The Leader of the House of Commons (Mr David Lidington)

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The business for next week is as follows:

Monday 17 October—Second Reading of the Savings (Government Contributions) Bill.

Tuesday 18 October—Debate on the BBC on a Government motion.

Wednesday 19 October—Opposition day (9th allotted day). There will be a debate on an SNP motion, subject to be announced.

Thursday 20 October—Debate on a motion on BHS, followed by a general debate on industrial strategy. The subjects for these debates were determined by the Backbench Business Committee.

Friday 21 October—Private Members’ Bills.

The provisional business for the week commencing 24 October will include:

Monday 24 October—Second Reading of the Health Services Medical Supplies (Costs) Bill.

Tuesday 25 October—Opposition day (10th allotted day). There will be a debate on an Opposition motion, subject to be announced.

Wednesday 26 October—Consideration of Lords amendments.

Thursday 27 October—Business to be nominated by the Backbench Business Committee.

Friday 28 October—Private Members’ Bills.

I should also like to inform the House that the business in Westminster Hall for October and early November will be:

Monday 17 October—Debate on e-petitions relating to the UK’s exit from the European Union.

Thursday 20 October—Debate on the Education Committee reports on mental health and well-being of looked-after children and on social work reform, followed by a general debate on National Arthritis Week 2016.

Monday 24 October—Debate on an e-petition relating to the local government pension scheme.

Thursday 27 October—Debate on the Defence Committee reports on defence expenditure and the use of Lariam for military personnel.

Monday 31 October—Debate on an e-petition relating to driven grouse shooting.

Thursday 3 November—General debate on the future of the steel industry.

Mr Lidington

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I warmly welcome the hon. Member for Walsall South (Valerie Vaz) to her new responsibilities. I am sure that she will bring to the role the wit and good humour, as well as the commitment to the House, that we have grown to expect of her during her time here. Let me also thank and pay tribute to her predecessor, the hon. Member for Newport West (Paul Flynn), for his service. He is the living embodiment of the principle that age is nothing but a number. Throughout his parliamentary career, he has continued to express his views, and to speak on behalf of his constituents and his party, with all the passion and commitment that brought him into politics in the first place.

The hon. Lady made various points about work and pensions matters. The Government will, of course, respond in the way that they normally do to petitions that Members present to the House, and Members in all parts of the House will have an opportunity to put questions to DWP Ministers about their responsibilities as early as next Monday, when DWP questions will take place.

I think that the hon. Lady tempted providence slightly when she talked about honeymoons. I have yet to see the Leader of the Opposition’s honeymoon even begin, let alone end.

I am sure that Members on both sides of the House will have sympathy for the hon. Lady’s call to restore our Marmite. The best advice I can give her, in relation to her email correspondent, is to advise Jeremy that a number of own-brand yeast extracts will be available during the current commercial dispute between the wholesaler and the retailer, and I am confident that in an area such as Islington there will be a wealth of traditional and organic alternatives available to the discerning customer.

I shall now touch on some of the other points that the hon. Lady raised. I shall take back and reflect on the points she made about a debate on the Childs report, “The Good Parliament”, and whether it would be appropriate to link that to the debate that we are going to have on the restoration and renewal report in due course. I know that the Select Committee on Women and Equalities is looking into the implications of “The Good Parliament” report as part of its own work at the moment. The Chancellor of the Duchy of Lancaster, my right hon. Friend the Member for Derbyshire Dales (Sir Patrick McLoughlin) and the Leader of the Opposition gave evidence to that Committee on some of those matters earlier this week.

The hon. Lady raised questions about foreign workers. The position on this is perfectly clear. The Government have made it plain that there is no question of naming individual employees or trying to shame companies, but it is not unreasonable for the Government to go out to consultation—which is what is being planned—on whether firms should be asked to supply evidence about the proportion of their workforce that is made up of workers from outside the UK. For one thing, that might be a way of providing independent evidence about labour shortages and informing the Government’s approach to what we and British industry might do address that issue. This system already operates in the United States of America, after all, so I do not think that a consultation of that sort is unreasonable in the way that she suggests.

The hon. Lady also asked about European matters. The Secretary of State for Exiting the European Union, my right hon. Friend the Member for Haltemprice and Howden (Mr Davis), said yesterday during his speech, and I reiterate today, that we will make Government time available for debates on the European Union on the Floor of the House. At the moment, we are considering exactly when that will happen and what form those debates might take. I was glad that the Opposition accepted the Government amendment yesterday, but before the hon. Lady gives lectures on democracy, she really needs to have a word with some of her shadow Cabinet colleagues. I yield to no one in my open support for the remain cause during the referendum, but if we are democrats, we have to accept the outcome. It remains the case that, as recently as 11 September, the shadow Foreign Secretary, the hon. Member for Islington South and Finsbury (Emily Thornberry), said on “The Murnaghan Programme” that that was not enough. She said:

“I think that we have to have some form of democratic, an injection of democracy in some way…I think we need to go back to the British people in some way”.

That is at odds with the message that came from the Opposition Front Bench yesterday about the Opposition accepting the referendum outcome, whatever view any of us took during the campaign. So I hope that we will see greater consistency from the Opposition in future.

Mr Lidington

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When this report reached Transport Ministers, they immediately issued instructions to cancel the advertisement and approach this matter in a different way. Undoubtedly, there are lessons to be learned from the history of HS2 up till now, but my right hon. Friend will share the view of the Transport Secretary that the approach that she has described was not the best use of taxpayers’ money.

Mr Lidington

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l will certainly take on board the hon. Gentleman’s last point about party conferences, although, as he will know, all parties fix the dates and book the venues of their conferences several years ahead, so this is not something on which I can offer hope of change in the immediate future.

On his serious point about EU nationals living in the United Kingdom, I will respond by saying two things. First, people who have come lawfully from other European countries and who are living here, working here and contributing to our society in many different positive ways should be both welcomed and respected. We should have no truck whatever with xenophobic language let alone with tolerance of some of the appalling instances of abuse or even physical attacks that we have seen. Those should be deplored and condemned by people from all political parties, and by people who were active on both sides of the referendum campaign.

Secondly, my right hon. Friend the Prime Minister has made it clear more than once that her objective is to secure an agreement that enables people who are already in the United Kingdom lawfully to remain after we leave the EU. She would be keen to get agreement on that at an early stage of the exit negotiations. The only thing that we can see that would stop that happening would be if, for some reason, it were not possible to persuade the other 27 countries that British citizens on their territory should not be accorded similar rights. It ought to be in everyone’s interests to settle this definitively and early on, and I hope that we are able to achieve that.

I do not want to dwell too much on Marmite; I am sure that there is as much appetite for that product in Scotland as there is anywhere else in the United Kingdom. I simply note that, on the information that I have been given this morning, the ingredients of Marmite are not imported into the UK but are manufactured and supplied here. It is probably not for the Government to intervene in what seems to be a dispute between two commercial companies.

Mr Lidington

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Following the statement made by my right hon. Friend the Defence Secretary a few days ago, the Government, led by the Ministry of Defence, are actively looking at the measures that we would need to take to give effect to this policy. Legislative change might be required, in which case we shall have to prepare such legislation and bring it forward as early as we can, when there is an appropriate legislative opportunity.

Mr Lidington

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On behalf of the Government and my right hon. and hon. Friends, I join the hon. Gentleman in wishing a speedy restoration to health to the hon. Members for Easington (Grahame M. Morris) and for Blyth Valley (Mr Campbell).

I am grateful to the hon. Gentleman for what he says. We always try to give as much notice as possible to him and his Committee. I should issue a word of caution about Thursday 27 October, however. The Government’s current intention is that half a day will be allocated to the Backbench Business Committee. As I said in my statement, the business for that week is provisional at this stage; I will be able to speak with much more certainty next week.

Mr Lidington

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My hon. Friend is a fierce champion for the communities in her constituency on bus services, as on other matters, and I hope that she will have the opportunity to make her case directly to Arriva, as the local bus provider, and to the relevant local authority about whether it can provide any kind of subsidy to bus services that are essential socially, but that are not viable in strictly economic terms. The Government want a diverse mix of public transport provision—bus and rail services, and other kinds—and I am sure that if she wants to put her case in detail to my right hon. Friend the Secretary of State for Transport, he and his team will look carefully at the concerns that she expresses.

Mr Lidington

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All hon. Members, on whichever side of the House they sit, certainly understand the importance to their constituents of ensuring that NHS services and local authority social care are organised and managed in a way that looks to the constituent—to the client or patient—first of all, and that budgets are organised and commissioning takes place to try to ensure there is as much support for the needs of the individual as possible. I had the chance this morning to look briefly at the Care Quality Commission’s report. What struck me was that it says that 72% of adult social care services, 87% of GP practices and 56% of the core services of NHS hospital trusts have been rated as either good or outstanding. It does point to challenges that need to be addressed and argues that less-well-performing authorities need to learn from the experience of those that are more successful. It seems to me that the commission is doing its job as an independent inspectorate, but what it has actually found is that the quality of care that most people receive in this country is very good.

Mr Lidington

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My hon. Friend is clearly campaigning very hard on behalf of his constituents. Some years ago, I used to live quite close to his constituency, so I am well aware of the importance of those commuter rail services to the people whom he represents. I suggest that his message to Govia should be to encourage it, yes, to put the need to provide for passengers first, but also to work more closely with its cleaning contractors and the transport police to ensure that trains are cleaned of offensive graffiti in a timely fashion and that the people responsible for the graffiti are identified and brought to justice.

Mr Lidington

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I am grateful to the right hon. Gentleman for his kind words. I think that somewhere in my loft I have the programme card that lists him as a CUCA college secretary at some distant date in the past. He raises a really serious subject. Yemen is too often overlooked as we focus on the appalling situation in Syria. As he will, I think, know by now, he has obtained an Adjournment debate on Yemen on 18 October, which will enable him to raise some of these matters, and we have Foreign and Commonwealth Office questions on 18 October, too, which will enable him and other colleagues to raise these matters with the Secretary of State and Foreign Office Ministers. I completely share the right hon. Gentleman’s view that the Government need to continue to do all that they can to help to support the UN special envoy for Yemen and his valiant efforts to establish a credible peace process, and to devote a decent slice of our humanitarian aid budget to helping people in desperate need in that country.

Mr Lidington

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As I said earlier, there will be, as recommended by the Joint Committee on the Palace of Westminster, a debate and decision by this House, and separately by the House of Lords, on the proposals in the Committee’s report. I am giving thought to the precise wording of the motion to be tabled. Whatever the form of words used, the motion will be, subject to your ruling, Mr Speaker, capable of amendment. I am sure that hon. Members of all parties will want to look at the motion and see whether they want to change it in any way.

I hope that hon. Members take the time to read the Joint Committee’s report. It is a completely cross-party Committee. It spent a lot of time on the subject and interrogated a lot of witnesses before reaching its recommendations, and the House owes it to colleagues who served on the Committee to look seriously at the arguments and evidence that it has presented.

Mr Lidington

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I take issue with the right hon. Gentleman’s description of my earlier response. I not only had a look at the report this morning, but listened to the chief executive of the commission speaking on BBC radio, and it was he who said that the key lesson was that best practice needed to be copied by those authorities and NHS areas that were not delivering the best quality service at present. My right hon. Friend the Secretary of State for Health will, of course, want to consider very carefully and urgently the views expressed in the Care Quality Commission’s report. I am sure he will want to make clear to the House in the relatively near future his view on its recommendations, and there will be opportunity at Health questions or otherwise to put questions to him.

Mr Lidington

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I cannot promise a debate in Government time, but my hon. Friend has been in the House long enough to know that there may be opportunities by way of Adjournment debates or questions to Ministers that enable him to speak up on behalf of his constituents.

Mr Lidington

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We all have constituents who have benefited from debt advice, which is not always best provided by an agency that has “OHMS” stamped all over it. It is sometimes better provided through a voluntary organisation that is able to engage with people in a less rule-bound way than is usually the case with even the best-intentioned Government agencies. I will take back to my hon. Friends with ministerial responsibility the concern that the hon. Lady has expressed and ask the relevant Minister to write to her directly.

Mr Lidington

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That is a cause that David Cameron championed during his time as Prime Minister and I am delighted that he is continuing his association with the cause afterwards. As my hon. Friend will know, earlier this week the Government introduced the National Citizen Service Bill, which will put the NCS on a statutory basis for the first time.

Mr Lidington

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I know that the Home Office is looking at the legislation governing gun dealers, and that may go some way to address the hon. Gentleman’s concerns. It is right that we remind ourselves that police forces have an important responsibility to ensure that people who hold firearms licences legitimately store guns and ammunition in a secure and safe fashion, and that they are fit and responsible people to have such licences.

Mr Lidington

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My hon. Friend will want to talk with the Prisons Minister about Wellingborough prison, but I am sure that the policy is the right one for our right hon. Friend the Secretary of State to be pursuing. Not only are more modern prisons more cost-effective than maintaining prisons on what has become very valuable inner-city real estate, but they provide conditions for prisoners that are more secure and humane than those in the old-fashioned, Victorian prisons, which in some cases have lasted for far too long.

Mr Lidington

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Those of us who deal with a significant amount of immigration casework in our constituencies will know that it is quite difficult to generalise about cases when the quality of evidence varies greatly. From my experience, I advise my constituents that it is really important to have the audit trail of evidence to show that there is a previous pattern of sticking to the terms of visas that have previously been granted, and also the best possible documentation to show that a potential visitor has good reasons to return home afterwards, such as family or job reasons.

Mr Lidington

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My own view is that early-day motions are an overrated currency. I was somewhat surprised to see reports this morning that Scottish National party Members have been spending so much time tabling early-day motions, and on subjects ranging from Christmas trees to the anniversary of the first screening of “Star Trek”. They need to be a little careful, because a number of us are coming to the conclusion that they do not have enough work to do, and I think their constituents would be somewhat shocked to find that out.

Mr Lidington

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As the hon. Gentleman knows, we have, for a long time and under successive British Governments, supported the efforts to try to bring about an end to the appalling conflict in Colombia. We welcome the courageous work President Santos has done to try to reach that agreement, and British Ministers are certainly not going to, in any way, seek to tell the President of Colombia how he should proceed in setting the final seal on an agreement that we all hope will endure.

Mr Lidington

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I will certainly draw the Justice Secretary’s attention to the point my hon. Friend has made, but I would just add this: all but a very small number of prisoners are going to be released one day, either at the end of the sentence or on life licence. It is not unreasonable, in the context of people who are approaching the end of a sentence, to be looking at ways in which to make it possible for them to adjust to society outside prison and to earn a living, take family responsibility and, hopefully, pursue a better path at that point. Where my hon. Friend is absolutely right is that such a step needs to be looked at in the context of overall sentence planning, and should not be a way in which to soften the necessity for the punitive aspect of a prison sentence, which the public rightly expect judges and the Prison Service to see enforced.

Mr Lidington

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We do source British steel wherever possible, but in this case there was no viable UK bid for the specialised steel required for this particular part of the Successor submarine manufacture. Other stages of construction will include steel that British suppliers can support, and we expect them to take the opportunity to bid. As with every major Government procurement, we are working hard to ensure that, where we can, we source British steel. We expect about 85% of the BAE Systems supply chain for the new submarines to be based in the UK.

Mr Lidington

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It will be important, as we move towards 2020, to see the NHS making best possible use of the extra £10 billion the Government have allocated to it—£2 billion more than the NHS itself had requested—but also for the NHS to deliver on the internal reforms that the chief executive has said he intends and needs to carry out. I am sure my hon. Friend will find an opportunity to raise some of these wider questions about future funding with Health Ministers, either at questions or perhaps through a Westminster Hall debate.

Mr Lidington

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My hon. Friend may well have the opportunity to raise this matter directly with the Foreign Secretary at Foreign and Commonwealth Office questions on Tuesday. I share his wish to see an end to the violence in Kashmir, which has continued for far too long. That will in the end depend on the readiness of the Governments of both India and Pakistan to hammer out an agreement with which they both feel able to live.

Mr Lidington

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I do not want to say anything that could prejudice court proceedings under way today that touch on precisely the issues the hon. Gentleman raises. However, when I looked at the Hansard report of yesterday’s debate, I found that the issues of prerogative powers and the rights of Parliament were aired at considerable length and I am sure that that will continue as we find other opportunities to debate the European issue in the months to come.

Mr Lidington

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I cannot offer my hon. Friend a debate in Government time. If he would like to put some of the detail in a note to me, I will draw it to the attention of the relevant Minister in the Department for Culture, Media and Sport so that he can have a comprehensive response.

Mr Lidington

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A half-hour debate on cancer diagnosis in Westminster Hall on Tuesday may provide the opportunity for an intervention, but the hon. Lady has done the House a service by reminding us of the importance of this issue. I am sure we would all wish to support the work the cancer charities are doing to highlight the importance of secondary breast cancer to ensure that that challenge is not overlooked, and that we would all wish to support both the research on causes and cures, and the work going on to support those who have to live with secondary breast cancer and their families.

Mr Lidington

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I am sorry to learn about what is happening in my hon. Friend’s constituency. These decisions are sometimes a matter for the local authorities involved. If he will let me have the details, I will ask the Sports Minister to respond to him. He may also like to seek an Adjournment debate, where he can secure a ministerial reply in open session of the House.

Mr Lidington

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I am grateful to the hon. Gentleman for raising this matter on behalf of his constituents. I confess that it is not a subject with which I am familiar. It strikes me that it is likely to involve the responsibilities of a number of Departments. My advice to him is to look for opportunities to raise it with the relevant Ministers at questions or to secure an Adjournment debate, so that he can get a direct response from Ministers to the concerns his constituents are expressing.

Mr Lidington

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I very much welcome the hon. Lady’s support for the nuclear industry. I share her view that nuclear has an important part to play in this country, as it already has in France, as part of the overall energy mix to ensure that we have supplies of fuel that are as clean as possible and reliable. The nuclear industry provides many opportunities for high-skilled and relatively well-paid employment, often in parts of the country where such jobs are very scarce indeed. Although I cannot promise her an early debate in Government time, I think her comments will have struck a chord with hon. Members in all parts of the House.

Mr Lidington

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Clearly, in all parts of the United Kingdom, decisions about individual prosecutions and court cases are rightly the province of independent prosecuting authorities. I am uneasy about the idea that Governments should intervene to either initiate or stop a prosecution that has been decided upon independently in that way, but I completely understand the point the hon. Gentleman makes. Pretty well everyone in the House will acknowledge the bravery over so many years of the servicemen and women who served in Northern Ireland. They were a line of defence for decent, law-abiding people of all communities in Northern Ireland against ruthless terrorism. I will draw his remarks to the attention of the Ministers he mentioned.

Mr Lidington

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I cannot promise an immediate debate in Government time. It is quite an important principle that the Arts Council administers its budget at arm’s length from Ministers; we do not want any suggestion that political sympathies might start to influence individual grant decisions made by Arts Council England or arts organisations elsewhere in the UK. But the hon. Gentleman has demonstrated again that he is a champion of the achievements of Rochdale in the artistic world as well as in many other areas of life.

Mr Lidington

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I welcome the hon. Lady’s comments and add my unreserved congratulations, support and good will to her two constituents. It is the truth that in our constituency work every single one of us in this House comes across cases, such as the one she has described to us this morning, of the most incredible acts of selflessness and public spirit by our fellow citizens. Whenever politics is at risk of making us feel a bit low and depressed, those sorts of acts of kindness and generosity by ordinary, decent British citizens really warm the heart and make us have faith in this country.

Mr Lidington

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I am happy to endorse the hon. Lady’s congratulations to Yorkshire, and will make sure that the Sports Minister is aware of her concerns about funding—I am sure that the Sports Minister will want to have due regard to the importance of the success of that event. Everyone in the House will want to thank Jessica Ennis-Hill for all that she has done, for her achievements in her chosen sport and for the inspiration she has given to so many aspiring young athletes, and women athletes in particular, in Yorkshire and far beyond in the UK.

Mr Lidington

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We seem to be moving from toast and sandwiches through to pitta bread and dips. The truth is that when sterling falls, imports become more expensive but exports become cheaper. When sterling rises, it is the other way around. Companies of all types learn to plan and adjust for those currency risks. Currencies go up and down, fluctuating in value. If the companies in the hon. Gentleman’s constituency are producing good, high-quality products in an efficient way, they should look forward to a successful future.

Mr Lidington

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Nobody would dissent from the hon. Gentleman’s view that any increase in incidence of childhood cancer should be deplored and that we should be active in seeking ways in which to prevent the occurrence of cancer, and to ensure early detection and effective treatment. I hope he will have the opportunity at Health questions in future or in an Adjournment debate to continue to highlight that important subject.



Bill Presented

Criminal Finances

Presentation and First Reading (Standing Order No. 57)

Secretary Amber Rudd, supported by the Prime Minister, Mr Chancellor of the Exchequer, the Attorney General, Secretary David Mundell, Secretary James Brokenshire and Mr Ben Wallace, presented a Bill to amend the Proceeds of Crime Act 2002; make provision in connection with terrorist property; create corporate offences for cases where a person associated with a body corporate or partnership facilitates the commission by another person of a tax evasion offence; and for connected purposes.

Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 75) with explanatory notes (Bill 75-EN).

The Minister for Security (Mr Ben Wallace)

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I beg to move, That the Bill be now read a Second time.

First, may I, through you, Madam Deputy Speaker, apologise to the House on behalf of my right hon. Friend the Home Secretary, as she is unavoidably detained on departmental business pertaining to national security and has therefore asked me to open this debate?

Both terrorism and serious and organised crime pose a real and present threat to the UK. Those involved in terrorist activities endanger our domestic security and overseas interests. Terrorism may be the greatest threat we face, but serious criminality arguably causes the greatest harm, costing the UK at least £24 billion annually, causing loss of life, and depriving people of their security and prosperity. Right hon. and hon. Members must not doubt the scale of this problem, as it damages our economy and our communities. It also has impacts on real people, whether we are talking about a grandparent being scammed out of their life savings; the trade of weapons that enable the type of marauding firearms attacks we have seen in Paris; the smuggling of illegal drugs that blight our high streets and local neighbourhoods; or the organised trafficking of young women and children.

Those crimes have a corrosive impact on the most vulnerable in society—they ruin the lives of real people—but this is part of a truly global issue. As David Cameron has said, international corruption is

“one of the greatest enemies of progress in our time”

and the

“cancer at the heart of so many of the world’s problems”.

Financial profit is at the heart of almost all forms of serious and organised crime. The UK drugs trade alone is estimated to generate £4 billion of revenue, and Her Majesty’s Revenue and Customs estimates that more than £10 billion was lost to tax evasion and criminal attacks against the tax system in 2014-15 alone.

Mr Wallace

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I thank the hon. Gentleman for that point. The Bill does extend some of the offences and powers it contains to cover an extra-territorial extent, which will go a considerable way to getting to the bottom of money laundering, whether that be carried out here or elsewhere around the world. It also goes some way to dealing with people who evade tax overseas. Just because they are not evading our tax but are robbing another country, it does not mean that we would not still like to take action against those individuals. The Bill goes some way on that.

Mr Wallace

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I will make some progress and Members will doubtless be able to make their points throughout the debate.

Many of the criminals who profit from such activities live in plain sight, untouched by law enforcement agencies. They reap the benefits by money laundering—moving, hiding and using the proceeds of their crimes to fund their lifestyles and enable further criminality. It is estimated that the annual amount of money laundered globally amounts to $1.6 trillion, while the National Crime Agency assesses that many billions of pounds are laundered into or through the UK as a result of international corruption.

We should be rightly proud of the UK’s status as a global financial centre. This is one of the best places in the world in which to do business, but we must recognise that the size of our financial sector and open economy and the attractiveness of the London property market to overseas investors make this country unusually exposed to the risks of international money laundering. That is why this Government are taking action—to combat money laundering, terrorist finance and corruption—here and overseas. We are sending a clear message that we will not stand for money laundering or the funding of terrorism through the UK.

Mr Wallace

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Yes, I absolutely agree that transparency is one of the steps along the path of tackling both corruption and money laundering. That is why, at the anti-corruption summit in May, the Prime Minister basically reaffirmed that commitment. Even before that, we had worked with the overseas territories and Crown dependencies to ensure that, hopefully by the end of this year or into next year, there will be transparency, registers, of which a considerable number will be public, and automatic information exchange between our tax authorities and those of our dependencies. In that way, we will be able to have access to information about people hiding tax from us, and our law enforcement agencies will then be able to set about tackling the matter.

This Bill is part of that process. A key element of that approach will be ensuring that we work with the private sector to make the UK a more hostile place for those seeking to move, hide or use the proceeds of crime.

Mr Wallace

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Yes, but I will come to that part of the Bill later on. It is certainly our intention to prosecute those corporations, or the corporate body, that allow their companies to facilitate tax evasion. Under the current system, an individual can be prosecuted for evading tax, and someone within a company can be prosecuted if they facilitate that evasion. At the moment, it is very, very hard to prosecute the corporate body. We are intending to make that change in our Bill. If the hon. Lady reads the Bill, she will see how we will do that. We will go after not only the corporate body here in the UK, but overseas companies. Being an overseas company will not be an excuse, and we will go after them in the same extra-territorial way that we do with the Bribery Act 2010.

Mr Wallace

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I am grateful to the right hon. Gentleman for his intervention and for his kind comments about my appointment.

First, we will remove those barriers to information sharing. Often some of the regulators or the bodies that we deal with say that they would like to pass on more to us, but feel that they are not protected from sharing wider information. We will remove those barriers so that the National Crime Agency can see the full chain of a financial instruction. We will also empower the NCA with a stronger disclosure order so that it can force people—it can go and apply for an order—to release documentation or to comply with questions about a particular transaction. Such an order currently exists in the Proceeds of Crime Act 2002, but it only covers fraud. We will now do the same for money laundering. We will also extend the time limit for a suspicious activity report. At the moment, there is a one-off extension of up to 31 days, but we would like to see that extended to six months, which means that the NCA will have much longer for its investigations.

Mr Wallace

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The right hon. Gentleman is absolutely right that 381,000 referrals is a hefty amount to get through. First, we need to ensure that there is time to get through them. Secondly, what we do not want is what has happened in the past, which is that the private sector makes a suspicious activity report by default. If we can remove those excuses about why it cannot get to the bottom of a transaction before it passes it on, that will ensure that it passes on proper suspicious activities, rather than the ones that it can satisfy itself are not such a problem. In that way, we can cut out some of the referrals that are unnecessarily done.

Mr Wallace

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Yes, I can assure the right hon. Gentleman that that will happen throughout the passage of the Bill and even after. This is part of a longer process. We will make sure that, where we cannot get hold of the information that we need, we will prosecute people who are deliberately trying to evade tax, and also prosecute people who are trying to launder money. That is part of the process. Many of these powers, including the unexplained wealth orders, give us the benefit of the doubt and put it on to us to say, “Actually, we think you’re linked to serious organised crime, or we can show you are. Explain to us where your money is from.” At the very least, that will get over some of those hurdles about not being able to get to the bottom of the information in that process. That is one of the steps that we will take and that I hope the right hon. Gentleman will support as the Bill goes through.

Mr Wallace

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My hon. Friend is right that, in the past, it has been a challenge. Crafty hoods have been very good at taking their money out of cash and putting it into a range of moveable valuables, such as fast cars, paintings, jewels, or even betting slips, which I know the Scottish Government are quite keen for us to consider. We need to broaden it out and ensure that when they are crafty, we are crafty as well.

This Government have already done more than any other to tackle money laundering and terrorist financing. More assets have been recovered from criminals than ever before, with a record £255 million recovered in 2015-16, and hundreds of millions of pounds more frozen and put beyond the reach of criminals. We set up the Panama papers taskforce to ensure an effective, joined-up approach to those revelations. The London anti-corruption summit in May built capacity with overseas partners.

It is important to note that we are already doing this. In November 2015, the UK returned £28 million to Macau, which were the proceeds of corruption laundered in the UK. That is a concrete example of our giving back money to those countries that have been robbed by crooks who have used Britain to launder the money or to make the money in its jurisdiction. I want to see more of that and to see it go further.

There was a need for legislation and a need to build on the process of the anti-corruption summit and to find out where we were still vulnerable. In October 2015, the Government published the “National risk assessment for money laundering and terrorist financing”, identifying a number of areas where these regimes could be strengthened. Our response to that assessment was the action plan for anti-money laundering and counter-terrorist finance, which was published in April 2016. It represents one of the most significant changes to our anti-money laundering and terrorist finance regime in more than a decade.

The Bill will give effect to key elements of that action plan. It will significantly enhance the capability of UK law enforcement to tackle money laundering and to recover the proceeds of crime. It will strengthen the relationship between public and private sectors and combat the financing of terrorism.

Part 1 contains a number of measures that will amend the Proceeds of Crime Act 2002, including the creation of unexplained wealth orders. There are criminals who declare themselves almost penniless, yet control millions of pounds. Law enforcement agencies may suspect that assets are the proceeds of international corruption, but they are unable to freeze or recover them, often because they cannot rely on full co-operation with other jurisdictions to obtain evidence. A court will be able to make an unexplained wealth order to require an individual or organisation suspected of association with serious criminality to explain the origin of assets, where they appear to be disproportionate to their known income. If that person does not respond, this may enable the property to be recovered under existing civil recovery powers.

Part 1 chapter 1 will extend the use of disclosure orders, which allow a law enforcement officer to require someone who has relevant information to answer questions as part of an investigation. Those orders are already in use for civil recovery and confiscation investigations. They will now be available for money laundering cases.

Chapter 2 will enhance the process by which private sector companies report suspected money laundering—the suspicious activity reports, or SARs, regime. Where a company in the regulated sector, such as a bank, accountancy or legal firm, suspects that it may commit a money laundering offence, it is obliged to submit a SAR to the National Crime Agency, seeking consent to proceed. At present, there are occasions where these SARs are incomplete and where further information is needed to inform the NCA’s decision. The Bill will give law enforcement agencies more time to investigate those suspicious transactions that require consent and the NCA extra powers to request further information from companies to help to pursue those investigations and conduct wider analysis.

The Bill will provide a gateway for the sharing of information between regulated companies—subject to appropriate oversight—to help to build a broader intelligence picture of suspected money laundering. This has been piloted through a programme known as the joint money laundering intelligence taskforce. In the 12 months from February 2015, the taskforce led directly to 11 arrests, the restraint of more than £500,000 and the identification of 1,700 bank accounts linked to suspected criminal activity. We want to build on the success of that work, by providing the clearest possible legal certainty that companies can share information for the purposes of preventing and detecting serious crime.

Part 1 chapter 3 will improve the ability of law enforcement agencies to recover the proceeds of crime. Existing legislation contains civil powers to confiscate cash, but criminals hold proceeds in other forms, as I said earlier, and we must adapt. The types of asset covered by the power are listed in the Bill, so that Parliament can properly scrutinise its potential use. We continue to consult operational partners on their requirements, and I expect that we will introduce a Government amendment to extend the list to include gambling slips and tokens, which are often used by organised criminals to launder their ill-gotten cash. I hope that such an amendment will attract cross-party support.

The rest of part 1 will extend existing POCA powers to a number of other organisations, including the Serious Fraud Office, Her Majesty’s Revenue and Customs and the Financial Conduct Authority. It will make a range of minor and technical amendments to POCA.

The first duty of any Government is to keep their citizens safe. The terrorist threat is real and is growing. If we are to combat that threat, we must cut off the funding streams that enable terrorist-related activity. The 2015 national risk assessment identified two key weaknesses in this area: the raising and moving of terrorist funds through vulnerabilities in the financial sector, including money service businesses and cash couriering; and the abuse of the charitable sector for terrorist purposes. To combat these issues, part 2 will make complementary changes to powers for terrorist finance cases, by mirroring many of the provisions in the Bill, such as those on SARs, disclosure orders and seizure and confiscation powers, so that they are also available for investigations into offences under the Terrorism Act 2000.

Part 3 will deliver on the Conservative manifesto commitment to make

“it a crime if companies fail to put in place measures to stop economic crime, such as tax evasion”.

At present, if an individual evades tax and that is criminally facilitated by those working for a company, the individual taxpayer will have committed a crime and those individuals facilitating it could also be prosecuted, but it is very difficult and often impossible to hold the corporate entity to account. That needs to change. That is why we are creating two new offences of corporate failure to prevent the criminal facilitation of tax evasion—one in relation to UK taxes; another in relation to taxes owed to other countries.

Tax evasion is wrong. It is a crime. It cannot be right that a business operating in the UK can escape criminal liability simply because a tax loss is suffered by another country rather than the UK. The new offence in relation to foreign taxes will be of particular benefit in tackling corporate facilitation of corruption in developing countries. HMRC has conducted two public consultations on these offences, including engagement with the private sector—banks, accountants and legal practices—and everyone is clear of the need to take responsibility for ensuring the highest possible standards of compliance in this area.

As I have said, tax evasion and corruption in the developing world are key contributors to global poverty. Those crimes are frequently facilitated by companies in other jurisdictions. We cannot abdicate our responsibility and leave solving this problem to other countries. The UK’s financial sector should lead on the disruption of tax evasion, money laundering and corruption. This measure will help to do just that.

The Government are committed to reducing the regulatory burden on business, which can make it harder for companies to focus on real risks. The measures in the Bill were developed in close partnership with law enforcement agencies and the regulated sector, including major financial institutions, as well as other key representatives.

Mr Wallace

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I am grateful to my hon. Friend for his intervention. In the past few months, I have visited regional organised crime units up and down the country, including in his region, and the NCA, and they all say that their barrier to getting further with some of these problems is not the resource issue; they all say that their barrier has been the ability to find the cash, see the cash and seize it. Those three things are incredibly important. We can put all the resources in the world into our law enforcement agencies, but if they do not have the powers to take back some of the stolen assets, it will not make a difference.

The thing that struck me coming into this job only a few months ago, although I thought I knew a bit about terrorism from my previous life, and what has absolutely shocked me is the weight and strength of organised crime across the United Kingdom. To see its depth, how it affects my community in the north-west and how close it comes to us all really takes my breath away. I am absolutely determined not only that the guys and girls at the top, the Mr Bigs, get sent to jail for as long as possible, but that those people who consider themselves a little removed from it—the facilitators, the white-collar smoothies who launder the money into property and so on—also face their time in court, because they are the people who contribute to the message that there is a permissive society and that it is okay to be associated with crime. They are the people who help the nasties to put a gloss on themselves.

That is what I am determined to do with the Bill. All Members should rest assured that I will use the Bill to try to build momentum in non-legislative areas—in the non-regulated sector. I want to ask the regulators of estate agents and accountants what they are doing to play their part. If we can change the powers here, if their members get into trouble, what are they going to do to hold their members to account? Legislation is only one part of this. I hope that everyone supports the Bill and that the message goes out that there is more to do and that we will make sure that those people who facilitate and think that they live on the edge of the crime know that we are coming after them.

Mr Wallace

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There are several parts to this. The NCA has absolutely got the bit between its teeth, and I see a professional organisation up and down the country determined to tackle the threat that we face. I compliment police forces throughout the country that have put away the old-fashioned territorial boundaries that organised crime often exploited and have been determined to work together. When we visit Police Scotland and regional organised crime units in the north-west and all the other regions, we see police forces all sitting around the same table, working together for their own ends, led by intelligence, deciding on their priorities, sharing capabilities and knuckling down and getting on with it, rather than just focusing on their small areas. The NCA and regional organised crime units have provided the impetus on this, and the results will speak for themselves. I can assure the House that each of the Bill’s provisions will be subject to a set of stringent safeguards and robust oversight, so that they can be used only where it is necessary and proportionate to do so.

We considered carefully the responses to the public consultation on options for legislative proposals to implement the action plan. We published the Government response alongside the Bill earlier this month. I am grateful to everyone who responded to that consultation. There will inevitably be some additional pieces of statutory guidance to underpin the measures in the Bill. We will seek, wherever possible, to make that available to Parliament during the passage of the Bill, to ensure the widest possible consultation on how it will work in practice.

The Bill is only one part of a wider package of measures, as I have said, aimed at strengthening the Government’s response to money laundering and increasing the amount of criminal assets confiscated by the state. Our wider programme includes improving the effectiveness of the supervisory regime for the regulated sector; reforming the SARs regime, including investment in systems and processes; and further increasing our international reach, working with other Governments, overseas territories, Crown dependencies and international organisations to crack down on money laundering, tax evasion and corruption. We must ensure that the Bill and those other projects have the greatest possible impact on money laundering and terrorist finance in this country and abroad.

I welcome the hon. Member for Hackney North and Stoke Newington (Ms Abbott) to her post as shadow Home Secretary, and I am pleased that she has been able to meet me since her appointment to discuss this Bill. I would be delighted to continue to meet her and her team during the passage of the Bill to make sure that we get it right. Hopefully, we can work to ensure that the whole House agrees to support the Bill to send a message to the crooks, criminals and facilitators that we will not tolerate this any more. I hope that the hon. Lady, her colleagues and Members from the Scottish National party agree that it is in the public interest that the Bill be enacted at the earliest opportunity, hopefully with clear cross-party support.

I also congratulate the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper) on her recent election as Chair of the Select Committee on Home Affairs. I am afraid that she is not in the Chamber, but she has a wealth of experience in home affairs, and I look forward to discussing these issues with her and the Select Committee.

The Government are committed to protecting the security and prosperity of our citizens, and the integrity of our world-leading financial system. We must ensure that we can pursue vigorously those who abuse that for illicit means. That is what the Bill will do, and I commend it to the House.

Mr Wallace

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It is a joy as a non-lawyer to be skewered between two barristers in this place, but may I point out to the hon. Gentleman that one reason why the Bill imposes an unlimited fine for a conviction of corporate facilitating of tax evasion is that we believe it will change behaviour. It is one thing to fine a company for a capped fee, but we need to change the attitude not only of the bosses but of the shareholders—and massive fines make a difference. If that is coupled with our provision to increase the powers of the Financial Conduct Authority, we hope that both will help to change behaviour.

Mr Wallace

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I have listened carefully to what the right hon. Lady said. Will she not concede that since the lead-up to the London anti-corruption summit in May, the Crown dependencies and overseas territories have agreed to establish a central register of beneficial ownership and a data-sharing system with the UK enforcement agencies that will give us access to those data almost in real time, and that that goes a long way to meeting some of her concerns? I recognise that the Scottish National party would like this to be public as well as shared with our law enforcement agencies, but it still goes some way on this issue. On the other side, the unexplained wealth orders for politically exposed persons will allow us to grab the money should they put it in this country and live in the nice houses that they sometimes seem to live in.

Mr Wallace

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I can get an exact answer to the right hon. Lady’s question. Just around that, though, we have started to sign memorandums of understanding with a number of countries—we signed one in August with Nigeria—to help them recover their assets, without barriers between here and there, and to assist them, both in their country and here, with tackling crime. Once they find their assets, we will get them back to them as soon as we can.

Mr Wallace

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That is quite straightforward. We are unable under EU law to discriminate against different members of the EEA in relation to the UK citizen. What we do for the UK citizen we also have to do for other members of the EU.

Mr Wallace

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I reassure the hon. Gentleman, given our meeting yesterday, that I have listened to what he said. I will meet my ministerial colleagues to discuss the problem he raised with me and see what we can do about it.

The Minister for Policing and the Fire Service (Brandon Lewis)

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I thank right hon. and hon. Members for this informed and valuable debate. We have heard strong and important contributions, and there has been support from both sides of the House for the principles behind the Bill. We will have interesting and strong discussions in Committee.

As my hon. Friend the Minister for Security emphasised at the start of the debate, there can be no doubt about the seriousness of the threats of terrorism and organised crime, or about the scale of the challenge that we face in combating them. As of July last year, about 5,800 organised crime groups were operating in the UK. Fraud due to organised crime is thought to cost this country about £9 billion, and the social and economic costs of illegal drug supplies are estimated to be some £10.7 billion a year. As has been said, these are not faceless, victimless crimes; they have an impact on people we know and those who live in our constituencies.

As we have heard, the UK is a fantastic place to do business, and the Government want to maintain that. We want to send out a clear message across the country that we are open for business, but if we are to maintain our position, we must ensure that this is one of the cleanest and safest places to invest. We need to send a message to those who would seek to corrupt legitimate trade.

I am grateful to all right hon. and hon. Members who have contributed to the debate, and I particularly welcome the hon. Member for Ealing Central and Acton (Dr Huq) to her Front-Bench role. I also welcome the hon. Members for Dumfries and Galloway (Richard Arkless) and for Kirkcaldy and Cowdenbeath (Roger Mullin) to their roles. I was pleased to hear that the Minister for Security has had the opportunity to discuss the Bill with the official Opposition and Scottish National party Members prior to the debate—indeed, some of the paperwork was shared some two months ago—and I know that we will continue that conversation during the passage of the Bill.

It is clear that Members on both sides of the House want to contribute to make sure that we end up with a robust, strong system of which this country will be proud. Almost without exception, hon. Members who have spoken have understood the importance of these powers and been supportive of the Bill. Of course, it is right that on such issues as money laundering and terrorist finance, the House should present a united front, as it is doing on the principle behind the Bill. I welcome the fact that in our consultation on the Bill, a diverse group of stakeholders—ranging from the major banks, which have been mentioned today, to law enforcement investigators, prosecutors and civil society groups—have given an overwhelmingly positive response to its provisions.

Brandon Lewis

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My right hon. Friend makes an important point, particularly by outlining the importance of the Bill’s Committee stage to ensure that Members have a chance to have an input into the debate, as indeed they have had this afternoon. He should have great faith in my hon. Friend the Minister for Security, who is determined to work with colleagues to ensure that the Bill is robust. The Bill gives a clear message to those who want to try to usurp our system that that will not continue—we will not allow it. Although we are a country that is open for business, we are also a country that believes in fairness and that will ensure that fairness prevails.

A couple of core issues have been raised by a number of Members, particularly about the overseas territories. We heard speeches from the right hon. Member for Barking (Dame Margaret Hodge), and the former Chair of the Home Affairs Committee, the right hon. Member for Leicester East (Keith Vaz). We have agreed that UK law enforcement and tax authorities will have, in real time, unrestricted and secure access to things such as the beneficial ownership initiative, and information about corporate and legal entities incorporated in the overseas territories and the Crown dependencies.

The right hon. Lady outlined the excellent work of David Cameron and the strong message that he gave when he was Prime Minister. This is something that the current Prime Minister is determined to continue. We will ensure that there is an end to people usurping the law. It is important that we work closely with our colleagues around the world to ensure that we have a strong and robust system. We have taken a lead on this. Those territories have agreed that they must commit to new global standards in tax transparency so that Her Majesty’s Revenue and Customs can investigate any untoward activity. As a result, later this year, HMRC will have new data on billions of pounds of accounts held in the overseas territories by UK taxpayers. This is a big step forward. I know that we as a Government are determined to ensure that we stamp out that kind of behaviour.

Funding was mentioned by a number of Members, including the right hon. Member for Leicester East. The NCA’s funding has increased from £448 million to nearly £478 million over the past year and police budgets have been protected. Funding for HMRC has also increased—up to £3.6 billion, with the £241 million input that was mentioned earlier.

I can be clear that we are determined to ensure that the police and the NCA have the resources that they need to be able to look at all this in the round, including IT issues. The right hon. Gentleman suggested that I use the debate to discuss the police funding formula, but he will have to excuse me for resisting that temptation for now. Over the past few weeks, I have written to all chief constables and police and crime commissioners to ask them to come to talk to me as we seek to deliver our election manifesto commitment of a fair funding formula for police, which we will do.

In response to comments about the overseas territories and Crown dependencies, I am pleased to announce that the British Virgin Islands and the Turks and Caicos Islands have just—conveniently, as I am here at the Dispatch Box this afternoon—committed themselves to the initiative on beneficial ownership, which many hon. Members have spoken about today. All the overseas territories have now agreed to have central registries, which will be accessible to law enforcement authorities. We will continue to push for all countries to introduce public registers. This is good news, and we will continue to work on it.

Brandon Lewis

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As I said just before the hon. Gentleman intervened, we will continue to push for all countries to introduce public registers. This is a step in the right direction. I welcome it, and we acknowledge that we want to continue to work on this. Another issue raised by his good self, as well as the hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin) and others, was about Scottish limited partnerships. I hope that they will take into account the fact that my hon. Friend the Minister for Security intervened to say that we want to work on that with colleagues across Parliament. We have very much taken those points on board.

My right hon. and learned Friend the Member for Harborough (Sir Edward Garnier) and my hon. Friends the Members for Kingston and Surbiton (James Berry) and for Wealden (Nusrat Ghani) spoke passionately and made incisive contributions. In particular, my hon. Friend the Member for Wealden outlined the Bill’s importance given the part that it will play in ensuring that we fight the funding of extremism. We have discussed the Bill’s vital importance in protecting the UK’s position and status as a global financial centre and in ensuring that criminals cannot benefit from the proceeds of their crimes. I expect and hope that right hon. and hon. Members will want to give in-depth scrutiny to the Bill, as they have suggested this afternoon, as we move on to clause-by-clause examination in Committee, and I look forward to a lively debate on its provisions.

I am proud that, by comparison to most European countries, we are positioned high in the league table for having a strong and independent judiciary, as well as a determined law enforcement environment. If we are to maintain our record and position, we always need to stay one step ahead of those who seek to undermine our attempts, especially in such a fast-moving global environment. That is why the Bill is so important, why it is reassuring that it has received principled, cross-party support in the House, as that sends a clear message, and why we must ensure that law enforcement agencies have the powers they need to combat the ability of criminals to launder the proceeds of their crimes, as well as to tackle terrorism financing and to bring more offenders to justice. I hope that the House will agree that that is in the public interest and that the Bill should be passed at the earliest opportunity with clear, continued cross-party support. On that basis, I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Criminal Finances Bill (PROGRAMME)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Criminal Finances Bill:

Committal

(1) The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 24 November 2016.

(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Proceedings on Consideration and up to and including Third Reading

(4) Proceedings on Consideration and any proceedings in legislative grand committee shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which proceedings on Consideration are commenced.

(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.

(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and up to and including Third Reading.

Other proceedings

(7) Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.—(Andrew Griffiths.)

Question agreed to.

Criminal Finances Bill (MONEY)

Queen’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Criminal Finances Bill, it is expedient to authorise—

(1) the payment out of money provided by Parliament of—

(a) any expenditure incurred under or by virtue of the Act by a Minister of the Crown or a government department; and

(b) any increase attributable to the Act in the sums payable under any other Act out of money so provided; and

(2) the payment of sums into the Consolidated Fund.—(Mel Stride.)

Question agreed to.

The Minister for Security (Mr Ben Wallace)

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I want to clarify the point: the seizure threshold is £1,000 and the unexplained wealth order threshold is £100,000. I did not want members of the Committee to get confused about the two. If we are talking about taking money out of a bank account, it is at the £1,000 level; if we are talking about confiscating assets on an unexplained wealth order, it is £100,000.

Mr Wallace

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We are getting there.

Mr Wallace

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Q The ARIS scheme allows HMRC, the investigators and the prosecutors to keep 50% of the proceeds of any confiscation. If the Bill leads to further confiscation, would you say that therein lies some of the solution that you are going to highlight across the road? If they will be able to keep what they recover, will unexplained wealth orders, for example, or seizures improve their budgets?

Alex Cobham: That seems potentially helpful, but I think you would be wise to look at the bigger question of whether HMRC is appropriately resourced given the bang per buck that it actually gets in different areas, rather than having just that one measure in mind.

Professor Murphy: I would rather have no crime and no proceeds than fund collection through increased recovery.

Mr Wallace

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Q Unlike Corbyn economics, we live in the real world.

Professor Murphy: But it is the wrong direction of travel.

The Minister for Security (Mr Ben Wallace)

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Q Thank you very much for your input into the formation of the Bill. It helps the Government, and hopefully the Bill reflects some of that. I am keen to find out from the regulated sectors and the professions what you envisage could or would happen to any one of your members should they be convicted of the offence of corporate tax evasion or money laundering. What penalties are available to you to deal with either law firms or the individuals who could be convicted?

Amy Bell: In relation to law firms, while the Law Society is the named supervisor, we delegate enforcement responsibilities to the Solicitors Regulation Authority. Its powers are incredibly wide and include restricting or stopping a firm from practising, intervening in a firm, closing the firm down, stopping the individual solicitors involved from being able to practise and ultimately referring them to the solicitors disciplinary tribunal, where they can lose their right to practise and be removed from the role. Quite serious options are open to the SRA.

Mr Wallace

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Q And for the banking and financial sector?

Nausicaa Delfas: From our perspective, obviously, individuals could be prohibited from the industry. In terms of firms, there are significant fines and reputational damage.

Mr Wallace

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Q And they could potentially lose their banker’s licence, if they are a bank.

Nausicaa Delfas: Removal of permissions, yes.

Mr Wallace

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Q Ultimately, if an international bank loses its British banker’s licence, what does it mean for that bank in the global world? Is it usually the case that if they lose their banker’s licence in a developed market, it is pretty much curtains for them in the rest of the world?

Nausicaa Delfas: It would have a significant impact, yes.

Anthony Browne: If you lost your licence to operate in London, it would clearly have a dramatic effect on an international bank.

Mr Wallace

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Q Do you think some of the overseas offences here will have a change of behaviour effect on foreign-owned banks that operate here as well? Ones that may previously have been able to exploit their jurisdiction elsewhere will find that the stakes are higher for them.

Nausicaa Delfas: Undoubtedly so. Obviously, where controls are exercised from the UK, those powers already exist, but this certainly goes further.

Anthony Browne: One aspect of the criminal offence of failing to prevent tax evasion about which we do have concerns is its extraterritorial impact and the degree of extraterritoriality. For example, if a US citizen who is a customer of a US bank operating in the US evades tax in the US and that US bank has a branch in the UK, the entire US bank could become criminally liable for an action that has no nexus in the UK whatsoever—it is a US citizen, US tax and a bank operating in the US under US law. The same goes for Japan, and so on. Effectively, that would place us as regulators for jurisdictions overseas. The US Department of Justice, for example, does not have such authority over UK banks operating in the US. It could have a dramatic impact on the UK’s competitiveness as an international financial centre.

Mr Wallace

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Q But the US regulator does have a say in things like foreign and corrupt practices over examples such as the one you used. You do not have to have an entity with their extraterritorial reach in their other legislation.

Anthony Browne: It has to be a nexus in the US, I think. That is my understanding of that, but we can get back to you on the detail of it. Our understanding is that there no legislation which has this impact, in the sense that it is entirely extraterritorial without any nexus. It does not involve UK taxes, UK citizens, UK banks or UK laws.

Mr Wallace

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Q But we do not really want tax evaders anywhere, do we? We do not want to allow tax evaders to rob other countries of their wealth either. We do not want to be a permissive society.

Anthony Browne: No, but obviously, the US, Japan and other countries have very sophisticated tax evasion laws already. Getting them to comply with two different laws simultaneously on a global basis, for both the UK and other jurisdictions, would have quite big implications. I do not know whether you have spoken to other Governments about the impact of this.

Mr Wallace

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We have not had any representations from the United States objecting to this.

Mr Wallace

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Always.

Anthony Browne: We broadly support this Bill and almost all the provisions in it. The one thing we would like to see changed in the Bill is the threshold for intelligence sharing, which is a point that Ms Delfas made earlier. It would be beneficial and make the regime more effective if you lowered the threshold for intelligence sharing. If there was activity that was just below the formal level of suspicion, so that banks do not deal with it as a suspicious activity report, if they could at that stage share intelligence with other banks like two pieces of a jigsaw, they could find out that something happening in bank A is also happening in bank B.

That could raise it to a suspicious activity and so enhance the intelligence sharing and make it far more useful and effective. We are worried that the way it is prescribed at the moment would actually be a lot less effective than either the Government or the banks want.

Mr Wallace

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Q I thank The Herald for what you have done. I have read some of your stuff and it has been quite an eye-opener. The SNP obviously raised it in the debate and that prompted me to have a meeting with one of my business Minister counterparts to see where we can go forward with it. Some of the stuff that you have identified—well done for it—is the truest form of good investigative journalism that can be produced. It was the Glasgow Herald when my grandmother wrote for it way back 40 or 50 years ago. It is clearly a structure that has been abused, and I think we want to ensure that that does not happen.

I want to ask Mr Quantrill about a bigger issue: the Crown dependencies and overseas territories. If we stack it up, going back to the anti-corruption summit chaired by David Cameron back in May, we have got to a position now where all of them will have a central register of beneficial ownership, except the Caymans, which will have a linked register of ownership. Our law enforcement agencies will have access to them. We are the only country in the G20 to have a public one. Never mind the dependencies or anywhere else; our neighbours in Europe do not have them yet, so the trajectory is in the right direction. It seems to boil down to a call to make the Crown dependencies make them public—that we, the UK Government, impose our will on the Crown dependencies and territories, in primary legislation.

Do you recognise what that actually means? I have many constituents who, for example, have very strong feelings on abortion. Does that give this sovereign Parliament the right—technically, we are sovereign over Scotland and the Crown dependencies—to impose that very strong will on those Crown dependencies? That is the next step. The step you are suggesting is for us to ignore their own Parliaments and impose our will on them, because it is a subject that you and many other people feel passionately about. I respect that, but it is what you are proposing. Is that something that you are happy to do?

Toby Quantrill: Not happy—

Mr Wallace

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By working with them, we have got to a position rather quickly of having central registers and getting our law enforcement automatic access to those data without long, drawn-out court cases. We have done that in the space of a year. Is Christian Aid proposing that we override the democratic expression of those countries, whether they like it or not, because it is a subject that you have decided is more important than other issues?

Toby Quantrill: I certainly recognise the difficulties. I would also very much prefer that we did not have to go down the path of legislation. I do not necessarily think that we would need to, but it ought to be available, and it ought to be made clear that it is available. There have been precedents in the past.

That is one thing, but what we are looking for is a timeline and to be really clear by when this will happen, so that we know what is happening and can see the UK using all its powers to persuade and support these places to go in that direction, primarily. However, we do not think it is acceptable for this not to happen within a timeline. The reason for that is that the impact globally is so great. The Panama papers are a game-changer in this respect. It puts these places right at the heart of the system. The damage being done globally, to our mind, overrides the very real discomfort of taking this action, but it is not an action without any precedent. The UK has gone down that route in the past, as I am sure you are aware, on a number of different issues.

Also, interestingly, I had sight of a paper recently, the Foreign Office annual report on the Cayman Islands Government from 2003; it goes back some time. In it, there was a single paragraph relating to the EU savings directive. At that time, the Caymans Government clearly did not want to implement it; it was a similar issue of making certain information available. The paragraph stated that voluntary action by the Caymans Government meant, effectively, that we did not have to legislate. It was clear that the threat of legislation had been used, and had been effective in that case. It has been done in the past, in a similar incident.

Yes, I recognise the difficulty—I honestly do—but there are potential implications of maintaining secrecy in these places. It is not just one particular place; it was, as I said, one of the most important centres of financial secrecy in the world. I think the potential impact of that staying in place is too great to ignore, but what we are looking for is a timeline, persuasion and all means possible first.

Mr Wallace

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Q You quote the Panama papers, which was a significant leak, and there have been previous ones—Liechtenstein and others. The access that our law enforcement agencies will now get will be greater than the Panama papers. The Panama papers are not complete, and they are effectively within the control of the journalists in the sense that they were selectively leaked to them and then published. No one is able to get the full picture because we do not have open access to Panama, which is not a Crown dependency or an overseas territory; it is a place that Scotland had a bad relationship with a few hundred years ago.

What we are proposing, and what the Crown dependencies are giving our law enforcement access to, is the complete picture. In one sense, we will have a greater advantage than the Panama papers because our law enforcement agencies will be able to have full access to the full range automatically. Therefore, in one sense we are 90% there. As you said, we do not have the transparency bit, but the Government’s intention is to do that. We are doing it, first, by leadership. We are the first in the G20 to say it is our aspiration. The step that seems to be mooted is to impose the sovereign will of Parliament on them, but in 12 months we have gone 90% of the way.

Toby Quantrill: We are looking for a timeline. We must give time and support to moving in that direction and be clear about when we are going to reach it. The Panama papers demonstrated the power of making this information public, because the impact has been global. In countries all around the world, citizens have gained information about people often within their Government and judiciary, and they have been able to investigate, follow those leads and hold their Governments to account. That is the power of transparency. It should be full transparency, not just the bits and bobs. We should not have to rely on leaks to hold our Governments to account. That is the point we are making.

The Minister for Security (Mr Ben Wallace)

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It is a pleasure to serve under your chairmanship, Sir Alan. As we begin the line-by-line scrutiny, it might be useful if I give the Committee a brief outline of how unexplained wealth orders will work.

In short, an unexplained wealth order is a civil investigatory tool. It is a court order that requires a person to provide information that shows they obtained identified property legitimately. If the person provides information and responds to an unexplained wealth order, the enforcement authority can then decide whether to investigate further, take recovery action under the Proceeds of Crime Act 2002 or take no further action. If the person does not comply with an unexplained wealth order, either by not responding or not responding fully to the terms of the order, the property identified in the order is presumed to be recoverable under any subsequent civil recovery proceedings. It is important to note that the unexplained wealth order does not in itself lead directly to recovery action. It is designed to be an investigatory power and a precursor to civil recovery action.

An unexplained wealth order is an order made against a person, requiring them to provide information to explain how they obtained the property. It is important for all of us to understand this crucial factor: the unexplained wealth order is made against a person, not against property, and does not itself result in the recovery of that property. That is the vital point in relation to amendment 1.

In the Proceeds of Crime Act, it is clear that, if an order is to be made against a person or a property overseas, it must be explicitly stated on the face of the legislation. For example, section 282A of POCA provides that a civil recovery order can be made against property overseas if there is a connection with the UK. Section 375A of POCA also provides that an evidential request can be made overseas in constructing a case for civil recovery.

The same is already the case with unexplained wealth orders. New section 262A(2)(b) in clause 1 of the Bill provides that the person on whom the order will be served must be named, and it expressly provides that

“the person specified may include a person outside the United Kingdom”.

The unexplained wealth order therefore has global effect. The definition of “property” in the POCA already encompasses all property, whether it is situated at home or abroad. An unexplained wealth order can therefore list any property, wherever it is in the world. The court has an associated power to make an interim freezing order in respect of that property.

Clause 3 inserts a provision into POCA that an enforcement authority can request assistance from an overseas state concerning the freezing of property overseas that is subject to an unexplained wealth order. I therefore assure the hon. Lady that unexplained wealth orders will be effective against property anywhere in the world. Accordingly, I invite her to withdraw her amendment.

Mr Wallace

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We are all in agreement that law enforcement agencies should do more to co-operate and talk to each other before embarking on action against a person or property, and that they should ensure that they are acting to combat corruption in all its forms. In that sense, the implication of the amendments is entirely sensible.

As the hon. Lady set out, amendment 2 would impose a duty on operational agencies to co-operate prior to applying an unexplained wealth order. Such co-operation would have several benefits. Most obviously, it would avoid duplication of the same effort against an individual and their property. It would avoid one agency trampling over another that had embarked on a similar line of inquiry. Indeed, another agency may well have an explanation of the wealth. An obvious example is that HMRC can be aware of complex legal tax arrangements that an individual may have.

I am entirely supportive of the spirit of the hon. Lady’s amendment. I would go further and say that liaison should not be limited to those bodies that can apply for unexplained wealth orders and take civil recovery action; it should happen between all law enforcement agencies and prosecution authorities. I am pleased to reassure her that that already happens. Law enforcement agencies, as a matter of course, check various law enforcement databases to see whether there is a flag against a particular person or property that is of interest to them. They can then liaise accordingly. In addition, unexplained wealth orders will be subject to the Proceeds of Crime Act investigation code of practice, which will be amended and subject to debate in both Houses before coming into force. I can assure the Committee that this issue will be addressed in that code.

The Proceeds of Crime Act is not the only legislation where a conflict between law enforcement agencies could occur relating to the same person or property. Several police forces may have an interest in the same criminal. Those conflicts can be resolved without the need for primary legislation. This is a matter for internal discussion on tasking and co-ordinating, which the code of practice will achieve.

New clause 12 would impose a duty on agencies to prevent corruption when considering the use of unexplained wealth orders. It is my hope that the mere existence of these orders in UK law will in itself create a deterrent to those who seek to place their corrupt wealth in the UK.

We continue our efforts to tackle corruption in all its forms. This year, we hosted the London anti-corruption summit, bringing together world leaders, business and civil society to agree a historic package of actions to expose, punish and drive out corruption in all walks of life. We will continue to implement UK commitments from the summit and encourage others to do likewise.

Indeed, the limb of unexplained wealth orders that allows their application to non-EEA foreign officials and politicians reflects the real concerns about those involved in corruption overseas who then launder the proceeds of their criminality in the UK. I hope the hon. Member for Stoke-on-Trent Central can see that the power will be used to tackle corruption, but unexplained wealth orders go further: they will also apply to cases in which there is a suspicion of involvement in serious crime, not necessarily corruption. The proposed duty could risk the deprioritisation of other crime types, which we agree that the NCA, the Crown Prosecution Service, HMRC and the Financial Conduct Authority could be tackling. They will of course pursue those guilty of corruption, but I hope we agree that our law enforcement agencies are best placed to prioritise their resources to pursue a whole range of criminals.

The Secretary of State and Attorney General already issue statutory guidance on the use of powers under POCA, including the use of civil recovery powers. That guidance will be extended to the new bodies granted civil recovery powers in the Bill. HMRC and the FCA intend to reissue the guidance next year, when we will be able to address both issues. I hope that the hon. Members for Ealing Central and Acton and for Stoke-on-Trent Central are reassured that the issues are already accounted for. I invite her to withdraw the amendment.

Mr Wallace

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On the Magnitsky case, it would be inappropriate to comment on a case that could be under continuing investigation. The main point is that our law enforcement agencies have operational independence. It is for them to decide the priorities for how they spend their resource and work together. We do an awful lot, without primary legislation, to ensure that they work together. They liaise through regional bodies such as the regional organised crime units, and through the national co-ordinators and everything else.

Our view is that primary legislation is unnecessary because, whether it is through the code of practice, which will be published alongside the Bill, or in the operational day-to-day running of the organisations, joint working is part of their remit and, effectively, their duty. We do not think it is necessary to put anything in the Bill because we fear that that could pervert their priorities and interfere with their operational independence.

Mr Wallace

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I thank the hon. Gentleman for his comments. We had a useful meeting yesterday about some of these issues. He will know that we welcome these amendments as they give us the opportunity to discuss why we have effectively a different regime between politically exposed persons outside the EEA and ourselves. The amendment would cover us sitting in this room—all PEPs in the EEA. That is important because, if any of us were to face an unexplained wealth order, we would want to know that it had been issued on the basis of evidence linking us to serious crime; we would not want to give our authorities the ability just to slap one on without any evidential threshold.

We have confidence that, within the EEA—the hon. Gentleman used the example of a country prosecuting its own former Prime Minister—there are the tools to find the evidence and the ability to work with fellow law enforcement agencies around Europe to meet the evidential threshold. We cannot discriminate within the EEA; we cannot say, “This applies to Slovenia but it doesn’t apply to France”. Once we go into that area, we cannot discriminate between the different states. He picked out Hungary, where there is immunity for parliamentarians. I think there are other countries—even Italy; I do not know. If I remember my Berlusconi history, I think there were lots of issues about immunity in that country. That is the real issue. We have confidence in our neighbours and friends in Europe that they have the capacity to build the evidence and therefore to build a case for an unexplained wealth order.

Mr Wallace

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I am grateful to my hon. Friend for his intervention. He makes the clear point that we want to be confident that, when we are held to account, it is based on evidence gathered by our resourced law enforcement agencies. The decision on PEPs outside the EEA reflects real operational challenges that we and organisations such as the National Crime Agency have had in gathering evidence against people in some countries where there may be no properly functioning Government or, indeed, where the Government are entirely corrupt and it is very difficult to gather that evidence.

That is the reason we have had to plug that gap in that way. I hope that the hon. Member for Stoke-on-Trent Central understands that that is why we have a different approach. I urge him not to push his amendment to a vote.

Mr Wallace

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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.

Mr Wallace

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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”.

Mr Wallace

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The cumulative wealth would of course build up. I am happy to be persuaded by the Committee about the threshold. The reality is that, given the vast number of people involved with organised crime groups across the threat picture and the staggering wealth of some of them, we will be lucky to get to £100,000. We will be going for people worth £20 million, £30 million or £40 million and all the way down. It would chill people’s bones to realise how some of the people who live among us make their money out of crime and launder that money. The bottom line is the number of those individuals. That is why we chose £100,000, but hon. Members may want to make a persuasive argument otherwise. Cumulative wealth is certainly an issue. I was in the north-east of England the other day and met an individual who is unemployed but has well over £400,000 in their bank account. I am looking forward to knocking on that person’s door.

Mr Wallace

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I will start with the good news: I support the spirit of new clause 11, which I discussed with the hon. Gentleman yesterday. It is important that we have a measure to ensure the transparency of the operation of unexplained wealth orders. In my recent responses to the reports of the Public Accounts Committee and the Home Affairs Committee on asset recovery—both reports were excellent, I have to say—I committed to publishing annual statistics on annual recovery performance. After our meeting, I instructed my officials to ensure that those statistics include unexplained wealth orders. I therefore hope there is no need for the hon. Gentleman’s new clause—which would create a statutory duty in primary legislation to report—as those figures will be contained in an annual bulletin.

New clause 13 relates to the risk that potential financial liability may make law enforcement agencies reluctant to apply for unexplained wealth orders. It seeks to ensure that the authorities are not liable following an unsuccessful unexplained wealth order application. I was pleased to be able to discuss that issue with the hon. Gentleman yesterday, and I am advised that the existing civil procedure rules, which would extend to cover unexplained wealth orders, mean that by default an application for such an order would take place in private. I am happy to share those civil procedure rules with the hon. Gentleman to see whether he thinks that is enough. That is also the case for any subsequent legal stages. On that basis, if an application is unsuccessful, or if the individual was latterly able to provide the court with an acceptable explanation of their wealth, it would not generally be public knowledge. There would therefore be no undue reputational damage to the individual concerned.

More generally, whatever the peculiarities relating to unexplained wealth orders, it remains our view that any awards of costs should follow the same rules that apply in other, similar matters. The general principle that the loser pays is a well established position. Changing it could lead to unfortunate unintended consequences in relation to other powers and procedures. In any case, the judge has a general discretion to award costs that are proportionate. It is not a matter of one side producing a figure and the judge awarding that without any consideration of the case; we should maintain a consistent approach.

On that basis, although I share the concern about impinging on our agencies’ ability to pursue crimes, it is not appropriate to indemnify them in this context. If they have made a mistake and applied for an unexplained wealth order against the wrong person, risking someone’s reputation, it is in my view appropriate for them to take responsibility. If we indemnify them, a mistake will be confused with normal investigative procedure. I do not think it is the best thing to indemnify them, given that hearings can be held in private, in court procedure. I hope that hon. Members will be satisfied with that.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2

Interim freezing orders

Question proposed, That the clause stand part of the Bill.

Mr Wallace

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Clause 2 acts in tandem with clause 1 in appropriate cases. It provides that the court can also issue an interim freezing order in relation to property that is subject to an unexplained wealth order. The interim freezing order provides that the property cannot be dealt with in any way while subject to that order. There is no point in putting an unexplained wealth order on something if it can immediately be sold, as we might lose the asset. The freezing order can be used to keep it in place.

It is important to split the obtaining of an unexplained wealth order and the freezing of property into two different matters. Although they will be done at the same hearing, they are different decisions with separate considerations. Some colleagues have asked why we are not providing that property must be frozen in every case. Freezing someone’s property is a very invasive measure and may not be necessary in every case. For example, there may be no suspicion that the property will be dissipated—perhaps it is a house that has been owned and occupied by the same person for many years—or that a civil recovery order will be frustrated in some other way.

We would not want unexplained wealth order applications to be rejected solely on the grounds of a technicality related to the freezing decision. It is also important to note that if property is frozen, the court may quite reasonably expect the case to progress at a far quicker pace than if no freezing order was in place. On that last point, I should flag up the fact that, under clause 1, if property is subject to an interim freezing order, the enforcement authority is given a deadline of 60 days to decide the next steps. The freezing order would then be discharged after a further 48 hours.

The expectation is that if an enforcement authority is to go forward with civil recovery action, it will obtain a property freezing order, with many of same provisions and safeguards, to apply immediately to the same property once the interim freezing order is lifted. The property would remain frozen.

An application can be made for the variation or discharge of the freezing order. The court can also provide that property can be released to meet affected persons’ reasonable living expenses, their need to carry on their business and their legal expenses. I hope that what I have said reassures hon. Members that the freezing order provisions are properly circumscribed.

Mr Wallace

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Clause 3 supplements clause 1, on unexplained wealth orders, and clause 2. It provides for a request to be sent to another country to freeze property there that is subject to an unexplained wealth order, which addresses the point that the hon. Member for Ealing Central and Acton made in the debate on her amendment 1 about going after property abroad.

I will make two points for the benefit of the Committee. First, an unexplained wealth order can apply to property outside of the UK. That reflects the operation of existing civil recovery powers, which can include property overseas if a sufficient connection can be shown with the United Kingdom—for example, where the suspected criminal is British, the criminality is thought to have taken place in this country or there are victims in the UK.

Secondly, there is no international law that expressly provides for the freezing of property in relation to unexplained wealth order-type powers. We will need to liaise closely with other countries in relation what existing international law may underpin such a request, as well as working on obtaining wider recognition of unexplained wealth orders. The clause primarily creates legal certainty that such a request can be made. We also encourage recognition of such requests as part of the wider fight against international crime and corruption.

Mr Wallace

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I thank the hon. Gentleman for his point. The point to note is that an unexplained wealth order is made against the person and therefore their collective assets, rather than an individual asset. Therefore, whether a successful gangster with a huge amount of money chooses to buy 10 houses where property prices are low—in any part of the United Kingdom—or one house, the order is against that person and catches all their wealth however it is stored.

I want to put the hon. Gentleman at his ease on his view that there is such a difference between Scotland and England. The threat of organised crime is exactly the same. Unfortunately for all of us, there are successful gangsters on both sides of the border who make considerable amounts of money. Therefore, the argument about the £100,000 threshold is that it will catch serious criminals on both sides of the border. We are going to go after their wealth. We must also remember that it is about the person rather than the property. I therefore urge him to withdraw his amendment. If he does so, I am happy to meet him to discuss this issue further—there are other opportunities for that, should he like to do so—and to explore the different options at the threshold.

Mr Wallace

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The clause brings us for the first time to devolution and separate court systems in the United Kingdom. Clauses 4 to 6 provide for unexplained wealth orders in Scotland on effectively the same terms as clauses 1 to 3 do for England, Wales and Northern Ireland. As such, much of what we have discussed relating to the substance of unexplained wealth orders applies equally here.

The reason for separate provisions for Scotland is the different court structure and the separate existing practice and procedure that relates to civil recovery. I assure the Committee that there will be a consistent approach to unexplained wealth orders across the United Kingdom. All the safeguards and other measures will apply in Scotland as they do elsewhere in the United Kingdom.

As we are adding to the criminal law, I will specifically mention the creation of a parallel offence of knowingly or recklessly making a statement that is false or misleading, but I do not think there is anything more to concern the Committee relating to unexplained wealth orders that we have not already discussed.

Mr Wallace

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The clause supplements clause 4 in appropriate cases. It provides that the court can also issue an interim freezing order in relation to property subject to an unexplained wealth order in Scotland. It is important to note that it provides in Scotland what clause 2 provides in England, Wales and Northern Ireland. The safeguards and processes are similar. It is also closely modelled on freezing powers that already exist in civil recovery.

Mr Wallace

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The hon. Gentleman makes an interesting point and my response is “judicial discretion.” It is up to the sheriff or the judge to weigh up the evidence, and the individual or party, before him. The likelihood and ability that they may flee and so on may well come into that.

Mr Wallace

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The provision reflects the existing civil recovery arrangements in both Scotland and England. In other civil recovery procedures, that is how it is dealt with at the moment. That is why it is framed that way in the Bill.

I take the hon. Gentleman’s point concerning the worry about flight and so on, but if criminals are obviously residents of the UK or European economic area and there is a link to serious organised crime, those making the application cannot just turn up, but will have to present evidence, so there will be scrutiny and the judge or sheriff will be able to weigh up whether there should be a freezing order.

Mr Wallace

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We can discuss that at length when we discuss the £50,000 threshold, which I am happy to do. As the hon. Gentleman knows, we are grateful to the Scottish Government with whom we have worked hand in hand on much of the Bill. Because we have accepted recommendations, advice and help from the Justice Minister in Scotland on some of the framing of the Bill, it is one we can agree on. We have accepted some of the guidance from the hon. Gentleman’s Government north of the border.

Question put and agreed to.

Clause 5 accordingly ordered to stand part of the Bill.

Clause 6

External assistance Disclosure orders

Question proposed, That the clause stand part of the Bill.

Mr Wallace

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The clause supplements clauses 4 and 5 and provides that a request can be sent to another country to freeze property there that is subject to an unexplained wealth order. It is a Scotland-specific provision but closely mirrors what clause 3 provides in England, Wales and Northern Ireland.

Mr Wallace

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The Proceeds of Crime Act 2002, which was introduced by the last Labour Government, provides a suite of powers to be used in connection with a range of investigations, including confiscation and civil recovery. A disclosure order is one of those powerful tools and requires any person having relevant information to answer questions, provide information or produce any document that is relevant to the investigation. Disclosure orders are flexible, practical and efficient. Their use avoids the need to seek multiple orders over the course of an investigation. The changes we are making extend the power to seek disclosure orders in money laundering investigations that were previously explicitly excluded. This exclusion was primarily because of concerns over self-incrimination. However, that protection is maintained in the new provisions, ensuring that individuals who are subject to a money laundering investigation cannot be compelled to provide information that might incriminate them.

Clause 7 also changes the definition of who can apply for a disclosure order, removing the need for a prosecuting body to be responsible for its application. Significantly, this change does not lead to a reduction in the level of seniority of the person who can apply. An appropriate officer can apply for a disclosure order only on the approval of the senior appropriate officer, ensuring that the application process is safeguarded. These changes will be reflected in the statutory code of practice on the investigation tools in the Proceeds of Crime Act 2002.

Clause 8 replicates in Scotland the provisions contained in clause 7 for England and Wales that enable an application for disclosure orders in money laundering investigations, providing an essential UK-wide response.

Mr Wallace

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I beg to move amendment 8, in clause 9, page 28, line 34, at end insert “(subject to the restriction mentioned in section 336A(6))”

This amendment clarifies that the 186 day maximum period for extending the moratorium period also applies to a decision of the appeal court in Scotland.

Mr Wallace

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Clause 9 inserts in part 7 of POCA a scheme for the extension of the suspicious activity report moratorium period beyond 31 days. As the action plan for anti-money laundering and counter-terrorist finance sets out, the Government see a more robust law enforcement response as central to tackling money laundering. It might help if I briefly explain how the suspicious activity report regime works.

Where a company in the regulated sector—a bank, an accountancy firm or a legal firm—suspects that they may commit a money laundering offence, they are obliged to submit a suspicious activity report to the National Crime Agency seeking consent to proceed. The National Crime Agency then has a seven-day period to determine whether it is necessary to refuse consent to the company to proceed with the transaction. If consent is refused, the 31-day moratorium period begins. During the moratorium period, law enforcement agencies need to gather the necessary evidence to instigate civil recovery proceedings or a criminal investigation in relation to the money laundering activity. However, money laundering investigations can be multi-layered and complex. Money launderers obfuscate the financial trail to distance proceeds from their criminal source; funds are often moved overseas.

New section 336A of the Proceeds of Crime Act 2002 states that the court may not grant a further extension of the moratorium period if the effect would be to extend the period of more than 186 days in total, beginning with the day after the end of the initial 31-day moratorium period. The amendment makes that clear. Amendment 15 replicates in Scotland what clause 28(2) already does for England and Wales. Amendments 52, 53, and 56 are consequential to that.

The criminal’s property, referred to in POCA as “free property”, which may be in the form of cash, is available for consideration in confiscation unless it is already subject to a forfeiture or deprivation order. When a court considers making a confiscation order under POCA, it must not take into account certain types of property when calculating the amount of the order. This is to ensure fairness to the defendant and prevent the double counting of assets.

Clause 28 amends POCA to clarify the situation in relation to cash that has been seized and is being detained pending the decision of a forfeiture application. Cash that is detained in anticipation of the forfeiture application being made is already excluded, so this is an extension of the existing principle in section 82 of POCA. The amendment extends that to Scotland. We hope to be making an equivalent amendment in respect of Northern Ireland in due course—we are awaiting their formal agreement.

Amendments 50 and 51 will correct an error in clauses 37 and 38, which incorrectly refer to England when they should refer to England and Wales. That is merely to ensure that the text of the Bill reflects the intent of the policy, which is for the measure to extend to England and Wales. Amendment 55 will correct another typographical error.

Mr Wallace

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It is 186 days.

Mr Wallace

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The timescale is really just a reflection of what the investigatory agencies have said to us: that some of these cases are very complex. Some of the ways in which people hide their wealth—they sometimes freeze it themselves—and who they are mean that the process will take time. We want to ensure that our agencies have time to investigate, rather than being under the sort of pressure where effectively they run out of time. Those people exploit that. That is the reason for the longer period. Hopefully it will not be used, but the very fact that it is there will give power to the elbow of the agencies trying to do the job.

Mr Wallace

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I beg to move amendment 9, in clause 9, page 29, leave out line 47.

This amendment removes a reference to the Scottish Ministers from the list of persons who may make an application to the sheriff for extending the moratorium period under new section 336A of the Proceeds of Crime Act 2002.

Mr Wallace

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The amendments will remove references to Scottish Ministers from the list of persons who may make applications to the sheriff for extending the moratorium period and for making a further information order under the Proceeds of Crime Act 2002 or the Terrorism Act 2000. In our ongoing dialogue with the Scottish Government and with law enforcement partners, we have clarified that Scottish Ministers do not require those powers. In Scotland, they would be used by the Crown Office and Procurator Fiscal Service, the National Crime Agency, the police and HMRC in respect of the moratorium period and by the procurator fiscal, the police and the NCA in respect of further information orders. We are acting on the advice of the Scottish Government, with whom we have consulted extensively in the development of the Bill and will continue to do so. We are making these amendments to ensure that the new measure will work effectively in Scotland.

Mr Wallace

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Clause 9 inserts in part 7 of POCA a scheme for extending the suspicious activity report moratorium period beyond 31 days. As the action plan for anti-money laundering set out, the Government see a more robust law enforcement response as central to tackling money laundering. I have already explained the SARs regime, so we do not need to hear about that again.

As the national risk assessment set out, the UK is vulnerable to abuse by professional enablers from the legal, accountancy and finance sectors. The level of expertise involved can make it difficult to progress a money laundering investigation substantially in only 31 days. That is particularly the case when the law enforcement agency needs to obtain evidence from overseas authorities, which is another reason for an extension for a further length of time—the hon. Member for Ealing Central and Acton asked why it needed to be so long—or to undertake complex asset-tracing inquiries. Accordingly, the moratorium period may be lifted and funds dissipated before the investigation has progressed sufficiently to determine whether civil or criminal proceedings should be undertaken.

We need to provide law enforcement agencies with an appropriate amount of time to undertake investigations. This clause provides for the extension of the moratorium period by a court for periods of up to 31 days. That can be repeated up to a total of 186 days from the end of the initial 31-day moratorium period. The hon. Lady is better at adding up than me, so she produced the right figure. Providing an extension of the moratorium period enables law enforcement officers to continue investigating particularly complex transactions, such as those involving overseas grand corruption or other serious crime. The clause ensures that proceeds of crime are not dissipated when there is a suspicion that money laundering activity has taken place and when the law enforcement agency has not had the opportunity to complete its inquiries.

The Government recognise that there may be concerns about the length of time for which an individual’s property could be withheld from them. The clause does not allow unlimited extension of the moratorium period. The court must approve the application to extend the moratorium period each time an extension is sought. Law enforcement agencies must demonstrate to the court that it is reasonable in all circumstances for the moratorium period to be extended. They must satisfy the court that the investigation is being carried out diligently and expeditiously and that further time is required to progress the investigation.

An application to extend the moratorium period will be made to the Crown court, which provides a senior level of judicial authorisation. The owner of the property will be able to make representations in person before the court and is provided with the opportunity to appeal the decision to extend the moratorium period. An application may be made only by a senior officer who has a remit to undertake financial investigation. A senior officer is at the police rank of inspector or equivalent.

Money laundering is an enabler of serious and organised crime. The clause will help to stop criminals profiting from their criminal behaviour. It gives our law enforcement agencies the time to progress critical investigations into money laundering where they have genuine reasons for being unable to progress their investigation substantially in 31 days.

Mr Wallace

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The clause introduces a new provision into the Proceeds of Crime Act 2002. As the action plan for anti-money laundering also set out—it seems to make a regular appearance—the Government see public-private partnership as central to tackling money laundering and terrorist financing. A major part of that approach is to provide support for the effective exchange of information, both within the private sector and between the public and the private sectors, to increase our collective knowledge of threats and vulnerabilities, to help the regulated sector to protect itself and to improve the quality of the UK’s financial intelligence.

Both the private sector and law enforcement agencies hold significant amounts of information that can be of great use to each other. The private sector holds data on financial transactions and related personal data; law enforcement agencies hold intelligence on money laundering and terrorist financing. When those data have been shared, there have been benefits to both sectors.

Mr Wallace

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Clause 11 creates a new power to issue further information orders. In the anti-money laundering action plan the Government set out our commitment to improving the financial intelligence that would be available to both the law enforcement agencies and the private sector. Improving our financial intelligence is essential to allow the identification of the major risks from money laundering, and to identify where resources from both the public and private sectors should be focused.

The action plan also contained a commitment to do more to tackle money laundering internationally, through sharing information and intelligence, and working through international bodies such as the Financial Action Task Force. The suspicious activity reports regime, run by the UK Financial Intelligence Unit at the National Crime Agency, is central to the UK anti-money laundering regime, and to the development of financial intelligence. The regime took more than 380,000 reports in 2014-15 from the regulated sector, including banks, lawyers and accountants.

Clause 11 will allow the UK Financial Intelligence Unit, following the receipt of a suspicious activity report, to request further information from any member of the regulated sector, irrespective of whether that entity raised the SAR.

There are a number of reasons why the UKFIU needs such a power. First, there are occasions where the SAR does not contain all the information necessary to allow the UKFIU to determine whether action, including an investigation, should be undertaken. That is particularly important when determining how scarce resources should be allocated. The intention is to drive up the quality of SARs and to enable improved intelligence analysis for the better identification of risk and threat.

Secondly, the UKFIU can use the power when it needs information in order to develop effective intelligence to identify the major threats from money launderers. That intelligence will be used to inform the work of law enforcement agencies and can be shared with the private sector to help them put in place effective counter-measures to the threats they face from money laundering.

Thirdly, it will allow the UKFIU to seek further information on behalf of a foreign financial intelligence unit to support investigations or intelligence development in that country. That will be subject to the appropriate safeguards, and the UK will benefit from the ability to request equivalent information from foreign financial intelligence units. The provision will also ensure that the UK is compliant with the relevant Financial Action Task Force recommendations ahead of the its evaluation of the UK anti-money laundering regime in 2018.

The clause will allow the National Crime Agency to direct that further information is provided and, if it is not provided, to apply to a court for a further information order to require the person to provide the information requested. We are keen to support appropriate information sharing between financial intelligence units, and we know that FATF and its members want to do more in that area. Incidents such as the attacks in Paris, where financial intelligence was needed to support the investigation, illustrate the need to be able to share such information. However, I would like to be clear that there should be safeguards in place for international information sharing. As with a request driven by the NCA itself, a court order will be required where a regulated entity does not provide information if requested to do so by the NCA. That in itself is an important safeguard. I am, as ever, open to discussing this issue with hon. Members if it is felt that additional safeguards may be appropriate.

On a separate point, I know that the issue of privileged information is of concern to Members, and I want to be clear that the UK Financial Intelligence Unit will not be able to request the provision of privileged information as part of this measure. This is an important safeguard for those who hold such information, and we do not believe that it should be requested under this power.

The Minister for Security (Mr Ben Wallace)

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I am grateful to the hon. Member for Dumfries and Galloway for his amendment, which was set out in his party’s manifesto for this year’s Scottish Parliament elections. The Government take this issue seriously, as do the Scottish Nationalist party and the Scottish Government.

As we have heard, to avoid detection, criminals use a range of means to transfer value among themselves. Law enforcement agencies and prosecutors—particularly those operating in Scotland—have made us aware of criminals’ use of gaming vouchers and casino chips to do that. There has been media coverage of drug dealers using fixed odds betting terminals to convert cash obtained from street drug dealing into vouchers issued by those machines. Those vouchers can either be converted into cash at the bookmaker, thus laundering the funds, or transferred to another person to pay the drug dealer’s debts.

The Proceeds of Crime Act contains provisions that enable law enforcement agencies to seize cash, but those provisions do not extend to the type of criminal tactic that I have just described, so clauses 12 and 13 seek to allow those agencies to freeze, seize and seek forfeiture of illicit funds held in bank accounts and other forms of criminal property used to transfer value. It has always been the Government’s intention to include gambling vouchers and casino chips in those provisions, as I made clear on Second Reading. When the Bill was introduced, we were still looking at the best way of achieving that in legislation, but I tabled new clause 10 on Monday—I apologise for doing so at the beginning of the Committee stage and not giving hon. Members more time to look at it—which will add gambling vouchers and casino chips to the definition of cash in the Proceeds of Crime Act and allow law enforcement agencies to seize those items on the same basis as they can seize cash, where their individual or aggregate value is more than £1,000.

Officers will have to demonstrate to a court that they have reasonable grounds for suspecting that vouchers or casino chips are either proceeds of crime or intended for use in unlawful conduct. That is an important safeguard that we apply to all forms of seizure. Law enforcement agencies will need to show why they seek the detention of the property, and will be able to seek administrative forfeiture of vouchers or tokens, or the agreement of a court. In all cases, an individual who believes that such vouchers or tokens are theirs legitimately will be able to challenge their detention or forfeiture.

I turn to the hon. Gentleman’s point and why we have used the term “gaming vouchers” rather than “betting slips”. In discussions with law enforcement agencies, we have identified that there is a major concern about the laundering of proceeds of crime through machines that provide a guaranteed return if they are played in a certain way. Those machines produce pay-out vouchers with a value that can then be cashed in. Betting slips, such as those used for horse racing, are used for betting with no guaranteed return and, therefore, are much more risky for use in money laundering.

However, once the points had been raised by the hon. Gentleman, I asked officials to examine whether there is potential to extend the Bill to ensure that we cover betting slips as well. As someone who likes the horses and knows his way round a losing—rather than a winning —bet, I understand that the ability to exploit that type of bet could potentially lead to such money laundering.