Corporate Transparency and Economic Crime

Kevin Hollinrake Excerpts

Monday 28th February 2022 Commons Chamber

[Kwasi Kwarteng]

The hon. Lady is absolutely right to say that we want to have greater transparency. The example in the statement was merely that; it was an example of how people can hide ownership of assets. We want greater transparency generally.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I very much welcome my right hon. Friend’s statement, particularly the bit about overseas entities. There are a couple of things that he might consider for his White Paper. Some 43% of all financial crime is identified by whistleblowers, so proper whistleblowing protection is absolutely critical to identifying this stuff. The other thing is failure to prevent economic crime. If we want our banks and wealth managers to clamp down on this stuff and to do the right thing, they need to face criminal charges if they do not.

[Kwasi Kwarteng]

I pay tribute to my hon. Friend, who has been speaking about these affairs with a great deal of knowledge and passion for many years, and I have engaged with him on these subjects. He will also appreciate that what we are doing in bringing forward this legislation does not capture the entire economic crime package. There are other measures that we will be looking to bring in very soon.

Post Office: Horizon Compensation Arrangements

Kevin Hollinrake Excerpts

Thursday 24th February 2022 Commons Chamber

[Paul Scully]

I ask the hon. Gentleman to pass on my heartfelt sympathies to Della for what she has been through.

This is exactly why we set up the inquiry. My Department has said from the beginning that we will work with the inquiry in the fullest sense to ensure that we offer all the information, support and evidence that Sir Wyn wants, and I have received an assurance to the same effect from Fujitsu and the Post Office itself. I am determined that that process will be carried out.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I thank Members on both sides of the House, and indeed the Minister, for their efforts. As for the 555, lives have been ruined. Now lives have been lost; people die. The compensation must be delivered quickly. Why can people not have access to interim payments? That is the least we could provide. I accept that there are the legal challenges that the Minister mentioned, but this is something that we could and absolutely should do now.

As for the independence of the scheme, Herbert Smith Freehills acted for the Post Office in the litigation to reduce compensation, so how can it be right that it now acts with the Post Office in delivering compensation? That cannot be right, especially given that Herbert Smith Freehills oversaw the Lloyds Bank compensation scheme that was judged independently to be unable to deliver fair and reasonable outcomes to the victims, so it all had to be done again. If we do not put independent oversight into this—with a High Court judge—it will all have to be done again as well. We must act now to change the way in which this is working.

[Paul Scully]

That is why the Post Office has an independent panel to oversee the process. So there is independence. On the interim payments for the 555, they are there for overturned convictions. That is a legal issue that I am working through at the moment because, in the eyes of the law, it was a full and final settlement. That is what I have to tackle at speed because the 555 will understandably not understand this and want to crack on now; they want to receive the compensation. I am determined to ensure that that happens.

Economic Crime: Planned Government Bill

Kevin Hollinrake Excerpts

Wednesday 26th January 2022 Commons Chamber

[Kevin Hollinrake (Thirsk and Malton) (Con)]

(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy to make a statement on the Government’s plans to bring forward an economic crime Bill.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Paul Scully)]

I thank my hon. Friend for his question, but, as I am sure he will appreciate, I am not going to speculate about the content of any future Queen’s Speech, which is the correct moment for the Government to be setting out their legislative agenda for the next parliamentary Session.

However, I can confirm that the Government remain committed to tackling economic crime, which is why my colleagues in the Home Office and the Treasury take the lead on this. In recent years we have taken a number of actions, including creating the new National Economic Crime Centre to co-ordinate the law enforcement response to economic crime and establishing the Office for Professional Body Anti-Money Laundering Supervision to improve oversight of anti-money laundering compliance in the legal and accountancy sectors. We delivered the Criminal Finances Act 2017, which introduced new powers including unexplained wealth orders and account freezing orders. We are determined to go further to crack down on dirty money to protect our security and our prosperity. With the publication of the fraud strategy and second economic crime plan this year, we will further level up the response to crack down on crimes of this type.

My Department is playing its part. The Department for Business, Energy and Industrial Strategy announced plans to reform Companies House in September 2020. In 2021 we consulted on more detailed aspects of the reforms, and we will respond to the consultation soon. Investment in new capabilities at Companies House is already under way, with £20 million being invested in this financial year and a further £63 million announced in the spending review. The draft Registration of Overseas Entities Bill has undergone pre-legislative scrutiny. We are amending the Bill in line with the Committee’s recommendations, and in line with comments that the Prime Minister made to the House just yesterday. We will introduce the Bill and the broader reforms of Companies House when parliamentary time allows.

[Kevin Hollinrake]

I am grateful to the Minister for his response. As he knows, economic crime costs the people of this country £100 billion per annum, according to the National Crime Agency. The Government have committed themselves repeatedly to legislation to give our agencies the tools that they need to tackle this problem, and it was therefore concerning to hear from my noble Friend Lord Agnew—who recently resigned from his role as Minister responsible for countering fraud—that a decision had been made to drop the economic crime Bill from the legislation that is due in the next parliamentary Session.

This is not a notional white-collar offence; it affects real people in very tangible ways. Terrorists and drug dealers depend on it to launder and legitimise their money through UK banks, companies and properties. Up to 50% of moneys flowing through Russian laundromats, often used for tax avoidance, for stolen public funds and to launder moneys derived from organised crime, flow through UK shell companies. UK corporate structures were involved in arms deals which breached sanctions in Sudan. HSBC and NatWest have been fined hundreds of millions of pounds for allowing criminals and Mexican drug cartels to launder their money through accounts held at their banks. An estimated £5 billion or so of taxpayers’ money, in the form of bounce back loans, has been taken fraudulently because some banks have not applied the most basic of checks. Criminals, despots and terrorists involved in people trafficking, illegal immigration, drug dealing, extortion, kleptocracy, the impoverishment of nations, and fraud—including what is taken directly from the public purse, to the tune of £30 billion per annum—are all facilitated by some of the lax rules that we have in this country.

The Government have promised to tackle this issue—as my hon. Friend the Minister has said—by means of Companies House reform; to fund regulation by applying a small surcharge to the current cost of establishing a company in the UK so that we can close down those shell companies and trusts; and to introduce a register of overseas entities to reveal the real beneficial owners of UK property, and a corporate offence of failing to prevent economic crime so that, for example, banks can be properly held to account for granting those fraudulent bounce back loans.

All this, plus more resources for our agencies and new whistleblower protections, will boost this country’s reputation, tackle crime, and help to reduce our tax burden. Every Minister I have spoken to wants us to do this. The Treasury Committee wants us to do it, all our crime agencies want us to do it, and campaigners want us to do it. I urge the Government to introduce the legislation as soon as possible.

[Paul Scully]

Let me first acknowledge my hon. Friend’s work on Companies House reform, on whistleblowing, and on general economic crime. He really has a handle on this issue, and his thoughts are always well received.

My hon. Friend is right to say that economic crimes are a significant cost to the economy. It should also be borne in mind that there are victims at the end of these crimes, and that they experience significant distress. We also recognise the national security implications of allowing dirty money from overseas into our financial system. We acknowledge the need for action on economic crime, and the Government have acted. My colleagues in the Home Office and the Treasury have begun reforms to the suspicious activity reporting regime, created the National Economic Crime Centre to co-ordinate the law enforcement response, and reviewed our money laundering regulations and supervisory regime. That review will produce a report by June 2022. We are legislating for the economic crime levy in the current Finance (No. 2) Bill. We are committed to building a framework that will deter such crimes from happening and to providing a framework that will ensure that those who commit such crimes can be held to account.

Draft Trade Union (Levy Payable to the Certification Officer) Regulations 2022 Draft Trade Union (Power of the Certification Officer to impose Financial Penalties) Regulations 2022

Kevin Hollinrake Excerpts

Tuesday 25th January 2022 General Committees

[Paul Scully]

I am glad the hon. Lady has brought the focus to the regulations rather than the wider scope of the 2016 Act, which was discussed in Committee and during the passage of previous regulations. On finances, the work of the certification officer at the moment is funded through fines and other fees but the regulations will wrap them up in a levy, which will be proportionate and affordable, because we responded to the consultation and made some changes accordingly.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

Does my hon. Friend agree that it is quite common for industry to pay for its regulator? For example, the Financial Conduct Authority is funded directly by the banks, as are other financial schemes. That is quite a common way of funding such activities.

--- Later in debate ---

[Imran Hussain]

Certainly, I agree with the hon. Gentleman’s first point—that unions do a fantastic job—but unfortunately I do not agree with the rest. I am sure the hon. Gentleman is not saying this, but one could interpret from what he said that somehow, if the Government were to pay an independent regulator, they could tell that regulator what to do. We know that is not the case—of course it is not.

Again, that is not the issue today. As I said to the hon. Member for Stoke-on-Trent North, at the heart of this—I will come to this at greater length—are two points. The first is suddenly charging a levy—I know the Minister wants to say that there are other organisations where regulators are paid for in the same way, but unions are not profit-making organisations. It is almost as absurd as saying that charities should pay for the Charities Commission. The argument that the Minister made did not answer any of the questions posed from this side of the Committee, and I hope that he will do so when he sums up.

The first statutory instrument deals with the financial levy that the Government intend to impose on trade unions. That levy would impose unnecessary and disproportionate costs on trade unions, and would take money out of the funds used to fight for better pay terms and conditions. That is the crucial point. Any money that is taken from trade unions cannot be spent on defending their members. It is fine saying that it is 2.5% but, by the way, the overall figure is not capped.

That raises another interesting question: who makes up for the shortfall? If, for example, the certification officer says in two to three years that their costs will run into the millions—this instrument does not stop that; if the Minister disagrees, he can intervene—and we are saying that the cap on unions is 2.5%, who will make up for the shortfall?

[Kevin Hollinrake]

I guess the answer in the current situation is the taxpayer. Surely the only question here is: who should pay for the regulator? Should it be the trade unions and their members, or the taxpayer? That is the choice we are making. The Government have no money, so would the hon. Gentleman prefer the taxpayer to fund trade unions, many of whom do not benefit from trade union activity, or should it be the people who benefit from it?

[Imran Hussain]

The current known cost of the certification officer as it stands is about £700,000, which is paid by the taxpayer. There is, however, a principle: trade unions are there. I have just gone through some of the huge achievements of our trade union movement—which I am sure Conservative Members agree with me about—not just in this country but internationally, for workers in some of the poorest and most squalid conditions around the world. Our internationalist trade unions have gone and done that. Now, on the other hand, we are saying that the draft regulations are not for the good of workers. Trade unions help our workforce with their rights and conditions. Therefore, the principle is that of course this should be paid for by the taxpayer.

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[Paula Barker (Liverpool, Wavertree) (Lab)]

I declare an interest as a member of Unison and Unite the union. Does my hon. Friend agree that those on the Government Benches are treating trade union members as if they are not taxpayers in our society? They are taxpayers—

[Kevin Hollinrake]

Not all taxpayers.

[The Chair]

Order. Carry on.

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[John Spellar]

I have no objection to the regulation of trade union activities. I think it perfectly proper—many other countries do it—but what we are seeing is steadily undermining trade unions’ ability to operate at work, as we have seen over many years, and putting increasing burdens on them.

Let us take the example of vexatious complainants, which are covered by the regulations. There are no protections in the event that somebody comes along and says, “I read in The Daily Telegraph or the Daily Mail that this has happened, and I am lodging a complaint to the certification officer.” Quite apart from the cost of the certification officer, that puts a great burden on the unions, which will have to defend themselves against complaints not from members or even employers, who have other routes to make complaints about union behaviour, but from somebody sat in his armchair, picking up on a story in his newspaper. Why is that included in the regulations?

[Kevin Hollinrake]

I want to clear up one point. Personally—I probably speak for one or two others on this side of the Committee—I am not against trade unions, but I am for a fair balance between workers’ rights and the rights of business. I am also after a fair balance in who pays for that. In the UK, there are 6 million members of trade unions, but 10 million retired people and 6 million self-employed people. Why should those taxpayers pay for the people who benefit from trade union activities?

[John Spellar]

I think that applies to all sorts of activities. Of course, the hon. Gentleman is assuming that those 10 million retired people were not trade unionists when they were at work—a great majority were. They may actually believe in trade unions and think that there were very good in their time, and may regret that the role of trade unions has been diminished by persistent attack from Conservative Governments and employers.

Reducing Costs for Businesses

Kevin Hollinrake Excerpts

Tuesday 11th January 2022 Commons Chamber

[Jonathan Reynolds]

I love it when Members bring testimony from their own constituencies about specific sectors that have been affected. In the urgent question we had before Christmas, a lot of people mentioned coach companies, for instance, which were not at the time getting the national coverage they deserved. I thoroughly agree with the point my hon. Friend has made that businesses are directly affected by energy costs too, because they are seeing their bills go up while revenue goes down. That is clearly the case for energy-intensive industries, for which out-of-control energy hikes are simply unaffordable.

I am absolutely adamant that great British industries such as ceramics, glass and steel must have a future, but I recognise that that will not happen without political commitment. Many of us here are from places that take real pride in our industrial strength and heritage, and there has to be a future for these industries not least because, although their domestic carbon footprint is high, if we compare them with foreign competitors they are usually among the most efficient in their class. We cannot attempt to hit net zero simply by letting industry, emissions and jobs go overseas. That is why we have proposed a £600 million contingency fund to support energy-intensive industries, and we have laid out a plan for green steel, promising to fund pilot projects using hydrogen instead of coal for production and to joint-fund new equipment so the sector can grow.

However, if we want to keep these jobs and firms, it will require the public and private sectors to work together, and that brings me to the long-term challenges facing businesses because in many ways that is the most concerning picture of all. Right now, every economic indicator we have is heading in the wrong direction. The forecast for long-term growth is poor, productivity growth is appalling, wages are stagnant, and inflation is high and rising.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

Will the hon. Gentleman give way?

[Jonathan Reynolds]

I will proceed.

I know many Government Members are uncomfortable hearing it, but it is true to say that the Conservatives have become a high tax party because they are a low growth Government, and there is no plan that I can see to change that. In fact, most of the decisions the Government take tend to make things worse. Raising taxes, failing to deliver on transport promises and tearing up the existing industrial strategy are not the ways to increase productivity, growth and wages.

We used to talk about the danger of industrial strategy being the Government trying their hand at picking winners. This Government’s strategy is better described as kicking winners. Not a week goes by without some Government Minister trying to drag our world-class universities into their desperate culture wars, instead of recognising the pioneering research that, among other things, gave us the vaccine. There is the Brexit deal the Government negotiated that delivered none of the market access our financial services industry asked for, and which has put bureaucracy and red tape in the way of British exports.

If we are to meet the challenges of the future, it will take a lot more ambition than this Government have so far shown, and it will require a change of course in several areas. It will require reforms—significant reforms—such as the replacement of business rates that we have proposed, and policies that incentivise long-term growth and investment over slogans such as levelling up, or unproven flights of fancy such as freeports.

[Jonathan Reynolds]

I am particularly pleased I gave way to my hon. Friend because I drive through Chesterfield when I am going from Stalybridge to London, and I pay tribute to him and his local colleagues for the work they have done. He is absolutely right that our promise on business rates is to replace an outdated system that does not work with one that is fit for the future. That means rebalancing rates so that bricks-and-mortar businesses do not lose out to online firms and making sure we encourage, rather than disincentivise, investments in new plant and machinery.

[Kevin Hollinrake]

Will the hon. Gentleman give way?

[Jonathan Reynolds]

No, I am going to proceed. [Interruption.] Okay, go ahead—I give way.

[Kevin Hollinrake]

Just to make a point of detail about the context, the hon. Gentleman talks about runaway inflation in the UK, but does he accept that these are international problems? The inflation rate in Germany is actually higher than in the UK at 5.3%, and the inflation rate in the US is 6.8%, which again is much higher than in the UK. Shall we have some facts in this debate, rather than some of the rhetoric coming out from his speech?

[Jonathan Reynolds]

I always have time for the hon. Member, so I am not sad that I gave way to him. Yes, as we come out of the pandemic there are pressures on the global economy—we can see that in supply chains and in inflation. The question for the hon. Member is this: seeing that global picture, are the Government right not to take action, but to add further to the problem? We can see the impact on domestic energy prices, to which we are uniquely exposed because of his party’s Front Benchers. Is that the right course of action, or should we follow the route that the Opposition are putting forward, which I respectfully say is a much better proposition?

We are fortunate to live in a country where we have world-leading industries, but we agree that our productivity has stalled, that too much work is low-skilled and low-waged, and that prosperity is not shared in every community. With the right leadership from Government, I believe that many of our problems and challenges could be overcome.

The Opposition motion clearly sets out the action that the Government could take now: freezing and replacing business rates, saving the average shop or small factory £4,000 this year; alleviating the debt burden on firms, allowing them to pay back some Government loans when they are more profitable; not going ahead with the national insurance rise, which is a tax on jobs for employers at the worst possible time; and introducing a £600 million contingency fund for businesses, particularly in energy-intensive sectors, to address spiralling energy costs.

Where the Government have left the pitch, Labour will back businesses to keep British firms competitive. We need a Government who can match the vision and dynamism of British business, which we are ready to do. Labour is unashamedly a pro-business, pro-worker party. The leaders and entrepreneurs I speak to—[Interruption.] Quiet, Secretary of State! They do not want handouts from the Government; what they want is a level playing field and an environment they can do business in. They want the state to take the long view and provide the foundations that they need for success, and that is exactly what Labour will offer.

--- Later in debate ---

[Lee Rowley]

I hate to break it to my neighbour, but we came out last year with a reform of business rates, which is intended not just to save a substantial amount of money for businesses in his constituency and mine, but to ensure reform and recognition of the changes necessary. Labour ignores those kinds of changes, and what the Opposition did just a moment ago is a perfect example. The Chancellor’s 2021 Budget delivered a huge tax cut to business, freezing the multiplier for 2022-23, worth nearly £5 billion over the next five years, introducing a new temporary 50% relief for the retail, hospitality and leisure sectors, and moving to a yearly revaluation cycle from 2023.

[Kevin Hollinrake]

The only detail that we seem to know about in Labour’s plans to reform business rates is a sixfold increase in the digital services tax. One thing we know about the digital services tax is that Amazon, for example, passes it straight on to consumers, which is exactly what it did. The other thing we know is that it does not apply to Amazon’s direct sales, so those plans will hit small businesses and consumers. Is that not the wrong emphasis for reforming business rates?

[Lee Rowley]

I am grateful for my hon. Friend’s intervention, and that is exactly the level of detail that demonstrates why, when the Opposition come to this House and put forward half-baked schemes, they immediately fall apart when they come under scrutiny, away from the warm words.

We have just gone through a business rates review, which we have talked about, although it might have been useful, consistent or, indeed, even slightly coherent for those on the Labour Front Bench to actually say what they were going to do over and above that. Of course we acknowledge the burden that rates impose. That is why many of us on the Government Benches are here in the first place: because we recognise over the long term that a lower tax burden is the way to make society and communities healthier, happier and wealthier. I can tell the hon. Member for Stalybridge and Hyde how that is going, given that he sat on the Opposition Front Bench under the right hon. Member for Islington North (Jeremy Corbyn), who was going to raises taxes until the pips squeaked. As Conservatives, we know that a successful, dynamic, thriving private sector is the only way we get a strong economy in the long run. This is a Government that support business. We backed business robustly during this unprecedented crisis period, and we will continue to do so as we rebuild the economy following the pandemic.

This economic plan is working. The vaccine roll-out continues to play a key role in enabling us to lift restrictions, allowing sectors to remain open and businesses to recover. The UK was one of the fastest-growing G7 countries in 2021, and the same is likely in 2022. There are over 400,000 more people in employment than before the pandemic, and redundancies are below pre-pandemic levels. As we recover and move from the most unprecedented health situation of our lifetimes, we are moving towards the most unprecedented economics, whereby many economies are experiencing high inflation, primarily due to pressures from rising energy prices and disruptions to the global supply chain. My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) highlighted the equivalence of inflation elsewhere in the world. Those global pressures are the main drivers of higher inflation in the UK. Global production and supply chains are in the process of adapting and adjusting to that disruption, and the Chancellor is working with his G7 partners to monitor global supply chain pressures and build a strong and resilient recovery.

Before I conclude, I want to spend a short time on the third part of the motion, energy. On recent high energy prices, I want to acknowledge the concerns of industry and business and make it clear that the Government are committed to them both now and in the longer term, as we work through these immediate challenges and volatile times, and then look to opportunities and challenges over the long term. The Government are constantly engaging with stakeholders, including large energy users, businesses and energy retailers, to consider what action may be necessary. The recent rise in energy prices over the autumn and winter has been driven by the increase in the price of wholesale gas, the demand for which has grown, as we and other nations have recovered from the covid-19 pandemic. Consequently, higher wholesale gas prices have been observed in Europe and Asia in the last half of 2021.

However, it is vital to note that this has not impacted our energy security. The Government continue to work closely with Ofgem, National Grid Gas and other key industry organisations to monitor supply and demand. At the same time, the Government are determined to secure a competitive future for all businesses, including those that are energy-intensive.

--- Later in debate ---

[Stephen Flynn]

Absolutely. My hon. Friend makes an excellent point illustrating the knock-on impact the economy will face as a result of the crisis before us. Before finishing, I want to reflect on two further points.

[Kevin Hollinrake]

rose—

[Stephen Flynn]

As always, I am happy to give way to the hon. Member.

[Kevin Hollinrake]

If I were running a business in Scotland, I would want to know what the hon. Member is going to do in the future, because annual economic growth in Scotland between 2013 and 2019—pre-pandemic —was 1.2%, versus the rest of the UK’s 2%. That is bad for business. What is he going to do in Scotland to grow the economy more rapidly, even to the rate of the rest of the United Kingdom?

[Stephen Flynn]

Join the single market.

I shall move on to the two biggest outstanding issues that I have not touched on. The pandemic is an enormous challenge that is still with us and we need to be cognisant of that as we move forward, but we cannot reflect on the challenge posed by the pandemic without reflecting on the fact that there are still businesses up and down this land that have not had support from the Government throughout the pandemic—those among the excluded. I spoke to one earlier today—Puls8 in Aberdeen, an innovative company that is trying to do remarkable things, working alongside some of the biggest players in the North sea oil and gas sector, but which has not had the support that it needed from the UK Government. That is deeply regrettable. We should not have a discussion about businesses without remembering that important fact.

That leads me on nicely to my final point, on perhaps one of the biggest sectors in Scotland that needs support from the UK Government—our renewables sector. Scotland has 25% of Europe’s offshore wind capacity. Scotland can be a world leader in renewable technologies, but as I said—and I am sure the Minister heard—Scotland still faces the highest level of grid charging in the entirety of Europe. We have a natural resource on our shores—and off our shores—that we should be exploiting, and this UK Government are erecting barriers to business in terms of capitalising on that.

To conclude, it is important to reflect on the fact that much of what I have spoken about is a reflection upon the failures of this UK Government. When we look at it from a Scottish perspective, certainly when I look at it from my perspective, I see the shortcomings of this UK Government and I see what more Scotland could do if it had the powers of an independent nation.

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[Kevin Hollinrake (Thirsk and Malton) (Con)]

As the hon. Member for Bradford West (Naz Shah) knows, I entirely agree with her about the need for an independent Northern Powerhouse Rail that goes through Bradford from Leeds to Manchester. However, I do not agree at all with the shadow Minister, the hon. Member for Stalybridge and Hyde (Jonathan Reynolds). In his motion, he talks about

“increasing energy costs, high inflation, low growth and higher taxes as a result of the Government’s long-term failures.”

I have a great deal of time for him, but he is absolutely wrong on all counts. On energy costs, the wholesale price of gas has increased tenfold in little over a year, but that is an international issue, not domestic policy. I agree that we need to do something about it, but the tenfold increase is principally because of Russia and China, for different reasons.

Inflation is an international issue, too. As I have pointed out previously, the inflation rate in Germany is higher than that in the UK—it is 5.3% compared with the UK’s 5.1%. There is a slightly different calculation for the US, but the rate is 6.8% versus the UK’s 5.1%, so the hon. Gentleman is absolutely wrong again. He is also absolutely wrong about low growth. As my hon. Friend the Member for Grantham and Stamford (Gareth Davies) points out, the OECD says that the UK had the fastest growth in the G7 in 2021, and that it will have the fastest growth in 2022.

[Jonathan Reynolds]

I know that I am pushing my luck by intervening, but I am sure that the hon. Gentleman will not mind.

This is interesting, because when we had a global financial crisis, I do not remember Conservative Members highlighting global factors as a cause. On that point, he will know that we had the biggest hit in the pandemic; we fell the furthest. When we say that we have a projected high growth rate next year, it is because we are bouncing back. The long-term growth rate for this country is under 2%, and under the historical norm for each of the years that we have forecast for once we have recovered from the immediate hit of the pandemic. That is the point. That will not succeed in sustaining the living standards of this country, and the hon. Gentleman knows that.

[Kevin Hollinrake]

I agree with the hon. Gentleman on long-term productivity, but that is not what his motion says. It says “low growth”, which is absolutely inaccurate. Let us have some facts in this debate.

The hon. Gentleman is absolutely right on energy costs, and I think that we need to intervene. The Government are not doing nothing. They are consulting now on the right kind of measures—whether it is VAT for consumers, the warm home discount, or direct intervention in the business. It is absolutely right that we consult on those things and look at them properly. There are other issues as well, including labour costs, supply chains and other such things, the vast majority of which are international issues. Yes, of course, there are some Brexit issues, too, there is no doubt about it. [Interruption.] Anybody who voted for Brexit and thought that they were voting for the status quo was not reading the facts properly. The reality is that those things have to be dealt with, but they are short-term issues that will be resolved.

I say to the shadow Minister that it is the easiest job in the world to stand on the sidelines and criticise, which is what he is doing. [Interruption.] He is criticising higher taxes. How on earth would he pay for the huge amount of money that has to go into the NHS over the next few years to deal with the backlog? Would he simply borrow more money? That is what that money is for. There is also the fact that businesses are not even paying the higher taxes yet; they do not kick in until April. Again, the motion is entirely wrong.

Let me turn to what we should do. The motion mentions the reform of business rates; the solution of the hon. Member for Stalybridge and Hyde is absolutely deluded. A sixfold increase in the digital services tax would be passed straight to consumers and would not hit Amazon and others. It is absolutely wrong. He has no long-term detail on how he would reform business rates. In my view, we should scrap the business rates system completely. It is outdated—it is the wrong system for today—and business rates hit not just retail but lots of other channels and sectors. I would scrap business rates completely and find the £30 billion by adding that to VAT, because that would immediately create a fair and level playing field for all businesses that trade through whatever channel.

While the Minister is present, I press him to look at regional mutual banks, which I mentioned at Business, Energy and Industrial Strategy questions this morning. They can have a massive impact in lending to the productive economy to get the growth rate growing to the level we need it to be to pay off our debt.

Oral Answers to Questions

Kevin Hollinrake Excerpts

Tuesday 11th January 2022 Commons Chamber

[Paul Scully]

The success of the current pension arrangements means that a pensioner in the scheme is 33% better off than they would be in a normal pension scheme. We continue to believe that the arrangements agreed in 1994 with the scheme’s trustees work well and are fair and beneficial to scheme members and taxpayers.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

Regional mutual banks are key to the success of small and medium-sized enterprises in the world’s most productive economies, including Germany and the USA. Will my right hon. Friend meet me to discuss that important opportunity?

[Kwasi Kwarteng]

I am very happy to meet my hon. Friend. We have discussed that important issue on a number of occasions when I was wearing different hats in Government, but I am happy to meet him again.

Post Office Historical Shortfall Scheme

Kevin Hollinrake Excerpts

Tuesday 14th December 2021 Westminster Hall

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

I beg to move,

That this House has considered the Post Office Historical Shortfall Scheme.

I am delighted to have the opportunity to serve under you in the Chair, Dame Angela. I welcome the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Mid Norfolk (George Freeman) to his place as a substitute for the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Sutton and Cheam (Paul Scully), who has executive departmental responsibility for this issue.

I have a number of specific concerns about the Post Office’s administration of the historical shortfall scheme, which I will come to in due course, but I want to say something to the Minister and his colleagues in Government. If he takes nothing else away from the debate, I want him to take this away: from assisting constituents in relation to the HSS, it has become apparent to me and, I have no doubt, to others in the House that the culture in the Post Office still leaves a great deal to be desired. It is probably not unique for the Post Office to have a poor culture, but I say that because it has been accepted by Ministers. In fact, it is now a universally accepted truth that what happened in relation to the Horizon scandal was allowed to happen, and happened for as long as it did, because of the culture in the Post Office.

My basic concern is that if the culture is still not right, such a scandal could happen again. This is an opportunity for Ministers. We do not expect them to be responsible for the day-to-day management of the scheme or anything else in the Post Office—there are plenty of people who are rather handsomely paid to do that—but Ministers can and should insist on seeing that there has been a demonstrable change of culture.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I thank the right hon. Gentleman for securing the debate. What he says is absolutely right, and the scheme almost entirely mirrors what we did with Lloyds bank. We asked the bank to mark its own homework in opening a compensation scheme, which proved to be a complete travesty. It has to be completely redone, at a cost of hundreds of millions of pounds to Lloyds, and it has obviously caused massive distress to the victims. Does the right hon. Gentleman agree that the HSS must be done impartially?

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[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (George Freeman)]

I am grateful, Dame Angela, for the chance to serve under your chairmanship. I congratulate hon. Members for their contributions today and the right hon. Member for Orkney and Shetland (Mr Carmichael) for raising the matter. I am here with apologies from the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Sutton and Cheam (Paul Scully), who has been called into the House on primary legislation elsewhere. However, I relish the chance to respond on behalf of the Department for Business, Energy and Industrial Strategy, having experienced in my constituency the appalling injustice that the sub-postmasters suffered.

In one village in my constituency, Gressenhall, I saw the misery, the family disruption and the hell, as referred to by hon. Members, that the sub-postmasters were put through in a frankly disgraceful episode of institutional contempt for the little guy—if I can put it like that—at the bottom of the system. I am pleased today that, as hon. Members have remarked, we are announcing through a written ministerial statement—there will be an oral statement, subject to the Speaker’s permission, tomorrow—the Government’s commitment to fully fund the historical shortfall scheme and the losses for those who have not yet been compensated.

[Kevin Hollinrake]

The Minister makes a fair point, but so does the right hon. Member for North Durham (Mr Jones). The scheme excludes those who took part in the group litigation. That is entirely unfair and unjust. Lee Castleton, who is not one of my constituents but somebody I have tried to help through a third party, got £28,000 in compensation but he lost more than £400,000. That is simply unfair and that route for compensation cannot persist.

[George Freeman]

I thank my hon. Friend for that intervention. My hon. Friend the Member for Sutton and Cheam is the lead Minister on this matter and I will raise that with him. For the record, I want to make clear what has happened. Those who settled have a settlement. Today, we are tackling the issue of those who were not subject to a settlement. Nevertheless, my hon. Friend makes an important point. This must be fair and it must be seen to be fair.

I want to begin by echoing the Government’s support for the point about culture. It is vital that the painful and difficult lessons from this disgraceful saga are properly learned. Let the message go forth from this Dispatch Box that we expect the Post Office to tackle that culture change properly. I am delighted that there is a culture change programme and two new non-executive directors. However, this is not a tick-box exercise; it is a serious commitment that an organisation wholly owned by the taxpayer delivers properly and learns the lessons from this disgraceful saga. I dealt with the issue when I was a Minister in the Department in the coalition Government in 2015. I saw what seemed to me to be institutional obfuscation and institutional defence of injustice. All those who conspired in that should hang their heads in shame.

The right hon. Member for Orkney and Shetland mentions a law firm. I signal that some lawyers have stepped up to the mark on this and in particular Patrick Green QC at Henderson Chambers, who worked pro bono to help many of the sub-postmasters; Neil Hudgell at Hudgell Solicitors; and Freeths, who did tremendous work speaking up for those who did not have a voice. It is only because of the bravery of those sub-postmasters and their lawyers that we are where we are today.

It is good news that we have announced that funding, but I do not want to focus on that today. The Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Sutton and Cheam, has campaigned hard on it and he will speak to the House tomorrow. However, I want to set the record straight on where we are today for those watching or reading this debate. As everyone in the Chamber will be aware, the Post Office introduced the Horizon scheme in early 2000 and subsequently recorded shortfalls in cash at post office branches, which the Post Office then blamed on sub-postmasters—completely unfairly, it subsequently turned out. That resulted in horrific suffering, not just in losses for the small businesses being run by the sub-postmasters, but family losses, divorces, depression, mental health problems and anxiety, not to mention the loss of a facility in many rural areas that is crucial to the community. Many people were sent to prison. That is an absolute disgrace. It is important that the lessons are learned properly and that the culture that conspired to allow that to happen is seriously changed.

In 2017, a group litigation order was brought against the Post Office by the 555 postmasters. The postmasters won two landmark trials in 2019 and reached a settlement with the Post Office for £57.75 million. Those court cases and subsequent cases in the Court of Appeal have demonstrated just how wrong the Post Office was to behave in the way it did. It has apologised, and is now working to overhaul its culture to address the findings of Mr Justice Fraser.

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[George Freeman]

I understand the point that the right hon. Member is making. Let me include, for the record, the history of how we got to this situation. As part of the 2019 settlement, the Post Office committed to putting in place a scheme for those postmasters who were not part of that settlement and did not have criminal convictions related to the Horizon scheme. The historical shortfall scheme was set up to meet that commitment, and it is an important step. It opened in May 2020 and closed to applications later that year.

To be fair, the Post Office made significant efforts—quite rightly—to reach out to all postmasters, sending 7,000 individual letters to current postmasters and a further 20,000 to former postmasters. It is fair to say that the Post Office was quite surprised—I do not think that any of us in this room will have been—by the response. The scheme received over 2,300 eligible applications. I hear the points that the right hon. Member for Orkney and Shetland made about the nature of that form. Because I am not the lead Minister on this, I have not looked at it, but he makes an important point, which I will raise with the Minister. The form needs to make clear to people what they are entitled to and needs not to discourage them from understanding their rights, the enforcement of which is long overdue.

The response to the HSS meant that the cost of the scheme went beyond what the Post Office could afford, and it turned to the Government as its 100% shareholder. The Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Sutton and Cheam, has set out that the Government will provide sufficient financial support to the Post Office to ensure that the historical shortfall scheme can proceed properly and that those people are fully compensated. I understand that that raises a question about the fairness for those who settled out of court, which is a point that the Minister will no doubt want to address. The Post Office is contributing from its own funds.

[Kevin Hollinrake]

If the estimate is £300 million and there are 2,300 applications, that is £130,000 each. Lee Castleton got £28,000. The constituent of the right hon. Member for North Durham (Mr Jones) got £20,000. That just cannot be right.

[George Freeman]

My hon. Friend makes a powerful point, which I am sure that the Minister will want to address. I want to mention the question of speed. When the Government step up and say, “We will fully fund this,” it is incumbent on the Post Office to pull its finger out and get on with processing claims more quickly. I understand that the intention is that the vast majority of applications will be claimed within months, by the spring, and all of them will be claimed within the year —and that is long overdue.

I will close by picking up on a couple of the points that hon. Members have made. I will ask the Minister to write to the right hon. Member for Orkney and Shetland about the board. The hon. Member for Strangford (Jim Shannon) made the same points about his constituents. With the right hon. Member for North Durham (Mr Jones), I share the Government’s apologies to Tom Brown and others in his constituency, and I take the point about lessons for Ministers and for the Department for Business, Energy and Industrial Strategy. My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) made a very good point; we cannot have unaccountable quangos marking their own homework, and there are really important lessons about accountability.

It is good news that the Government are making a commitment to fully fund the HSS, but there are other issues that still need to be sorted so that this never happens again and that the injustices are properly resolved.

Question put and agreed to.

Subsidy Control Bill

Kevin Hollinrake Excerpts

3rd reading
Monday 13th December 2021 Commons Chamber

I represent Aberdeen North in Aberdeen city, which is bounded with Aberdeenshire. There are a lot of people and organisations and a lot of stuff happening between the two authorities. Aberdeen city is surrounded by Aberdeenshire. It is not out of the question that an organisation could be eligible for a subsidy from both local authorities because of the work it does across the boundary. That issue might arise because both local authorities could be giving a subsidy—particularly because it might not be uploaded in the subsidy control database until six months later. That compounds the problem, even if the Minister agrees to make the change to the MFA rules.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

The hon. Lady makes some very fair points, but to be fair to the Government there are requirements under clause 37(6) for the business to keep records of the subsidies received and report them. That is probably in many ways more practical. That subsidy might be given to all kinds of different subsidiaries of that particular enterprise and therefore, even if she wanted local authorities to determine what they had received in the past, it would potentially be difficult to do so by checking against the database. It makes sense to give the business some responsibility for recording that.

[Kirsty Blackman]

Actually, what the legislation does is to give the business a responsibility to keep the letter. It does not give the business much more responsibility, in my mind, although I will go back and have a look at the clause the hon. Gentleman points me to. I think having the subsidy on the subsidy control database would make all the difference, but if he wishes to come back in, he can.

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[Kevin Hollinrake]

Clause 37(6) states:

“The enterprise must keep a written record detailing—

(a) that it has received a subsidy,

and

(b) the date on which it was given, and

(c) the gross value amount of the assistance.”

That to me indicates that it must keep a full record of what it has received.

[Kirsty Blackman]

Once again, yes, it has to keep a full record, but it does not have to show Aberdeen City Council that record. There is no requirement on the company to be transparent about that record; there is a requirement to keep it, but not to share it. Having it on the database or adding the requirement to share that record, should a granting authority ask in advance of granting a subsequent subsidy, would make the difference we are asking for.

However, that does not fix the issue in relation to transparency of data and ensuring that the database and the scheme are working properly. This was mentioned in the witness sessions. We need to know whether this is working, and we will only know if it is working if we have an idea of the subsidies being granted, even if they are below the MFA threshold.

I said I would come on to the definition of interested parties. Amendment 12 adds devolved Administrations to the list of interested parties. Again, we discussed this at some length in Committee and the Minister gave some assurances. I shall quote a couple of questions that I asked and the response that the Minister gave. I said:

“Does a devolved Administration’s interests include indirect interests?”

I also asked:

“What if a number of organisations in their jurisdiction are potentially affected by a subsidy given?”

The Minister answered:

“Yes. I would say that is a direct interest rather than an indirect interest. Public authorities, including devolved Administrations, may be interested parties.”––[Official Report, Subsidy Control Public Bill Committee, 16 November 2021; c.308-309.]

I am glad that he gave some clarity. It is sort of because of the way the questions were asked that the Minister’s response was slightly woolly. I would very much appreciate it if, when he responds to the debate, he could make it absolutely clear from the Dispatch Box that, in cases of indirect interests, devolved Administrations are considered as interested parties.

Let us say that a subsidy was given somewhere else in the UK, or even in Scotland, and that subsidy negatively affected the chances of seven businesses in Scotland. I think that the Scottish Government should be able to bring a request to the tribunal to say that that needs to be looked at and that they believe that that is an issue. Under the definition of interested parties, it is only those people whose interests have been affected. The Scottish Government’s interests would not have been directly affected by that, but they would have been indirectly affected. I was trying to tease out from the Minister that he believed that, definitely, the Scottish Government or any of the other devolved Administrations could bring a challenge on behalf of organisations within their area. I am quite happy for that to be limited to devolved competences even. However, if they are not in the Bill as interested parties, we very much need that commitment from the Minister. If they are not in the Bill as interested parties, why is the Secretary of State included in the Bill as an interested party? If the definition is wide enough to cover all those areas—

[Kevin Hollinrake]

The Secretary of State is not necessarily an interested party, which is why he needs to be named in here; he might not be affected. The hon. Lady’s point about being directly or indirectly affected is covered under clause 70(7), which says that an interested party means

“a person whose interests may be affected”.

That could be directly or indirectly, surely.

[Kirsty Blackman]

We discussed this at length, with a lot of banter, in Committee. But I have a concern that the provision does not say “directly” or “indirectly”. It does not make that as clear as it could. A clear statement from the Minister at the Dispatch Box would give me a level of comfort. I do not think that it is the intention of the Government to exclude the Scottish Government, the Welsh Government, or the Northern Ireland Assembly from making these challenges, but I think that the Bill is written in a woolly enough way that it potentially accidentally excludes them.

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[John Penrose (Weston-super-Mare) (Con)]

I rise to speak to the amendments in my name and that of my hon. Friends. I start by saying that there is a great deal to support about this Bill, and I think I mentioned that on Second Reading. This Bill is vitally important, not just because it is required under the terms of our leaving the EU, but because it does some very important things to how the future subsidy control regime will be applied. We have already heard that the central set of principles is crucial. The notion of pre-approval and allowing things to be done at pace to create a much less bureaucratic, much more nimble, much more predictable regime is overall hugely to be welcomed. I hope everyone will be able to sign up to that.

The Bill also means that I hope we will be able to move to a principle where we have as few exemptions and exceptions to our subsidy control regime as possible. It is essential that we have a subsidy control regime that does not allow loopholes through which—I am sure the Minister would never dream of doing such a thing—some less principled future Government might try to drive any sort of measures through that might involve either cronyism or economic distortions of any kind. It is essential that there are minimal loopholes and that the Bill covers as evenly and as predictably as possible the entire economy.

It is no accident that this country has had one of the lowest levels of public subsidies granted in recent years under the guise of the EU’s regime. For the free marketeers among us and those who care about economic efficiency and productivity, that should be a source of pride, and we should not be trying to overturn or change that in future. In fact, I made that point in the Government-commissioned competition policy review that I was recently asked to do, which has a chapter specifically on subsidy control that says that less is definitely more. It is far better to do less in the area and therefore ensure more space for companies and business leaders to compete on their organisations’ abilities and the quality of their products and services rather than on whom they know in Government and, as a result, how much rent and subsidy they can wring out of their political connections. It is essential that we remember that, adhere to it and persist with it as much as we can.

That is crucial, because the Bill done right ought to be a major piece of post-Brexit dividend that we should seek to achieve as a result of leaving the EU. If we get it right, we can have a faster, more nimble and more economically rational way of dealing with subsidies. We can keep the best of the objectivity that everyone said we had under the EU but do it in a faster, more digitally enabled and generally more modern, less bureaucratic and less covered-in-red-tape fashion. Such a post-Brexit dividend is here for the taking. It is waiting for us to pick it up off the table, provided that we can do it correctly.

My concern—this is why I tabled amendments 1 to 8 —is that while the Bill does an awful lot of that right, we may be about to make one critical error. We have already heard the points about transparency made by the SNP spokeswoman, the hon. Member for Aberdeen North (Kirsty Blackman). It is all very well to pre-approve and to have a more flexible, faster and more nimble approach, but that will work only if we have an army of armchair auditors who can spot when something is going wrong and say, “Hang on a second. This is a marvellous principle, but it isn’t being adhered to in this case.” Without transparency, hon. Members, people in our constituencies and the journalists who pore over such things will not be able to do so until it is too late. In a digitising economy, speed matters, too. If it cannot be done before it is too late—or at all—companies will be driven out of business. Once all that is left is rubble, the jobs are lost and the investment is forgone, it is too late to come back two years later—or even eight months later in fast-moving sectors—and say, “We’re terribly sorry; we got this wrong.” We need to be able to move rapidly and pick up things up as soon as possible. That is why I tabled the amendments.

[Kevin Hollinrake]

My hon. Friend makes a strong point about armchair auditors in particular. As soon as the US published all loans of $150,000 under the paycheck protection program—its version of the coronavirus business interruption loan scheme—$30 billion was paid straight back to the US Treasury on the basis that companies did not want that visibility. It was not that money was taken fraudulently—perhaps it was taken inappropriately.

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[Kevin Hollinrake]

I rise to speak briefly in support of the amendments tabled by my hon. Friend the Member for Weston-super-Mare (John Penrose). I will particularly address amendments 1 and 8, which are about something brutally simple: scrutiny and transparency. The Government are rightly approaching this through their obligation to meet the competition requirements of the European Union. For that purpose, £500,000 would perhaps be the right level.

I think this is about more than competition; it is also about cronyism and, potentially, fraud. My hon. Friend put it well when he talked about armchair auditors. Time and again, information about things going wrong is brought to the attention of parliamentarians like me by members of the public and members of the press. The more we give people access to such information, the more likely we are to clamp down on any suggestions of cronyism. Although most are ill-founded, it is important that we clamp down on any suggestions of cronyism and of fraud.

I agree with my hon. Friend that we should lower the threshold for reporting and registering on the database from £500,000 to £500. That seems an enormous difference, but consider what we know already. The easiest place to look is the furlough scheme and the bounce back loan scheme. The National Audit Office estimates that some £26 billion may have been lost in those coronavirus loan schemes, not all of it through fraud—some of it was through non-repayment of debt, or defaults. Nevertheless, a significant proportion of the moneys granted to businesses, which were effectively a subsidy, might have gone missing. The Government rightly put together a huge new team of people within Her Majesty’s Revenue and Customs, with an investment to the tune of £100 million, to try to clamp down on it by investigating the potential for fraud.

Alongside that, it would be a simple requirement for the database to include every single subsidy over £500 for the armchair auditors, the press, the public and—another important component—the whistleblowers. People within an organisation often do not know what subsidies the business may have received, but they might be able to identify the moneys as inappropriate and alert the authorities to that effect. Some 43% of all crimes are now economic crimes, and 40% of those are brought to light by whistleblowers, so it is hugely important that they have access to this information so they can scrutinise what is happening within these businesses.

My hon. Friend the Member for Weston-super-Mare asked why would we not do this? One answer might be bureaucracy and cost—we are not big believers in bureaucracy and unwanted, unneeded cost, and we rightly want to make our system simpler, not more complicated, for businesses—but the requirement to publish on the database is negligible. As others have said, businesses have to issue a letter anyway, so putting five bits of information on a database is not exhaustive. The impact assessment suggests that the total cost of doing it annually will be only £20,000 extra, which is insignificant in terms of the cost of red tape, but the benefits are huge.

As I mentioned in my earlier intervention, the US had much lower levels for reporting than we did. Our level was €500,000 for telling the EU who received benefits from the loan schemes, and it was done quite late in the day, after the loans were received by businesses. In the US it was $150,000, which effectively brought about a $30 billion return of moneys to the US Treasury because those businesses were embarrassed to be receiving the moneys inappropriately.

Another reason we are not doing this is that, when the British Business Bank looked at the coronavirus business interruption loan scheme and the bounce back loan scheme, it felt it should not report on this because it might be likely to lead to

“speculation about the Recipients’ financial position”.

I do not agree. Even if it were true, we are already putting on the database loans over €500,000. Are we saying only businesses below that level would have that problem? That is clearly not the case. A lot of businesses that received coronavirus business interruption loans over £500,000 were quoted on AIM, for example, including my own business. I draw the House’s attention to my entry in the Register of Members’ Financial Interests, although I am no longer associated with that business in any meaningful capacity, as it was subject to a takeover earlier this year. I would have no problem at all with the loan we took under the CBILS programme being declared on a database so people could see it. The reasons we were taking it were quite obvious and I do not think it brought our financial position into question at all. Clearly, in the desperate times we were in, most people would see that we were going after desperate measures in terms of insurance policies, which the loan was to most companies. I do not see that as a valid reason for preventing the declaration to the database being completed for all subsidies down to that £500 level.

I will refer quickly to amendment 8. Allowing individual challenge to individual decisions under a subsidy scheme is another check and balance—another way to ensure money is being handed out appropriately. I think all these amendments make sense, which is why I have signed them all. To give the public, the press and Parliament access to the database is a crucial step. I do not think it would be a bureaucratic issue at all for the people responsible for it. I know we have spoken about it, but I urge the Minister to look at this again and to table such amendments at a later stage, if they are not accepted today.

[Liz Saville Roberts (Dwyfor Meirionnydd) (PC)]

Diolch yn fawr, Dirprwy Lefarydd. It is interesting to hear the hon. Member for Weston-super-Mare (John Penrose) describe this Bill as part of a post-Brexit dividend. For many of us from the devolved nations, it actually bodes ill. It bodes ill in relation not just to key devolved competencies, but to questions about whether this negates the power of public procurement and, particularly, whether it undermines the levelling-up agenda. We would expect to see more principles in operation than we currently do, particularly when we compare this with the regimes we worked with and complained about, but were familiar with, under the European arrangements.

My party, Plaid Cymru, will support new clause 1, proposed by the hon. Member for Aberdeen North (Kirsty Blackman), which would exempt devolved agricultural subsidies from the subsidy control requirements. This is a vital new clause that protects our farmers and ensures that the devolved nations can continue to tailor support to local requirements and priorities. I do not think I need to persuade anybody in this Chamber that UK agriculture is highly regionalised in its type, its significance, the impact it has on its local economies and whether it requires region-specific subsidy for its needs.

I am very much aware of that for the less favoured areas, representing as I do the constituency of Dwyfor Meirionnydd, which is very much an upland area. I have whole communities watching these legislative developments with some concern. I know the farmers’ representatives from Wales, Scotland and Northern Ireland are equally concerned about the implications of what, on its face, appears to be a fairly technocratic Bill, but none the less sets a precedent for the sort of legislation we see coming out from the trade and co-operation agreement in the United Kingdom Internal Market Act 2020.

In Wales, where more than 80% of land is used for agricultural purposes and farmers are the bedrock of our rural communities, guardians of our natural environment and protectors of our cultural identity, subsidies are vital to protecting that legacy. The latest farm business survey showed that subsidies provide on average 30% of upland cattle and sheep farms’ income. Leaving their fate to a Westminster Government set on securing questionable trade deals that boost UK GDP by 0.01% to 0.03% while at the same time sacrificing our farmers is clearly unacceptable. Equally, without this new clause, the Bill would pre-emptively tie the hands of the Welsh Government as they look to establish a new, post-EU subsidy regime. I therefore urge hon. Members across the House to support the clause to protect our farmers, as well as amendment 11 on net zero commitments.

I also extend my support to the amendments tabled by the Opposition, including amendments 19, 23 and 26, which would extend the rights of the devolved Governments. Although I believe that they could, and possibly should, be strengthened by recognising the value of the co- production of guidance, they nevertheless address somewhat some of the Bill’s governance issues. As we have seen time and again, the Government play hard and fast, and make the rules up as they go along. That is why such guarantees as are offered by the amendments are so important.

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[Seema Malhotra]

I do not think it is about us picking losers or winners at all. This is about us using the data, understanding where there are areas of greatest need and having that as part of a data-led levelling-up agenda. Given that the Government have created a specific Department for levelling up, Labour is surprised that that mandate is not clear and that the hon. Gentleman does not have the answers he needs to have a framework that gives confidence that we are applying resources to areas of greatest need. To be frank, the Government’s record on that is not very strong. The Bill should be explicit that supporting areas of deprivation should fall squarely within the subsidy control principles.

On improving the way the new regime will operate, there is a serious lack of transparency in the Bill on how public money is spent and how value for money can be assessed.

[Kevin Hollinrake]

Does the hon. Lady not agree that the problem with amendment 16—the net zero amendment —is judging what is consistent with the net zero commitments? I have a Westminster Hall debate tomorrow —at 4 o’clock if anybody has nothing better to do and wants to tune in. On greenwashing, for example, it is incredibly difficult to ascertain what complies with net zero when there is so much noise around this. We need to improve in that area. Is this not really a charter for lawyers to take these subsidies to court time and again? Is not that the problem with her amendment?

[Seema Malhotra]

I thank the hon. Member for his intervention. We have agreed with many of his amendments. What he has just said actually lends even greater weight to wanting to make sure that that is a consideration and that we have the resources to support that. Perhaps he will talk to those on his own Treasury Bench about this, because we would have hoped that by now there would be a clearer road map for how the country is supposed to move forward to achieving our net zero commitments. He will know as well as I do that many small businesses have been crying out for a road map to net zero to know what can make the most difference, how to assess it and how to look at whether they have a decarbonisation strategy that is fit for purpose. So I think he is lending weight to our argument that we need something in the legislation to help drive the processes behind that. People want answers and want to know they are doing the right thing and making the right investments on our road map to net zero.

I was referring to the serious lack of transparency in the Bill around how public money is spent and value for money can be assessed. There is no requirement to report subsidies below £315,000 over three years. An unlimited number—an unlimited number—of subsidies up to £500,000 could be made under a scheme and not one would need to be reported, as long as the scheme itself apparently is reported. That is not good enough. The argument that this is in order to be consistent with the EU fall because the thresholds in the EU state aid regime were in the context of a very different regime; they were in the context of a scheme of pre-notification, where scrutiny took place before the allocation of the subsidy, not a permissive regime that challenges subsidies after they have been granted. In that context, we must think differently about what we seek to import; we are not importing the whole environment around how those decisions were made in the past.

The Minister has previously stated that we are in a position to be able to change those thresholds—it is not a matter of can’t; it is a matter of won’t. The hon. Member for Weston-super-Mare (John Penrose) said very cleverly: if this is so obvious and the Minister agrees with transparency, why are we not doing it?

During covid, we have seen Ministers wasting money on crony personal protective equipment contracts. I could spend my entire speech talking about this, but my main point is that that would have remained hidden from the public and from Parliament without ongoing freedom of information requests. Transparency on public expenditure—who is paying out, how much is being given, who it is going to and what it is being used for— are basic questions that we should know answers to as a matter of routine on subsidies being paid by our Governments, local authorities or other public authorities. Greater transparency, not less, should underpin the system of self-assessment by public authorities that sits at the heart of the Bill and our responsibility to the taxpayer.

The Centre for Public Data has made it clear that greater transparency would help ensure the honesty, consistency and efficiency of the system. It is also essential that interested parties—be they competitors, other public authorities or groups acting in the public interest—are able to challenge subsidies that they believe are distortive or unfair.

On the subsidy database, we support amendments 1 to 8 on transparency and reducing the threshold for the requirement to report on the database. This includes subsidies made under a scheme referred to in amendment 1. As the Bill stands, subsidies made under a scheme with a value of less than £500,000 do not have to be entered on to the database. There is no convincing reason for that, and it is in the public interest that all subsidies under a scheme be published. Worse still, a scheme can be registered with little information so that there will be no overall transparency for a scheme under which millions of pounds of taxpayers’ money could be spent without scrutiny.

Amendment 8 in the names of the hon. Members for Weston-super-Mare and for Thirsk and Malton amends clause 70, which currently provides that, where a subsidy is made under a scheme, the decision to grant an individual subsidy cannot be reviewed. The amendment suggests that the response given by the Minister in Committee was not reassuring enough.

This set of amendments also reduces the timeframes in which subsidies must be entered on to the transparency database and the timeframes in which any modifications must be uploaded. Members will be aware that the Bill currently requires subsidies or schemes to be entered on to the database within six months of being made or within one year in the case of a tax measure. We argued in Committee that there was a need to reduce those timeframes. Having longer makes it more likely to result in an incomplete or inaccurate entry, because officials may leave or records may be lost. We heard evidence from Jonathan Branton, a legal expert in the area, who said,

“I have yet to hear a…persuasive case for why you need that long to publish…an award.”––[Official Report, Subsidy Control Public Bill Committee, 26 October 2021; c. 58, Q79.]

Amendments 21 and 22 were intended to bring all services of public economic interest subsidies with a value of more than £500 into the scope of transparency requirements. We do not understand why such subsidies—those up to £14.5 million or all those in the case of hospital care, adult social care and certain public transportation services—should be excluded from transparency requirements. With respect to amendment 6, we firmly support the need for the date of the subsidy to be entered on to the database. There should be no ambiguity about the day that the clock starts to tick for the period in which a challenge can be brought.

If the Minister wants to try to argue that greater transparency would lead to higher costs and more red tape for public authorities, that does not hold up to scrutiny either, because they have that information and they are used to reporting their expenditure above £500. That point was made on Second Reading as well by the hon. Member for Weston-super-Mare. When giving evidence in Committee, Dr Roger Barker of the Institute of Directors said that

“there should be transparency at every level of subsidy”.––[Official Report, Subsidy Control Public Bill Committee, 26 October 2021; c. 37, Q48.]

A transparent system is important, but so is the quality of the data contained in it. That is why we tabled amendment 20, which would require the Secretary of State to ensure that the subsidy database is subject to routine audit to verify the accuracy and completeness of entries. That would incentivise complete and accurate reporting and provide a mechanism for putting errors right.

In Committee, we heard clear evidence that the database in its current form contains significant inaccuracies and gaps in the data entered. Expert witnesses suggested that not all subsidies were being entered, as just 501 subsidies were recorded in the best part of 10 months. Of those entries that had been recorded, more than half had a zero or nil value, so either the database is not fit for purpose or the entry of data by public authorities has not been up to scratch—or both.

If the database is not subject to any oversight or control, and if inaccurate or incomplete information entered on to it is not checked, poor-quality information is likely to lead to misguided legal challenges or to harmful subsidies failing to be addressed. We want to be constructive on this point, which is why the amendment is drafted in a way that permits the Secretary of State to decide who should undertake the audits and how they can be done most effectively.

On devolution, this is not a fair four-nations Bill. As it stands, regulations and guidance can be developed without seeking the consent of the devolved Administrations; only the Secretary of State can call for subsidies to be assessed by the CMA; and there are no requirements for the devolved Administrations to be represented on the CMA’s new subsidy advice unit. That is important because we need a system that commands the confidence of all four nations.

The devolved Administrations should be given a genuine voice in developing and implementing the new regime. The Minister’s response in Committee to our concerns and those of the devolved Administrations was that he had had a number of meetings with the devolved Administrations and would keep talking to them. I would be grateful if he could provide an update on those discussions.



Amendments 23 to 25 would provide Scottish, Welsh and Northern Irish Ministers with the power to call in subsidies or schemes under clause 55. Currently, only the Secretary of State has the power to issue a call-in direction, triggering a report to the CMA. On that basis, the CMA’s reports are not binding on a public authority. The harm of extending the call-in power to the devolved nations is not clear to us. Why is the Secretary of State empowered to call in Scottish, Welsh and Northern Irish subsidies that may damage economic interests in England but the Scottish, Welsh and Northern Irish leaders cannot call in subsidies that they believe can cause economic harm in their nations?

Economic Crime

Kevin Hollinrake Excerpts

Thursday 2nd December 2021 Commons Chamber

[Dame Margaret Hodge]

I completely agree with the important contribution that our anti-corruption tsar has made in the House today. I think it is a really short-term view to believe that our British economy can flourish on the back of dirty money. We will flourish if we clean up the act in the City of London and it again becomes a trusted institution.

I just wonder how many Panama papers, Paradise papers, Pandora papers, FinCEN—Financial Crimes Enforcement Network—leaks, laundromat leaks, Falciani leaks and Luxembourg leaks we need for our Government to wake up, stop mouthing warm words, which they do a lot, and start acting with tough measures to bear down on this dangerous crime and this terrible trend.

A proposal to toughen up the regulatory framework was included in the 2015 Conservative party manifesto. The party pledged—I hope I am quoting accurately—to create a criminal offence where companies

“fail to put in place measures”

to prevent economic crime. The Government launched a consultation that lasted four years, and then parked the issue in the long grass by referring it to the Law Commission. I understand that the Law Commission is about to report, but we need and want corporate liability reform, and we want it now.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

It is a delight to work with the right hon. Lady on this particular issue. As part of the Law Commission consultation, there is talk that, instead of there being a criminal liability for failing to prevent economic crime within a corporation, it may be downgraded to a regulatory offence. Does she agree that that would not create the deterrent we need for these corporations, such as NatWest, which is facing a fine of £340 million for not properly monitoring money laundering in this country in a Bradford jewellery company? Does she agree that there must be a serious sanction, such as a criminal offence, where individuals could be locked up for not doing the right thing in these areas?

[Dame Margaret Hodge]

Again, I am pleased to see such unity across the Chamber today. I completely agree that if it is not made a criminal offence and there is no direct liability on the individuals concerned, it simply becomes a business cost and will not change the behaviour or conduct of those big corporations. I concur with the hon. Gentleman.

I was going to use the example, although I probably do not need to, of the Serious Fraud Office’s failure to successfully prosecute the Barclays bank case. As many observed at the time, that case showed that under our existing law the bank could not be held accountable for the actions of its employees, and the chief executive could not be held to account for the actions of the bank. Nobody could be held to account. These reforms would change that by introducing a vicarious liability condition and bringing in a “failure to prevent” clause. The Americans do it; they have much tougher laws that hit the corporations with criminal, civil and regulatory penalties, and they secure many more resources.

Our second ask is about starting the work to strengthen our enforcement by reforming Companies House. Creating a public register of beneficial ownership was an important move when David Cameron was our Prime Minister, and a huge step forward. In one year, the register was accessed more than 2 billion times, but the data, as we all know, is often inaccurate or incomplete. Global Witness did an analysis in 2018 that showed that 10,000 companies declare a foreign company—mostly linked to a secrecy jurisdiction—as the owner of the company, 335,000 companies had no beneficial owner and 9,000 companies were controlled by beneficial owners who each controlled more than 100 companies, so they were nominee beneficial owners.

It takes £12 to set up a company—it is ridiculous. That is why so many UK companies keep appearing in all the leaks we get of wrongdoing. Our lax enforcement leads to tragedies worldwide, and we need to do something about that. That is why these reforms could be funded by raising the fee. If we quadrupled the fee and charged 50 quid to start a company, we would raise a huge amount of money that we could put into reforming Companies House and ensuring that it had unique identifiers for the beneficial owners, and powers to investigate and interrogate.

My third proposal, which I will deal with very quickly, concerns the introduction of a property register. Buying a property through a shell company registered in the British Virgin Islands is the easiest way to launder money into the UK. There are very few good reasons for maintaining anonymity, but plenty of bad ones: not just money laundering, but avoiding stamp duty, inheritance tax and other taxes.

It is difficult to put a number on that, although many people have tried, but I will share one fact with the House. All London boroughs have had an increase in their electoral register over recent times; the only borough that has not is the Royal Borough of Kensington and Chelsea, the reason being that such a large number of properties there are bought through shell companies by foreign owners that there are fewer residents there today than there were 10 years ago.

--- Later in debate ---

[Kevin Hollinrake (Thirsk and Malton) (Con)]

It is a pleasure to speak in this important debate, and to follow the right hon. Member for Barking (Dame Margaret Hodge), who is such a champion in this area. I add my thanks to the Backbench Business Committee for granting this important and timely debate. This debate is urgent, particularly since, as the right hon. Lady said, the Government promised and intend to bring forward legislation in the form of an economic crime Bill. All we are asking for are things the Government have promised to do in the past, so we are pretty much on the same page. We must ensure that the Bill is brought forward quickly, because it is so important, and that it is brought forward in the same form. I am disappointed that there are not as many speakers as I might wish on the Government Benches, but it is wrong to think that this is not a political priority for many of my colleagues, and for Members across the House. It is good that 40 parliamentarians signed a recent letter on the issue to the Prime Minister, urging action in this area.

Perhaps some parliamentarians, and perhaps the public at large, do not feel that economic crime affects them. Perhaps in many people’s eyes it is a victimless crime, but nothing could be further from the truth. For evidence of that, we should look at the 27 victims—men, women and children—who drowned in the channel only a few days ago. They were victims of economic crime. Of course, the reasons people want to come to this country are manifold, including fear of persecution, or for a better life—whatever those reasons may be—but those journeys are enabled because they are facilitated by economic criminals, and people who benefit from economic crime. These are organised criminals.

If someone steals a little bit of money—£200 in cash, say—they can go down the pub and spend it or do something else with it. If someone benefits from a huge amount of money—these organised criminals are benefiting by millions of pounds from the business of people trafficking—how do they use that money? They cannot simply buy a house, which the right hon. Lady referred to, or a yacht; people cannot spend their ill-gotten gains in any way these days because there are checks and balances—some checks and balances. If a person goes to buy a house, somebody will say, “What’s the source of your moneys?” However, they do not check too far, and we cannot follow the money as far as we need to follow it.

If we want evidence of the importance of this, we should listen to the people who really understand economic crime. Paul Stanfield, the head of organised crime at Interpol, said recently:

“It’s all about the money. If you want to tackle organized crime, you have to go after the money.”

The small boats crisis is probably the No. 1 domestic political priority in the UK. It is a humanitarian crisis and it is an economic crime. In fact, there are two levels of economic crime in this area. One is the fact that organised criminals are taking huge amounts of money—thousands, or tens of thousands of pounds—from desperate people to cross a continent. That is an economic crime in itself, but that money is then laundered, and much of it is laundered through this country.

For evidence of that, we should listen to the Prime Minister’s corruption tsar, my hon. Friend the Member for Weston-super-Mare (John Penrose), who said exactly this in an intervention a few moments ago. This country is used because of some of our lax regulations, as the right hon. Member for Barking mentioned, but also because of the concentration of advisers in this country, be they lawyers, accountants, consultants—these other people who facilitate the rabbit holes that this money goes down so that it can then be used for legitimate purposes. That is what happens with this money, but the starting point is these terrible crimes.

Of course, we are talking not just about huge international organised criminals, but about domestic organised criminals. Recently, a Yorkshire “businessman” called Manni Hussain had an unexplained wealth order made against him by the National Crime Agency for £10 million. He presented himself as a bona fide businessperson, but he has connections with some of the worst organised criminals in this country. Murderers, drug dealers—all these people are facilitating crime in this country, and we are leaving open loopholes that we could close and clean up our economy.

Of course, there are lots of vested interests in this whole argument. Some would say, “Oh my God, all this dirty money will stop coming into the UK. It’ll damage our economy.” In my view as a businessperson, nothing could be further from the truth. What businesspeople need is a clean economy. That is the foundation of our economy—a clean framework that investors have confidence in. The more our law upholds that framework, the more successful our economy will be. But even if that money was good for this country, we are not interested in it; it can go somewhere else. We must show leadership in this context on the world stage.

And this is about the world stage. If anyone wants to look at how these rabbit holes work and how pernicious this activity is for billions of people on our planet, they should read the wonderful book “Moneyland” by Oliver Bullough. It is a fantastic book. He starts off with a very interesting story about former Ukrainian President Viktor Yanukovych and talks about this huge house he has—one of many palaces that he built around Ukraine, all from the expropriation of moneys from the Ukrainian people. He diverted money that was supposed to be there for health services and many other public services into his own coffers, and he eventually ended up in exile in Russia. He is a very brave man, Oliver Bullough, and he explains how this all happens. He explains very clearly how it could not happen without the rabbit holes that are enabled in this very country. It is not just the UK, to be fair. Some are enabled by our overseas territories and Crown dependencies—the Government are bringing forward, after a lot of pressure from people such as the right hon. Member for Barking, open registers of shell companies in those jurisdictions—and by many other countries, too. The US is very guilty, with places such as Dakota allowing similarly lax regimes. We want other countries to do the same. Such opportunities are facilitating some of the worst crimes known to humanity: people trafficking; drug dealing; organised crime; terrorism, which the hon. Member for Strangford (Jim Shannon) mentioned; the expropriation of public money; and the impoverishment of nations.



A report from Oxfam in 2000 talked about how money was being stolen by kleptocrats in developing nations around the world to the tune of £50 billion a year. We have big debates in this House about our international aid budget and whether it is used wisely. Significant amounts of money—our taxpayers’ money—are put into developing nations. In that year, internationally £50 billion went into developing nations. Can we guess how much money was moved out of those very countries by kleptocrats, officials and politicians? It was £50 billion—so, in one door and out the other. We are facilitating that and we can close it down.

Whether it is £10 million for the smaller scale organised criminal or billions of pounds for international kleptocrats, we have the opportunity to close those things down. The money is no use to anybody unless they can spend it. To spend it, they need to be able to salt it away and legitimise it. That is what our shell companies do under the lax regime of Companies House, where £12 sets up a company with no checks and balances, no identity checks and no requirement to check who is the beneficial owner. Trusts are not included, so money can go into trusts. There is no oversight of trusts in the UK or UK property. The Government, rightly, say they will bring forward a register of overseas entities. The City of London—its knowledge, its power, our legal firms and our accountancy firms—facilitates this stuff to the tune of £100 billion a year in the UK. As the motion sets out, £100 billion a year is money laundered in the UK. That figure is directly from the National Crime Agency and that is not even the full extent of economic crime—it is that big.

Paul Stanfield says that we have to follow the money. The point, ironically, is that our system stops us from following the money. That is what we need to address. The key to all of this is transparency. Everything needs to be more transparent. That is the point about Companies House. Companies House should become not just a register but a regulator, with checks and balances to make sure that the people setting up companies are the beneficial owners of those companies. It is quite straightforward: as the right hon. Lady the Member for Barking said, a simple levy on top of the £12 would provide the resources to do that. We need a register of overseas entities, so we can see who is buying UK properties—again, the Government have committed to doing that.

I want to come on to transparency in other contexts. I draw the attention of the House to my entry in the Register of Members’ Financial Interests. I was involved in a business until March this year when it was sold. Last year, when things looked pretty tough, we took on quite a significant coronavirus business interruption loan. We never drew it down. We repaid it without touching it when we realised that the recession was not going to be as hard as we thought on our business, but it was a significant amount of money.

Whether we are talking about CBILS or the bounce back loan scheme, the Government decided that it would not make these loans subject to public scrutiny—loans which were providing Government support, effectively enabled by taxpayers’ money. If I, as a businessperson, had taken taxpayers’ money, I would have no problem with that being open to public scrutiny. It is good if it is subject to it—what is wrong with that level of transparency? The Government decided not to make that transparent, but we had to provide some level of transparency because of our association with the European Union.

Bloomberg got hold of this issue and scraped the data on 45,000 companies—hon. Members can read its report, which was in the paper last week—and there were some very startling cases. One included a £4.7 million loan that was drawn down by a company that existed only two days prior. There are lots of different concerns about those programmes. Some of that loan may be legitimate, although it seems unlikely that it was bona fide, because the company would have had to be a viable trading company before that time. However, if all this stuff is open to public scrutiny, it could be looked at by people such as us and those who have more time to do it, such as journalists, who do a fantastic job in this area by highlighting these issues—where would be without the investigative journalists who look at this kind of stuff? That would deter people in the first place from drawing down a loan in such circumstances and, because people would know that they would be pursued, it would reduce the level of fraud. This is a key issue for the Government in relation to the furlough scheme, the bounce back loan scheme and other areas. I cannot see how it would be detrimental to our economy to have more transparency in these areas. I am thinking particularly of Companies House reform and the register of British overseas entities.

My final point on the motion is about the offence of a failure to prevent economic crime. That is so important. This is an extension of the “failure to prevent” offence that exists, for example, for bribery—so if an organisation does not put checks and balances in place to make sure that its staff are not bribing other people or customers to try to get work, for example, it is breaking the law. That is a criminal offence, and it relates to tax evasion as well.

We want to extend that offence to cover economic crime. That means—I spoke about the NatWest example—that if a company does not put measures in place to prevent money laundering, so there are not checks and balance throughout an organisation to prevent that, it has corporate criminal liability. As I said, I would like to see that as individual criminal liability, because that would provide the biggest deterrent for senior executives and mean that they clamp down on the wrong kind of behaviour in their organisation. We can look at the construction sector for an example. This is a bit tangential, but the number of accidents and deaths on building sites dropped markedly only when directors suddenly had personal criminal liability over health and safety on their construction sites. Personal liability makes a big difference. Otherwise, this is seen as just a cost of doing business.

The “failure to prevent” offence does not just cover money laundering, and that is key. If we spoke to the banks about this, they would say, “We have that covered already under money-laundering rules”, but this is not just about money laundering. The corporate criminal offence is a tougher penalty and is available to the Serious Fraud Office rather than just the regulator, the Financial Conduct Authority, and it covers other crimes.

As many people know, in the all-party group on fair business banking we have dealt with the fall-out of the financial crisis in relation to RBS, the Global Restructuring Group, Lloyds, and HBOS Reading in particular. Let us look at the HBOS Reading scandal. For 10 years, Lloyds and HBOS denied any wrongdoing and that a fraud was happening in their organisations before it was proven in court in 2017, and four people went to jail for 47 years. It is the only case in the history of fraud ever proven against a bank in this country, and we know there has been more than that. Nevertheless, there was denial for 10 years.

Over that 10-year period, going back as early as 2007, victims were saying to Halifax Bank of Scotland and then to Lloyds bank, “There is fraud going on in your bank.” They were ignored; it was denial after denial. When an individual within Lloyds, its senior risk manager Sally Masterton, wrote a report on it and gave it to the bank, it sacked her. It shut her down for five years, saying that she was not a cogent witness and that she was acting for her own reasons rather than on a company instruction. That turned out not to be the case, and the bank had to retract the claim and compensate her in 2018. If we had the “failure to prevent” offence, that could not happen. People in those organisations would be accountable at a senior level, and that would clamp down on such behaviour. It would be a tremendous deterrent. It would also work with lawyers and accountants, because they too have responsibility to prevent economic crime. Instead of being facilitators, they would be required to stop this stuff happening.

We are currently having plenty of conversations in debates about how we can prevent scams such as push payment fraud, particularly on platforms including social media. The “Online Harms” White Paper refers to user-generated content rather than corporate-level scams. The Government are talking about expanding the Online Safety Bill to include those, but a requirement to prevent economic crime could work for Facebook, Google and the rest of them as well.

At present, platforms such as Google can simply take money from the highest bidder. They accept “pay per click” for companies to advertise investment opportunities, without checking whether they are bona fide companies. They do not check whether a company is Standard Chartered or someone posing as Standard Chartered; they simply take the money and let the company advertise on their sites, with no checks and balances and no requirement for them. If there were a “failure to prevent economic crime” provision, they would not be able to do that. They would have to put in place those checks and balances to ensure that the companies concerned were the companies that they were purporting to be, which, as we all know, is not beyond the wit of those platforms. This would tackle many different hugely important issues at the same time.

I have spoken for far too long, Madam Deputy Speaker, but all these matters are so important. The Government could introduce the necessary measures very quickly, and I urge them to do so. I believe that they will, and when we see that legislation, Members on both sides of the House will be championing them from the rooftops.

[Stephen Timms (East Ham) (Lab)]

I am very pleased to follow the hon. Member for Thirsk and Malton (Kevin Hollinrake), and I welcome his collaboration with my right hon. Friend the Member for Barking (Dame Margaret Hodge). They both advanced powerful arguments in opening the debate.

I want to focus briefly on one specific point. I mentioned, in an intervention on my right hon. Friend, the Work and Pensions Committee’s inquiry into pension scams, which reported a little while ago. This is an important area of economic crime, and our report highlighted in particular the menace of online scams, which the hon. Gentleman has just mentioned. As he said, the Online Safety Bill presents a unique opportunity to address this menace. The Prime Minister has said that tackling online fraud is one of the Bill’s main aims, but the current version, which is undergoing pre-legislative scrutiny, leaves out the major part of the problem. That must be changed.

The campaigner Mark Taber gave evidence to our inquiry. He found the compare-uk-bonds.co.uk fake comparison site on Google, and reported it to Google in May last year. An elderly woman who had recently been bereaved contacted him after losing more than £200,000 to that scam site on Google in September. Google finally took it down in December. People think that if they find something on Google, somebody must have vetted it, but of course they have not. Google gets paid by scammers, and then also gets paid by regulators to warn about the scammers people find on Google. It is a pretty good business. I have no idea why Google did not take that scam down in May. Was it because the company was disorganised? Was it because it wanted to keep the advertising income coming in? Google will not say, and I do not imagine that we will ever know. What this shows us is that the law must be changed. If it is not changed, crooks will continue to ruin the lives of thousands by advertising scams online. That would be an unforgivable failure of Government.

Last year, the Pension Scams Industry Group estimated that £10 billion had been lost to pension scams by 40,000 people since the pension freedoms were introduced by George Osborne in 2015. I welcome some of the recent changes that have been made to help. The new Pensions Schemes Act 2021 will restrict the statutory right to transfer, which was given in the pension freedoms, where there are signs of a scam. The High Court recently ruled that the fraud compensation fund could be used to compensate pension liberation scam victims. Those are both welcome steps, but we need to do more. In particular, we must tackle the menace of online scams. The insurer Aviva told the Work and Pensions Committee that in the six months before it gave us its evidence it had found 27 scam websites purporting to be Aviva. Having found them, it takes quite a lot of effort to get them taken down, and there are always victims before the sites are removed.

In the Online Safety Bill, the Government are tackling user-generated scams, but not paid-for scam adverts. That needs to be changed, because it is the scam adverts that are the heart of the problem. That is not just the view of my Committee and the Treasury Committee; it is the view of almost everyone outside Whitehall who has looked at this, except for the internet companies. The Governor of the Bank of England told the Treasury Committee that the risk to consumers from online fraud

“could be tackled through the Online Harms Legislation, but the experience so far...is that there is strong resistance in other parts of the official sector to extending the legislation to financial services. This is a serious problem.”

He is absolutely right.

The City of London police wrote to the Work and Pensions Committee in May that the exclusion of advertisements and cloned websites from the Online Safety Bill

“leaves a gap in the protection provided for the public”.

The City of London police went on to call for

“legislation requiring a duty to protect and/or corporate criminal liability for failure to prevent across all online and telecommunications enablers.”

The Financial Conduct Authority told us in evidence to the Committee that

“financial harms should be included in the Online Safety Bill to ensure that online platform operators take responsibility for the material which they disseminate which could cause consumers financial harm.”

That is absolutely right as well. The Prime Minister told the Liaison Committee in July that

“one of the key objectives of the Online Safety Bill is to tackle online fraud”.

I welcome and applaud that pledge, yet the Bill as it stands entirely misses the major problem of online fraud, which is paid-for advertising.

Martin Lewis of MoneySavingExpert.com, Sir Richard Branson and Dawn French have all had their name or image used in online scams. They all wrote to the Prime Minister last month calling for the Online Safety Bill to tackle scams, pointing out that the current Bill will penalise someone who posts a scam, but not someone who pays to post the same scam. They went on to say that the

“Government has said it wants to eventually tackle scam adverts through changing advertising regulation—but this will have to go through a lengthy process of legislating in the face of fierce opposition from a powerful advertising industry.”

We understand that work to address the problem of scam advertising is going on somewhere—the Department for Digital, Culture, Media and Sport, I think—but on a much longer timetable. If that is the track we go down, it will be years before anything changes, and thousands more people will lose their life savings in the meantime.

[Kevin Hollinrake]

That is a really interesting quote. Who is in the “powerful advertising industry”? The only people I can see benefiting from scams posted in the paid-ads section of Google are those at Google, not those in the advertising industry.

[Stephen Timms]

That hon. Gentleman raises an interesting point. I know that Ministers have been looking into this issue. As I understand it, there is now a very complex infrastructure around advertising. Google is at the end of the chain, but there are all sorts of agencies and intermediaries—a whole industry—in the middle. I imagine that letter is referring to the fact that all those people in the middle would say, “No, don’t touch this because it’s working very well.” It is working well for them, but I am afraid that for the public it definitely is not. If we wait in the way suggested in the letter, it will let crooks and scammers continue to ruin people’s lives for years to come. That would be a catastrophic Government failure. My plea is for Ministers to change course now, face up to the undoubted technical challenges, and legislate in the Online Safety Bill.

Finally, I agree with a point made by my right hon. Friend the Member for Barking in opening the debate: this is an existential threat to the UK economy. Financial services account for a big part of our economy, and we have a worldwide reputation and provide a great deal of expertise and high-quality services. If people conclude that they can no longer trust our financial services sector because fraud is being allowed to run rife, that is a massive threat not just to that industry but to our entire economy. We really do need to tackle economic crime, face it head on, and make the kind of changes that my right hon. Friend and the hon. Member for Thirsk and Malton have argued for, to protect not just the customers of these services but the entire economy.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lee Rowley)]

Thank you, Madam Deputy Speaker, for the opportunity to contribute to this debate; it has been a good and constructive one and I am grateful to all those who have contributed. In particular, I congratulate the right hon. Member for Barking (Dame Margaret Hodge), who has done extraordinary work in this area for so many years, first on the Public Accounts Committee—I had the privilege of sitting on it a few years after the right hon. Lady, but her reputation went beyond her time there—and now in the all-party parliamentary group on anti-corruption and responsible tax that she is pursuing. I also pay tribute to my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) for the extraordinary work he continues to do for so many people, referred to by other hon. Members today, through his all-party parliamentary group on fair business banking. I thank them both for securing this important debate.

I have heard many important points today underlining the evils and dangers of all forms of economic crime—fraud, corruption, tax evasion, laundering, terrorism, potential people-trafficking, organised crime, drugs and the expropriation of public money. I agree with them. Economic crime is every bit as insidious as hon. Members have so cogently argued today. I reiterate that the Government are committed to continuing to build a framework that will deter such crimes and provide the genuine accountability that hon. Members have so accurately outlined through this short debate.

Several hon. Members have outlined some of their own personal experiences from their constituencies, and I know and accept that economic crimes not only represent a significant cost to the economy, but have real-life implications for individuals out there. That is something we must not forget about. I have seen it in my own constituency; just a few months ago I dealt with a gentleman from one of my towns, Killamarsh, who had had £20,000 taken from him in a telephone-based scam. We had to struggle to get that money back from the bank in the first place, but it should not be the responsibility of the individual, and the individual should not have to engage with their Member of Parliament, to get that money back through those processes. The money should never be taken in the first place, and we should prevent such problems before they happen.

On that basis, I accept the challenge here but, without taking anything away from the valuable and important points made today by all hon. Members, I highlight that it is important that the Government pursue a targeted and proportionate level of enforcement, focusing on achieving compliance from companies. I do not think anyone here today would disagree with that in principle. We must seek to counter financial crime, but we must also seek to protect the dynamism of the UK’s business environment.

The overwhelming majority of the UK’s 4.5 million companies contribute productively to the UK company, abide by the law and make a valuable contribution to society, and our responsibility to them is as important as the absolute requirement to crack down on the small minority who misuse the system. We must not undermine the strengths of our current systems nor overburden the law-abiding majority.

Notwithstanding that, the Government are committed to increasing the transparency of business so that those behind the abuse of companies can be identified and our law enforcement bodies can access the information to support their investigations. I know the main question today is one of timing; it is a question of how quickly we get there, and I appreciate the exhortations from hon. Members across the House. I assure them that both the Department I represent and the Government as a whole are working hard to bring forward appropriate measures as soon as we are able. We are taking it seriously, and further information will come forward on that as soon as possible.

I highlight that because it should be clear, based on things we have already done, that the intention is moving in the direction hon. Members want. Consultations were published a couple of months ago, and the Department has published responses on limited partnership reform, increasing transparency, and reforming the powers and role of Companies House—something the right hon. Member for Barking has highlighted throughout the debate. Members have seen a draft Bill to increase the transparency of overseas companies that own property in the UK, as referenced throughout the debate. As Members will know—many Members in the Chamber have been here longer than I have—by convention, the Queen’s Speech outlines the point at which the legislative programme comes forward, and we will do that in due course. I assure the House of the Government’s commitment in that regard.

[Kevin Hollinrake]

The Minister is making a good and important speech. His Department is looking at a review of whistleblowing regulations and legislation. We have heard evidence from across the House that fraud now accounts for something like a third or even 40% of all crimes, and around 40% of those crimes are identified only because of the work of whistleblowers. It is widely acknowledged that whistleblower legislation is falling behind that in other countries. Does the Minister agree that we must focus on that issue in the context of this debate? Whistleblowers are key to finding the information, so that we can crack down on crimes that are facilitated within these organisations.

[Lee Rowley]

I am grateful to my hon. Friend for highlighting that important point. Whistleblowing is a vital part of an ecosystem that works and has appropriate checks and balances. He correctly highlights the need to ensure that our frameworks are appropriate for that, and I know that Ministers responsible for that area of policy are listening to this debate and will take his points on board.

Let me take a moment or two to talk about context. Context is important because, even in a good-natured and constructive debate such as this, it is important to acknowledge some of the work that has been done, while also recognising that Members are keen for us to move further and quicker. In 2015, the Government legislated to ban bearer shares and create a public register of beneficial owners of UK companies, and that register has been a template for countries across the world. Indeed, a number of years on, we still get requests from other parts of the world about it. Since 2016 the Government have made significant changes to the way they tackle money laundering, particularly through new powers in the Criminal Finances Act 2017, which include unexplained wealth orders, new seizure and forfeiture powers for bank accounts, and new protections for the sharing of information.

Subsidy Control Bill (Tenth sitting)

Kevin Hollinrake Excerpts

Tuesday 16th November 2021 Public Bill Committees

[Kirsty Blackman]

Thank you, Ms Nokes, for your forbearance in continuing to chair these sittings for us; we appreciate it.

It strikes me that there are three really important things in the Bill. The first question is this. What is a subsidy, and when can and cannot a subsidy be awarded? Actually, we have had not much disagreement across the Committee about what constitutes the answers to those points. The second question, which we have raised a number of concerns about, is this. How do we know what has been awarded? Specifically, we have raised a number of issues about transparency, how transparency will work and whether the transparency measures being suggested are adequate. The third question is how subsidy decisions can be challenged. The Bill and this system, the subsidy control regime, will not work if there is not a mechanism for a challenge to be made. That seems to me to be the third of those three important areas.

We have suggested amendment 23, which is specifically about the definition of interested parties. The Bill says that “interested party” means

“a person whose interests may be affected by the giving of the subsidy or the making of the subsidy scheme in respect of which the application under subsection (1) is made, or…the Secretary of State”.

The Minister has been clear a number of times that being too prescriptive about some things and including too many things risks suggesting that we are not including others. If the measure includes a, b and c, potentially an imaginary d would be excluded, because it explicitly says a, b and c.

The legislation talks about “interested parties” as those people who have been affected, but it also includes the Secretary of State, so presumably, in the Government’s eyes, the Secretary of State has a specific role whether or not he or she has an interest or the Government have an interest in whatever it is that has been subsidised. The Secretary of State has the ability to request a call-in whether or not they have an interest. The Minister has spoken at some length—indeed, a number of people have—about the asymmetry of the legislatures in the UK, and there is an asymmetry of legislatures. Westminster has reserved powers and, as we have seen in the United Kingdom Internal Market Act 2020 and various other power grabs, the ability to override some of the devolved competencies. We are not disagreeing that there is an asymmetry, but there is a requirement and a recognition that we have devolved legislatures that have a very important role to play in not just the economic development but the wellbeing of their citizens under whatever the devolved competencies are.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

Is the hon. Lady not defining that exactly as the legislation is set out? The devolved legislatures have an important role to play. Therefore they are an interested party. That is the point; it does not need to be set out specifically.

[Kirsty Blackman]

In that case, it does not need to be set out specifically that the Secretary of State is an interested party. There would be no need to include the Secretary of State if the Bill applied equally to any of the devolved legislatures whether or not they had a direct interest or whether or not their interests would be affected. It may be the case that the Scottish Parliament’s or the Scottish Government’s interests are not affected by something but that the interests of a significant number of businesses in Scotland are affected, in which case it would be completely reasonable for the Scottish Government or Scottish Ministers to be included, as we have suggested in the amendment; we have also referred to Welsh Ministers and “a Northern Ireland department”. The aim is specifically to catch the issue that has just been made clear. Sometimes the devolved institutions will not have a direct interest that affects the operation of their Parliament, but they might have an interest on behalf of the wellbeing of their citizens or the economic development of the places they represent. Subsection (7)(a), which defines interested parties, does not go far enough to allow those institutions to raise concerns about potential issues. If the concern does not affect them directly, it seems they are excluded from raising it.

I understand the point made earlier by the Minister about the Competition Appeal Tribunal and how it may define interested parties, but there is a definition of interested parties in the Bill. I feel it is too narrow to include other interested parties such as Scottish Ministers, unless they are directly affected.

Legislatures need to be responsible. We need to take action on behalf of our citizens, and to be able to take that action. Given that these institutions are democratically elected and there have been votes that resulted in the creation of the institutions, we must recognise that the devolved legislatures have a stake and a responsibility—a place to fill in supporting their constituents. This is not about trying to say that the Scottish Government are better than the Westminster Government—I mean, they are, obviously, but the amendment is not about fighting to change the power structure of the UK. It would simply allow Scottish Ministers, Welsh Ministers and the relevant Northern Ireland Department to take their place and be able to exercise their right to protect the people, the businesses and the countries they are elected to represent.

If the term “interested parties” covers everybody, including those who have an indirect interest, then it does not make sense to include the Secretary of State in the definition. However, if the term “interested parties” does not include Scottish Ministers, the Welsh Ministers and the relevant Northern Ireland Department, we have a really big problem. This is not how devolution is intended to work; it is intended that those institutions can support their constituents.

I would appreciate it if the Minister will look at the issue. It is likely I will consider pressing the amendment, because it is such an important issue. As I said, this is one of the three most important parts of the Bill. The devolved legislatures absolutely should have the right to have subsidy decisions called in. This is not a power that is going to be used every five minutes. It is not like anybody is going to be challenging the decisions or looking for assessments on a regular basis—that is not how it is going to work. If the UK Government are committed to levelling up and the principles in the Bill of looking at competition throughout the United Kingdom and the effects of subsidies, it is really important that the three devolved Administrations have this power.

[Kevin Hollinrake]

Does the way that the amendment is drafted not mean that Scottish Ministers, Welsh Ministers and the relevant Northern Ireland Department could interfere or be an interested party even though they had no interest? For example, a Scottish Minister could intervene in something that was happening in Wales, which has no relevance—they would have no interest at all. Is that the intention—that a Scottish Minister can intervene in a subsidy scheme in any part of the United Kingdom, even though it does not directly affect Scotland?

[Kirsty Blackman]

Yes, because that is the point of the Bill. The point of the legislation is to make sure that we do not have those subsidy races. As was made clear on Second Reading, Members want a situation in which there are not subsidy races and in which they can ensure that the best decisions are being taken for their area. If the hon. Gentleman, the local authority in his constituency or the Secretary of State felt that something in his constituency was being affected negatively because of the actions of the Scottish Government or the Northern Ireland Department in granting a subsidy, I would expect the Secretary of State to consider calling that in. If the hon. Gentleman made representations to the Secretary of State on behalf of organisations in his constituency that might not want to go through the process of employing lawyers to get it called in, but are genuinely affected, surely that is one reason why the Secretary of State may be included.

[Kevin Hollinrake]

The hon. Lady makes my point for me. If something were affecting North Yorkshire, I would be an interested party already, because that is how it is defined.

[Kirsty Blackman]

No, the hon. Gentleman would not be an interested party, because the Bill states that an interested party is

“a person whose interests may be affected by the giving of the subsidy or the making of the subsidy scheme”.

The hon. Gentleman’s interests are themselves not affected. His constituents’ interests are affected—

[Kevin Hollinrake]

That is the same thing.

[Kirsty Blackman]

It is not the same thing, and that is the point that I am making. That is why either the definition of an interested party needs to change, or we specifically include those people whose direct interests may not be affected but whose indirect interests—whose responsibilities towards their constituents and their country—are affected as a result. In such circumstances, therefore, the hon. Gentleman would not be an interested party. I cannot see how his interests possibly could be affected, going on the reading of the legislation, although his constituents’ interests would be affected. If that is how we want the measure to operate—which is how I would like it to operate—I would very much like it to operate in the way that he is suggests.

[Kevin Hollinrake]

My interests are my constituents’ interests, and vice versa, so why would my interests not be affected if my constituents’ interests were affected?

[Kirsty Blackman]

The Bill states:

“a person whose interests may be affected by the giving of the subsidy”.

The hon. Member’s interests would not be affected by the giving of the subsidy, his constituents’ interests would be. If the Minister, when he speaks, confirms that a Member’s interests cover all the interests of his constituents, can define the interests of the Scottish Government, Welsh Ministers and the Northern Ireland Department or can say absolutely that, for example, a Northern Ireland Department’s interests cover the interests of businesses and constituents within its jurisdiction, I will be delighted that the hon. Member for Thirsk and Malton is correct. That is what I would like it to say but, as drafted, that is not what the Bill says.

There is therefore a gap, an issue with not enough people being able to make that challenge and in those democratic institutions not having that right. As the Minister said, it is not a foregone conclusion that such things would go through, that the CAT would look at the subsidy decision and say, “Oh, the Secretary of State has referred this, so they are definitely correct and the subsidy is definitely wrong.” That is not how it would work. The CAT is an independent organisation and it will be making those decisions.

On the specific point about people who have the ability to refer subsidy decisions, however, I think that those people with indirect interests on behalf of their constituents or the areas that they represent should have the right to make that referral—and for the CAT to make the decision after that. Again, that will not lead to a significant increase in the number of challenges to come forward, but if the Government are committed to levelling up and to the Subsidy Control Bill regime working as it is intended to work, changes have to be made to the clause. Amendment 23 was the best way that I could see of making the changes to ensure that those interested parties with indirect parties would be able to fulfil adequately their roles to work on behalf of the people who elected them.