Draft Police and Criminal Evidence Act 1984 (Codes of Practice) (Revision of Codes C, E, F, and H) Order 2018

Nicholas Dakin Excerpts

Monday 18th June 2018 General Committees

[Victoria Atkins]

May I thank the Opposition for their agreement in principle to the operational codes? These codes have been in place since 1984 to ensure that the powers the police exercise are used fairly, equitably and effectively, meeting the public’s expectations for law enforcement, while ensuring that the rights of suspects are observed.

The hon. Member for Lincoln asked a question about resources that was echoed by the hon. Member for Harrow West. I know that the order is not focused on police resources, but with your consent, Mr Austin, I want to talk about the fact that we have protected police funding since 2015. This year, after the Policing Minister spoke to every local police force in the country, we have secured up to £460 million more, with the help of police and crime commissioners, to help the police. The Home Secretary has announced his intention to look at police resources as part of the comprehensive spending review.

The hon. Member for Harrow West mentioned the plans that the Met Police Commissioner and the Mayor of London have in relation to consolidating units within London and forming the tri-borough unit. That is an operational decision for the commissioner and the Mayor of London; it is not a matter for the Home Office. If the hon. Gentleman has concerns about that decision, I hope he will speak to the commissioner and the Mayor of London. The whole reason we have devolved power to the Mayor, as PCC for London, is precisely because he has the local knowledge to enable that process to happen.

[Nic Dakin (Scunthorpe) (Lab)]

I thank the Minister for giving way; she is comprehensively responding to the debate. Could she bear in mind that police resources have been significantly reduced since 2010, and that is part of the context that my hon. Friends are alluding to?

Draft Passport (Fees) Regulations 2018

Nicholas Dakin Excerpts

Wednesday 28th February 2018 General Committees

[Caroline Nokes]

We have looked very carefully at this issue, and I can reassure the hon. Gentleman that 90% of the UK population have access to the internet. I recently made the point in a different Committee Room that many older people use the internet very successfully and with great efficiency. It is important that we reflect the difference in cost to HM Passport Office between a postal application and the online application, which obviously is much more simple and more straightforward. We also provide an assisted digital service for those who might have difficulty submitting their application online.

[Nic Dakin (Scunthorpe) (Lab)]

Could the Minister give a bit more information about how the assisted service works for people with disabilities or the elderly in remote or rural areas, such as parts of my constituency?

[Caroline Nokes]

We are enabling people to submit their application via a third party, so they can ask people to assist them if they have particular disabilities or challenges; that applies particularly to those who have a visual impairment. The hon. Gentleman makes a very important point about areas that might have lower broadband speeds. In my constituency in the south-east, I have some of the lowest performing wards for broadband in the country, although I am very conscious that my excellent colleague, the Secretary of State for Digital, Culture, Media and Sport, has made huge strides and has hit our targets for increasing high-speed broadband across the country. I accept that there is still work to be done on that.

We intend to increase the online adult fee by only £3, which is broadly in line with inflation. That will mean that the adult fee will increase to £75.50, which is still below what was charged between 2009 and 2012, when an adult passport cost £77.50. The child passport fee will increase by the same amount, and will be set at £49. Fees for adult and child passports applied for via post will each increase by £12.50, to £85 and £58.50 respectively, to reflect the additional cost of processing postal applications. HM Passport Office provides excellent priority services for applicants who wish their applications to be processed faster, or who prefer to apply in person. It is right that applicants pay more for these priority services. We intend to move the fees for these services towards full cost recovery sooner than online or postal services, given their optional nature and the additional benefits that the customer receives by using them.

Finally, we are introducing a new and specific power in the regulations that allows the Home Office to consider waiving fees for replacement passports where they have been lost or destroyed during an incident considered a national emergency or crisis, where the UK Government have activated exceptional assistance measures overseas. This will allow the Government to ensure that we can provide the appropriate support to vulnerable individuals in emergency situations and crises.

We are committed to ensuring that the Government continue to move towards a position where the border, immigration and citizenship system is funded by those who directly use it, and where, as a key part of that, passport application fees include the cost of UK passengers leaving and entering the UK. The additional income from the proposed fee increases will help to protect vital frontline services, and ensure that we continue to operate a world-class border system.

Civil Partnerships, Marriages and Deaths (Registration Etc.) Bill

Nicholas Dakin Excerpts

2nd reading: House of Commons
Friday 2nd February 2018 Commons Chamber

[Will Quince]

I am very sorry to hear of my hon. Friend’s loss, and I thank him for his campaigning on this issue. He makes an important point about the discrepancy in our law, and the time has come to address it.

The all-party group on baby loss has two fundamental aims. The first is to reduce stillbirth and neonatal death, and the Government have been hugely supportive on that aim. We now have a target of halving stillbirth and neonatal death by 2025. When I first arrived in Parliament and we raised the issue in late 2015, the aim was to achieve that reduction by 2030, but the date has been brought forward. That is fantastic news, because we lose between nine and 15 babies every day. We have one of the worst records in the western world, and it has to change. The Government have put in place a number of steps to make that happen, and I am hugely positive and optimistic about the future.

Even if we meet the aim of reducing stillbirth and neonatal death by 50%, however, 2,500 to 3,000 babies will be stillborn every year. That does not even touch on the huge number of parents who suffer what we define in law as a miscarriage, and the Bill will give us the opportunity to look at registration and recognition in that area. Even if we achieve all our aims, there will still be parents who go through this emotional and personal tragedy. That is why bereavement care and support are so important. The hon. Member for Washington and Sunderland West was right to mention cold cots, because we need such facilities—and, indeed, bereavement suites—in every hospital in the country.

[Nic Dakin (Scunthorpe) (Lab)]

I have listened to most of this debate, and I have been very impressed by the contributions. Does the hon. Gentleman agree with me about the importance of organisations such as Scunthorpe Rotary, which is working locally to get a bereavement suite at Scunthorpe General Hospital? The work of such organisations across the country makes a real difference to people at a very difficult time in their lives.

[Will Quince]

The hon. Gentleman makes a powerful point. Charities and the Government have to work hand in hand with each other and with parents, many of whom want to do something to support the hospital that helped them after they suffered their tragic loss. Parents are helped not just by hospitals, but by charities, too. After our loss in 2014, my wife said to me, “I don’t want flowers. I don’t want the house to be full of flowers that then die.” So we set up a JustGiving page to enable people to donate money—in the end, it was a huge amount—to the specialist bereavement suite.

The work being done by groups such as Rotary, as well as by charities and individuals up and down the country, is to be applauded and welcomed, but the Government should not use it as an excuse not to act in places that do not have such facilities. The Secretary of State has been very positive in that regard, and he wants there to be a bereavement suite attached to every maternity unit in the country.

Bereavement care is hugely important, and I am pleased to say that the bereavement care pathway has been launched and is operating in 11 trusts. The plan is to roll it out nationwide later this year, to provide consistent bereavement care for those who suffer the loss of a child. Not only are the consequences of getting it wrong too great for the parents and the family, but there is a huge social cost, as we can see from the number of parents who, sadly, separate after the loss of a baby.

I want to touch on the point about recognition. The hon. Member for Washington and Sunderland West made this case very powerfully in her speech, and I applaud her for her bravery in setting out the case for this change more powerfully than I ever could. We come to the very term “stillborn.” In effect, when we talk about stillbirth we are talking about a “still born” baby. It is important to recognise the double meaning: they are indeed still born, whether it is pre-24 weeks or post-24 weeks. For the parents who hold that baby in their arms—perfectly formed, beautiful babies—the only difference is that they are not breathing. I am not going to be the person who says to that parent, “That baby didn’t live,” or, “They weren’t here. They weren’t with us. They weren’t a real entity. They shouldn’t be recognised in the law.” The time has absolutely come for this change. We pretty much have cross-party consensus on that, and I am really pleased that the Government support it. The review will make a difference and the all-party group on baby loss will, of course, feed into that.

Clause 4 is a policy that I very much support. My hon. Friend the Member for East Worthing and Shoreham and I are undoubtedly very much on the same page on investigations into stillbirth, and his campaign is a very big part of why the Government have made so much progress on this issue. We can learn a huge amount more from people’s experiences and share them across the NHS, and that has to be a good thing, because the more we speak to parents, the more we hear that those who lose a child want their child’s life, however short, to have meaning. I raised that in an intervention on the hon. Member for Washington and Sunderland West, but I am not sure it helped all that much. What I mean by that is that parents want to know what happened, how it happened, where there will be learning, and that those learnings will be shared across our NHS to ensure that as few parents as possible have to go through that huge emotional tragedy and ordeal.

I was kindly invited by the Secretary of State for Health—now the Secretary of State for Health and Social Care—to his speech to the Royal College of Obstetricians and Gynaecologists. He came immediately afterwards to make a statement, saying that from April this year, the Healthcare Safety Investigation Branch will investigate every case of stillbirth, neonatal death, suspected brain injury or maternal death notified to the RCOG Each Baby Counts programme. To put that into numbers, there are around 1,000 incidents every year. He also announced—this point is significant in relation to the Bill—that he would work with the Ministry of Justice

“to look closely into enabling, for the first time, full-term stillbirths to be covered by coronial law”—[Official Report, 28 November 2017; Vol. 632, c. 179.]

This seems an appropriate time for me to pay tribute to the Secretary of State for all the support that he has given me and the all-party group in our campaign to reduce the stillbirth and neonatal death rate. I also pay tribute—this is my first opportunity to do so in the Chamber since the reshuffle—to my hon. Friend the Member for Ludlow (Mr Dunne) for all his work as Minster of State in the Department of Health, following on from his predecessor, the Care Quality Minister, the former Member for Ipswich. As Back-Bench MPs, we have numerous meetings with Ministers, and we know that those take place more out of courtesy than anything else, but that was never the case with my hon. Friend the Member for Ludlow. He genuinely took an interest in the issue and our work, and he recognised that we had a real opportunity to make a huge difference in reducing our stillbirth and neonatal death rates in this country. We should all be very proud of that legacy.

My wider point is that the Government are listening. The Bill reinforces the mood music and soundings that we have had from them in this regard. They are trying to learn from best practice elsewhere and from unfortunate incidents where stillbirth occurs. Most importantly, as I mentioned, the Secretary of State has already told the House that he is looking into coroners investigating stillbirths, and that is very welcome. When that work has been undertaken, we will certainly work with him and anybody else who wants to be involved with the all-party group.

Improving support for bereaved parents and learning from experiences so that we can lower our stillbirth and neonatal death rate are small things, but they will make a huge difference to thousands of people up and down the country. I will support the Bill.

Draft Policing and Crime Act 2017 (Maritime Enforcement Powers: Code of Practice) Regulations 2017

Nicholas Dakin Excerpts

Wednesday 10th January 2018 General Committees

[Nic Dakin (Scunthorpe) (Lab)]

It is a pleasure, as always, to serve under your chairmanship, Mr Wilson. I thank the Minister for describing extensively the reasons why it is so necessary to bring in a change to legislation at this point. It is right and proper that this extension of powers is put in place. I am pleased to hear that the code of practice has been brought together and is in place, but I would be grateful for a little more information about how it was drawn up and what processes were involved in engaging others to ensure that it is fully fit for purpose. I welcome the description the Minister gave of the way in which the devolved authorities will roll out similar measures in their jurisdictions. Generally, Her Majesty’s Opposition welcome the legislation.

EU Asylum Reform Package

Nicholas Dakin Excerpts

Monday 19th December 2016 General Committees

[Mr Goodwill]

My hon. Friend, as so often, is absolutely right. Let us not forget that the UK remains one of the largest member state contributors to Greece’s efforts to implement the EU-Turkey agreement. We offered 75 personnel initially and a further 40 this month. The UK has deployed a Border Force search-and-rescue cutter to the Aegean and contributed assets to the NATO mission, including the HMS Mersey, an offshore patrol vessel. We contributed £2 million to the assisted voluntary return project through the International Organisation for Migration office in Greece from January 2014 to 2016. The UK has allocated up to £34 million to the humanitarian response in Greece, including £8 million to the United Nations High Commissioner for Refugees, £11.5 million to the Start non-governmental organisations, more than £1 million to the IOM, and more than £1.8 million of essential supplies, including more than 3,100 tents for more than 15,600 people, 60,000 blankets, 8,000 sleeping bags, 8,000 sleeping mats, and other basic items. I do not call that not standing up for people in need. We have contributed vessels and resources to Italy to support efforts in the central Mediterranean, including a chartered Border Force vessel as part of Frontex’s Operation Triton, and one officer in the Rome maritime rescue co-ordination centre. The UK has also directly supported the German Government with returns.

The Government recognise that there are problems with elements of CEAS, as has been highlighted by the migration crisis. It is necessary to develop an asylum and migration framework in Europe that works to control illegal migration, deters abuse and prevents secondary movement. However, that does not mean that the Government agree with all the Commission’s suggested policy options, or indeed that they are in the UK’s national interest.

I recognise that there are positive elements in these proposals, but not opting in means that we can retain the flexibility and sovereignty of the UK system and provides the UK with greater scope to continue tackling abuse of that system. The SNP raised the point that the new asylum procedure regulation would provide applicants with a right to a personal interview during the asylum process. That conflicts with current UK practice, which provides for an interview to be omitted when an application is made merely to frustrate a removal decision.

[Nic Dakin (Scunthorpe) (Lab)]

The Minister said that he thought some elements of the proposals that we have opted out of were positive. Will he indicate which, and how the UK will be able to take those positive opportunities in the future?

[Mr Goodwill]

I have already said that our failure to opt in does not obviate the possibility that we can participate in some of the schemes. I have already mentioned what we are doing in Italy and Greece. The recent operation following the clearance of the Calais camps shows that we have been able to deliver on that.

Let me give another example of the implications of not opting into the proposal. On the reception conditions directive, the Commission proposes reducing the time limit for access to the labour market from nine to six months. In the UK, asylum seekers are allowed to work only if their claim has been outstanding for more than 12 months through no fault of their own. The Government policy on access to the labour market also provides permission to work only in jobs on the shortage occupation list published by the Home Office.

As I am sure hon. Members are aware, we already participate in various schemes, including the Dublin III process, under which large numbers of people have been brought to the UK. The Government are providing more than £70 million in response to the wider Mediterranean refugee crisis. The UK has also established a £10 million refugee children fund to support the needs of vulnerable refugee and migrant children arriving in Europe.

The UK has also, as I have mentioned, committed to resettling 20,000 Syrians—we are on track to do that by the end of the Parliament—as well as 3,000 vulnerable children and family members by 2020, in addition to our gateway and mandate schemes. We already share best practice with member states through resettlement schemes.

The proposals under consideration today are still being negotiated. Previous iterations have been subject to extensive negotiation. The Government will continue to monitor the negotiations and consider areas of convergence and divergence. It is, however, the Government’s position that it is necessary to develop an asylum and migration framework in Europe that works to control illegal migration, deters abuse and prevents secondary movement. This does not mean that the Government agree with all the policy options that the Commission suggests, or that they are right for the UK. The opt-in decisions were made fully in line with the national interest.

Question put and agreed to.

Criminal Finances Bill (Sixth sitting)

Nicholas Dakin Excerpts

Committee Debate: 6th sitting: House of Commons
Tuesday 22nd November 2016 Public Bill Committees

[Mr Wallace]

I do not want to look ungrateful to the hon. Member who is, as he says, trying to help me enhance the Bill and do my job. I am incredibly grateful for all the suggestions from hon. Members over the last few weeks.

[Nic Dakin (Scunthorpe) (Lab)]

Wonderful.

[Mr Wallace]

I am not that grateful.

New clause 16 would require the Secretary of State to report annually to Parliament on the number of prosecutions brought and the number of convictions made under the new corporate offences. Under the domestic tax evasion offence, HMRC will be the investigating authority and the decision on whether to prosecute will rest with the Crown Prosecution Service. In relation to the overseas offence, the Serious Fraud Office and the National Crime Agency will be the investigating authorities and the decision to prosecute will rest with the SFO or the CPS.

It is important to emphasise that, as with the corresponding offence under the Bribery Act 2010, the number of prosecutions alone will not be a true metric of the level of success of the measure. The new corporate offences are not only about responding to wrongdoing but about changing corporate culture and behaviour. True success will lie in changing corporate culture and preventing wrongdoing from occurring in the first place.

In any case, all of the prosecuting authorities already undertake extensive public reporting on investigations and prosecutions. For example, HMRC publishes quarterly performance updates and the CPS publishes an annual report. Neither of those documents are obscure—they are weighty but not obscure. I can confirm that information relating to the new offences will be included in those existing formats. Accordingly, I invite the hon. Member for Stoke-on-Trent Central to withdraw his new clause.

Criminal Finances Bill (Third sitting)

Nicholas Dakin Excerpts

Committee Debate: 3rd sitting: House of Commons
Thursday 17th November 2016 Public Bill Committees

[Mr Wallace]

The previous debates have given us the opportunity to begin considering clause 1, which provides for the creation of unexplained wealth orders. Those are powerful new tools, and I welcome the cross-party support for them as well as the strong endorsement of those in civil society from whom we heard earlier this week.

The London anti-corruption summit in May galvanised the international response to corruption. Domestically, we must tackle grand corruption and protect the integrity of the UK’s financial sector. Unexplained wealth orders will help us to do that. As we have discussed, unexplained wealth orders are essentially an investigatory tool that will help to enable civil recovery of the proceeds of crime under existing powers in the Proceeds of Crime Act 2002. Civil recovery is a powerful tool, because it can be used where criminal prosecution followed by a confiscation order is impossible, perhaps because a person is abroad and cannot be extradited or there is not specific evidence linking an individual to a crime, but there is enough evidence to show that property is linked to the wealth generated from a crime.

Between April 2015 and March 2016, £6.5 million was recovered under those powers, but there is still a gap where law enforcement agencies cannot satisfy the necessary evidential burden. Unexplained wealth orders will flush out evidence to enable enforcement agencies to take forward recovery action under POCA. Such an order will require a person to provide information that shows that they obtained identified property legitimately. If they do so, agencies can then decide whether to investigate further, take civil recovery action or take no further action. If the person does not comply with the order, the property identified in the order is presumed to be recoverable under any subsequent civil recovery proceedings.

I stress that the unexplained wealth order is designed to be an investigative power and a precursor to civil action, not an end in itself. I accept that there is significant interest in the way that such orders will operate, because they involve the reversal of the burden of proof. That is why they are subject to stringent safeguards. The value of the property subject to an unexplained wealth order must be greater than £100,000, a much higher threshold than for normal civil recovery, where action cannot be taken against property worth less than £10,000.

[Nic Dakin (Scunthorpe) (Lab)]

I thank the Minister for being so complete in his arguments. Can he explain why £100,000 was chosen? I note from the evidence that we have received that no one had any objection to that figure, but I am interested in why it was chosen.

[Mr Wallace]

The hon. Gentleman poses an interesting question. Unexplained wealth orders are linked to serious and organised crime. Although, inevitably, some serious criminals make below £100,000, that was thought to be a useful threshold, and that is where we should look as a starting point. There will be concerns among Members that Aunt Bessie’s £25,000 appearing in someone’s bank account may trigger something like an unexplained wealth order, and we wanted the wealth threshold to be significant enough to ensure that there was a link between serious crime and the recovery of assets being triggered. I know that some people wanted that threshold to be higher than £100,000 and some people wanted it to be lower. As the Minister, my job is to try to get it in the right place, but I would welcome his suggestions on whether it should be, say, £59,000 or £105,000. It could be like “Bullseye”.

Criminal Finances Bill (Fourth sitting)

Nicholas Dakin Excerpts

Committee Debate: 4th sitting: House of Commons
Thursday 17th November 2016 Public Bill Committees

The amendments will put in place bespoke arrangements for training, accrediting and monitoring counter-terrorism financial investigators. The Metropolitan Police Service will be responsible for training and will be required to provide a system of accreditation for civilians who wish to become counter-terrorist financial investigators. That will include monitoring performance and withdrawing accreditation from any person who contravenes or fails to comply with any condition of their accreditation.

[Nic Dakin (Scunthorpe) (Lab)]

The Minister is explaining the need for the amendments. Will he explain exactly what difference the proposed changes will make to the accreditation? How will it compare with what it would otherwise have been?

[Mr Wallace]

As I said earlier, terrorist financing often happens much more in real time. It is not about someone banking their asset to enrich themselves; it is about funding an operation. There will therefore be different requirements for these financial investigators. They will almost be chasing the money as they go, often to stop an operation that is about to happen—someone may be about to book a plane ticket and we may need that stopped—so they will need a different skill set from a normal accredited financial investigator. That is one fundamental difference; another relates to the different approaches that the Bill takes to terrorist financing and to criminal financing. There is a difference between enriching oneself and funding an act of terror.

Amendment 16 agreed to.

Criminal Finances Bill (First sitting)

Nicholas Dakin Excerpts

Committee Debate: 1st sitting: House of Commons
Tuesday 15th November 2016 Public Bill Committees

[Antoinette Sandbach]

Q Are you therefore satisfied that the current procedures in the Bill tackle the major challenges you face in your aspect of the investigations?

Mick Beattie: It definitely improves some of the operational difficulties we have highlighted. We have been privy to the formation of the Bill, we have been invited, we have been allowed to comment and we have contributed to the drafting of the Bill. You always want more. There is more we would have liked around information sharing. But there are definitely advantages to the Bill that will help criminal investigations.

[Nic Dakin (Scunthorpe) (Lab)]

Q Thank you for your evidence. You seem to be saying there is more that perhaps could be done, Mr Beattie. What additional things should we take the opportunity to look at in the Bill, to make sure you have the powers you need to do your job?

Mick Beattie: A lot of what we would have liked, we have got. Information sharing between the private and public sectors is done through the NCA UK Financial Intelligence Unit, which is under a lot of pressure. It is a unit that services the whole of UK law enforcement. The Bill allows communication between the banking sector and the UKFIU, which would then release that information to policing. If we had a particular interest, we may have to go back through the UKFIU back into that institution. We would have liked a little bit more direct access, but it is not a problem. It is something we can overcome.

In the early stages, I can understand the reticence from the banking sector. This is a new area of business for them, piloted through the joint money laundering taskforce very successfully. I can understand the small-steps mindset in relation to that—get some understanding, some evidence and some culture. So we are very supportive of what we have got in the Bill.

Donald Toon: From our perspective, the Bill takes us forward on a range of difficult issues, but it does that in a balanced and thought-through way. From law enforcement’s perspective it is always easy to want more power, but that has got to be balanced against the fact that, for example, the financial services sector has to continue to do business.

We are satisfied that this makes the changes and we have been able to set out a clear, operational, evidenced case for the change. Do we think this will stop and it will be the panacea for the future? No, because we are involved in an arms race here. There are people on the other side—whether professionals involved in providing money laundering services or serious criminals—who will always be looking for another opportunity. That is why the Proceeds of Crime Act 2002 has had to be amended so many times since it was first introduced.

Do we think this will stop further amendment? No. Does it actually address the issues we can evidence now? Yes.

Detective Superintendent Harman: I echo that. The answer for us now lies not in more legislation. The Home Office consulted very closely with us. We are seeing the legislation in here that we asked for. The answer now for us is about co-operation with the financial sector, about sharing information. Just like we asked the public for information to help us to fight terrorism, now we are asking the regulated sector, and I think the Bill will help with that.

[Richard Arkless (Dumfries and Galloway) (SNP)]

Q For the most part, my questions have been dealt with by colleagues previously asking about additional powers, but I will come back to one point. There is a huge array of regulatory bodies that cover money laundering in the UK. Do you think that consolidating these would make life easier for you in the pursuit of money laundering activity?

Donald Toon: The Treasury has been doing work on this space now. From our perspective, all those regulated bodies are covered by anti-money laundering regulations and are required to submit SARs. We need to see clear, consistent standards across all parts of the regulated sector. I do not care whether that is achieved through one supervisory body or a number, provided they are all operating to the same set of standards and the same commitment to ensure that SARs are produced—and produced to the necessary quality—and they are prepared to take action against those parts of the regulated sector that they supervise when they do not live up to those standards.

Mick Beattie: I support that. The police get nearly 400,000 suspicious activity reports a year. There are definitely gold nuggets in there, but some of those reports are of such a poor standard, or they are defensive reporting or a means for the bank—really, their own regulators could have a role around the quality of the SARs submitted.

Detective Superintendent Harman: I do not have anything to add to what Mr Toon said.

--- Later in debate ---

[Mike Wood (Dudley South) (Con)]

Q This question is directed in particular to Mr Thompson. Could you tell us more about the challenges faced by the Serious Fraud Office in investigating a suspected criminal financial activity, and how the specific measures in the Bill will help you to do that more effectively? In particular, I would like to know more about how unexplained wealth orders might be expected to help in pursuing foreign officials suspected of grand corruption.

Mark Thompson: Members of the SFO and I have been involved in consulting with the Home Office as this process has developed. Unexplained wealth orders provide an avenue for us to start civil recovery investigations effectively in a way that we cannot do at a moment. Where information is held abroad, or is in jurisdictions where co-operation is unlikely, this tool provides us with a way of kicking the process off and taking action against property in the UK that we suspect to be derived from crime. As things currently stand, the thresholds for pursuing civil recovery are, in many cases, high enough to make this difficult. That is how I would see our using the legislation in the first instance.

[Nic Dakin]

Q The new corporate offence relates only to tax evasion, which makes sense. But is there a case for extending it to dissuade companies from facilitating quite aggressive tax avoidance?

Simon York: At the moment this is a criminal offence, and tax avoidance is not a crime, which is why that would be difficult. We are currently consulting on additional legislation that would penalise the enablers of tax avoidance, so we are seeking legislation in that area too.

[Victoria Atkins]

Q Thank you, and it is a pleasure to serve under your chairmanship, Sir Alan. I want to pick up on the point about avoidance and evasion. Mr York, you said that these powers are directed at tax evasion, which is a crime. To give us an idea of the complexity of veering into the world of tax avoidance and tax efficiency, is it not right that a person simply investing in a pension can be described as being tax efficient because that prevents them from paying as much tax as they would otherwise pay?

Simon York: Certainly it can be tax efficient. We tend to use the phrase “tax planning”, so a pension or an ISA or something like that would fall into that category. Tax avoidance is typically where people are using schemes—which are often quite contrived and artificial—to do something that Parliament never intended. They are not lying to us, or being fraudulent, or misrepresenting something, but it is all artificial. We will criminally investigate the kind of situation in which people step over that line—which sometimes they do—and when they are part of something that might appear to be an avoidance scheme that actually becomes fraudulent, or where they are deliberately going out to defraud and disguise it as an avoidance scheme. We have had some significant wins over the past 12 months on big complex frauds disguised as avoidance. When it crosses that line, we will come right down on that. But if it is avoidance in the theoretical, pure sense, we will tackle that through civil litigation and take those cases to court.

On the subject of tax avoidance, the Government have done lots of work on tax avoidance over the last five or six years, and 40 loopholes have been closed down. In particular, we have brought in the accelerated payments legislation which completely changes the economics of tax avoidance, and makes people pay upfront while we wait for tribunal results. There are some really striking figures. The flow of new schemes is now down 99%. In 2006, there were 600 new schemes a year; last year there were seven. A couple of years ago, there were 2,300 new users of avoidance schemes; last year there were 410. We are really taking the bottom out of the individual market of avoidance schemes. The proposed legislation is to tackle another intractable problem, which is evasion, which is a criminal offence.

--- Later in debate ---

[Antoinette Sandbach]

Q If I can go back to the smaller business point, I do not know if you were here when I asked Simon York about the other end of the scale. Some tax evasion is not for the purposes of evading tax—the purpose is to evade other liabilities that follow on from declaring taxable income. That can be supported by small accountancy firms that may not apply regulations as rigorously as they should do. Do you think this offence will have a deterrent effect on the smaller and mid-range companies?

Professor Murphy: I think it will. The reason why is that it is a strict liability offence: the existence of evidence of tax evasion is sufficient to prove liability without motive being questioned. That could be important in certain cases. I can think of a very recent example—it has been in the press—where somebody has not paid tax quite deliberately, it seems, out of a company for which they were responsible. It would make it easier to prosecute in those cases. It will have a deterrent effect. I do not have a problem with strict liability offences for that reason. I know many in my profession do.

[Nic Dakin]

Q You both spoke earlier in giving evidence about the great opportunity to bring about behavioural change or improve compliance. Are there measures we ought to be looking at in this legislation that you would like to see us take the opportunity to put in?

Alex Cobham: I would say it is the reporting of it. If the Bill is seen as having made it on to the books without driving any serious change either in the way that HMRC operates and the extent to which it looks at enablers or in the ultimate prosecutions and revenue recovery, or if there is a perception of that even without that being the case, that is a missed opportunity in terms of how much impact it has. There needs to be a requirement for consistent reporting of the numbers of prosecutions, and of the transition between prosecution of evasion cases and, for each of them, whether there is a related prosecution of the enabler or not. If the second number is a very small fraction of the first number consistently, there needs to be space to come back and review, but at least having that will drive attention.

Professor Murphy: I would make the non-provision of accounts and a corporation tax return a strict liability offence for tax evasion under the terms of the Bill. I would also require a provision that is very similar to one we are demanding internationally, which is that banks simply report each year to HMRC which companies they provide services to.

We will next year be in the absurd position that HMRC will get more information on a company owned by a British person in the Cayman Islands than they will on a company owned by a British person in Stockport, because there is automatic information exchange from the Cayman Islands and there is not within the UK. If banks were required to provide information to HMRC on which companies they provide services to and the simple value of sums deposited in a bank account each year, we would know which companies were trading and therefore which were due to file accounts and which were due to submit a corporation tax return. Failure to submit would be a strict liability offence. Nothing would scare the accountancy profession or small company directors more than that. Make them personally liable for the tax not paid at the same time and you have solved the problem of tax evasion virtually overnight. It is simple.

[The Chair]

We have only five minutes left, so I will ask the three Members who want to speak to ask their questions first, and then you can reply. You will get a copy of the minutes, which will include any questions that you did not have time to answer.

Criminal Finances Bill (Second sitting)

Nicholas Dakin Excerpts

Committee Debate: 2nd sitting: House of Commons
Tuesday 15th November 2016 Public Bill Committees

[Roger Mullin]

Q Are you satisfied it is working satisfactorily?

Anthony Browne: I know that, as the banking sector, we think that it is a lot stronger. It is very important to have a strong whistleblowing regime. It is an important part of improving the culture of banks and preventing wrongdoing. We have been working with the regulator on this, so you should ask the regulator.

Nausicaa Delfas: I agree that the regime has been strengthened. We regard it as very important. It feeds into work on culture in banks as well. I would be interested if you thought it should be further improved.

Amy Bell: I cannot comment, unfortunately, in relation to the financial sector. In relation to the solicitors’ profession, we do have in our regulations the obligation for people to report serious misconduct. We do not have any specific whistleblowing provisions but that is not something we have encountered an issue with.

[Nic Dakin (Scunthorpe) (Lab)]

Q From the evidence we had this morning I formed the opinion that there is a view that banks are pretty good at spotting irregularities and bringing them forward to the authorities but other parts of the regulated sector are less proactive in that way. That seemed to be what was coming through the evidence this morning. Does that ring true to you? Are the measures in this legislation likely to improve the performance of other parts of the regulated sector?

Anthony Browne: We think it is important that the Government and law enforcement authorities use all the tools that they can to combat financial crime and not just rely on banks. I would agree with the assessment that banks do an awful lot; we certainly do an awful lot. It is important that you do not underplay or pay too little attention to other sectors—not just lawyers but accountants and estate agents. There are lots of different groups that get involved with this. They can all play their part against financial crime. We should all play our full part in that way.

Nausicaa Delfas: I agree with that. I obviously cannot speak for the other professions but we are aware that there are about 400,000 suspicious activity reports filed with the NCA each year. The vast majority of those, I understand, come from the financial sector. Obviously, perhaps more could be done. I go back to the point that that is a huge number. It is a quantity issue and we would urge any changes that could be made to improve the quality of those so that there are better leads for law enforcement.

Amy Bell: We have to be careful in judging the numbers of suspicious activity reports. The Financial Action Task Force and the NCA’s predecessor, SOCA, were both clear that there is no right number of reports. It is fair to say that the vast majority of reports do come from the financial sector. They see patterns of financial activity that we do not see. I do understand that there is criticism levelled at the professions in relation to reports about clients that banks report but maybe the professions are not reporting, but that is because we see different parts of the transaction. That should not be underestimated.

Although I think we should continue to be vigilant, we need to be very careful about drawing any conclusions from the disparity in the numbers. I think the information sharing will help because that means that the bank can communicate with the regulated sector where they see things that will give data to the professions to be able identify suspicious activity.

[Peter Dowd]

Q This morning we had evidence from the National Crime Agency, the National Police Chiefs Council, the Met police SO15 counter-terrorism policing, Her Majesty’s Revenue and Customs, the Serious Fraud Office and the Crown Prosecution Service. To a man—they were all men, by the way—I would say that they looked at the Minister, gulped and said that they had enough resource to do their job. Will you give me a view from outside, so to speak, as to whether you get the sense that those agencies have sufficient resource to do their job, given that you presumably have pretty close relationships at points in the investigatory process?

Nausicaa Delfas: Every organisation has constraints around resources. The question is how best to deploy them. The more precise the information, powers and so on that can be given, the better, but there are constraints in all cases.

Anthony Browne: Clearly it is important that they are properly resourced. We submit about 80% or 90% of the SARs that are submitted—360,000 last year. One of our concerns as an industry is that they are not all followed through, and we get very little feedback about what follow-through there is. A huge amount of SARs are put in, but we have concerns about whether there is sufficient resource to follow up that suspicious activity.

As you know, there is a whole Home Office programme to reform the SARs regime to make it more intelligence-led and less of a tick-box exercise, and to improve the quality of the SARs rather than just the numbers. We totally support that but it will only work if there are enough resources to follow through. That is why one thing that we have proposed in a submission to the Government is a forfeiture for the proceeds of crime in bank accounts such that the money raised is used to add resource to the SARs regime.

Amy Bell: The well known difficulty with the SARs regime—the reporting system—is one of resource. I echo what my colleagues say in relation to the numbers of SARs that go in and the feedback we get, and I believe that is a resourcing issue.