Economic Crime and Corporate Transparency Bill

Robert Buckland Excerpts

Consideration of Lords message
Wednesday 25th October 2023 Commons Chamber

[Alison Thewliss (Glasgow Central) (SNP)]

I knew that when you referred to us all as distinguished and experienced Members you did not mean me, Madam Deputy Speaker.

This is the third time we have been back here, and I think it incumbent on the Government to listen to the Lords. They have made it clear that they feel strongly about their very reasonable amendments, which shows how important they are and how we should be getting this right. There is no question that, as the Minister suggested, we are going to let the Bill fall today. I think that if he were worried about that he would accept the Lords amendments this afternoon, rather than allowing the process to go on and on. We did not need to be here at the last minute; he could have accepted many of the amendments at a much earlier stage, because fundamentally he agrees with them. We know that, because he said it on many occasions before he took ministerial office. I think that a great deal can be done if the Minister will make that compromise this afternoon.

The notion that 99.5% of businesses can be exempted from the “failure to prevent” offence is absolutely mad. Small businesses are both part of and victims of economic crime. Some figures from UK Finance arrived in our inboxes earlier today. According to its findings, criminals stole £580 million through unauthorised and authorised fraud in just the first half of 2023. UK Finance says that that is a 2% decrease, but it is still a significant amount of money. Businesses as well as individuals are losing out, and the Government should be paying more attention to that.

The Minister described “failure to prevent” as a distraction for business. I wonder if he also thinks, for consistency’s sake, that the “failure to prevent bribery” offence in the Bribery Act 2010 and the “failure to prevent tax evasion” offence in the Criminal Finances Act 2017 are distractions for business. If he thinks that “failure to prevent” economic crime is a distraction for business, he must surely think that those other offences are also an unnecessary bit of bureaucracy that businesses have to carry out. It does not make any sense.

I fully support the level playing field for cost protections. We must give our enforcement agencies both the tools and money to do their job. No enforcement agency should be thinking, “We cannot afford to take on this case. We cannot afford to prosecute these economic criminals.” The Government should be supporting law enforcement, allowing this Lords amendment to go through, and ensuring that we make the best possible legislation. There is no excuse for the Government not to do these things. The Government agree with them, and we in the House agree with them on a cross-party basis. The Government should get on with it, and not return the Bill to the Lords.

[Sir Robert Buckland (South Swindon) (Con)]

I will certainly remember your exhortation to brevity, Madam Deputy Speaker. As you know, that is something of a challenge for me at the best of times.

[The Secretary of State for Levelling Up, Housing and Communities (Michael Gove)]

No, no.

[Sir Robert Buckland]

I think my right hon. Friend may suffer from the same affliction, dare I say; but I will draw a veil of charity over that.

My hon. Friend—and my friend—the Minister has campaigned assiduously with us in the trenches on this issue for many years. I yield to none in my admiration for him, and I want to put on record how grateful I am that he is in this place, in that spot, doing the job that he is doing. We have come a long way. I well remember being on the Parliamentary Business and Legislation Committee giving authorisation for this Bill in the first place, and knowing then that it would require heavy amendment during its course.

It was inevitable that, in the light of the appalling incidents in Ukraine and the changed world situation, the Bill would develop and mature, and mature it has. The identification principle changes are truly radical and reflect a view long held by the Law Commission and others that we needed to update the Tesco v. Nattrass principle, which is now 50 years old. I salute the Minister and colleagues in the Lords for making sure that that has happened, but I must press him again about the basis upon which the Government make assertions, very much at the last minute, about the regulatory or administrative cost burdens on small and medium-sized businesses. I do not think that they are going to be as dramatically high as they assert. We have not had proper time to test the estimates, and I do not think that they stand up to scrutiny. They do not reflect the Government’s position on previous “failure to prevent” offences—namely, for tax evasion and bribery—and this begs a huge range of questions.

There is no doubt that my colleagues in the legal profession—I refer the House to my entry in the Register of Members’ Financial Interests on every occasion, and I do so now—will feast upon these threshold definitions. Worse than that, unscrupulous operators in the field will exploit these threshold definitions and find clever ways around the law. We know what that means. We will see shell companies and people of straw. We will see the same behaviour that we are rightly trying to eradicate because we want this country to be one of the best places in the world to invest.

This is chiefly an economic argument. Yes, there is a morality to it, but chiefly it is an economic argument. That is why, at the last minute as we come up to Prorogation, I remind my hon. Friend the Minister of the increased majorities in the other place for these amendments and in particular of the attempt we have made to compromise with the Government. At the last minute, I imposed myself upon the goodwill of the Clerks in order to get a further amendment in before the time limit. It was a manuscript amendment to increase the period of one year mentioned in the amendment to 18 months. It has not been selected for debate, but the important political point that we wish to make is that we are seeking at the last minute to come up with reasonable compromises.

I will give the Minister another idea. Bills normally come in with Royal Assent, which we imagine will happen either today or tomorrow with the Prorogation ceremony. Two months is the normal period for Bills to then come into force but he has the power to lay commencement orders to ensure that certain parts of this Bill do not come into force until a statutory instrument has been laid. He has that power, so why not use it in this case and accept the amendment tabled in the name of my right hon. Friend the Member for Barking (Dame Margaret Hodge)? He can see that we are commanding all the ingenuity that we have to come up with reasonable compromises that will allow the Bill to pass in the best possible order. I make a last-minute plea to him to accept these exhortations and not to oppose the amendment in the name of my hon. Friend the Member for Bromley and Chislehurst (Sir Robert Neill) and me. I can say no more to my hon. Friend the Minister, other than to thank him and ask him to go that extra yard.

[Dame Margaret Hodge (Barking) (Lab)]

This is another leg in a long journey. I want to focus on the amendment that stands in my name, which is supported by the right hon. and learned Member for South Swindon (Sir Robert Buckland) and the hon. Member for Bromley and Chislehurst (Sir Robert Neill).

May I place on the record my thanks to everybody across the House, some of whom are here today, for the way in which we have managed to work together as Members of Parliament and put our political affiliations behind us in trying to find a common-sense, pragmatic way to tackle a horrific problem and to improve the Bill that was laid before us almost a year ago? I also pay special tribute to Members of the House of Lords, who have again worked incredibly hard to improve the Bill in a practical way. In particular, I thank Lord Garnier, Lord Agnew, Lord Vaux and Lord Edward Faulks, all of whom have moved important amendments that have been supported by Members across the House, many of whom are members of the all-party parliamentary group on anti-corruption and responsible tax.

I draw to Members’ attention what happened to the amendment to the “failure to prevent” measures. When it was first considered by the House of Lords it was passed by a majority of three. When it was considered a second time, it was passed by a majority of 26. When it was considered a third time, last week, it was passed by a majority of 41. So the strength of feeling in the other place about the importance of the propositions in the Bill simply grew over time, as the argument was heard by more and more members of the House of Lords, and I bet that if it goes back again, it will get through again with an even greater majority. I say to the Minister that people are voting for this and it is not just a partisan issue; Cross-Benchers and members of the Conservative party are either voting or choosing to abstain. That is why we are securing those majorities in the House of Lords.

Our amendment is moved in the spirit of compromise. All we are saying in that amendment is that we would require the Secretary of State to carry out a review a year after Royal Assent, with a report to Parliament within 18 months of Royal Assent, where it would assess the impact of excluding so many businesses from having duties to prevent fraud. It would also look at the impact of that on the incidence of fraud and assess the potential merits of bringing more companies into scope.

I want to take Members back to when the Government promised to introduce a “failure to prevent” offence on the basis of new clauses introduced by the right hon. and learned Member for South Swindon and the hon. Member for Bromley and Chislehurst when we considered the Bill on Report. They were detailed new clauses to which we had given great thought. The Government agreed at that point to adopt our proposals on the basis that we would not seek to divide the House on the issue. We kept our side of the bargain but, sadly, the Government have failed to deliver on their commitment. So Lord Garnier tried valiantly three times to hold the Government to their word, and every time he put it to a vote he got a greater majority in favour of what he was proposing.

This measure was first championed when the Minister was a Back Bencher, as he is well aware. He was the individual on our all-party parliamentary group who argued the case for it with the greatest passion and commitment, so it is especially sad that the effectiveness of the new offence has been so undermined and weakened by the changes he has chosen to make or been forced to make by colleagues in his own Department or in the Treasury. He often argues that we were the first country to introduce a “failure to prevent” offence. I agree with that, but I would simply say to him we are also the jurisdiction of choice for dirty money, so surely we have a duty, more than any other jurisdiction, to lead on reforms and to clamp down on this evil matter.

The Government’s changes have substantially weakened the power of the new offence, and the Minister has to accept that. He has taken out the failure to prevent money laundering, and the offence now covers only fraud. He has excluded all medium-sized, small and micro-businesses. That means that his carveout has excluded 99.9% of all businesses. It has excluded two thirds of all the people employed in private enterprise. It has excluded half the turnover that flows through private enterprise. I say to the Minister that this is a missed opportunity by his Government that represents a failure to act firmly and decisively against the scourge of dirty money.

The Government’s own report, “National SME Fraud Segmentation”, found that medium-sized companies employing between 50 and 250 employees were significantly more likely to experience fraud than larger companies. The Metropolitan police and UK Finance have warned that SMEs are particularly vulnerable to fraud, and the procedures to prevent companies from committing fraud are exactly the same as the procedures to prevent companies from experiencing fraud. Why on earth and on what basis have the Government chosen to excuse them? I cannot understand the logic.