because she was coming up for retirement and was willing to face the flak. Younger whistleblowers are just not protected. An office for the whistleblower is clearly in the public interest.

Thirdly, on SLAPPs, which we have again heard a significant amount about tonight, I echo the words of the noble Lords, Lord Cromwell and Lord Fox, and many others. I also commend my noble friend Lady Stowell and her suggestion on Clause 81 fines being raised to £250 million for lawyers rather than the current £25,000. Our country’s legal system has been abused by corrupt, wealthy individuals to intimidate those trying to expose their corruption and silence public-interest journalism. The lawyers engaged in this are profiteering from abuse that is designed specifically to silence journalists, campaign groups or individuals. The lawyers involved fail to recognise wider ethical societal obligations, and they must know the bad behaviour of these individuals and institutions that they are defending. Helping to undermine the fabric of our democratic institutions and the rule of law should have no place in our legal system.

In true Augustine style, the Government have promised new anti-SLAPP legislation—but not yet. Other countries have already acted, and this Bill offers an opportunity to do so. The Solicitors Regulation Authority needs stronger powers to impose punitive fines on legal firms, and courts should be encouraged to throw out vexatious claims at an early stage. I hope that my noble friend will accept amendments as this Bill proceeds. I will be supporting amendments in all these areas. I also look forward to seeing the Government’s own amendments, as promised by my right honourable friend in the other place, Tom Tugendhat.

I also commend the excellent work of the right honourable Margaret Hodge and her APPG staff, and my right honourable friend Sir Robert Buckland, for all the cross-party work that they have been doing on important amendments. I very much hope that my noble friend will consider accepting these during the passage of this Bill.