Small Business, Enterprise and Employment Bill

Debate between Lord Watson of Invergowrie and Lord Flight

Monday 9th March 2015 Lords Chamber

[Lord Watson of Invergowrie]

My Lords, I oppose the amendments in the name of the noble Lord, Lord Flight. Frankly, they are quite in contradiction to the whole thrust of the Bill, which is to increase transparency. They would have the opposite effect and I very much regret that. I am not going to rehearse the arguments that we traded in Committee a couple of months ago but I would just like to point out that he has brought up a new point about proper purpose. I dare say we could be here till this time next week before getting any sort of consensus on what a proper purpose was—in fact, we might not have succeeded even by then. I really think that that would be a backward step.

Surely the basic premise of the legislation is that public scrutiny will root out corruption more effectively, and indeed quickly, than the legal authorities themselves could do. I cannot understand noble Lords being opposed to that. To a certain extent, as far as companies are concerned, there is a case of, “If you have nothing to hide, you have nothing to fear”—but, equally, what do companies have to fear from transparency? The analogy with the former Prime Minister Tony Blair was not particularly apt in this situation. Personal privacy is one thing but companies have to be prepared to be open about the way in which they operate. Commercial confidentiality is one thing, but it has its limits.

My final point is about removing the requirement for a business to make its register publicly available. That is an essential element of this part of the Bill. I find it strange that the noble Lord, Lord Borwick—

[Lord Flight]

My suggestion was that we fell in with the new arrangements, which are not complete but which use the language of a public register while stating very correctly that it should not be available to any old Tom, Dick and Harry but should be available for legitimate purposes. That seems to me to be the essence of what we are here to do.

[Lord Watson of Invergowrie]

Yes, but defining what is a proper purpose is simply not achievable. People will ask for information. If they use that information in a way that is against the law, they leave themselves open to action. That is a protection.

The noble Lord, Lord Borwick, said that he did not understand why the Liberal Democrats or the Labour Party were supporting this legislation. I have to remind him that it is a government Bill, and it is a government Bill with different aspects to it. It did not emanate from his coalition partners or from the Opposition. However, this is one aspect of the Bill which all parts of the House should get behind, because it seeks to achieve transparency. In terms of the way in which British business operates, surely that has to be a positive development.

Small Business, Enterprise and Employment Bill

Debate between Lord Watson of Invergowrie and Lord Flight

Monday 19th January 2015 Grand Committee

[Lord Flight]

It depends on whether a shell company falls within the Companies Act definition, so it will depend on what funds there are—what the shell company is capitalised at—and the other issues in the Companies Act that determine what is a small business. There is not necessarily a black-and-white answer, but I would have thought that if the Government graciously accepted my amendment they could add to it significantly by carving out that shell companies are not excluded.

[Lord Watson of Invergowrie (Lab)]

My Lords, I am rather puzzled by one of the arguments that the noble Lord, Lord Flight, has advanced in favour of his amendment. As the noble Lord, Lord Phillips, has just said, it appears that the noble Lord, Lord Flight, has not read the impact assessment on this Bill. It was highlighted in the impact assessment that the majority of shell companies, which are often the vehicles of choice for money laundering and other criminality, would be classified as small businesses. To exclude them would, as the noble Lord, Lord Phillips, said, leave the door wide open and not solve one of the major problems that this legislation is looking to solve.

The noble Lord, Lord Flight, mentioned burdens on small companies. Of course I do not want to create burdens on any kind of company, but I believe that when a law is justified and has been implemented, small companies have a duty to keep on top of that legislation and make sure that they are not caught out by having failed to identify their person of significant control. As the noble Lord, Lord Flight, said, the vast majority of the companies are small companies owned by the people that run them, so they will have nothing to declare; they will have simply to say that the managing director or the chief executive is the person of significant control and that will be the end of it. The burdens on small companies, I suggest, are actually very slight and for that reason I would argue against this amendment and hope it will not be proceeded with.