Small Business, Enterprise and Employment Bill

Debate between Lord Mitchell and Lord Flight

Monday 19th January 2015 Grand Committee

[Lord Mitchell]

My Lords, in moving Amendment 37D, I shall speak also to Amendments 44HA, 47A and 44 and will be returning to the central themes that I marked out when speaking to the amendments in the previous two groups: the need to ensure that the boundaries and scope of the provisions that we are talking about are adequately drawn so as to ensure that no loopholes remain and the need for appropriate transparency to make sure that the register serves the purpose that it was intended to serve. As before, I will often be probing rather than criticising the measures, which have our support.

Our Amendment 37D, the first in this group, would provide for the explicit circumstances when it will be necessary to exclude otherwise necessary information from the register. Clearly, it is understandable that, where there is a danger either to an individual or to national security, companies can be exempted from providing information. However, it is important that those circumstances are explicitly in the Bill, otherwise there may be exemptions for less important reasons in the future. The amendment also provides for any such decision to be challengeable through judicial review. Despite the fact that this Government have recently set about attempting to damage and degrade judicial review, it remains an important mechanism for holding the Government to account—hence its provision here.

I have also added my name to Amendment 44. My noble friend Lord Watson will no doubt be able to give a more complete explanation of it in a moment, but the essential point is that the Bill as drafted appears to preclude the possibility of a journalist using the register to investigate a potential impropriety. New Section 790O(4)(d) says that any request for information should include whether or not the information is going to be passed on to another person. In an age where open data are providing insight in a variety of fields, appearing to want to prevent them being passed from one person to another seems—to me, at least—to be a rather odd decision. I am keen to hear the Minister’s explanation for that subsection.

Amendment 44A is a probing amendment. New Section 790P sets out the process through which a company, upon receiving a request for information, can either provide it or go to court. However, subsection (4), which sets out when a company does not have to comply with a request, appears to have no time limit attached. Our amendment requires it to be reviewed annually.

Amendment 47A follows on from Amendment 37D in marking out the extent of the exclusions. Circumstances where a person’s details could be suppressed from a register are to be laid out in regulations by the Secretary of State. Amendment 47A would make it possible to challenge any such decisions. Taken together, these amendments would improve the clarity of these provisions and improve their ability to increase transparency about ownership of companies. I beg to move.

[Lord Flight]

My Lords, I declare my interests as in the register. My various amendments in this group are all part of the same process and seek to change the proposed arrangements so that, although there would still be a register and companies would still need to know their shareholders, there would be no requirement to send details to Companies House. If the company in question did not wish to give access to the register, access would be by way of an application to the court, which would then be limited to security, taxation and law enforcement reasons—implicitly by those three categories of bodies. The Bill thus amended would comply with the G8 commitment, which I was pleased that the noble Lord, Lord Mitchell, read out. It specifically did not commit to a public register but committed to making the information on share ownership able to be accessed by security, taxation and law enforcement authorities.

As I argued at Second Reading, the Bill’s proposals for a public register as they stand are, in my view, flawed on several counts. I think we all agree on the need to address the issue of anonymously owned companies having connections with terrorist groups or evading tax—I might add that the same goes for charities, where the record of involvement is under some question. My amendment addresses this by allowing security, tax and criminal law enforcement bodies access. Indeed, the provisions in my amendments could be adapted to simply obliging companies to provide the information on controlling interests to those three bodies.

My point is that there is really no need for public access, which is potentially open to abuse. The Bill as it stands overturns 200 years of the right to privacy under UK company law without really debating it. Transparency of ownership relates to whether a company is public or private under British law. As has been pointed out, publicly listed companies have to make an announcement that goes right down to a 3% shareholder, but for a private, family business, privacy has generally been accepted.

The categories of privacy that are protected are contemplated in the BIS October 2014 consultation, and the Government have since responded further to that. Those categories relate to people who are at risk of intimidation or violence, but there are many other areas in which protection of ownership should be justly considered. The measures, as they are likely to evolve, would be expensive to operate and, at the end of the day, decisions about where people need protection are relatively subjective. The Government’s recent advice on secondary legislation suggested that they would confine protection to situations risking violence or intimidation. I suggest that that would be far too narrow to be just. There are a number of situations where families would be open to press vendetta, for example, should they be thus exposed.