Economic Crime (Transparency and Enforcement) Bill

Baroness Neville-Rolfe Excerpts

Committee stage
Monday 14th March 2022 Lords Chamber

Moved by

[Baroness Neville-Rolfe]

91: Clause 52, page 32, line 35, at end insert—
“(2A) In section 1, after subsection (10) insert—“(11) Before making any regulations under this section the Secretary of State must lay an impact assessment before Parliament.(12) The Secretary of State must specify a date on which regulations made under this section cease to have effect.””Member’s explanatory statement
This is a probing amendment and is intended to seek confirmation that an impact assessment will be prepared before such regulations are laid. It also provides for appropriate sunset Clauses.

[Baroness Neville-Rolfe (Con)]

My Lords, as we move on to the final group, I rise to move my Amendments 91 and 96. I was sorry that the short notice prevented me speaking at Second Reading, and as the Bill may have implications for trade and investment, I declare my interest as the chair of the UK-ASEAN Business Council.

Today we are rightly focused on Russia, and are full of sympathy and horror for all that is happening in Ukraine. This Bill has been accelerated and we all want to speed it on its way. I am well known for taking a contrarian view to try to tease out important issues as part of the vital role of scrutiny by the House of Lords. For example, on the Covid legislation, I emphasised the importance of perverse effects and cost benefit, and I think I was right to worry about the adverse impact on health problems other than Covid, such as cancer, and the harm to children’s education, and on the social agonies of the pandemic. Happily, that is behind us thanks to the Government’s brilliant record on vaccination.

As my noble friends the two Ministers said in their very helpful recent letter, the economic crime Bill is novel, particularly in relation to property rights, and largely unprecedented in other countries. In most respects, it will also apply very widely and way beyond Russia, as the Minister made clear. It is concern about that which is behind my amendments.

There are three aspects. First, while a good deal is on the face of the Bill, there are also wide-ranging regulation-making powers, so I propose that any such regulations should be subject to an impact assessment before being laid. The object of this is to ensure that they are properly thought through and to minimise red tape, bearing in mind that the Bill extends beyond the current crisis. I am very grateful for the three impact assessments that have been produced by BEIS, the Home Office and HM Treasury. Helpfully, the BEIS impact assessment discusses on page 36 a Malaysian investment—Battersea power station. Fortunately, it concludes—presumably with its knowledge and agreement—that the new rules would not have resulted in new information being made available or any substantive compliance costs relative to the value of the investment.

However, with my practical mien and business experience, I know how easy it is to get the detail wrong in legislation and regulation of the kind we are debating. The money laundering regulations are a good example. The compliance costs on the honest, including, but not confined to, the rules on politically exposed persons—such as affect some noble Lords—are often burdensome. The bureaucracy involved is also bad for the UK economy without, apparently as we have heard, actually catching the bad guys. So I believe we must stick to the discipline of impact assessments which requires us to balance these matters and do our best to get the rules right, simple and clear across the wide areas covered by this Bill. We also need proper enforcement, probably by investment in tough public sector experts, not external lawyers.

Secondly, I am seeking assurances on the use of sunset clauses. To those noble Lords who are remainers, I refer them to some good practise by the EU—the five-year reviews in single market legislation. These reviews were uncomfortable for incumbents, both the civil servants or the large or dominant external players, but they were good for new thinking and for new entrants. My amendment asks for a specific end date to regulations. But, of course, it is possible to vary the timescale and provide for extensions, as was done with the Covid regulations.

My final area of concern, articulated in Amendment 96, is that there should be a review of all the provisions we are putting so rapidly into law in this Bill and the regulations and guidance made under it. That would take place a year after its passage or at some other suitable period, allowing for the economic crime Bill part 2. It would cover, first, its effectiveness in achieving the objectives set out in the Explanatory Notes; secondly, its impact on parties involved, including small business, whose investments in the UK might dry up needlessly; and, finally, enforcement, especially enforcement by Companies House. I share the concerns expressed by others on the need for accuracy, resourcing and effective enforcement, and I look forward very much to hearing from the noble Lord, Lord Brennan, and my noble friend Lord Agnew of Oulton.

I have no wish to delay the Bill. Indeed, I am proud to have played a part as the Minister responsible for the Small Business, Enterprise and Employment Act 2015, which contained the domestic provisions on beneficial ownership discussed here in this very House. I also worked on the groundwork for David Cameron’s commitment to a register for foreign companies which own or buy property in the UK. The importance of getting this on to the statute book quickly has been underlined today by Ukraine’s tragic circumstances. I beg to move.

[Lord Cromwell (CB)]

My Lords, I recognise that we are on the home straight. On Amendment 91, the House needs to be clear whether we are having a sunset clause or not. My understanding from the outset from talking to Ministers is that we are not, and that this is going to be a permanent piece of legislation. In fact, throughout the two days we have debated this, we have been talking up having ECB 2—something I coined, which I am glad everyone has adopted—to fill in the gaps and be the unspecified bag at Christmas in which we are all going to find our favourite toys, but we shall see.

[Baroness Neville-Rolfe (Con)]

Just for clarification, my proposal is for sunset regulation within the regulations, not within the Bill itself—which will, of course, be entirely permanent.

[Lord Cromwell (CB)]

My mistake; I struggle with joined-up writing.

Since I get only bite of the cherry and have an amendment coming up in my name, I will tackle both Amendments 93 and 95 on resources. It is widely acknowledged and was highlighted emphatically by speakers at Second Reading that the resourcing of those responsible for the difficult work of identifying, investigating and prosecuting those covered by the Bill are currently inadequate. In the Minister’s letter of 11 March, which I referred to earlier, page 6 refers to an overall package of £400 million and the creation of a kleptocracy cell in the National Crime Agency and says that the NCA has “surged additional officers”. I am aware that the NCA has obtained fewer than five prosecutions for economic crime offences in the last five years and has seen its budget cut, despite calls for increases. The number of investigators at the proceeds of crime centre has declined, despite Parliament raising concerns. I simply do not know whether the resourcing now referred to is sufficient, but I am told that a figure of £1.7 billion is a more realistic amount to get this job done.

Amendment 95, to which I have added my name, calls for an annual review of the suitability of funding arrangements for enforcement agencies. A theme of our debates has been the need to revisit what we have discussed and agreed to here. It is pure vanity to pass legislation that cannot be enforced and resourced effectively. This amendment will be useful in making sure that a proper focus on resourcing is maintained. I therefore support Amendment 95 or, if it is preferred, Amendment 93, which has much the same effect.

Turning finally to Amendment 94 in my name, I am very grateful to the noble Lord, Lord Thomas, for adding his name to it. We have heard an awful lot about enablers during our debate, which draws a pantomime hiss that used to be reserved for lawyers, accountants and bankers—but, unfortunately, we all fall into that category of enablers now.

A number of speakers, myself included, raised the issue of SLAPPs, or lawfare, at Second Reading. As is appropriate at this stage, I do not propose to rehearse in detail what was said then. Nevertheless, it is a well-established fact that UK law firms and others—some, anyway—undertake deliberate intimidation tactics known as lawfare to prevent journalists and others bringing matters of public interest to light.

It is further well known that this has ensured that information in the public interest is regularly neutered or hidden. The rule of law requires equality before the law, but this behaviour goes well beyond any reasonable approach to a defence of reputation. It is the dark side of our legal system, where inequality of arms means that the wealthy can—at times, using ill-gotten gains—out-resource those on whom we as a society rely to find out the truth and shine a light into dark places.

The Defamation Act 2013 sought to introduce some protective measures, but this is a complex area of law that not only is costly but carries the risk of liability for the other party’s costs. It is this prospect of bankruptcy or insolvency that is primarily used to intimidate journalists and other organisations. Furthermore, such a defendant against a claim may be unable even to obtain a legal representative willing to take on the risk of cost recovery from the other side. Even what are known as “trials of preliminary issue” regularly run up costs of £25,000 or more, and a full trial will often cost well above £500,000. Even if successful, the defendant will be faced with the irrecoverable portion of their costs, which can also be very substantial—and we should remember that this does not take into account all the work, time, disturbance and anxiety before a court action even arises.

We must not allow the Bill’s purpose—tackling dirty money and illicit practices of the sort that it covers—to be undermined by allowing the wealthy to abuse our legal system in order to intimidate and muzzle the free press in this way. Amendment 94 would require the Government to assess how the Bill might be frustrated, have its impact blunted and its implementation thwarted by such conduct, and it would require the Government to share their findings with Parliament.

The Bill is operating in a very compressed timeline, and I am grateful to the Minister for his email exchange with me over the weekend on this issue. I note that the Deputy Prime Minister announced on Friday the launch of an urgent call for evidence in this area, and I have the Minister’s assurance that this call for evidence will not be just a listening exercise but that:

“Where action is needed, we will take it quickly and effectively”.


The origin of the Bill’s arrival here is the Russian invasion of Ukraine. An immediate step by the Putin regime has been to shut down the channels of free communication and free media within Russia. Surely we must ensure that we do not allow the same regime to do the same in the UK. I therefore invite the Minister to confirm on the record the Government’s commitment to this, not just as a one-off inquiry but on a regular basis, as foreseen in Amendment 94. I also ask him to confirm that the action he has referred to will include specific provision for it in ECB 2. I beg to move.

--- Later in debate ---

[Lord Ahmad of Wimbledon (Con)]

My Lords, I stray into the work of other departments—both the Home Office and the Treasury—but I can assure noble Lords that this is an all-of-government approach, ensuring that not only are we acting appropriately in whatever department we need to act, but of course that there is appropriate funding and support for the actions we are taking.

[Baroness Neville-Rolfe (Con)]

My Lords, I am very grateful to all those who have taken part in this short debate. I thank my noble friend the Minister for his response. My probing amendment applied to Part 4 of the Bill, of course—so, to all regulations made under it—but I understand exactly where he was coming from on the sanctions provisions.

As we are short of time, I will dispense with the customary summary of the excellent points that have been made this evening, except to emphasise to the noble Baroness, Lady Smith of Basildon, that I am as keen as anyone else to avoid delay. I was glad that she also saw value in impact assessments appropriately tabled.

I think there is a measure of agreement across the Committee on the need for adequate enforcement of the provisions in the Bill and on the need to provide the necessary resources. I will return to this matter, to the idea of effectiveness reviews and indeed to the various regulations, in due course. I agree with my noble friend the Minister that the House has worked well on this Bill to get it through Committee in such a short time—but for now I beg leave to withdraw my amendment.

Amendment 91 withdrawn.