Economic Crime and Corporate Transparency Bill

Lord Browne of Ladyton Excerpts

2nd reading
Wednesday 8th February 2023 Lords Chamber

[Lord Browne of Ladyton (Lab)]

My Lords, it is an immense privilege to follow the noble Lord, Lord Clarke of Nottingham. He invites us all to be repetitive, and I will try not to be, except to this extent: I agree with every syllable, every word that was uttered by my noble friend Lord Ponsonby, followed by the noble Lords, Lord Fox, Lord Vaux and Lord Clarke of Nottingham. In trying not to be repetitive, I may inadvertently touch on some of the subjects they mentioned.

My thanks go particularly to the noble Lord, Lord Fox. His speech covered almost all the points that I want to make, so maybe I should go on to his Back Bench and support him, as he suggested his noble friends will be doing. I also welcome the Minister to his Front-Bench position and congratulate him. I look forward to working with him, particularly on this Bill, as we all do.

I noticed that the Minister used a form of words that the Government almost always use when talking about economic crime. He is not to be criticised for that consistency; it is a good thing. Almost every time I go on a government website about economic crime, in which I have an interest, the first sentence is to the effect that economic crime is not merely an enforcement or regulatory issue but—and this is what interests me—it poses a threat to the UK’s national security, economy and institutions, as well as causing serious harm to society and individuals. It is a threat to our national security because we seem to have an open door to some of the most dangerous and violent people in the world who either send their money or, in some cases, come to live with us because they can, partly because, at one stage, they could buy visas that would allow them to do that if they invested a significant amount inwardly.

It is not only that. I was pleased that my noble friend Lord Ponsonby started with the scale of this crime, which is extraordinary. It is estimated that economic crime costs this country somewhere in the region of £300 billion per year, but everybody who says this also says that the difficulties of assessing the scale of undiscovered economic crime means that this is almost certainly an underestimate. As we heard in the fraud Select Committee, which I will come back to, a large number of people are so embarrassed about being defrauded that they do not report the crime so it is never entered into the statistics. Even so, at that rate, it constitutes 15% of GDP. I do not think there is a measure of London buses that would help people realise what that means, but it is seven and a half times what the UK spends on defence.

The prize for all this and the contribution it would make to the good order of this country is that, if we can interdict this behaviour, there is an enormous amount of money to be gained. There would be no problem with the Government paying public servants what they want if we could get that money back or, better still, stop it leaving the country in the first place. That is where our focus should be.

This debate takes place directly in the shadow of the UK’s fall from 11th to 18th place in the Corruption Perceptions Index. This should concern us because it suggests that the systemic failures, which we have often discussed in your Lordships’ House and will be discussing today and throughout the passage of this Bill, are being noticed by our partners abroad and causing trust in the probity of our institutions to ebb.

Against this backdrop, the provisions in this long-overdue Bill are welcome. I think they will be welcomed by all the speakers who contribute to this debate, but my welcome is not unqualified. The reforms to Companies House, the enhancement of transparency, the disclosure requirements for limited partnerships and the strengthening of the scope and ability of law enforcement agencies to confiscate illicitly acquired crypto assets—although I share the bemusement of the noble Lord, Lord Fox, about how that is going to be done, because I have no idea how you can take an illicitly acquired crypt asset off somebody; that will have to be explained to me at some stage—have all rightly garnered cross-party support, but with this support, and we have the other place to thank for it, comes a helpful, cross-party and expertly informed call for the Government to strengthen certain measures further and include a few well-thought-out additional provisions.

In the 10 or more years that I have been in this House it has been almost a tradition for many speeches at Second Reading to include a criticism of the other place for a failure to scrutinise the detail of the legislation, consequently delivering it to your Lordships’ House in a state where fundamental repair or, in some cases, reconstruction work is necessary. Nothing could be further from the truth in respect of this Bill. The Report stage debate on 24 and 25 January in the other place is a model of parliamentary legislative scrutiny. It was cross-party, informed and detailed, and in almost every line of the excellent speeches an improvement of the Bill emerged. It turns out that—people who have been around Parliament long enough know that this invariably happens in debates on Bills—the Government resisted the temptation to accept any of those amendments although, in this case, they promised to come back to some of them.

The deep irony was that the two Ministers who were being persuaded—one was the current Security Minister and the other was Kevin Hollinrake—were partly responsible for the process that generated these amendments in the first place. Behind this—a virtual industry, over the years—were two All-Party Parliamentary Groups. The people who spoke in the debate were either members of those groups and had contributed to these amendments or were members of the Treasury Select Committee, which had been debating and promoting them for some years. It was a virtual treasure-trove of advice and suggestions to improve the Bill significantly.

Over the period of time that we have the Bill, it is almost certain that this House will nurture it and bring it forward through a process in which all this will be repeated and debated. From my experience of the House, particularly recently, the Government will have greater trouble here in getting the votes to go with them when they resist common-sense and well-thought-through improving amendments to the legislation. I am not suggesting that we just jump to that process—we have to go through it and we will—but that is my confident prediction about where this Bill will end up. We will give it back to the other place in the state that it hoped it would come to us in.

This will be a big challenge for the Government but, in my view, it will be a much-improved piece of legislation that starts to deliver what the Government want, which is to make us more resilient against what has become a disease in this country, that is, corruption and fraud. It is costing us phenomenal amounts of money. There is a big prize.

I had intended at this point to refer to some of these points, but since the noble Lords, Lord Fox and Lord Vaux, have done it for me, I will not. I think that we have laid out the menu. However, I will ask the Minister one important question. I too was a member of the fraud Select Committee, immensely ably chaired by the noble Baroness, Lady Morgan of Cotes, and there are other speakers in this debate—such as the noble Lord, Lord Young—who were also members. I think that we are all very proud of the work we did and commend the report, which should be read. However, I say to my noble friend Lord Vaux that I am not certain I want the fraud strategy to be published in the current circumstances, for the reason that I am about to come to.

Coincidentally, alongside the publication of the committee’s report—we did not set this up—the National Audit Office published a value for money report on combating fraud, which is the responsibility of the Home Office. Five years before, it had published a value for money report and been deeply critical of the Home Office for not having, among other things, data about the level of fraud, so it must have been to its surprise—it was to mine—that this report, which it published at the same time, said among other things that the Home Office had no reliable way of measuring the financial impact of fraud or the value for money of its own policies to tackle it. That is because its data was—guess what—six years out of date, coincident with the last time that the Home Office told it that it had no data to measure fraud. That struck me as appalling, given the Home Office’s responsibility, as I am sure it did the National Audit Office. This is now with the Public Accounts Committee, so we cannot debate it in any more detail in this House until that comes out.

Believe it or not, the Home Office put up a spokes- person on the day who said, and I paraphrase—responses of all Governments of any hue to crises start off by saying, “We take this issue very seriously”; the answer to that in many cases is, “No you don’t, because if you did then there wouldn’t have been a crisis”—that they took this issue very seriously, were in the process of drafting a national fraud strategy and would take into account the criticism of the National Audit Office. They should have said: “We will delay the publication of our national fraud strategy until we have some data on which to base it.” I am not so desperate to get from this machine a national fraud strategy until they have corrected the problem that the National Audit Office described.

I am conscious of time; I had promised myself that I would not go any further than eight minutes. I think that I have said enough; I will say no more. I support this legislation, but it must be improved, exactly as the other place tried to improve it.