Economic Crime and Corporate Transparency Bill

Baroness Hodge of Barking Excerpts

Report stage
Tuesday 24th January 2023 Commons Chamber

[Kevin Hollinrake]

I will make a little progress, if I may. I appreciate that there are a large number of Government amendments, hence the need to make some progress. I would like to reassure the House that they are intended to ensure that the measures in the Bill will work as intended, and in most cases they reflect issues raised in Committee.

I will briefly summarise our amendments relating to parts 1 to 3 of the Bill. First, and importantly, our new clause 15 requires the Government to publish an annual report on the implementation and operation of parts 1 to 3, which includes reforms to Companies House.

[Dame Margaret Hodge (Barking) (Lab)]

Will the Minister give way?

[Kevin Hollinrake]

I will give way to the right hon. Member on that point, because her many speeches in Parliament have led to some of the changes we have made.

[Dame Margaret Hodge]

I am very grateful that the Government have listened to our representations on accountability. I would simply say to the Minister that there is also a new clause down on this issue—new clause 16, put together by Back Benchers from across the House and members of the all-party parliamentary groups—which has more detail. Would he be willing to incorporate the detail of that amendment into his new clause? At the moment, his new clause 15 seems a little vague, and we would just like to button it down a bit better.

[Kevin Hollinrake]

Again, we discussed this at length in Committee. The right hon. Member’s perspective is that we should be very prescriptive about how the registrar—Companies House—should operate and set out specific things it should do. We would prefer those at Companies House to do what they think is right. They are the experts at making sure the register is accurate, and we have given them the resources to do it, which is crucial. I think it is wrong to specify exactly how the registrar should do its job. We are parliamentarians, not experts in registers and Companies House.

[Dame Margaret Hodge]

I am extremely grateful to the Minister for giving way again. This is not telling Companies House what to do; it is the information that Parliament would want to hear. I think that, in discussions with him, he actually suggested we set out in greater detail the sorts of areas we wanted to cover, and that is what we have attempted to do in our new clause. It is not a question of instructing Companies House; it is a question of enabling Parliament to really hold Companies House to account on the breadth of issues for which it will be responsible.

[Kevin Hollinrake]

I am happy to respond to the right hon. Member’s new clause later when we have debated it. I have read it, and it sets out some interesting ways of doing this. I absolutely agree with the principle of Parliament holding Companies House to account, which is why we want it to report annually on the implementation and operation of this legislation. That is how I think we should do it. I think we want the same thing, and I am happy to have an ongoing discussion with her. Many of the things she has listed in her new clause are already reported on by Companies House, so I think it is important that we do not overly prescribe how Companies House should operate, in my view.

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[Seema Malhotra]

My right hon. Friend is right about keeping our legislation up to date. He says that with great authority. We must recognise that those who seek to perpetuate economic crime are always innovating, and unless we are aware and informed, we will not move our legislation and processes on with that. There is also a vital point about the information that comes to the House. Today, we are debating reporting and information. There will be further debate tomorrow about the appropriateness of the structures through which that information is assessed.

New clause 16 seeks to specify further some of the information that should be brought forward and, crucially, calls for a detailing of instances—or maybe even numbers, depending on the reasons—in which exemption powers under the Bill are used by the Secretary of State. The Minister will be aware of the concerns that we raised in Committee about the need for Parliament to have transparency even on the number of uses of exemption powers under the Bill.

[Dame Margaret Hodge]

My hon. Friend is making an excellent contribution to the debate. The point is that the Government’s new clause 15 simply reflects reporting on the process of implementation—[Interruption.] That is how I read it, and that is how the Minister spoke to it. If I am wrong, I am happy to be corrected. Through new clause 16, we are trying to hold the whole of Companies House’s works to account and ensure that it delivers what we have in mind in being at the front end of fighting economic crime through the data that it collects.

[Seema Malhotra]

My right hon. Friend is absolutely right. We should be ambitious for the registrar and for Companies House in tackling economic crime and being a beacon around the world for how a nation should do that. She makes an important point about where the new clause goes further than the Government’s proposal. Along with the report and the data in it, importantly, there would be recommendations about whether further legislation should be brought forward in response to that report and the information in it. That is extremely important, because that is where Parliament will have to make choices about whether it chooses to take further action.

Issues of concern that the report may draw attention to, and which we could encourage the registrar to look at, could include investigations of unusual patterns of directorships and companies registered at one address. All of that would also enable Parliament to hold Companies House to account for its performance. We are willing to work with the Minister to strengthen the Government’s new clause so that it becomes more purposeful and effective—and, in doing so, collectively achieve the outcomes that we intend for the Bill.

I turn to further amendments tabled by Labour Front-Bench Members. New clause 22 seeks to disqualify any individual convicted of a serious breach of the National Minimum Wage Act 1998, such as a deliberate refusal to pay the national minimum wage, from serving as a company director in future. In Committee, the Minister stated that it was

“right to identify the scale and nature of the problem before we legislate”.––[Official Report, Economic Crime and Corporate Transparency Public Bill Committee, 3 November 2022; c. 240.]

He said that he was “keen to do so.” He also said:

“There have been 16 people convicted under the National Minimum Wage Act 1998. I want to do some further research on that to see what has happened to those people and their director qualification or disqualification. That might inform debate more clearly.”–[Official Report, Economic Crime and Corporate Transparency Public Bill Committee, 3 November 2022; c. 233.]

Since then, we have not heard a satisfactory answer to the central question: should an individual convicted of an offence for a serious breach of the National Minimum Wage Act 1998, such as a deliberate refusal to pay the national minimum wage, be prevented from serving as a company director?

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Our amendment would change the focus of those objectives from minimising risk to proactively seeking to identify suspect uses of the register for criminal purposes and to act accordingly. It would be a strong enabler of the risk assessment-based approaches to detecting and preventing economic crime that are set out in the important amendments tabled by the hon. Member for Barrow and Furness (Simon Fell) and my right hon. Friend the Member for Barking (Dame Margaret Hodge), among others.

[Dame Margaret Hodge]

Does my hon. Friend agree there can be absolutely no objection to that approach? In the Minister’s opening remarks, he said that the reforms will give Companies House much more proactive capability. If the Minister sees that, and if we want that, what on earth is the objection to putting it in legislation so that Companies House knows darn well that that is what we expect of it?

[Seema Malhotra]

The Minister has heard what my right hon. Friend says. If that is what Parliament wishes and intends, we should have the courage to put it in the Bill. The amendments tabled by my right hon. Friend and by the hon. Member for Barrow and Furness and others—including new clauses 17 and 19 and amendments 102 and 103—are important, and we support what they are calling for. Separately, we strongly encourage the Minister to look at amendment 101.

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[Seema Malhotra]

I thank the Minister for his confirmation. The legislation is not as tight as we would like it to be, but if he puts his intentions on record, that does take us a step further.

Amendment 107 would require a limited partnership dissolution notice to be published on the registrar’s website and to remain published for a minimum of 20 years. The Minister has previously said that he would like to explore with Companies House the feasibility and costs associated with introducing that requirement. I should be grateful if he confirmed that he has concluded those discussions, and tell us what decision he has reached.

New clause 20, which we support, concerns resourcing. It would raise Companies House fees to £100 to help to properly fund the fight against crime. The current fee of just £12 makes this country the sixth cheapest place in the world in which to set up a company. The Treasury Select Committee recommended a fee of £100. Will the Minister tell us what his plans are? Having a plan to resource Companies House is fundamental to achieving the goals of the Bill.

I thank Scottish National party Members for their amendments, whose arguments are similar to ours. In particular, we support new clause 36 and amendment 109, which deal with reporting and unique IDs—although we think that some minor changes might be made to new clause 36—and would also support any attempt to push them to a vote.

New clause 26, which is being debated today but will be subject to a decision tomorrow, would amend provisions in the Sanctions and Anti-Money Laundering Act 2018 to require the introduction of open registers of beneficial ownership in each of the UK’s overseas territories. There should be no double standards in the legal requirements for transparency of beneficial ownership across different parts of the UK, including the overseas territories. We have witnessed too many scandals involving money being laundered through territories for whose administration the UK is ultimately responsible to accept the idea that we must simply leave them to their own devices. According to the spin that the Government chose to put on the wording of the 2018 Act, its obligation had been met simply by the publication of a draft Order in Council, regardless of when, or even whether, such an order might actually come into force. The result is that we are here yet again, nearly five years later, still discussing how to ensure the implementation of registers to the same standards across all the UK’s territories. Surely it should not have been beyond the wit of Ministers, even in this Government, to have sorted this out by now. [Interruption.] With the exception of the Minister who is present today.

[Dame Margaret Hodge]

My hon. Friend is raising a really important point, which has been put into some question by a judgment of the European Court of Justice by an action relating to a shell company in Luxembourg. I know that this is not entirely in the Minister’s control but it is particularly important because, although the Crown dependencies agreed in 2018 or 2019 to publish registers of beneficial ownership, we never passed the legislation because we got their agreement verbally. I am really concerned that they will now go back on that in the light of that judgment. It will be interesting to hear the Minister’s views on that.

[Seema Malhotra]

I thank my right hon. Friend for her intervention and for the discussions that we had on this matter prior to the Report stage.

In summary, this legislation is essential, but as we have heard from across the House today, there are still areas in which it must go further if we are to catch up after years of being on the back foot on economic crime due to years of inaction. These are thoughtful and purposeful amendments that will improve the Bill, and I look forward to the Minister’s response.

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[Harriett Baldwin]

I think I heard the Minister acknowledge that Companies House needs more resources, and that those resources should be raised not through a one-off fee when setting up a business but through ongoing registration fees. I also think I heard him say that he rather likes our proposal to increase the fees every year to reflect inflation. I think he substantially agrees with the thesis of new clause 20, so this is a great opportunity for him to endorse it so that Companies House is able to start budgeting right away.

I heard the Minister make the valid point that he wants to ensure the budget is worked from the bottom up, and that an arbitrary number should not be put into legislation. I have sympathy for his point of view, but I want him to understand the urgency of the matter. I want him to appreciate that we have waited long enough for this Bill, and that the Treasury Committee will therefore not allow this measure to be kicked into the long grass. We will continue to scrutinise progress, and we expect that progress to be urgent and rapid.

[Dame Margaret Hodge]

At this point in the cycle, I cannot believe there is not a resource budget. Even within the constraints of the Bill, there should be a budget because the negotiations will be starting. It would be interesting if the Minister could reveal that figure.

My second point, with which the Minister might agree, is that we so under-resource the enforcement of existing anti-money laundering regulations in this country that, even if this figure of £100, which the Treasury Committee and other Committee came up with, proved too much, which I doubt, setting up an economic crime fighting fund would mean that other enforcement agencies, such as the National Crime Agency and the Serious Fraud Office, could use those resources to provide better defences against economic crime.

[Harriett Baldwin]

The right hon. Lady makes some excellent points. Once the Minister does this work, it may well turn out that £100 is a good starting point. Other things are budgeted for, and I understand the budget for the work that is under way is £20 million for the financial year just ended. A further £63 million is expected to be needed up to 2024-25 and was allocated in the last spending review.

Forgive me if I am cynical about the budgets for public sector computer procurement projects, as they sometimes come in somewhat over budget. I urge the Minister in his response to new clause 20 to make sure that he can move swiftly to change the amount that it costs to set up a business, while making sure that it remains competitive in terms of economic parameters. It is not every day that Back Benchers say to Ministers, “Here’s some more money for you. We think this is going make the UK much safer and a centre that is less vulnerable to economic crime.” That is the purpose behind our support for this new clause.

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[Dame Margaret Hodge]

I welcome the Minister to his place. I enjoyed working with him for a number of years on the Back Benches. We have co-operated well, and I look forward to that co-operation continuing now that he is a Minister. I am pleased to be working closely with his successor at the all-party parliamentary group on fair business banking, the hon. Member for Barrow and Furness (Simon Fell), who has tabled a number of the amendments put forward by the APPG.

I join others in welcoming the Bill. I welcome the fact that we are having this debate. This could be legislation that fundamentally transforms the landscape that has enabled economic crime to flourish in the UK. It could be the moment when we, in Britain, through the decisions that we make here in Parliament, give a message loud and clear to the world that there will be zero tolerance of money laundering fraud and other economic crime in our country. It could be the moment when, by acting against economic crime, we lay the foundations that would enable our financial sector, and with it our economy, to flourish and grow. As I have often said, we will never achieve sustained economic growth on the back of dirty money, but we could achieve it as a trusted jurisdiction that openly and firmly rejects illicit finance. It could be all of those things.

The Bill before us is welcome; it enables us to have these debates and to legislate, but in its current form it fails in too many ways. First, as it currently stands, I fear that it cannot achieve its stated purpose. Omissions and loopholes mean that there is a real danger that we could be setting up a new Companies House that will fail. One library filled with dud information will simply replace another. Secondly, in my view and that of the all-party parliamentary group on anti-corruption and responsible tax, which we will certainly make clear in tomorrow’s debates on new clauses, the Bill is too cautious and unambitious in its scope. It fails seriously to tackle the challenge that we in Britain face because of the exponential growth of economic crime. It is worth the House remembering what that is. Every year, economic crime costs this country somewhere in the region of £300 billion. That is a conservative estimate—in fact, I think it is a gross underestimate. That is 14.5% of GDP.

To look at just the fraud element of that, reported fraud affects one in 11 adults. I have been a victim of fraud that I have never reported, and we all know that there are victims of fraud who do not report it. One in 11 adults are affected, so this is a massive issue. That figure of £300 billion is double what we spend on the NHS. We are talking about mega sums that get lost in the UK economy every year and impact on all sorts of things: the quality of our public services, the raising of taxes, the economy as a whole and the reputation of the UK. There is an endless impact, and we have to tackle it.

I ask the Minister, as we did in Committee, to put aside the natural instinct to resist amendments tabled by Back Benchers. Our purpose is simply to strengthen the Bill, so that when it is passed, it can support our shared mission across the House to eradicate money laundering, fraud and other economic crime. I urge him and the Government to support our amendments, and I hope that Members in the other place will reflect on our debates today and in Committee when they consider the Bill in detail over the coming weeks.

I welcome the new clause that the Minister has tabled in relation to the accountability of Companies House. However, if he were to accept new clause 16, tabled by my hon. Friend the Member for Feltham and Heston (Seema Malhotra), it would improve what he wants to do and the information that we in Parliament expect to receive about the performance of Companies House.

I warmly support all the new clauses tabled by members of the all-party group. As the right hon. Member for South Northamptonshire (Dame Andrea Leadsom) said, those measures would strengthen the duties of Companies House, which is really important; giving powers is one thing, but duties really matter. Those duties would ensure that we can validate the information contained in Companies House and that it has the integrity it needs to fulfil the purpose for which it is intended.

I look forward to tomorrow’s debate on important issues such as the reforms to corporate criminal liability, the strengthening of support for whistleblowers, tackling the growing problems associated with SLAPPs and introducing new powers that could help us to seize as well as freeze the assets that the Government control from people they have sanctioned.

I will focus my comments today on two sets of amendments that we in the all-party group are convinced are necessary to ensure that the reforms work and that the appropriate resources are in place to properly fund the reforms. Otherwise, our legislation is in danger of simply gathering dust on the shelves of the Library.

[Kevin Hollinrake]

I am always interested in what the right hon. Lady has to say. We have shown that we are willing to engage with her suggested amendments, although we perhaps draft them in a different way, and the debate we had in Committee has been useful and fruitful for both sides.

On the question of duties, which my right hon. Friend the Member for South Northamptonshire (Dame Andrea Leadsom) also referred to, I point Members to clause 1. It is very clear that the registrar

“must… seek to promote the following objectives.”

The first is to ensure that documents are delivered to the registrar. The second is to ensure that the documents delivered are accurate. The third is to ensure that those documents do not create a “false or misleading impression”, and the fourth is to minimise the extent to which companies and others carry out unlawful activities. That is a duty—the registrar must do those things—so Members’ concerns should be assuaged by that clause.

[Dame Margaret Hodge]

It is an important clause—I agree with the Minister on that—but equally, if we introduce a duty to ensure that persons with significant control of companies are who they say they are, it will strengthen the Bill. It will not undermine or contradict any of its clauses; it will simply strengthen it. With all my experience in this House as both a Minister and a Back Bencher, I know that if we are not very specific about what we place in legislation, we come back to it in subsequent years and regret that lack of determination. We see that particularly in our attempts to fight economic crime; so many times we think we have achieved something, then we come back and find it has not worked.

I turn to the first set of amendments that we in the all-party parliamentary group think are necessary, many of which have been tabled by the hon. Member for Barrow and Furness. We have tabled several amendments to create new duties on Companies House, rather than giving it powers, the most critical of which is about corporate service providers. If the Minister does not accept that, I predict that we will end up creating another database that is infected with falsehoods and errors, and will simply reinforce in people’s minds across the globe the growing acceptance that the UK is the best place to hide and launder dirty money.

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[Peter Dowd]

The disease of not listening troubles me. I am not saying that the Government are not listening, but they are not listening enough. On my right hon. Friend’s point, there are still thousands of properties in London and across the country that have unknown offshore owners and we do not know where the money comes from. Will the Bill, or its previous incarnations, do anything to resolve that issue? I am not convinced that it will.

[Dame Margaret Hodge]

My hon. Friend makes an important point, because we legislated last year to create a register of properties that are owned through corporations in foreign jurisdictions, but I understand that Companies House is having real difficulty in establishing it, because it is very difficult for it to assess the real beneficial owners of trusts and companies incorporated somewhere such as the British Virgin Islands. That is why the amendments tabled by the Labour Front Bench to ensure that company service providers are located here so that we have better control and supervision are hugely important.

Last week, as I am sure the Minister saw, Danske Bank agreed to forfeit $2 billion in the US courts as part of an agreement to resolve the criminal liabilities facing it. On top of that, civil litigation has led to a fine of more than $400 million and individual employees could yet be charged by the US courts. That is massive. It is worth reflecting on the words used in that court verdict, including that

“Danske Bank, the largest bank in Denmark, deliberately disregarded U.S. law of which it is well aware, facilitated the laundering of criminal and suspicious proceeds through the United States, and placed the U.S. financial network at risk, all in the name of its bottom line.”

The judgment also says that it

“lied and deceived U.S. banks to pump billions of dollars of suspicious and criminal funds through the U.S. financial system… If you want to use the U.S. financial system, you must play by the rules. If you don’t, we will hold you accountable.”

[Kevin Hollinrake]

The right hon. Member is raising a very important case, which she rightly says I have referred to on many occasions, and I welcome that fine. One of the things I know she will be debating tomorrow is corporate criminal liability, which I think would have a profound effect on companies willing to turn a blind eye to that, as Danske Bank did.

May I raise a couple of points about what the right hon. Member said earlier? It is always the Government’s position on this Bill that any overseas company service provider needs a UK branch and needs to be regulated by a money laundering supervisor. That is not something we were asked to do, but something we very much wanted to do.

On the point made by the hon. Member for Bootle (Peter Dowd), which the right hon. Member mentioned, about the register of overseas entities, the onus is on the entity itself to register the person who is the enterprise’s beneficial owner. If it does not do so—and it has to be done by the end of this month—it cannot sell or lease the property, and there are sanctions available such as fines, or potentially criminal prosecutions can be taken forward. That is the method of making sure we have such information.

[Dame Margaret Hodge]

On the last point, the Minister is right that such companies cannot sell or lease the property, but I think it is probably almost impossible to verify whether the data they provide is accurate, because it is based on the incorporation of an entity in a foreign jurisdiction. That is the problem, and as I understand it from discussions I have had with those at Companies House, it is a problem it is currently facing.

I think the Minister and I would both wholeheartedly endorse the words of the court in the United States—I hope he would; I am sure he would—but let us start by recognising the truth. UK limited liability partnerships and companies were the preferred vehicle for all those clients, most of whom were not Latvian at all but were called non-resident clients—the Russian kleptocrats, drug smugglers, people smugglers and all those sorts of people—who used the Latvian branch of Danske Bank. It was UK company formation agents who worked closely with that Danske Bank branch in setting up those shell British registered companies.

To give one example in today’s context, it was a UK registered company, registered by a UK company service provider that set up Lantana Trade with an address in Harrow, and that company then set up a bank account in the Latvian branch of Danske Bank. According to the whistleblower in the Danske Bank case, the real beneficial owner of that company, which of course has now been dissolved—surprise, surprise—was Igor Putin, Putin’s cousin. The real purpose of setting up that company was to launder money stolen from Russian citizens out of Russia, and our company service providers facilitated that.

We know from an analysis of the FinCEN files submitted to various Committees by the people we have mentioned before—Simon Bowers and Richard Brooks, two very good investigative journalists—that the UK stood out in the FinCEN files as the jurisdiction where there was the largest concentration of companies about which suspicious activity reports had been filed. Over 3,000—3,267—shell companies revealed in the FinCEN files were UK companies. We know that just four of the largest company formation agents in the UK were associated with over half of those 3,267 companies, and they were named in those leaks. We also know that an address in Potters Bar was used by over 1,000 companies featured in that body of leaks. So again, company service providers facilitated the creation of companies that then appeared in that massive FinCEN leak.

My final example comes from a story last week in The Guardian and concerns the infamous Mr Usmanov, the Putin ally whose wealth is said to amount to £14 billion—I have seen different figures in different publications. He claims to have divested himself of most of his UK assets before he was sanctioned on 3 March last year, seven days after Russia invaded Ukraine, but ever more evidence is emerging suggesting that while he has created companies and trusts, using our company service providers to do so, with nominee owners, nominee trustees, nominee shareholders, nominee directors, he remains the real beneficial owner and controller of his assets.

This concerns not just his homes—Beechwood house in Highgate, said to be worth over £80 million, or the 16th century Sutton Place estate in Surrey—but his investment in Everton football club, now bottom of the league. He claims to have sold his interest in the club to his friend and long-time colleague Farhad Moshiri. Our professionals helped to structure these transfers of assets; our company service providers were involved. Yet when Everton was interviewing potential managers after 2016—after he claims to have sold his interests, but before he was sanctioned—Usmanov was always there. According to The Guardian, one candidate to become Everton manager said Usmanov stated during the interview that he owned the club, and another candidate said Usmanov left him with the impression the club belonged to the tycoon. Even Frank Lampard said that when he attended his interview

“Mr Usmanov was on Zoom call with Mr Moshiri”.

I have chosen just three examples, but there are too many bad apples among our company service providers, the people we are proposing to entrust with providing verified, reliable data for the new Companies House register.

We also know that, as colleagues have mentioned, the current system for supervision is broken. The Treasury commissioned a report that found that 81% of the bodies responsible for the legal and accountancy sectors were not supervising their members effectively on anti money-laundering regulations.

[Catherine West]

My right hon. Friend is making an excellent speech. Does she agree that the US model is worth looking at? Law enforcement agencies that are successful get a percentage of the proceeds of their success back to recycle to employ more people to do more enforcement. It is a virtuous circle, whereas our rather hands-off approach is perhaps less effective.

[Dame Margaret Hodge]

My hon. Friend is absolutely right and I will refer to that a little later in my contribution.

There is another report on HMRC’s supervision of company service providers. It looked at 672 of the company service providers and only 95—14%—were found to be compliant with checking that AML regulations were enforced by their members. More than half—352—were non-compliant, but only a third of those 352 were ever deemed to be non-compliant and were pursued through the courts; they received an average fine of £8,000.

This litany of ills demonstrates why we need to sort out the supervision of company service providers before we enact the legislation, and that is why our amendments in the name of the hon. Member for Barrow and Furness are so important. We need to be certain that the company service providers have been properly checked and supervised before we let them loose on verifying data for the new register.

The Treasury is already reviewing the supervision mechanism. I saw just recently that consultation on that review will start in the second quarter of 2023. What I am saying to the Minister is: where there is a political will, there is a political way. There is absolutely no reason why the review should not be completed and implemented concurrently with implementation of the legislation contained in the Bill. By putting that in the Bill, we would make certain—with my greatest love for every civil servant in the country—that that gets enacted. If we do not do that, we will end up with another dud register. We are giving him and the Government a pragmatic and practical suggestion that will simply make the Bill work as it is intended.

[Nigel Mills (Amber Valley) (Con)]

We have wrestled with a similar issue on tax agents, where it has become clear that people are filing tax returns on behalf of their clients when they are neither competent nor perhaps have the right ethics to hold that power. However, it becomes hard to sort that out once they are existing in the system and filing returns. Does the right hon. Member agree that it would be much better to get only the right people authorised in the first place and that, by doing that up front, we would not have to come back afterwards to try to kick off people who have a heavy investment in carrying on?

[Dame Margaret Hodge]

The hon. Member makes a valid point, as he always does. That is a parallel argument for ensuring proper supervision and regulation and then checking and disciplining people in a professional capacity so that we get rid of the bad apples right across the piece. I was thinking about lawyers, because I think that only one case has been taken by the Solicitors Regulation Authority against one firm of solicitors on implementation of AML regulation. It is pathetic how little has been done in that context.

I turn briefly to the resourcing of the regulatory enforcement agencies and new clause 20. Our failure properly to resource these agencies is a disgrace. We should all share blame for where we are to date. In the USA, Biden sees economic crime as a security issue. As we now know from Russian activity in relation to the invasion of Ukraine, it is a security issue, and yet, if we look at our records, expenditure in the USA is going up by 31%, whereas here in the UK it has been cut by 4%. That is absolutely crazy. The Americans are much more aggressive and assertive in pursuing economic crime in both the civil and criminal courts. There is the Danske bank case, and there is the HSBC case that involved the Mexican drug cartel—the Minister will know about that. In America, in 2012, HSBC was fined $1.4 billion. In Britain, by 2021—nine years later—we managed a fine of only £64 million. Let us also look at the case of Standard Chartered—a UK bank. There again, the USA fined it $842 million. What we did in the UK? A fine of £102 million.

Let us look at the implementation of the Bribery Act 2010—legislation that we all think is working quite well—with a “failure to prevent” duty in it. In the UK, we have seen 99 criminal convictions since its introduction. In America, where there is a similar legislative framework, 236 criminal convictions—more than twice as many—have been completed.

Despite our timid approach to pursuing economic crime, and despite our pathetic response, it still pays to pursue it. In the five years between 2016 and 2021, the enforcement agencies brought in £3.9 billion to Treasury coffers. So it is not just a good thing for all those other arguments we have given; it also helps to support the public finances.

It is pointless passing laws and then failing to agree appropriate funding that would enable the Government to put those laws into practice. Our amendments aim to do just that, at—I stress this fact, which I think the hon. Member for West Worcestershire (Harriett Baldwin) mentioned—no cost to the taxpayer. We are doing it through raising the fees, which do not appear on the public sector borrowing requirement. We are not doing it by demanding any bit of public sector funding towards that cost.

It is absurdly low, whatever Members feel, to pay £12 to set up a company. To put that into context—this is a figure I used in Committee, but I will share it with the House—it costs £1,220 to get a visa for a skilled farm worker. We have just got the priorities completely, crazily wrong. If we look at the cost of incorporating a company across the world, even in those jurisdictions that are not the best, the British Virgin Islands charges £1,000 to set up a company and Jersey charges £425 to set up a company. In America, it varies from $570 to $1,400. Luxembourg—not my favourite jurisdiction—charges €1,100. It is only Greece and Slovenia who charge less than the UK.

We propose £100. That is a figure slightly imagined rather than grounded in fact, but it is the figure the Treasury Committee chose and the figure that the House of Lords’ Committee on fraud put forward, so we thought it was a better one. I do not accept that it is a barrier to any business, whether it is run by women or men. I just do not accept that argument at all. If you are setting up a business and you do not have £100, you have to question, whatever the nature of the business, the motivations for establishing it.

[Liam Byrne]

Does my right hon. Friend agree that if the Minister does not agree with new clause 20, he is in effect asking for powers without giving the House any confidence that we can actually summon the resources to implement those powers if we so grant them?

[Dame Margaret Hodge]

Absolutely. The Minister always assures us that he will be on top of it, but he will not be there forever, much as he might like to be. We therefore have to embed these issues in legislation, otherwise we will never to the position where funding for the enforcement of economic crime will be a priority for a Government of any colour. That is why setting it here is really important. I have to say to the Minister that I just do not believe that the figures are not around. I think that by this stage in the cycle, he will have figures that demonstrate how much is required. If we have more duties, it may go up. That is not a bad thing, because if it goes up it means we will be more effective at policing the system, and therefore preventing and detecting.

[Nigel Mills]

rose—

[Kevin Hollinrake]

rose—

[Dame Margaret Hodge]

I will give way to the hon. Member for Amber Valley (Nigel Mills) and then I will give way to the Minister.

[Nigel Mills]

I am not sure I should pull rank on the Minister, but I am grateful to the right hon. Lady. Does she agree that it is not just the set-up fee we need to get at the right level, but the ongoing annual registration fee? Ensuring companies have the correct records on an ongoing basis is as important as having them on day one. There is probably a lot more money to be raised for Companies House with an annual fee, rather than a one-off at the start.

[Dame Margaret Hodge]

If that has been proposed, it has not been proposed in the Bill. I am not hostile to that; it is a perfectly good suggestion. At the moment, all we have is a fee which we are trying to tie to inflation so it does not get caught up in annual arguments over priorities in the Budget. However, if there is a proposal, it would have been nice to see it. If there is a proposal to fund it in a different way, that would be great.

[Kevin Hollinrake]

My hon. Friend the Member for Amber Valley (Nigel Mills) has made absolutely the right point: as I said earlier, there are annual fees as well as incorporation fees, and we should look at both elements.

On the question of specifying a fee in the Bill, as the right hon. Member for Barking (Dame Margaret Hodge) says, we do not even know yet what duties will be required of the registrar, because the Bill has not yet passed through both Houses. The registrar may end up having more duties that will cost more to perform, so it is impossible to say right now what resources she will need. As the right hon. Lady says, we may discover further down the line that more will be required, so why would we set out the fee in the Bill rather than in regulations, where we can vary it more easily?

[Dame Margaret Hodge]

My simple response to the Minister is to invite him to share with us the current budget estimate for Companies House, if the Bill is enacted in its present form, and to tell us what that will mean. I just cannot believe that the information is not in the mix somewhere, but the Minister is not choosing to share it with us Back Benchers at this point.

[Kevin Hollinrake]

indicated dissent.

[Dame Margaret Hodge]

Well, an estimate must be available, because we know where we are in the cycle. We know that somewhere or other this is being discussed. If the estimate changes, there is nothing to stop us changing the new clause at a later date.

More importantly, if 100 quid is too much, if the registrar does not need that much, or if the Minister wants to change the law and move from charging a fee on incorporation to charging an annual fee, I can see the logic of that, but presumably he would still have to come back to the House to put that in legislation—

[Kevin Hollinrake]

In regulations.

[Dame Margaret Hodge]

Okay. But if the fee is too much, I still suggest that the Minister looks at subsections (5), (6) and (7) of new clause 20. We hope that he will set up an economic crime fund. Any surplus that results from raising the fee to 100 quid could then be well used by the NCA, the Serious Fraud Office or another agency with access to the fund. Our new clause would ensure that the money is ringfenced for use against economic crime, rather than being taken away by the Treasury and used for other purposes.

We also suggest that the Minister comes back to us on the issue of penalties to fund the fight against economic crime. Since 1984, all forfeiture proceeds in the USA have gone to an assets forfeiture fund. Just think what it will do with the $2 billion it has got out of the Danske Bank criminal settlement! We do not have that system in the UK: at the moment, something like 40% of the current fines and penalties go towards fighting economic crime. That is too little: it should be 100%.

There are precedents. The Information Commissioner has announced a new arrangement with the Department for Digital, Culture, Media and Sport whereby it can retain the money that it accesses through penalties to support its arguments and its work against the big tech companies. The Gambling Commission accepts contributions to compensate victims or payments to charity, rather than imposing a fine: that is another ringfencing hypothecation. Ofwat’s penalties levied against Southern Water were used to reimburse customers.

I have spoken for too long, Mr Deputy Speaker, but I have focused on two of the issues that I consider most critical among today’s group of amendments. That is not to say that the others do not matter—they do—but these are practical, common-sense proposals that are supported by the all-party group, and I know from conversations with Members that they command wide support across the Chamber. There is no badge of honour for Ministers in the Government if they fail to listen to their Back Benchers.

More importantly, we have to make this reform work. If we ignore these proposals, we will risk consigning much of the reform to the dustbin. The fight against economic crime is utterly vital. We all know that this is a once-in-a-generation opportunity. We know what the problems are, and we know that the solutions are multifaceted and complex. For heaven’s sake, let us work together and do what we can to make these reforms effective, efficient and fit for purpose. In that spirit, I will wait for the Minister to cheer me up by saying that he will accept these amendments from by Back Benchers of all political parties.

[Simon Fell (Barrow and Furness) (Con)]

I rise to speak to new clauses 17, 18, 19, 101, 102 and 103 in my name, and to support new clause 20 in the name of my friend the right hon. Member for Barking (Dame Margaret Hodge). I am grateful to her and to members of the all-party groups on anti-corruption and responsible tax and on fair business banking for their support. I should say that I do not plan to press any of those new clauses to a vote today.

The Bill is the second part of a package designed to prevent the abuse of the UK’s corporate structures and to tackle economic crime. It is a good Bill which will go a long way towards achieving its aims, and I certainly welcome the Government new clauses and amendments, but we have to go beyond “good”. Those who seek to exploit our open economy and our corporate structures to enrich themselves—whether organised criminal gangs, fraudsters, kleptocrats or even terrorists—are better than “good”. They are singularly motivated to find opportunities to enrich themselves and their clients, and to abuse our systems in doing so. They are good at it because it is a profitable endeavour for them, and because it is unfortunately too easy for them to exploit the systems in which we operate.

--- Later in debate ---

[Kevin Hollinrake]

That is an operational matter for Companies House; it is not for me as the Minister. The registrar clearly has a responsibility to ensure the integrity of the database, and how she seeks to do that will be up to her.

Amendment 101 is clearly key. The Government are committed to ensuring that the checks carried out by ACSPs are robust. ACSPs will be required to carry out checks to at least the same standard as the registrar, who will be able to query any suspicious information. The registrar will establish a robust scrutiny process with AML supervisors for onboarding ACSPs. If necessary, she can suspend or de-authorise an ACSP to exclude it from forming companies. The vast majority of accountants, lawyers and other agents who make filings on behalf of companies operate to high standards. It would be disproportionate to block them all from making such filings while the Treasury works through the reform of the supervisory regime—something that we all clearly want it to get right.

New clause 34 requires the Government to report on the number of foreign corporate service providers that have been registered at Companies House. Clause 63 gives the Secretary of State the power to permit the authorisation of foreign corporate service providers subject to equivalent AML regimes abroad. That is obviously in the context of a potential trade deal that is not currently on the table.

On amendment 104, tabled by the hon. Member for Feltham and Heston, I cannot agree with this fifth objective for the registrar. The Bill already places a legal duty on the registrar to seek to promote the objectives, which inherently demands proactivity. Tentative use of her powers would result in the registrar being in danger of failing to satisfy the duty.

On the accuracy of existing data, I thank the hon. Member for Glasgow Central (Alison Thewliss), whose new clause 36 would have the registrar ensure the accuracy and veracity of all register information prior to the commencement of the Bill’s reforms. Clearly, that constitutes many millions of pieces of information, with many thousands being added every day—the analogy of painting the Forth bridge springs to mind. If we were to do what she asks and the registrar were to fulfil the requirements of the new clause, it is unlikely that the beneficial reforms of the Bill would ever be realised, because of the duty it would place on the registrar.

[Dame Margaret Hodge]

Will the Minister give way?

[Kevin Hollinrake]

I have been told that I need to make progress, but I thank the right hon. Lady—my former partner in fighting economic crime—for her amendment on Companies House fees, which is clearly key. It is critical that the registrar is sufficiently funded to carry out her duties.

The right hon. Member for Birmingham, Hodge Hill (Liam Byrne) is wrong to say that the Bill does not provide extra resources to Companies House to implement the measures, because clause 90 sets out exactly what areas will be taken into account when fees are set. The Bill gives the Government more flexibility to increase the fees and charges by broadening the range of functions that can be funded through those fees. The Government are reviewing funding arrangements in the context of the reforms and are committed to ensuring that Companies House is fully resourced to perform its new role and functions. As I said earlier, Companies House levies a range of fees, not just the up-front charge on incorporation, and I confirm that we are exploring a range of options about how fees will evolve.

New clause 22, on the national minimum wage, tabled by the hon. Member for Feltham and Heston, seeks to ban those convicted under the National Minimum Wage Act 1998 from being appointed as directors. The national minimum wage enforcement team at HMRC, whose resources have been doubled over the last six years, as have the penalties for non-compliance, already refers appropriate cases to the Insolvency Service, which, as part of its normal remit, considers director disqualifications where appropriate. Indeed, three people were disqualified in 2021 for such transgressions.

I thank my hon. Friend the Member for Barrow and Furness (Simon Fell) for his new clause 18, which would require a person who controls more than 5% of the shares in a public company to disclose that information to the registrar. I very much note his concerns about shareholder transparency. However, we must balance transparency concerns and the benefits of having additional information against imposing undue burdens on businesses.

[Dame Margaret Hodge]

Will the Minister give way?

[Kevin Hollinrake]

Very briefly, and just to the right hon. Lady.

[Dame Margaret Hodge]

Will the Minister accept any of the amendments or new clauses brought forward by Back Benchers today?

[Kevin Hollinrake]

As the right hon. Lady knows, new clause 15, which we tabled today, is based on some of the debate we had and the ideas she brought forward in Committee. So I say to her that she should keep bringing forward the ideas, and we will certainly consider them.

The Companies Act already requires traded companies to maintain up-to-date lists of their shareholders and report any changes in shareholders above 5% on an annual basis.

New clause 37—and indeed amendment 112—on phoenixing, which was debated by the hon. Member for Paisley and Renfrewshire North (Gavin Newlands), requires the registrar to block the registration of companies that share common characteristics with more than three companies wound up in the preceding five-year period. Successive companies being wound up in this manner is known as phoenixing. We feel there are provisions that will be implemented through this Bill that will provide safeguards against such behaviour. Suitable coverage is already provided by the existing rules, and there are new powers in the Bill that give the registrar of companies a power to compel people to provide information in the context of the examination of information on the register, and to interrogate and share that data with other authorities.