House of Lords

Monday 11th September 2023 Lords Chamber

Monday 11 September 2023

14:30

Prayers—read by the Lord Bishop of Gloucester.

Clothing Sales: Sustainability

Monday 11th September 2023 Lords Chamber

Question

14:37

Asked by

[Baroness Bennett of Manor Castle]

To ask His Majesty’s Government what they assess to be a sustainable level of clothing sales by volume and material in the United Kingdom.

[The Minister of State, Department for Environment, Food and Rural Affairs (Lord Benyon) (Con)]

My Lords, the Government have not made an assessment of sustainable levels of clothing sales, but reducing textiles waste will be critical to hitting our net-zero goals. Our Maximising Resources, Minimising Waste paper, published in July, outlines our initial policy proposals for reducing textiles waste. We propose to ban textiles waste from landfill, require clothing retailers to provide in-store take-back of unwanted textiles and ask businesses to separate textiles waste for reuse and recycling.

[Baroness Bennett of Manor Castle (GP)]

I thank the Minister for his Answer and am pleased that he acknowledged the critical place of dealing with the fashion sector, given that 20% of the world’s water use and 10% of greenhouse gases are generated by this and that the level of waste has trebled in the last 20 years. However, in the EU they are actually making very strong rules compared with what the Minister offered: clothing must become more durable, more repairable and more recyclable, and they are demanding extended producer responsibility. When is the UK going to catch up with—or, if we are to be world leading, exceed—what the EU is doing now?

[Lord Benyon (Con)]

We have very demanding targets in our Environment Act commitments, which include reduction by 50% to 2019 levels. The noble Baroness is absolutely right about the impact of fashion and textiles in terms of both carbon and the use of embedded water, and we will be publishing details next year of how we are going to progress the producer responsibility for textiles. Our priority is packaging.

[Baroness Jones of Whitchurch (Lab)]

My Lords, there are some outrageous claims made by people in the fashion industry about the sustainability of their products. What are the Government going to do about greenwashing and about tackling those claims, some of which are fabricated claims? The EU, as we have heard, is taking action, and that is one of the things it is going to legislate on. Are the Government similarly going to take action on that?

[Lord Benyon (Con)]

What the Government can have the most control over is what happens to clothing when it has finished being used, so we are working with the industry on durability and then diverting it away from landfill. But the noble Baroness is absolutely right that the supply chain comes from right around the world. The amount of clothing produced doubled between 2015 and 2020. This was because of a higher number of middle-class people and their demand for clothing, and it has come at a great environmental cost. The clothing industry may not be the biggest emitter, in terms of carbon and its impact on water, but the Government are working internationally and domestically to tackle this very serious problem.

[Baroness Meacher (CB)]

My Lords, as the chair of a new commission on plastics and the environment, I am conscious of the contribution of clothing to the mass of plastics gradually killing off our oceans. Are the Government doing anything to reduce the amount of plastics used in clothing materials in order to begin to address that problem?

[Lord Benyon (Con)]

We are certainly having ongoing engagement with the industry to try to reduce the amount of plastics. Of course, there is sometimes a trade-off with plastics when you are trying to get more durable garments that are not disposed of so quickly, but the UK water industry research project, which was done by the UK Centre for Ecology and Hydrology, reported in April last year that wastewater treatment plants remove 99% of microplastics by number and 99.5% by mass. We are looking at what France is proposing, which is a mandatory filter in washing machines, and that may be a direction down which we will go.

[Lord Rooker (Lab)]

My Lords, the Minister talked of a variety of sources. Could he Minister tell us how much cotton has come to us in the last 18 months in products grown in Xinjiang? This cotton is grown by slave labour and can be checked out by the technical element analysis system pioneered by Oritain, rather than by paper trails. Cotton products can be checked to see where the cotton was grown, and the Government have consistently promised they will check on the sources of cotton. What have the Government actually done about it in the last 18 months?

[Lord Benyon (Con)]

Our anti-slavery legislation went a long way towards requiring companies to develop robust information on their supply chains. I cannot give the noble Lord a precise answer about the amount of cotton that has come from that area, or how many of the workers involved were or were not—by our standards—properly employed. However, it is a very serious issue. The consumer can create a great demand on retailers and retailers can have a great effect. The Government must play their part, though. Domestically, we have 62% of clothing retailers signed up to our voluntary agreement, which goes precisely to the point the noble Lord makes. That means there are still some that are not, but we will continue to make sure that we have full transparency within the supply chain.

[Baroness Jenkin of Kennington (Con)]

My Lords, we are now well into Second Hand September. Speaking as somebody who made a vow 12 years ago to never buy anything new for the rest of my life, might I encourage my noble friend to join this campaign? eBay, charity shops, Swishing and Vinted are all alternatives to us buying new clothes and creating more of a problem.

[Lord Benyon (Con)]

My noble friend is a living example that buying from thrift shops is what we should all be doing. This month in particular, we should be encouraging people to do that. Slow fashion is the way forward. We need to continue to make sure that we are requiring manufacturers and retailers to make and sell goods that last longer, are properly supplied and do not go landfill when they come to the end of their natural life. Recycling is an emerging technology, but the most important thing is that we all stop buying so many new things.

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, an estimated 92 million tonnes of textile waste are created annually by the fashion industry. This is set to increase by 2030. Thinking of Marrakesh as an example, would the Minister agree that it would be better for this redundant clothing to go to parts of the world where people have lost their homes and possessions, instead of to landfill?

[Lord Benyon (Con)]

Like everyone in this House, I pay huge tribute to those charities and organisations that do precisely that. It is absolutely vital that support is given to people in vulnerable circumstances who have lost everything so that they can clothe themselves and their families. It also shows us the importance in our lives of trying to develop policies, both as a Government and societally, so that we use less, consume less and, where we can, support those in need.

[The Earl of Clancarty (CB)]

My Lords, with three-quarters of UK exports going to Europe, fashion is yet another creative industry detrimentally affected by Brexit. Has the Minister seen the new report produced for the industry by the University of the Arts London and the University of Leeds, detailing the many difficulties, which include concerns over sustainability and improving ethical practice?

[Lord Benyon (Con)]

I have not seen that document, but I know that the UK fashion industry directly generated an estimated £28.9 billion gross added value contribution to the UK economy. That is a factor. Of course, we want that to be a sustainable industry, but I hope we take great pride in the fact that this country has a leading role in the international fashion industry and we want that to continue.

[Baroness Hayman of Ullock (Lab)]

My Lords, textiles recycling varies significantly across different local authority areas. As we have heard, although some fashion retailers offer their own recycling schemes, both councils and retailers have the same problem: not everything is recyclable, so a proportion of material will always end up in landfill or being incinerated. This situation is not helped by fashion brands and retailers that purposefully destroy old stock rather than offering it at a discount. How do the Government plan to improve access to textiles recycling, while also ensuring that there is transparency about its limitations?

[Lord Benyon (Con)]

We have made some progress. The Textiles 2030 policy, promoted by WRAP, helps signatories to reduce their water and carbon footprints per tonne of clothing by 18.2% and 21% respectively. We want to help local authorities with the work that they are doing and they are being funded to bring forward changes to packaging recycling collections through the extended producer responsibility payments. Separate food waste collections will be funded via new burdens payments, and new collection requirements for consistency in recycling for households in England will come in shortly.

[Lord Forsyth of Drumlean (Con)]

My Lords, following on from the question from my noble friend Lady Jenkin, might we all be able to avoid buying new clothes if the authorities in this House did something about the moths?

[Noble Lords]

Oh!

[Lord Benyon (Con)]

I spoke earlier about consistency; it is always freezing in here and boiling out there, so you never know what to wear.

Russia: Sanctions

Monday 11th September 2023 Lords Chamber

Question

14:46

Asked by

[The Lord Bishop of Leeds]

To ask His Majesty’s Government what assessment they have made of the impact of sanctions against Russia in the wake of its invasion of Ukraine.

[The Minister of State, Foreign, Commonwealth and Development Office (Lord Ahmad of Wimbledon) (Con)]

My Lords, sanctions by the United Kingdom and its international partners have starved Russia of key western goods and technology, degrading Russia’s military and restricting its capacity to fight a 21st-century war. UK exports of machinery and transport equipment have decreased by 98%. Sanctions also limit Russia’s financial resources. The UK has sanctioned 29 Russian banks, accounting for over 90% of the Russian banking sector. We have also frozen over £18 billion-worth of Russian assets in the UK. Without sanctions, we estimate that Russia would have over $400 billion more to fund its war machine.

[The Lord Bishop of Leeds]

My Lords, I thank the Minister for his answer. The stated aim of sanctions is to

“encourage Russia to cease its destabilising actions in Ukraine”.

It seems to me that there is no evidence that sanctions have had any such impact. Russian GDP has dropped by a mere 2% and the country is skilled in circumventing sanctioned goods through third countries. Despite being subject to 13,000 different sanctions, which I think is more than any other country before, they have made no appreciable difference to Russia’s behaviour—we think of its links with North Korea, China, Iran and so on. Are the Government therefore prepared to move to more precisely targeted smart sanctions, the aims of which are clearly defined and the impact of which more measurable?

[Lord Ahmad of Wimbledon (Con)]

My Lords, the right reverend Prelate talked about the impact of sanctions. I can share with him that sanctions are having a direct impact. On revenues alone, they have left Russia’s budget in deficit, rather than the surplus that the Russian Government themselves predicted for 2022. Russia has suffered an annual deficit of £47 billion, the second highest of the post-Soviet era. Russia’s energy revenues fell 47% in the first half of this year. At the same time, global oil prices are lower. Less immediately visible, but more importantly in the long-term, more than 1,000 foreign businesses have left Russia, along with thousands of high-skilled workers. More continues to be done, as we co-ordinate and work with other countries. Particularly notable recently is that Armenia, Turkey and Kazakhstan have taken action on the issue of supply chains, which the right reverend Prelate raised. That kind of co-ordination is important if we are going to make these sanctions work across the piece.

[Lord Robathan (Con)]

My Lords—

[Lord Sahota (Lab)]

My Lords—

[Baroness Williams of Trafford (Con)]

My Lords, we will let my noble friend ask his question and then we will go over to the noble Lord, Lord Sahota.

[Lord Robathan (Con)]

My Lords, on targeted sanctions, the oligarchs who make up the inner circle around Putin, and the huge number of people who have property here, have almost invariably made their money by nefarious means—they must have done, because 30 years ago there was no private capital in Russia. Could my noble friend the Minister give us an update on how many oligarchs are having their property—and whatever else—put into suspension so that we can confiscate and use it to rebuild Ukraine?

[Lord Ahmad of Wimbledon (Con)]

I agree with my noble friend that we all want—I think I speak for the whole House—to get Russia to pay for its war on Ukraine. At the time of the invasion, the UK sanctioned 129 oligarchs who have a combined net worth of around £145 billion. As I said earlier, we have frozen £18 billion-worth of Russian assets under the regime. The UK has also set up specialist agencies in the NCA and, as I said earlier, we are working with key partners. Legal hurdles need to be addressed, but we are not doing that alone—other partner countries are also looking to allow those assets, now that they are frozen, to be moved across. Ultimately, when the war ends, we can use the money from those assets in the reconstruction of Ukraine.

[Lord Sahota (Lab)]

My Lords, the Prime Minister signed a joint declaration at G20 which did not condemn the invasion of Ukraine by Russia. Is the Government going soft on Russia now?

[Lord Ahmad of Wimbledon (Con)]

I am sorry to say that I cannot disagree more with the noble Lord. We have not gone soft on Russia; this House has not gone soft on Russia; this country not gone soft on Russia. At meetings such as the G7 and the G20, there are a broad number of countries and alliances. I assure the noble Lord that I have sat in many meetings where we have had to agree a statement; the fact that Ukraine was mentioned in that statement, with Russia present in the room, indicates a way forward. We also have to address these issues with partners who still do not have the same view as us, and we do that through effective diplomacy and specific action, as we are taking with our key partners.

[Lord Purvis of Tweed (LD)]

My Lords, the Minister knows that Russia’s export in goods is now at pre-war levels, and the very friends the Minister referred to—in India and the Gulf—are offering financial services directly to Moscow. We are currently negotiating trade agreements with those areas, offering them preferential UK market access. Does the Minister share my concern that we are actively encouraging financial instruments who are supporting the Russian war machine to have preferential UK market access? Surely that cannot be right.

[Lord Ahmad of Wimbledon (Con)]

My Lords, many of those countries, including India specifically, have had historic and legacy relationships with Russia. As the noble Lord is aware, India has relied on Russian defence support for a long time over history. It is right that we talk directly, and raise those concerns, with key partners such as the UAE and India, while, at the same time, working constructively to ensure that there are alternatives. I assure the noble Lord that we are seized of that; it is why we are making progress in our discussions on the issue of circumvention with key countries such as the UAE. Turkey recently initiated certain procedures domestically to assist in this respect. Let us be very clear that, while Kazakhstan has a strong reliance on Russia, it is looking at its domestic legislation to see how it can curb the issue of circumvention.

[Lord Hannay of Chiswick (CB)]

My Lords, could the Minister explain to the House why we have a memorandum of understanding with the United States on co-operation over sanctions against Russia but we do not have one with the European Union? Could he also explain why the Foreign Secretary fended off the recommendation by the European Affairs Committee of this House that we need a properly structured framework for co-operation with the EU on sanctions so that, together, we could make them more effective?

[Lord Ahmad of Wimbledon (Con)]

My right honourable friend the Foreign Secretary has been very much leading on direct engagement with our partners in the European Union, not just on the issue of sanctions specific to this Question but on a broad range of issues. I know that we will shortly be looking in the Moses Room at various committee reports. I assure the noble Lord that we are working very much hand in glove with our key partners—that is, Canada, the United States, the European Union and others—to ensure that sanctions are co-ordinated. I look to the noble Lord, Lord Collins, specifically—this may have been his question—and say that we are working hand in glove with those partners, and the impact on Russia is beginning to tell.

[Lord Collins of Highbury (Lab)]

Let me ask that question, as the Minister provokes me into it. Last week, I asked him specifically about Ursula von der Leyen’s statement about freezing €200 billion-worth of assets. The EU has announced that publicly. He said last Thursday that we support this initiative. Let us have a clear statement from the Government today that we will act in concert with the EU and announce our intention to freeze assets so that they can be repurposed for rebuilding Ukraine.

[Lord Ahmad of Wimbledon (Con)]

I assure the noble Lord that, in many years across the Dispatch Box with him I have sought not to provoke him, and if I have done so, I have failed miserably on this occasion. However, I can give him that assurance. I totally agree with President von der Leyen’s statement, and we are working with our key partners on ensuring that the assets that have been frozen stay there. The important thing is the legal impact, and no country, including the various jurisdictions of the EU, has yet designed the system and structure to allow for those assets to be deployed for the reconstruction of Ukraine. We are working with the key countries, and, as the noble Lord knows from the Ukrainian Recovery Conference, with the private sector, on reconstruction.

[Lord Leigh of Hurley (Con)]

Given the assertion in the Washington Post last month that 6,000 drones have been supplied by Iran to Russia, will the Foreign Office reconsider its position on Iran, and in particular the IRGC?

[Lord Ahmad of Wimbledon (Con)]

My Lords, as my noble friend knows, we have taken a very firm line on Iran and sanctions. As the Minister responsible for Iran within the FCDO, I can say that we have taken a forward-leaning position on ensuring that Iran is held accountable for its actions. I agree with my noble friend that it is appalling that drones have been supplied directly by Iran. It is also interesting to note that Russia is now looking to the likes of Iran and the DPRK, both countries themselves subject to sanctions. I hear what the noble Lord, Lord Coaker, is saying from the Front Bench about the IRGC—that is why God has given us two ears: one for the questioner and one for the Labour Front Bench. Of course, I cannot speculate on future proscription, but I assure noble Lords that we keep all tools under review.

[Lord West of Spithead (Lab)]

Did our Prime Minister raise with Mr Modi the fact that India is still importing a large amount of Russian oil that is then being mixed with other oils, and so it is difficult to identify, and resold on the international markets? This is dangerous in a number of ways. First, it supports Russia, but, secondly, we are getting a plethora of very dangerous tankers—I got ships in—around the oceans of the world, which is a real problem.

[Lord Ahmad of Wimbledon (Con)]

Tankers—as I know from the definition at school—count as ships, so, again, awards must go to the noble Lord. The Prime Minister had wide-ranging discussions with all G20 partners and during his bilateral with Prime Minister Modi. As the noble Lord will be aware, Russia and its illegal war on Ukraine were among a number of points that the Prime Minister raised directly with Prime Minister Modi.

National Crime Agency: Fraud and Economic Crime

Monday 11th September 2023 Lords Chamber

Question

14:58

Asked by

[Lord Browne of Ladyton]

To ask His Majesty’s Government what is the total number of National Crime Agency staff dedicated to the prevention or investigation of (1) fraud, and (2) economic crime.

[The Parliamentary Under-Secretary of State, Home Office (Lord Sharpe of Epsom) (Con)]

My Lords, due to operational sensitivity and flexible deployment of resources in response to demand, it is not possible to provide a precise figure of staff allocated to a particular type of criminality. However, the NCA’s National Economic Crime Centre, the NECC, leads the response to economic crime, including fraud. As of 1 August 2023, the headcount for the NECC, which brings together law enforcement agencies, government departments, regulatory bodies and the private sector, was 123.5 full-time equivalent. Many other teams across the NCA also contribute to the investigation of economic crime, in addition to the NECC.

[Lord Browne of Ladyton (Lab)]

My Lords, the only way to assess the adequacy or otherwise of resources devoted to battling fraud, which was assessed last year to cost this country £219 billion, and economic crime—I understand that the Government’s own assessment is that this costs the country between £300 billion and £350 billion—is to look at the results. Will the Minister tell the House how many investigations the NCA has conducted in each of, or even one of, the last three years? How many cases of fraudsters targeting the UK from abroad have resulted in any criminal justice outcome and how many in any form of disruptive action? If he cannot do that, can he tell us how many investigations the Government expect it to conduct this year?

[Lord Sharpe of Epsom (Con)]

Significant resources are being allocated to the NECC to improve its investigatory capabilities. It will end up with an additional 400 new officers dedicated to tackling fraud; some of those will go to the NCA, some to the City of London Police and some to regional and organised crime units. They will be recruited by March 2025. There are also 475 new highly trained financial crime investigators, partly funded by the economic crime levy, who will also be spread across intelligence, enforcement and asset recovery at key agencies. I will not speculate as to their likely success, but I certainly hope they have some.

[Lord Hogan-Howe (CB)]

My Lords, has the time not come to simplify the investigation of fraud? As the noble Lord, Lord Browne, suggested, the crimes are massive and the response is weak, even with the investment the Government are about to make. The problem with local forces investigating is that violence always trumps theft, so resources are devoted more to violence. At the moment, the complex nature of the crime—crypto, cross-jurisdictional, online—is complicated further by a 43-force response, regional units, NCA, SFO; I could go on. Surely the time has come to have one force dedicated to prevention, detection and the recovery of assets.

[Lord Sharpe of Epsom (Con)]

My Lords, the noble Lord will be aware that the City of London Police partially fulfils that function. It prioritised investigators to the City of London as part of its recent increase in the numbers of police. Angela McLaren, the commissioner there, has a strong background in economic crime and its investigation, and the City of London Police runs an economic crime academy. The noble Lord makes an interesting point about having just one agency, but that agency is the National Economic Crime Centre, which co-ordinates all the various activities across the various police forces, including regional organised crime units.

[Lord Clement-Jones (LD)]

My Lords, given that the UK cyber industry plays a critical role in supporting law enforcement to tackle cyber-enabled fraud, when will the Government reform the Computer Misuse Act so that the cyber industry does not face legal jeopardy for protecting our citizens and businesses online? Is it not high time that the Home Office came to a conclusion on its review?

[Lord Sharpe of Epsom (Con)]

My Lords, I cannot speculate on that Act but the anti-fraud champion, Anthony Browne MP, has been having some close engagement with industry. An online sector charter—which I appreciate is not entirely the same thing but is certainly related—is due to be published in the autumn, so we should watch and wait for that.

[Lord Hunt of Kings Heath (Lab)]

My Lords, Hourglass, the charity particularly concerned with abuse of older people, has drawn attention to the problems of economic crime and financial abuse that affect many older people. Is this being taken forward by the agency as an area that it needs to give more attention to?

[Lord Sharpe of Epsom (Con)]

The noble Lord makes an extremely good point that we should not forget the victims of economic crime. I want to make two points here. First, the fraud strategy looks at three aspects of this crime: pursuing the individuals doing it, empowering people to avoid it—which takes in the victims the noble Lord describes—and preventing the scams and whatnot taking place in the first instance. Secondly, as the noble Lord will be aware, Action Fraud is being redesigned, which will help. Already, anybody who reports to Action Fraud where vulnerabilities are detected will receive a bespoke counselling service after they have engaged with it.

[Lord Faulks (Non-Afl)]

My Lords, the Minister will know well that one of the themes that emerged during our debates on the Economic Crime and Corporate Transparency Bill was the inequality of bargaining power that often existed between the agencies that have to pursue fraudsters and those fraudsters, who were often heavily lawyered-up to enable them to resist any applications. One of the initiatives brought forward by this Government under the Criminal Finances Act was unexplained wealth orders. Can the Minister explain why they have been used on so few occasions? Is it because of lack of resources? Is it because of the risk on costs? What other explanation is there for such a powerful potential weapon not being utilised?

[Lord Sharpe of Epsom (Con)]

The noble Lord will be aware, from other conversations that we have been having around the various aspects of the Bill that will go through the House this afternoon, that the agencies tell us they are appropriately resourced. I cannot account for the small number of UWOs that have been issued, but I will continue to keep it under review and report to the noble Lord.

[Lord Coaker (Lab)]

My Lords, my noble friend Lord Browne made a really good point about the number of people investigating fraud, because people generally feel that fraud is given a very low priority. The Government themselves have said that in recruiting people there is a particular need to understand that the type of person with the sorts of skills that need to be recruited may be different from the normal crime-fighting model that we have. They have also said that they are taking steps to address that, particularly in respect of cybercrime. Can the Minister update us on what the Government are doing to recruit people with the necessary skills in this area?

[Lord Sharpe of Epsom (Con)]

The noble Lord makes a good point, and I think he is aware of my opinions on this subject. Clearly, it is a difficult area for the entire economy—not just the agencies responsible for fighting crime but those who are involved in the online world where, of course, much of this crime takes place. I have referred to the large number of new officers being recruited; as far as I understand it, they are on track to be recruited according to the timescales that have been set out. I cannot really comment any more on the recruitment process itself, but I will certainly ask the question and come back to the noble Lord.

[Baroness Ritchie of Downpatrick (Lab)]

My Lords, what steps will the Government take to introduce a safer ageing strategy for older people to protect them against economic crime and fraud?

[Lord Sharpe of Epsom (Con)]

I just referred to the fraud strategy that was published in May this year, a sizeable part of which is about empowering people to avoid being defrauded in the first place. I recommend that the noble Baroness refers back to that; of course, I would be happy to discuss it further in future debates.

[Lord Lexden (Con)]

My Lords, would the National Crime Agency not be in a stronger position today had it not appointed as its director-general of operations Mr Steve Rodhouse, who is currently suspended from his normal duties while he is investigated for gross misconduct as head of the infamous Operation Midland, through which our former colleagues Lord Bramall, Lord Brittan and others were hounded mercilessly over allegations made by a fantasist? Is it not shocking that, so far, of all those found culpable by Sir Richard Henriques after his independent inquiry seven years ago, Mr Rodhouse alone has been the subject of a disciplinary process?

[Lord Sharpe of Epsom (Con)]

My noble friend asks a good question. It is one that I am unable to answer; I cannot speculate as to whether it would have had that much operational impact on the National Crime Agency. I go back to the point I made earlier: the NCA is well resourced and its budget has increased year on year since 2019. I do not believe that it should have had any impact, but my noble friend is entitled to his point of view.

[Lord Sikka (Lab)]

My Lords, can the Minister say something about why and how the Government protect those who engage in economic crime and fraud? Let me refer to an example. The Bank of Credit and Commerce International was closed in July 1991 after the biggest banking fraud of the 20th century. To this day, there has been no independent investigation. Through litigation against the Treasury, I obtained one document, codenamed the Sandstorm report, which shows that the Government are protecting al-Qaeda, arms and drug smugglers, murderers and others who committed fraud through that bank. I invite the Minister to place a copy of the Sandstorm report in the Library of the House and, if he will not, to explain what is so secret that it cannot be made public.

[Lord Sharpe of Epsom (Con)]

I will not place a copy of that report in the Library. I am afraid that I am not qualified to speak on events from 32 years ago.

Afghanistan: Aid for Women

Monday 11th September 2023 Lords Chamber

Question

15:09

Asked by

[Lord Watson of Wyre Forest]

To ask His Majesty’s Government what steps they have taken to aid and support the women of Afghanistan since the departure of United Kingdom armed forces.

[The Minister of State, Foreign, Commonwealth and Development Office (Lord Ahmad of Wimbledon) (Con)]

My Lords, we prioritise support for women and girls in response to the Taliban’s repression. We have repeatedly urged the Taliban to reverse harmful policies. I assure the noble Lord that we raise these issues internationally. I regularly meet Afghan women and leaders to hear their concerns directly. Since April 2021, the Government have disbursed more than £532 million to Afghanistan, giving 2.3 million women access to food, healthcare and other essential assistance. At least 50% of beneficiaries of UK aid are women and girls.

[Lord Watson of Wyre Forest (Lab)]

I thank the Minister for that Answer. However, the Taliban have targeted women and girls by using decrees which place severe restrictions on freedom of movement, expression and association, prohibitions on virtually all forms of employment and bans on secondary and higher education, as well as permitting arbitrary arrests and violations of the rights of liberty. Taken together, that is arguably a crime against humanity based on gender, so what further actions can the Government take to support women human rights defenders who seek safe passage to the UK because their lives are under grave threat?

[Lord Ahmad of Wimbledon (Con)]

My Lords, I believe that I speak for most noble Lords but I believe on a point of principle that the humanitarian support that we have given to the people of Afghanistan, supported by Pakistan, Uzbekistan and other near neighbours, has been the right approach. We cannot discard over 36 million people. We have also sought to provide support for those who are most vulnerable, those who work directly with the United Kingdom, through the various schemes that we have run—the ACRS pathway 3 and the ARAP. Those schemes support their access to the United Kingdom, particularly Chevening scholars working within the security firm GardaWorld but also those who worked within the British Council. That still is work in progress on year 1.

There is a lot more that we can do but we directly address the Taliban and say that what they are doing is not just against our assessment of human rights but against the assessment of the very faith that they claim to follow. Rights of women are human rights and the Taliban need to uphold them.

[Baroness Hodgson of Abinger (Con)]

My Lords, I thank the Government for the moral support that they have offered to the Afghan women so far, particularly my noble friend the Minister, who has consistently met them. However, can he please tell me how the UK Government will help those Afghan women to be part of any international talks and able to play a part in the future of their country?

[Lord Ahmad of Wimbledon (Con)]

My Lords, I thank my noble friend for her kind remarks. As I say, it is about doing your job, but I pay tribute to her and to all other noble Lords who have worked collectively on this important agenda. There is no easy solution, but I assure my noble friend that we are working directly with leaders from various representative groups of women in Afghanistan and more broadly too. We continue to engage with key personnel on the ground in Afghanistan who were previously involved within administration while it was still functioning, but equally we are working with key international partners, notably Indonesia and Qatar among others, to ensure that the issue of Afghanistan is kept on the front burner and that inclusivity—the restoration of women’s rights and all rights, including minority rights—is not forgotten.

[Baroness D'Souza (CB)]

My Lords, the Minister will be aware of the growth of cluster education, or cluster classes, whereby groups of secondary school girls gather in neighbourhood houses and qualified teachers visit them. The scheme with which I am involved is now educating upwards of 1,000 girls in three provinces in Afghanistan. In a very few cases, local Taliban commanders have asked whether their daughters can join those classes. Is this something that the UK Government would support, since it is often difficult for those international aid agencies operating in Afghanistan to do it as it runs right across the policy of the Taliban? Maybe the UK has got a channel for funding this kind of education.

[Lord Ahmad of Wimbledon (Con)]

My Lords, recognising the important work that the noble Baroness has done, of course we fully support such initiatives. As she will know all too well, we protect the agencies that we work with on the ground to allow them to continue their important work, particularly when it comes to girls’ education. In our general assessment, there are now six to eight regions within Afghanistan where, because of the fragmented structure of the Taliban, there are initiatives which allow health access but also allow women in certain respects to go to work and allow girls to be educated.

[Baroness Hussein-Ece (LD)]

My Lords, I also pay tribute to the Minister, who has personally worked tirelessly to help Afghan refugees fleeing the brutality of the Taliban. His commitment is well documented.

Do the Government accept that the deteriorating situation for Afghan women, as we have heard, amounts to gender persecution, which is a crime against humanity? This has happened in plain sight of the world over the last two years. What global support is taking place, such as we had in 2001 when the world rallied behind the cause of Afghan women? If Afghan women’s rights were important in 2001, surely they are just as important in 2023? What support is taking place globally to bring this gender apartheid, or gender persecution, to an end?

[Lord Ahmad of Wimbledon (Con)]

My Lords, recognising the important work the noble Baroness has done in this respect, I think I speak for everyone in saying that what is happening in respect of the rights of women and girls in Afghanistan is abhorrent. It is against the very traditions of the faith that the Taliban claim to follow; it is not right, it is simply wrong. That is why we are working with key partners within the Islamic world—for them to seize back the narrative on empowerment of women and girls’ rights and education. On our specific support, we are working with key agencies. I have already alluded to the figures but—just to share with the noble Baroness—we are supporting 4.2 million people with food assistance, of whom 2 million are women and girls. The issue of nutrition is high on our agenda, as well as empowering them through education.

[Baroness Coussins (CB)]

My Lords, can the Minister tell the House how many Afghan interpreters who have been relocated to the UK have wives still awaiting security clearance in Afghanistan so that they can join their husbands here, as they are entitled to do? They are very likely to be living in vulnerable situations while they wait; even living in hiding. Perhaps the Minister could write to me if he does not have this figure to hand today.

[Lord Ahmad of Wimbledon (Con)]

My Lords, I assure the noble Baroness that I keep abreast of figures on a weekly basis, but I do not go into specific details at the Dispatch Box for the sole reason of protecting those vulnerable individuals. We have seen a large number of interpreters arrive in the UK and there is an issue about supporting family members. Where I can, I will share the specifics with the noble Baroness.

[Baroness Kennedy of The Shaws (Lab)]

My Lords, perhaps by a slip of the tongue the expression “gender apartheid” was just used by a previous speaker. Increasingly, that terminology is used by Afghans who are here in exile, by the international community and by lawyers. A great deal of research has been done in support of it by South African lawyers, because apartheid means denial of participation in society—keeping apart. I wonder whether that is language that is accepted, and might be used by, the Foreign Office and whether the full force of the Foreign Office could be put behind amending the Rome statute so that it included gender apartheid as a crime against humanity.

[Lord Ahmad of Wimbledon (Con)]

My Lords, the noble Baroness with her legal background has far more insights into the technicalities and changes that she is proposing, but I can say to her that what is happening to women and girls in Afghanistan is nothing short of abhorrent and we need to do our utmost to ensure that we stand up for their rights and afford them the protections that we can. I assure the noble Baroness that we are working in a very focused manner on that objective.

[Lord Swire (Con)]

My Lords, regrettably but perhaps understandably, there are still a large number of women in neighbouring countries, not least Pakistan, waiting to find somewhere to start their lives again. Many are former high-ranking officials, human rights defenders, policewomen or women connected to the police and politicians. Can my noble friend the Minister, who I know takes an enormous interest in these matters and I congratulate him on so doing, reassure this House that none of those women will be forcibly repatriated to Afghanistan against their will? If they are, many of them will meet a bleak future.

[Lord Ahmad of Wimbledon (Con)]

My Lords, I thank my noble friend for his remarks and I assure him that we are working very closely with the neighbouring Governments to Afghanistan, particularly Pakistan. Notwithstanding the change of Administration in Pakistan, they have been very supportive of our efforts to sustain and retain the people who have sought refuge there while their immigration status is finalised. Vulnerable women and girls are at the forefront our work in that respect.

Offshore Wind

Monday 11th September 2023 Lords Chamber

Private Notice Question

15:19

Asked by

[Baroness Bennett of Manor Castle]

To ask His Majesty’s Government what steps they plan to take to ensure the continued development of the offshore wind industry following the failure to attract bids in the latest Contracts for Difference round.

[The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)]

My Lords, the Government are disappointed that no offshore or floating offshore wind projects secured contracts for difference in the most recent allocation round. The results provide valuable learning for subsequent auctions. Work has already started on allocation round 6, incorporating the results of the recent round, and we look forward to a strong pipeline of technologies participating. The Government remain fully committed to our target of decarbonising the power system by 2035 and to our ambitions for 50 gigawatts of offshore wind, including up to 5 gigawatts of floating wind.

[Baroness Bennett of Manor Castle (GP)]

I thank the Minister for his Answer, but can we really wait? Look at what has happened in other countries: for example, Germany had a similar experience in December then, in the subsequent two quarters, lifted its price cap and increased its number of bids by several times. In the US, Massachusetts had a failure and New York is now considering petitions to offer a higher price. This is the low-cost, low-carbon alternative: the industry is now suggesting that there is a 24-gigawatt gap for the 2030 target. Surely the Government should be taking immediate action in the shorter term to fix this problem of their own creation, given that this was widely predicted to happen before the contracts closed.

[Lord Callanan (Con)]

I am happy to hear the noble Baroness be so cavalier with bill payers’ funds; she is, in effect, talking about increasing the strike price. It is always difficult for the Government to strike the right balance: we want to get the best value possible for bill payers, as opposed to providing sufficient revenue for the companies to build. I obviously know which side the noble Baroness is on but I want to be on the side of the bill payer. We have already secured the largest offshore wind sector in Europe by far; she quotes the example of Germany, which should be very jealous of the amount of offshore wind capacity that we have. We secured almost 7 gigawatts in the last allocation round and, in this round, secured 91 projects with other technologies. There is a viable long-term pipeline of about 77 gigawatts of wind available to this Government and we will take advantage of it, but we will make sure that we do it at the right price for consumers.

[Lord Deben (Con)]

My Lords, I am on the side of bill payers. The problem is that they will have to pay more, because we will not have the renewable energy that we would have had and will have to use more expensive gas instead. This was the Government’s fault; everybody warned that the reserve price was too low. But let us forget the past. Why can emergency legislation not pass through the House, which I am sure would be supported by all sides, so that we can replay this very quickly for the bill payer?

[Lord Callanan (Con)]

The bill payer will be very grateful that 7.5 gigawatts of construction is already under way, as we speak. We all want to see more, but at the right price. I understand why industry is urging us to pay more for this. That is understandable and in its commercial interests, but I would have expected most Members of this House to be on the side of bill payers as well. We can do both: we can get a good deal for the bill payer and take advantage of the many gigawatts of potential construction in there, which has either been consented or is under consent. Following a contract being let, it takes three to four years, on average, for the capacity to come on stream. Obviously, the capacity let in previous rounds is coming on stream gradually, as we speak. As I said, we consented to about 7.5 gigawatts in the last round. There will be another auction in about six months and it would take almost that long to pass new legislation.

[Baroness Walmsley (LD)]

My Lords, what assessment have the Government made of the increase in potential of both productivity and profitability for wind power companies to fit turbines to the base of their installations, where conditions allow, to take advantage of tidal energy, which provides a baseload. What support are the Government giving companies prepared to do that?

[Lord Callanan (Con)]

The noble Baroness asks a very good question. Eleven tidal stream projects were consented in this allocation round, totalling about 41 megawatts. The price for that is currently higher but we need to develop this technology. I hope, as has been the case with offshore wind, that if we continue to let more CfDs the price will continue to come down over time. That was one area of the round that was successful.

[Lord Lennie (Lab)]

My Lords, given the Government’s monumental failure—and they were warned about it, as has been said around this House—to attract any interest whatever from the energy sector in their recent CfD bidding process for offshore wind projects, can we assume there will not be any similar complacency when it comes to developing onshore wind projects, which, in light of the current failure, must now be the Government’s priority towards achieving net zero?

[Lord Callanan (Con)]

Again, there is no complacency. I understand that there are many projects wanting the go-ahead, but we must be careful in making sure that the consumer gets a fair deal. Lots were consented to last year; I am sure that lots will be consented to in the future. The noble Lord talks about onshore wind. I am pleased to tell him that 24 onshore wind projects were consented to and were successful in this round, totalling 888 megawatts.

[Lord Naseby (Con)]

Is my noble friend aware that a number of us have taken an interest in this market, recognising the enormous steps that His Majesty’s Government have taken on the development of offshore wind? At a time when it is stated that we are facing a possible bill of £65 billion to replace the internal grid to all our homes in the United Kingdom, is it not more appropriate that the resources we do have should be used for research such as that into the mix of hydrogen with LPG to see whether it can be used in the existing pipelines available to every house in the country?

[Lord Callanan (Con)]

The noble Lord asks a lot of different questions within what he said. I think his figure of £65 billion refers to the cost of upgrading property to EPC level C, which is a long-term aim. His separate question on hydrogen for heating is indeed a controversial subject. We will make a decision on whether to go ahead with a hydrogen village trial by the end of the year. Similarly, another issue facing us is whether to allow blending of hydrogen into the gas network; you can blend up to about 25% with the current network. Again, that is an issue where, frankly, there are a lot of pros and cons on both sides of the argument. We will make a decision on that by the end of the year as well.

[Lord Harries of Pentregarth (CB)]

The next round comes in six months’ time. Are the Government confident that the price will be set at the right level to attract a good number of significant bids?

[Lord Callanan (Con)]

Of course, that will be our aim. As I said, we want to see more projects consented to and we will try to get the balance right. We will certainly learn the lessons from this round. It is obviously disappointing that we did not attract bids this time, but the offshore wind industry has been a tremendous success for the UK. We have by far the largest capacity in Europe. We have the largest offshore wind farm in the world, the second largest, the third largest and the fourth largest. One reason that developers were unable to proceed this time was pressure in the supply chain. There is pressure in the supply chain because every other country in Europe wants to copy our example, because they can see the success we have made of the offshore wind allocation rounds through the contracts for difference price system. Most other European countries are trying to adopt the same model; they are a long way behind us but trying to adopt the same model now. Of course, that brings pressure in the supply chain, which, adding in the Covid pressures as well, contributes to the increase in costs that industry is experiencing.

[Lord Trefgarne (Con)]

My Lords, is it not the case that wind-generating facilities in the North Sea tend to cause mayhem with the wild bird population? Can anything be done about that?

[Lord Callanan (Con)]

My noble friend certainly highlights a concern, but lots of protections are built in and lots of environmental regulations need to be adhered to when these projects are consented to and all the matters are gone into fully, in both environmental and regulatory permitting. Every energy source has its drawbacks. Those who are against nuclear would point to its drawbacks; with coal-fired power stations, there are obviously drawbacks; gas-fired power stations have their drawbacks. There has been an increase in new solar farms being developed in the UK. I can assure noble Lords that, from my postbag, lots of people write in to complain about those as well. We have to get generation capacity and electricity supplies from somewhere. No system is absolutely perfect but offshore wind is certainly one of the best.

[Baroness Sheehan (LD)]

My Lords, it is unacceptable that last week’s offshore wind auction was a failure because of the Government’s insistence on an unrealistic strike price, yet we remain none the wiser about the cost of another source of electricity—nuclear energy. The cost of Sizewell C’s electricity remains shrouded in secrecy. The only thing we can be sure of is that it will be exceedingly expensive. The Commons Science, Innovation and Technology Committee has called for greater transparency on Sizewell’s cost. Will the Minister take this opportunity to give an updated cost estimate for Sizewell C? We need to be sure that we are on a level playing field.

[Lord Callanan (Con)]

I will be happy to supply those figures to the noble Baroness in writing if I can. Again, it is worth saying that, in a diversified energy system, it is important to have different sources of supply. I am very enthusiastic about solar and offshore wind; they are intermittent but they are cheap when they are generating. We also need baseload supply, so there will a role for nuclear and for gas-fired power stations, ideally with CCUS fitted as well. It is important that we have diversity of supply, including such things as tidal on a relatively small scale. Geothermal is another technology that was successful in getting contracts under this allocation round. Again, these are nascent technologies that are starting to build up. We need diversity of supply for our future generating mix.

[Lord Cormack (Con)]

My Lords, I agree with my noble friend that Britain is a world leader in offshore wind; he is right to boast gently about that. But he also said that lessons would be learned from what has just happened. Is my noble friend Lord Deben not right that we got it wrong—and that we must make absolutely sure that in six months’ time we get it right?

[Lord Callanan (Con)]

I have said that lessons will be learned. As I said, there is a healthy stream of projects wanting to come forward. Understandably, the developers want to be paid as much as possible. The unique thing about offshore wind is that it involves very high initial capital investment costs. Once the things are built, they are relatively cheap to operate, unlike some other sources of generation. It is all about providing long-term guarantees of revenue for those developers. There is always a process of negotiation; the CfD auction rounds have been successful in the past and I am sure that they will be in the future.

[Baroness Hayman (CB)]

My Lords, I declare my interest as chair of Peers for the Planet. The Minister recognises that the offshore wind industry raised these issues some time before this round of contracts for difference. The Government did not listen and we have the results with offshore wind, as we have seen. At this time, the onshore wind industry is saying to the Government that the, frankly, puny changes in the planning regime that they announced will not bring forward the large-scale increase in onshore wind production in this country. Will the Government listen in time this time and put the planning regime for onshore wind on a level playing field with other renewable infrastructure?

[Lord Callanan (Con)]

I know that the noble Baroness is passionate about onshore wind. I hope the changes that we announced will produce more capacity. As I said, we have just let 24 projects under the latest CfD round. She is right that the industry said in advance of this round that it wanted to be paid more. Across all the different areas of government for which I have been responsible, I have never met a private developer who want to be paid less for what they do. Let us be realistic: this is a negotiation process. Of course, industry will say, “We need to be paid more; we need to be given larger contracts”. That is entirely understandable. We have to bear in mind our responsibility to the bill payer who ends up paying these costs. We of course want to see more renewable capacity laid out—it is intermittent but it is cheap. We need to produce a strike price that is fair to the developers, so that they get a return, but also to the bill payers.

[Lord West of Spithead (Lab)]

My Lords, the Minister is right that we should praise ourselves for the offshore wind farms, which I must say are most impressive. However, the interconnectors and so on lie along the seabed. Like so many other aspects of our energy supply and other things, the seabed has certain vulnerabilities. We have seen Russian ships from the main directorate of undersea research regularly in the North Sea, going along areas where these lie. Is the Minister happy that we have put enough effort into monitoring and tracking where they are all the time and then using ships, aircraft and whatever else to go and make sure that those lines are still safe?

[Lord Callanan (Con)]

The noble Lord makes a good point. There are a number of such areas of critical national infrastructure, including gas-interlinking pipelines and electricity interconnector cables with other countries, as well as our interconnector cables with the offshore wind farms. These are all critical vulnerabilities and the noble Lord can be assured that we monitor these things closely. We are well aware of the possible threat presented to them.

Business of the House

Monday 11th September 2023 Lords Chamber

Motion to Agree

15:35

Moved by

[Lord True]

That Standing Order 44 (No two stages of a Bill to be taken on one day) be dispensed with on Thursday 14 September to allow the Northern Ireland Budget (No. 2) Bill to be taken through its remaining stages that day.

Motion agreed.

Northern Ireland (Ministerial Appointment Functions) Regulations 2023

Monday 11th September 2023 Lords Chamber

Motion to Approve

15:35

Moved by

[Lord Caine]

That the Regulations laid before the House on 10 July be approved. Considered in Grand Committee on 7 September.

Motion agreed.

Economic Crime and Corporate Transparency Bill

Consideration of Commons amendments
Monday 11th September 2023 Lords Chamber

Commons Amendments and Reasons

Scottish and Welsh Legislative Consent granted, Northern Ireland Legislative Consent sought.

15:36

Motion A

Moved by

[Lord Johnson of Lainston]

That this House do disagree with the Commons in their Amendment 23A and do propose Amendments 23B and 23C in lieu—

23A: As an amendment to Lords Amendment 23, leave out lines 84 to 96

23B As an amendment to Lords Amendment 23, in the text inserted by subsection (5) of the new Clause, leave out section 113C (required information about members: nominees)

23C: As an amendment to Lords Amendment 178, in the text to be inserted, after paragraph 12A insert—
“12B After section 790I insert—
“Power to impose further duties
790IA Power to impose further duties involving nominee shareholders
(1) The Secretary of State may by regulations make further provision for the purpose of enabling a company to which this Part applies to find out about anyone who has become or ceased to be a person who is—
(a) a registrable person in relation to the company by virtue of shares being held by a nominee, or
(b) a registrable relevant legal entity in relation to the company by virtue of shares being held by a nominee.
(2) The regulations may, in particular—
(a) impose obligations on a company with a view to obtaining—
(i) information about whether a person has become or ceased to be a nominee shareholder;
(ii) if they have, information about: (A) the shareholding; (B) the nominee; (C) the person for whom the nominee holds or held the shares;
(iii) any other information required by the regulations;
(b) impose obligations on others (including nominees or former nominees) with a view to providing the company with—
(i) information of a kind described in paragraph (a)(i)
or (ii);
(ii) any other information required by the regulations.
(3) The regulations may, in particular, make provision similar or corresponding to any of the preceding provisions of this Chapter.
(4) The provision that may be made by regulations under subsection (1) includes provision amending this Chapter.
(5) Regulations under this section are subject to affirmative resolution procedure.””

[The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)]

My Lords, I shall also speak to Motions B, C, D and D1. I thank noble Lords for their extraordinarily high level of constructive input over the last few days as we have come to this point. I believe that together, across the House, we have created a truly powerful piece of legislation that will have a meaningful impact on how Companies House operates, how we deal with financial crime and how we make our system safer and cleaner.

I should declare my interests. I have interests in limited companies and other companies, but I do not believe there is any conflict of interest in this process today.

Motion A relates to Lords Amendment 23, tabled on Report by the noble Lord, Lord Vaux of Harrowden, which would require members of all UK companies to declare whether they were holding shares on behalf of, or subject to the direction of, another person or persons as a nominee and, if so, to provide details of the person or persons. We have been in conversation over the last few days about that amendment. While we understand the intention to tackle what we perceive to be an industry of nominee service providers prone to acting unlawfully, I am afraid we do not believe that the amendment is the appropriate way to achieve that goal.

However, the Government, via Motion A, have therefore tabled Amendments 23B and 23C in lieu of Commons Amendment 23A. I hope that is making sense to the noble Lord. The new amendments allow the Secretary of State to make regulations to make further provision for the purpose of enabling a company to find out who its PSCs are—that is, people of significant control—in cases where shares are held by a nominee. That could include, among other things, imposing further obligations on companies to find out if they have nominee shareholders and, if so, for whom they are holding shares, or imposing further obligations on nominee shareholders to disclose their status and for whom they are holding shares.

It is important that we make it clear that the reason for tabling the new amendments rather than accepting the noble Lord’s revised amendment is that we are slightly wary of imposing disproportionate burdens on business. There are a vast variety of nominee types which we need to make sure we have taken into account when ensuring that we are getting the right information from the right types of nominees. As I have said to the noble lord—at this Dispatch Box, I believe—the commitment in principle to try better to understand the route between the nominee and the beneficiary is an important one. We want to do it in the right way, and these amendments would give the Secretary of State the powers to do that. I hope that the noble Lord can agree that that is the right approach to take and, assuming that is so, can support the Government in this new amendment and consider withdrawing his own.

I turn to Motion B.

[Lord Agnew of Oulton (Con)]

My Lords, I apologise to my noble friend the Minister. I had been told that I needed to address my Motion D1 while Motion A was under discussion. I am very happy to wait but those were the instructions I had from the Table. Would anyone like to clarify?

[Lord Johnson of Lainston (Con)]

I am told that I should continue, and we will hear from my noble friend at a later stage—which I welcome and look forward to greatly.

Motion B is a technical Motion that allows the power to modify who is able to file with Companies House on others’ behalf, to ensure it is consistent for all types of filings. I hope the House is assured that these amendments are minor but sensible modifications to the Bill.

Motion C relates to Lords Amendment 115, also tabled by the noble Lord, Lord Vaux, at Report. This will introduce two new duties for overseas entities, the first requiring event-driven updates on beneficial ownership information, and the second requiring overseas entities to update their records no more than 14 days before the completion of a land transaction. We believe that requiring event-driven updates for the Register of Overseas Entities will not work in principle. I would like to reassure noble Lords that we have done an enormous amount of highly collaborative work with the noble Lord, Lord Vaux, on this issue. We are concerned that this would create additional risk for purchasers of properties involved with overseas entities. However, as I hope I have made clear to noble Lords, we are extremely committed to working further on this subject. The Government commit to keeping under review the question of the update period for the Register of Overseas Entities. That is extremely important, and I personally commit to that on behalf of the Government. We will have more evidence at our disposal as the first set of annual updates comes through. If we felt it necessary to change the reporting requirements, and if there were not the risks that we feel may be presented by the noble Lord’s proposal, then we would look to consult on that. For that reason, we will not be supporting that amendment.

I turn to Motion D, which my noble friend Lord Agnew will then speak to. Again, I am very grateful to my noble friend for his extraordinarily high level of commitment to making sure that the Economic Crime and Corporate Transparency Bill is genuinely powerful legislation that will enable us to achieve the goals we wish to achieve. Ultimately, transparency is at the core of our ambition. However, we are concerned, in that his amendment would make information about trusts submitted to the Register of Overseas Entities publicly available by removing it from the list of material listed as unavailable for public inspection. I note that my noble friend has also tabled a further amendment.

However, it is important to come back to these points, because they are very relevant to our ambitions. We are resolute in saying that we will not unilaterally change the rules relating to these trusts, and I think Members of the House understand why. However, we have committed already to launching a full public consultation before the end of the year on how we can further improve the transparency of trust information. Following further discussion with my noble friend, I would like to make it clear that the public consultation to which we are committed is a separate exercise from the commitment to make regulations that I have discussed already. The consultation will look at the case for broader transparency regarding trusts. The Government’s ambition is to increase and improve transparency. We commit absolutely that we will undertake this consultation and that it will be launched before Christmas of this year and run for no more than 12 weeks. That is in line with discussions we had with my noble friend.

I reassure my noble friend that Ministers across departments are committed to meeting this deadline and acting swiftly on the consultation’s findings. I would be very happy to meet with my noble friend, and indeed any noble Lords, soon after the consultation closes to discuss how we can move forward at pace. We therefore oppose my noble friend’s amendment, but I hope he can take the commitments I have made today at the Dispatch Box as sufficient reassurance to persuade him to withdraw his amendment. I beg to move.

15:45

Motion A1 (as an amendment to Motion A)

[Lord Vaux of Harrowden]

Moved by

Leave out from “House” to end and insert “do agree with the Commons in their Amendment 23A, and do propose Amendment 23D to Lords Amendment 23 in place of the words left out by Amendment 23A—

23D: Line 83, at end insert—
“113C Required information about members: nominees
If a member holds 5% or more of the share capital or voting rights of the company, the required information about a member includes a statement by the individual, or where the member is a body corporate, or a firm that is a legal person under the law by which it is governed, by an officer of that body corporate or firm, as to whether or not they are holding the shares on behalf of, or subject to the direction of, another person or persons, and if they are—
(a) where any such person is an individual, and the shares held on that person’s behalf or subject to their direction amount to 3% or more of the share capital or voting rights of the company, the information required by section 113A in relation to that individual;
(b) where any such person is a body corporate or firm that is a legal person under the law by which it is governed, and the shares held on that person’s behalf or subject to their direction amount to 3% or more of the share capital or voting rights of the company, the information required by section 113B in relation to that body corporate or firm; or
(c) a statement that the member is not holding shares on behalf of, or subject to the direction of, such person that amount to 3% or more of the share capital or voting rights of the company.””

[Lord Vaux of Harrowden (CB)]

My Lords, I hope that Motion A1 is clear. Before I start, I remind the House of my interest as a non-practising chartered accountant.

On Report, your Lordships agreed Amendment 23, which included a requirement that shareholders should have to state whether they are holding shares on someone else’s behalf and, if so, on whose behalf they are holding them. This requirement was rejected, as we have heard, by the other place. Motion A1 aims to reverse that, while trying to take on board some of the matters raised in debate in the other place. If I may, given that the debate we had in this House was now some months ago, I will briefly remind the House of the issue that that amendment was trying to resolve.

One of the easiest ways to hide the true identity of an owner of a company is to use a nominee—somebody whose name will appear on the register of members but who is in fact acting under the instruction of and for the benefit of the actual beneficial owner. A substantial industry has grown up to provide these nominee services. There are of course legitimate reasons for using a nominee, such as an asset manager holding and managing a range of shareholdings, but it is quite revealing to do a Google search of nominee shareholding services.

A near-endless list of such services appears, and these services are usually sold very clearly as being primarily about creating anonymity for the true shareholder. Let me quote from one of them:

“The beneficial owner may choose to appoint a Nominee Shareholder because they do not want to register the shares in their own name. A Nominee Shareholder is a great way to keep shareholder information away from public records”.


Another one states:

“In the United Kingdom, the purpose of using nominees is confidentiality. Because of the confidentiality requirements, owners are reluctant to associate themselves with beneficial ownership, and the practice of nominating shareholders will hide their association”.


Most nominee service providers market their services in the same vein. A few of them refer to the PSC—persons with significant control—rules or to anti-money laundering in the marketing literature, but they are very much in the minority. As I said, there are legitimate reasons for holding shares through a nominee, but not wanting to register the shares in their own name and keeping shareholder information away from public records are not legitimate reasons. In fact, that is precisely what this Bill is trying to stop.

The amendment originally passed by this House was intended to strengthen the Bill to prevent the misuse of nominees to hide the true ownership. I continue to believe that this is a very real issue and, as a result, I have tabled Motion Al, which tries to reintroduce the original amendment, but changed to reflect some of the reasons for rejecting it made in the other place—in particular, the question of undue burden that the Minister referred to a moment ago.

However, since I tabled my Motion A1, I am very pleased to say that the Government has tabled Amendment 23C within their Motion A. It shows that they now recognise that there is a genuine issue here and, in particular, that the enabling industry needs to be incentivised to clean up its act. I especially welcome the fact that proposed new subsection (2)(b) will specifically allow the Government to impose obligations directly on those who act as nominees. The real flaw in the current rules is that those enablers face no real risk at all when acting as they do. I hope that this specific mention in the Government’s Amendment 23C will cause the nominee industry to take note and clean up its act, in the knowledge that if it does not, it will face regulation.

While I would have preferred to have taken action now and introduced something in the Bill, the fact that the Government recognise the issue and are proposing a regulating power to deal with it is most welcome. I very much welcome the commitments made by the Minister a moment ago. I thank him and, given that and what he has just said, I will not press Motion A1. I thank him and his officials for their continuing very constructive engagement, which has been the case throughout the Bill. I look forward to seeing the proposed regulations before too long—he will know that I will not be dropping the issue until we see the regulations.

I shall also comment very briefly on Motion C, which moves an amendment passed in this House that aimed to fix an anomaly in the register of overseas entities, which is that it has to be updated only annually. First, I point out the reason given by the Commons:

“Because it would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason”.


That, frankly, is totally inadequate and nonsensical in this case. It has to be updated only annually. Other registers, such as the register of persons with significant control, have to be updated within 14 days of any change being identified. This anomaly means that the register of overseas entities can be up to a year out of date at any time. That introduces the risk that an innocent part might unknowingly find themselves entering into a transaction with a sanctioned person, for example.

Unfortunately, because of the way the register works in conjunction with the registration of property, this all becomes extremely complex. I thank the Law Society for its helpful and constructive engagement in many meetings over the Recess to try to find a solution to this. While we did find a possible way through, it was so convoluted as to be impractical—so I am not going to oppose the removal of this amendment, even if the issue it was trying to solve remains real.

The register of overseas entities is still in its early stage. While it has been successful up to a point, as I am sure we are going to hear from the noble Lord, Lord Agnew, there are still many properties the ownership of which is, at best, unclear. I am very pleased to hear the commitment the Minister made in his speech just now that they will keep this anomaly of annual updating under review. In the meantime, I caution any person who is buying or selling property from or to an overseas entity, or who is entering into a lease over a property with an overseas entity, to require it to be a condition of the transaction that the entity’s entry in the register is updated immediately prior to the transaction completing. Only by doing that can the innocent party know who they are actually transacting with. With that, I beg to move.

[Lord Agnew of Oulton (Con)]

My Lords, I shall speak in favour of my Motion D. I am grateful to my noble friend the Minister for his ongoing dialogue with me as we grind to the end of this Bill: he has been patient and courteous, as ever. My problem is that the Government continue to say one thing and then do something different. Just to remind noble Lords, the reason I pressed my original amendment was that a gaping hole had opened up in this newly created register of overseas interests. It is barely a year old and we have more than 50,000 properties owned by an entity whose beneficial owners are withheld from public view. That is approaching one-third of all entries. It is rapidly becoming the default advice from cute law firms to their overseas clients to use a trust structure that is opaque.

In rejecting my original Commons amendment, the Government claimed refuge behind the principle of financial privilege. This is bizarre, if not worse, but in a spirit of collaboration I will not use the word that I had planned to use. The costs to Companies House of publishing trust information are estimated on the back of an illusory envelope at between £600,000 and £2.8 million—a figure supported by absolutely no methodology—but under the Bill, Companies House funding is going to rise exponentially. The current filing fee of £13 will rise to anywhere between £60 and £90 if the guidance we have been given is followed. Taking the bottom-end number, £60 means an increase of £47 a year times 4 million companies, or £188 million a year, against this odd figure of £600,000 to £2.8 million. Even if the higher filing fees deterred some company creation or dissolution for non-viable entities, the additional cost, frankly, is a rounding error. Indeed, if the Government were to approach this logically and calculated that as a transparency cost, it would be around about 70p per registered company per year, or about 1.25%.

I give this example only because I continually worry that I get very clear assurances from the Minister but the actions taken by the Government are rather different. I accept through gritted teeth that we cannot debate that amendment as I was blocked from tabling it. This leaves us with a much watered-down proposal to try to hold the Government to account to get on with the consultation they say they need to ensure that there are no legal challenges. The Government have accepted that they need to start straightaway, in this calendar year, but they do not yet accept the principle of my proposed new subsection (2) that the consultation includes the principle of public access to protected data on a bulk basis.

This sounds arcane, but it is crucial because currently HMRC is not providing the information when requested, and it can be requested only on a case-by-case basis. As I have shown, there are already more than 50,000 hidden owners where the public are being denied the information, so doing it individually is simply not practical. I have consistently said that those with a bona fide need for confidentiality should have it, but this would be a very small proportion of the 50,000.

On the terms of the consultation, there are a couple of elephant traps that the Government should be aware of. A few years ago, when the consultation was issued to tighten up the non-dom loopholes, the lawyers’ excuse for not tightening them up was that anyone who declared non-dom status should have a reasonable expectation that it should last in perpetuity. That sounds pretty sinister to me, but apparently that argument has already been rolled out to civil servants on the issue of more transparency with trusts. I warn the Minister to be alert because, as I understand it, civil servants have already expressed their compliance with this idea. I hope that we as politicians are still running the country, not the civil servants.

We have heard from my noble friend the Minister and he has given commitments, which I very much appreciate. However, I hope he understands why I am extremely nervous: what he says and what the Government do are not always totally aligned. I will take his words exactly as he says them, though, and I ask him to keep a very careful eye on this process over the next few months. I think he has learned enough about me to know that, for all my many weaknesses, one thing I am is dogged. We will keep a careful eye on this. On that basis, I will withdraw my amendment.

[Lord Eatwell (Lab)]

My Lords, I strongly support the amendment from the noble Lord, Lord Agnew. I do this as a former chair of the Jersey Financial Services Commission. In Jersey we made a major effort to increase the transparency of trust information so that beneficial ownership could be accurately identified. One of the inhibitions for cleaning up, if you like, the register in Jersey was the behaviour of the Government in the United Kingdom, and their persistent obfuscation of the way in which trusts were to be treated.

The amendment from the noble Lord, Lord Agnew, contains exactly the process that needs to be dealt with in a consultation. I understand the assurances he may have received and that he may feel it appropriate to withdraw his amendment, but I hope he proves as dogged as we know him to be in pursuing this. I assure him of my continuing support.

[Lord Faulks (Non-Afl)]

My Lords, I also support what the noble Lord, Lord Agnew, has said and done. I am very sorry that the Government did not accept the amendment in relation to trusts. It was entirely in keeping with the purpose of the Bill, and more specifically with the purpose of the introduction of the register of overseas entities.

Some of us have been advancing the cause of this register—some would say banging on about it—for some considerable time. I had the privilege of chairing the Joint Committee on a draft Bill. We recommended legislation as soon as possible. Unfortunately, it took the invasion of Ukraine for the Government to incorporate the necessary legislation into the last economic crime Bill.

During the taking of evidence by the committee in 2019, the need to avoid trusts being used to avoid the identification of the true owner of property was specifically brought to our attention. It then became part of our recommendations that the legislation, when it came before your Lordships’ House, should cater for this obvious loophole. The Government ignored the recommendation then and have now resisted the amendment passed by your Lordships’ House.

If there is concern about minors and keeping them ignorant about their status as beneficiaries, this could have been catered for by an appropriate provision. Instead, the Government, against whom the former Lord Chancellor voted in the other place on this issue, have resorted to “financial privilege” as a means of blocking the amendment.

Trust lawyers are going to be very busy, as foreign owners will set about frustrating the purpose of the register and the aspirations that we all share for this and related legislation. I hope the Government bear that in mind.

16:00

[Lord Garnier (Con)]

My Lords, I had the privilege of being a member of the noble Lord’s committee. I agreed with what he had to say then, and I agree with what he has just said now.

[Lord Fox (LD)]

My Lords, in his opening dispatch the Minister praised those involved for the way in which the Bill has been modified and changed. The noble Lord, Lord Agnew, needs to take a lot of credit for how that modification has gone ahead, and the work that he has done and will have to continue to do in his role overseeing the Government’s response to this. I will not repeat anything that has already been said, other than to say that I agree.

The reason we are concerned about this issue is that the Government will rightfully say that they know who the names are in these trusts, but the issue we are talking about is the publication. It has been the role of civil society and journalists to uncover problems, and that has been very important in issues around this. If the Government can demonstrate that their commitment to enforcement, getting behind these trusts and exposing people who are using them to avoid issues is fully funded and fully backed by them, our relying on civil society—which we have had to do to date—would be less of an issue. That is why we support the quest by the noble Lord, Lord Agnew, on this, and will support him as he seeks to make sure that further steps are appropriate and that enforcement is at the heart of what we seek to achieve here.

[Baroness Blake of Leeds (Lab)]

My Lords, I start by thanking the Minister for the broader tidying up of the amendments in this group and by reflecting on the time, over several months, that we have been discussing these important issues. We must keep our eye on the scale of the issues that we are dealing with; they are immense, and they cost this country billions of pounds. We have a great deal to do to repair the UK’s reputation in the world, and I hope that we involved in this debate will all have our eyes on that prize.

I am pleased to say that we have seen some positive changes achieved through the passage of this Bill and a genuine appetite for change, as we experienced with our conversation with Companies House. We are going through an immense cultural change in the management of these affairs. As we know, it is the biggest shake-up for 170 years. I also pay tribute to everyone in the Chamber, and those who are not here today, for their diligence in the work that they have done, and to my colleagues in the other place, Dame Margaret Hodge and Seema Malhotra in particular. Months and months of work have gone into getting us to this place.

I am very grateful for the explanation that the noble Lord, Lord Vaux, gave. There is real recognition that there will be an ongoing need to scrutinise. I think we all accept the commitments in good faith, but we need to make it clear to Ministers and their officials that the interest is very live and that there will be close scrutiny as these matters roll up. Compromise has been reached on this—I accept that that is the reason we will not be taking the amendment to a vote—but we add our support to the ongoing scrutiny that will need to take place.

I also pay tribute to the noble Lord, Lord Agnew, for his persistence in this and his unique position having had experience in government, which has informed the approach he has taken and the concern that I think many would agree he has rightly raised. We are where we are—he has decided to accept the reassurances—but we also have an insight into those elephant traps that he referred to. I also reference the comments of my noble friend Lord Eatwell on the explicit need for vigilance.

With those comments, and thanking everyone for the spirit of compromise, I reassure everyone that we will look closely at this, and we very much hope that the measures being brought in today will be sufficient. We will look to those delegated powers that have been built in to make sure that, if change is necessary, it will indeed be made.

[Lord Johnson of Lainston (Con)]

I thank noble Lords for their contributions, including the noble Baroness, Lady Blake, for her extremely helpful and supportive comments about the overall debate. In her summation, she was right that we have, through a great degree of good faith among us all, come up with a very strong series of actions that will genuinely change the economic landscape in this country for the better.

I have had the privilege of working with my noble friend Lord Agnew for a number of months as we have come to today’s conclusion on these measures. I reiterate my personal commitment, and the commitment of this Government, to delivering on the thrust of his ambitions. On a process that came to light only recently—the issue of bulk data and its accessibility—I can commit that Companies House will do a review of how it can assess bulk data for the trusts’ information on the register of overseas entities once a consultation period has finished and it is deemed appropriate.

Ultimately, we are committed to greater transparency, and I am very grateful to my noble friend and noble Lords across the House for their understanding of our approach to how we can best achieve this without either endangering vulnerable minors or individuals or opening ourselves up to legal challenge which could derail many of the main principles of this part the Bill to which my noble friend is rightly keen to contribute.

Finally, I express my gratitude to the noble Lord, Lord Vaux, who, from the very beginning, has been a tireless collaborator in creating—with his input across the board in this section of the Bill—a truly powerful piece of legislation. It was my own personal pleasure and pride to work with him as we have come to this conclusion, and I am very grateful to him for his understanding, again, of how we believe that we can achieve our shared ambitions in what we think will be the right way.

We have made some clear further commitments today—to which I would be delighted to be held to account by my noble friend Lord Agnew and all noble Lords in the House today—to make the Economic Crime and Corporate Transparency Bill the most effective legislation it can be. I therefore invite the House to agree the government Motions in this group.

[Lord Vaux of Harrowden (CB)]

My Lords, I thank the Minister for his generous comments. I also thank noble Lords who have been so generous with their support throughout the passage of the Bill on these matters, which has allowed us to get to the point of achieving at least this compromise. With that, I beg leave to withdraw Motion A1.

Motion A1 withdrawn.

Motion A agreed.

Motion B

Moved by

[Lord Johnson of Lainston]

That this House do not insist on its Amendment 56 and do agree with the Commons in their Amendments 56A, 56B and 56C in lieu.

56A: Page 57, line 25, leave out subsection (3) and insert— “(3) After section 1067 insert—
“Who may deliver documents to the registrar
1067A Delivery of documents: identity verification requirements etc
(1) An individual may not deliver a document to the registrar on their own behalf unless—
(a) their identity is verified (see section 1110A), and
(b) the document is accompanied by a statement to that effect.
(2) An individual (A) may not deliver a document to the registrar on behalf of another person (B) who is of a description specified in column 1 of the following table unless—
(a) the individual is of a description specified in the corresponding entry in column 2, and
(b) the document is accompanied by the statement specified in the corresponding entry in column 3.

	1	2	3
	Description of person on whose behalf document delivered (B)	Description of individual who may deliver document on B’s behalf (A)	Accompanying statement
1	Firm	Individual who is an officer or employee of the firm and whose identity is verified (see section 1110A).	Statement by A— (a) that A is an officer or employee of the firm, (b) that A is delivering the document on the firm’s behalf, and (c) that A’s identity is verified.
2	Firm	Individual who is an officer or employee of a corporate officer of the firm and whose identity is verified.	Statement by A— (a) that A is an officer or employee of a corporate officer of the firm, (b) that A is delivering the document on the firm’s behalf, and (c) that A’s identity is verified.
	1	2	3
	Description of person on whose behalf document delivered (B)	Description of individual who may deliver document on B’s behalf (A)	Accompanying statement
3	Firm	Individual who is an authorised corporate service provider (see section 1098A).	Statement by A— (a) that A is an authorised corporate service provider, and (b) that A is delivering the document on the firm’s behalf.
4	Firm	Individual who is an officer or employee of an authorised corporate service provider.	Statement by A— (a) that A is an officer or employee of an authorised corporate service provider, and (b) that A is delivering the document on the firm’s behalf.
5	Individual	Individual whose identity is verified.	Statement by A— (a) that A is delivering the document on B’s behalf, and (b) that A’s identity is verified.
6	Individual	Individual who is an authorised corporate service provider.	Statement by A— (a) that A is an authorised corporate service provider, and (b) that A is delivering the document on B’s behalf.
7	Individual	Individual who is an officer or employee of an authorised corporate service provider.	Statement by A— (a) that A is an officer or employee of an authorised corporate service provider, and (b) that A is delivering the document on B’s behalf.

(3) In relation to a corporate officer that has only corporate officers, the reference in row 2 of the table to an individual who is one of its officers is to—
(a) an individual who is an officer of one of those corporate officers, or
(b) if the officers of those corporate officers are all corporate officers, an individual who is an officer of any of the corporate officers’ corporate officers,
and so on until there is at least one individual who is an officer.
(4) The Secretary of State may by regulations—
(a) create exceptions to subsections (1) or (2) (which may be framed by reference to the person by whom or on whose behalf a document is delivered or by reference to descriptions of document or in any other way);
(b) amend this section for the purpose of changing the effect of the table in subsection (2).
(5) Regulations under subsection (4)(a)—
(a) may require any document delivered to the registrar in reliance on an exception to be accompanied by a statement; (b) may amend this section.
(6) The Secretary of State may by regulations make provision requiring a statement delivered to the registrar under subsection (2) to be accompanied by additional statements or additional information in connection with the subject-matter of the statement.
(7) Regulations under this section are subject to affirmative resolution procedure.
(8) In this section “corporate officer” means an officer that is not an individual.””

56B: Page 59, line 9, at end insert—
“(7) The Secretary of State may by regulations amend this section for the purposes of changing who may deliver a document to the registrar on behalf of a disqualified person.
(8) Regulations under subsection (7) are subject to the affirmative procedure.”

56C: Page 129, line 37, after “regulations” insert “—
(a) amend this section for the purposes of changing who may deliver a document under a provision listed in subsection (4) to the registrar on behalf of another person;
(b) ”

Motion B agreed.

Motion C

Moved by

[Lord Johnson of Lainston]

That this House do not insist on its Amendment 115, to which the Commons have disagreed for their Reason 115A.

115A: Because it would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

Motion C agreed.

Motion D

Moved by

[Lord Johnson of Lainston]

That this House do not insist on its Amendment 117, to which the Commons have disagreed for their Reason 117A.

117A: Because it would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

[Lord Johnson of Lainston (Con)]

I beg to move.

Motion D1 not moved.

Motion D agreed.

Motion E

Moved by

[Lord Sharpe of Epsom]

That this House do agree with the Commons in their Amendment 151A.

151A: In subsection (1), after first “body” insert “which is a large organisation (see sections ((Failure to prevent fraud): large organisations) and (Large organisations: parent undertakings))”

[The Parliamentary Under-Secretary of State, Home Office (Lord Sharpe of Epsom) (Con)]

My Lords, I will speak also to Motions F, G, H and H1. We cannot agree to the proposed amendments for practical reasons, not least that the burdens they would place on business would not just be justified. It is for this reason, and not because of any intransigence or party-political reason, that we are unable to agree with the proposed Lords amendments. I will now talk specifically to the Motions in this group.

Motion E would reinsert the SME exemption for the failure to prevent fraud offence. I have of course noted Motion E1, tabled by my noble and learned friend Lord Garnier. I appreciate that he has moved closer to the Government’s position on this issue, creating his own threshold that would exclude microentities from the failure to prevent fraud offence. However, the Government remain extremely mindful of the pressures on companies of all sizes, including small and medium-sized enterprises, and therefore do not feel it is appropriate to place this new, unnecessary burden on more than 450,000 of them.

The analysis on this issue remains clear: even reducing the exemption threshold to only microentities would increase the one-off costs on businesses from around £500 million to £1.5 billion. Further, the annually recurrent costs would increase from £60 million to more than £192 million. Those costs would still be disproportionately shared by small business owners.

I know some noble Lords have expressed scepticism about the burdens, but the fact is that when a small business person hears that they may be liable to a new offence and significant fines if they are judged not to have taken action on something, they will worry. They will take time out of their business to scrutinise the guidance and, whatever it may say, there could be widespread overcompliance. Furthermore, they may well have to pay their accountant or lawyer to do it for them. While this burden is eye-watering in its own right, the issue cannot be taken in isolation. We must be aware of the cumulative compliance costs for SMEs across multiple government requirements or regulations. Furthermore, I can assure noble Lords that 50% of economic activity would be covered by the organisations in scope of this new offence with the Government’s threshold in place. It is of course already easier for law enforcement to attribute and prosecute fraud more easily in the smaller organisations that fall below the threshold.

I hope that noble Lords who feel strongly on this issue will be reassured that this is not the end of the debate. The Government have future-proofed the legislation by including a delegated power to allow them to raise, lower or remove the threshold altogether. Of course, as with all legislation, the Government will keep the threshold under review and will make changes if there is evidence to suggest that they are required. I therefore urge noble Lords to support government Motion E, rather than Motion E1.

I now turn to government Motion G, which disagrees with Lords Amendment 158. This was also tabled by my noble and learned friend Lord Garnier and seeks to introduce a failure to prevent money laundering offence. I am pleased that no amending Motions have been tabled for today, as I fear this amendment is entirely duplicative of existing regulations. Much like my noble and learned friend’s other amendment, it would therefore impose yet further unnecessary burdens on UK businesses. The UK already has a strong anti-money laundering regime in the form of the money laundering regulations, which require regulated sectors to implement a comprehensive set of measures to prevent money laundering. Corporations and individuals can face serious penalties, ranging from fines to cancellation of registration and criminal prosecution, if they fail to take those measures. What is more, those penalties will apply even if no actual money laundering has occurred. No knowledge of or intention to commit an offence has to be proved.

The money laundering regulations and the money laundering offences in the Proceeds of Crime Act are directly linked and can be seen as part of the same regime. A failure to prevent money laundering offence would therefore be highly duplicative of the existing regime. This is not just the view of the Government: in our conversations with industry, it has been very clear that duplication would create a serious level of confusion and unnecessary burdens on businesses. We should support legitimate businesses, rather than hamper them with overlapping regimes. I therefore hope that noble Lords will agree with the government Motion to disagree with the amendment from Report.

16:15

I turn finally to the Government’s Motion H, with which I will address Motion H1, tabled by the noble Lord, Lord Faulks. As I have discussed with the noble Lord, the Government’s position on this issue is that his amendments would be a significant departure from the loser pays principle, and therefore not something that should be rushed into without careful consideration. The effect that I believe he intends them to have would mean that the state could come after someone’s assets and lose the case, and then the individual—who will not necessarily be a Russian oligarch—would be left with a potentially ruinous legal bill. That would be the case even where the court decides that the property is not derived from unlawful conduct, although, as drafted, the noble Lord’s amendment would, in effect, achieve the opposite.

Furthermore, there is not the evidence that such changes would help achieve their intended aim of protecting enforcement budgets and increasing the number of civil recovery cost orders. There have been no adverse cost rulings against an enforcement authority carrying out this type of civil recovery in the past six years. Costs are just one of the many factors that determine whether law enforcement will take on a case. For example, the evidence available to pursue a case, particularly where evidence is required from overseas, often proves more vital to an operational decision.

I appreciate the noble Lord’s intentions behind Motion H1, which I think is intended to address some of these concerns, but I am far from convinced that it does. This amendment is not only a significant departure from the loser pays principle without clear benefits but it appears to make the starting point that the enforcement agency normally pays the costs to the respondent, regardless of the outcome of the case, unless the court decides that it is not in the interests of justice. Introducing legislation on costs that starts with the enforcement agency paying the respondent’s costs would swing the balance in favour of the respondent. This would expose the law enforcement agency to liability for costs even where it has won its case. It is not clear to me whether this was intended by the noble Lord, which in itself shows just how complex this area of law is.

Additionally, this would be a limited reform to economic crime offences, whereas the civil recovery regime applies to all kinds of unlawful conduct. Distinguishing which aspect of the underlying unlawful conduct was economic crime—for example, money laundering—and which was some other type of offence will be unworkable for law enforcement and the courts. In fact, the drafting of the amendment assumes that the property is recoverable, because it requires that the property has been obtained through economic crime. That suggests that a law enforcement agency must have satisfied a court that it derives from unlawful conduct, so it may well have won its case and recovered that property. However, the default would be that the agency pays the respondent’s costs. I do not think that was the intention behind the amendment.

I am keen to reiterate that civil recovery is a powerful tool that can result in the permanent depravation of someone’s home. The law in this area is well developed but relies on the discretion of the court to award costs, rather than the intervention of government to entirely remove the liability for costs of just one party except in certain circumstances. There are already a number of ways in which an enforcement agency’s liability to legal costs can be protected under the Civil Procedure Rules in England and Wales. For instance, Rule 44.2 gives the court discretion as to the payment of costs by either party, including whether they are payable to another party, the amount and when they are payable. In addition, a cost-capping order can be applied for under Rule 3.19 that limits any future costs that a party may recover under a later costs order. If we are to introduce further legislation, we must consider what gap this is trying to fill.

However, the Government recognise the strength of feeling on this issue and the potential merits in bolstering the system for all of civil recovery, not only economic crime offences. The Government would like the time, and more input from those affected, to be able to consider this issue further. That is why Motion H imposes a statutory commitment on the Government to review the payment of costs in civil recovery cases in England and Wales by enforcement authorities and to publish a report on their findings before Parliament within 12 months. This review will look in detail across all the available evidence, take account of key stakeholder views, analyse any potential legal issues and provide a view on whether and how any cost protection should be implemented. Given the need to ensure that any changes in this area are evidenced and workable, and the evident complications that can arise from rushed legislative changes, I urge noble Lords to therefore support government Motion E. I beg to move.

Motion E1 (as an amendment to Motion E)

Moved by

[Lord Garnier]

Leave out from leave out from “House” to end and insert “do disagree with the Commons in their Amendment 151A and do propose Amendments 151B and 151C in lieu—

151B: As an amendment to Lords Amendment 151, in subsection (1), after first “body” insert “which is a non-micro organisation or which is a large organisation (see sections (Section (Failure to prevent fraud): non-micro organisations), (Section (Failure to prevent fraud): large organisations) and (Large organisations: parent undertakings))”

151C: After Clause 180, insert the following new Clause—
“Section (Failure to prevent fraud): non-micro organisations
For the purposes of section (Failure to prevent fraud)(1) a relevant body is a “non-micro organisation” only if the body satisfied two or more of the following conditions in the financial year of the body (“year P”) that precedes the year of the fraud offence—

Turnover	More than £632,000 and less than £36 million
Balance sheet total	More than £316,000 and less than £18 million
Number of employees	More than 10 and less than 250.

(2) For a period that is a relevant body’s financial year but not in fact a year, the figure for turnover must be proportionately adjusted.
(3) In subsection (1) the “number of employees” means the average number of persons employed by the relevant body in year P, determined as follows—
(a) find for each month in year P the number of persons employed under contracts of service by the relevant body in that month
(whether throughout the month or not),
(b) add together the monthly totals, and (c) divide by the number of months in year P.
(4) In this section—
“balance sheet total”, in relation to a relevant body and a financial year—
(a) means the aggregate of the amounts shown as assets in its balance sheet at the end of the financial year, or
(b) where the body has no balance sheet for the financial year, has a corresponding meaning;
“turnover”—
(a) in relation to a UK company, has the same meaning as in Part 15 of the Companies Act 2006 (see section 474 of that Act);
(b) in relation to any other relevant body, has a corresponding meaning;
“year of the fraud offence” is to be interpreted in accordance with section (Failure to prevent fraud)(1).
(5) The Secretary of State may by regulations modify this section (other than this subsection and subsections (6) and (8)) for the purpose of altering the meaning of “non-micro organisation” in section (Failure to prevent fraud)(1).
(6) The Secretary of State may (whether or not the power in subsection (5) has been exercised) by regulations—
(a) omit the words “which is a non-micro organisation or” in section (Failure to prevent fraud)(1), and
(b) make any modifications of this section (other than this subsection) that the Secretary of State thinks appropriate in consequence of provision made under quotegraph (a).
(7) Before making regulations under subsection (5) or (6) the Secretary of State must consult—
(a) the Scottish Ministers, and
(b) the Department of Justice in Northern Ireland.
(8) Regulations under subsection (5) or (6) may make consequential amendments of section (Failure to prevent fraud: minor definitions).””

[Lord Garnier (Con)]

My Lords, I begin by referring to my interest as a barrister in private practice and informing the House that that practice includes economic and corporate crime.

I wish to acknowledge the genuine attempts of my noble friends on the Front Bench to understand my concerns, expressed over a good many years and, more particularly, during the passage of this Bill, not only in this Chamber and in Grand Committee but in meetings with them and their officials, most recently on Friday. My noble friend Lord Sharpe has had to bear the brunt of my concerns, but he has never dissembled nor lost his sense of humour, even when listening to my jokes. It is regrettable that he has not been permitted any discretion by Ministers in the other place and has had to stick to his instructions on a matter that has nothing to do with party politics or manifesto commitments.

I know that your Lordships are interested only in creating good, coherent and comprehensible criminal law that meets the needs of the modern economy and is in line with public opinion and morality. Thanks to the support of your Lordships’ House—I am grateful to noble Lords of all parties and none—the Bill we are dealing with was altered on Report to delete the SME exemption from the failure to prevent fraud offences regime, while money laundering was added to the failure to prevent regime introduced by the Government; by that, I mean the substantive money laundering offences under Part 7 of the Proceeds of Crime Act 2002, not to be confused with the due diligence requirements under the more recent money laundering regulations.

Last Monday, despite the powerful arguments of my right honourable and learned friends Sir Jeremy Wright and Sir Robert Buckland, the other place refused to extend the proposed new offence of failure to prevent fraud to 99.5% of the corporate economy and deleted money laundering from the failure to prevent regime. Having won the Division in the other place last week, the Government now seek to sustain that position in your Lordships’ House today. I accept that democratic politics is as much about arithmetic as it is about sound arguments; if a majority prefers to do something unsatisfactory, whether or not it has listened to the arguments and the evidence in support of them, that is what will happen. Even as they stand, these limited proposals are well overdue and have been in the making since 2010.

In the spirit of compromise, those of us who voted for the extension of failure to prevent to money laundering on Report have agreed not to press the money laundering extension today. We happen to think that it should be extended to money laundering—I happen to think also that there are other substantive offences, such as those listed in the deferred prosecution agreements schedule to the Crime and Courts Act 2013, that could be included—but, on the basis that the best is often the enemy of the good, and in an attempt to meet the Government a lot more than half way down the road, we will not take that matter further on this occasion. However, I invite the Government and the other place to reconsider the SME exemption, subject to a further concession to exempt micro-businesses; I hope that this will allay the fear, albeit unfounded, that extending the failure to prevent regime further than the Bill currently permits will stifle small businesses. Absent any agreement from my noble friend the Minister, I will seek leave to test the opinion of the House at the appropriate time.

On Report, I spoke in support of a number of amendments or proposed new clauses to the Bill—a Bill which has much to recommend it, even if it has been slow to arrive. The defects that I intended to correct related to the failure to prevent regime. No one needs reminding of this but that regime is not a new provision stealthily added to the criminal law in the past few months by an eccentric Back-Bench Peer. It was first introduced into our criminal law with cross-party support—indeed, without a vote—via the Bribery Act 2010, which began its passage through Parliament under Gordon Brown’s Labour Government and was enacted under David Cameron’s coalition Government. Failure to prevent bribery under Section 7 of the 2010 Act, supported by all three major parties, as well as the Cross Benches and others, is now a tried and tested criminal offence, with an easily understood and practical defence for companies and partnerships that I and many other practitioners have not found difficult to advise on or to apply in particular cases, whether we have been acting for the Serious Fraud Office or for defendant companies.

The objective of the 2010 Act was and is not to bring the full force of the criminal law to bear on well-run commercial organisations that experience an isolated incident of bribery on their behalf. Therefore, to achieve an appropriate balance, Section 7 provides a full defence. This is in recognition of the fact that no bribery prevention scheme will be capable of always preventing bribery. However, the defence was also included to encourage commercial organisations to put procedures in place to prevent bribery by persons associated with them. The failure to prevent bribery offence is in addition to, and does not displace, liability that might arise under Sections 1 and 6 of the Act for direct bribery here or of a foreign public official where the commercial organisation itself commits an offence.

That was well understood as the Act progressed through Parliament and I hope it is well understood now. So too are the special nature and parameters of the statutory defence of “adequate procedures”. Note that the defence requires “adequate procedures”, not perfect procedures. There is no practical difference between “adequate procedures” in the 2010 Act and “reasonable procedures” in the Criminal Finances Act 2017 and in this Bill. The law requires no more than a proportionate approach to the facts relevant to the company or partnership in question.

The alarmist suggestion that a failure to prevent fraud offences regime that does not include SMEs—that is, it does not exempt 99.5% of companies and partnerships—will impose unbearable cost burdens running into multiple billions of pounds on those organisations is absurd. There will be some cost but since the guidance under the 2010 Act has been available since 2011, it is well understood and can easily be adapted to the failure to prevent offences under this Bill. The Bribery Act guidance will easily translate to fraud offences and the sooner it is published, the better. The best estimates are that SME companies will need to spend between £2,000 and £4,000 to prepare themselves and some will need to spend nothing because of their low risk profile. These costs are a legitimate business expense but, to put this in proportion, Lesley O’Brien, a director of Freightlink Europe, said in June 2022 that it costs £20,000 per year to run one heavy-goods vehicle. No sensibly run business should be trading abroad without taking proportionate precautionary steps to avoid the risk of bribery or fraud committed by its associates.

In the guidance to the 2010 Act, published in 2011 by my noble friend Lord Clarke of Nottingham, the then Justice Secretary, he explained that “procedures” is used to embrace bribery prevention policies and the procedures that implement them. Policies articulate a commercial organisation’s anti-bribery stance, show how it will be maintained and help create an anti-bribery culture. They are therefore a necessary measure in the prevention of bribery but they will not achieve that objective unless they are properly implemented. Adequate bribery prevention procedures, I repeat, ought to be proportionate to the bribery risks that the organisation faces. The same applies to the prevention of fraud offences and, where the guidance refers to “bribery”, one could in the context of this Bill substitute “fraud”.

The guidance says:

“To a certain extent the level of risk will be linked to the size of the organisation and the nature and complexity of its business, but size will not be the only determining factor. Some small organisations can face quite significant risks, and will need more extensive procedures than their counterparts facing limited risks. However, small organisations are unlikely to need procedures that are as extensive as those of a large multi-national organisation. For example, a very small business may be able to rely heavily on periodic oral briefings to communicate its policies while a large one may need to rely on extensive written communication … The level of risk that organisations face will also vary with the type and nature of the persons associated with it. For example, a commercial organisation that properly assesses that there is no risk of bribery”—


substitute “fraud”—

“on the part of one of its associated persons will, accordingly, require nothing in the way of procedures to prevent bribery”—

substitute “fraud”—

“in the context of that relationship. By the same token the bribery”—

substitute “fraud”—

“risks associated with reliance on a third party agent representing a commercial organisation in negotiations with foreign public officials may be assessed as significant and accordingly require much more in the way of procedures to mitigate those risks. Organisations are likely to need to select procedures to cover a broad range of risks but any consideration by a court in an individual case of the adequacy or reasonableness of procedures is necessarily likely to focus on those procedures designed to prevent bribery or fraud on the part of the associated person committing the offence in question”.

16:30

It was not suggested by the Government then that the Section 7 offence or the failure to prevent facilitation of tax offences would not apply to SMEs or small partnerships. It is frankly laughable that we are, on the Bill’s current wording, about to exempt 99.5% of the corporate economy.

As I have indicated, Parliament criminalised the failure to prevent the facilitation of tax evasion via the Criminal Finances Act 2017. It was the next logical step in the extension of the failure to prevent regime and Parliament passed the relevant provisions without opposition. Of course, a number of professional lobbying organisations—paid for by those who thought that amending the law would be commercially inconvenient—approached the Government and parliamentarians, as they had in 2010, but their submissions did not attract support because most right-thinking people, in and out of government, recognised that things needed to change and that there was no good reason to accede to these narrow commercial interests. Similar attempts were made to prevent the corporate manslaughter and health and safety legislation in the early years of this century, on the basis, as now, that it would create unacceptable burdens on business. No one now sensibly countenances unsafe systems of work.

There have, within living memory, been those who thought it appropriate to prevent health and safety at work laws because they would create an unacceptable business cost. It was suggested that the deaths or injuries of scaffolders, ferry crews or steelworkers were rare and that, in any event, the proposed laws would be an unnecessary burden on business. The Government, it seems, have been persuaded by a couple of lobbying organisations—no doubt legitimately earning their fees by making the same arguments rejected in 2010 and 2017—that the laws we have unanimously passed in the past 13 years were wrongly enacted and should not be replicated in this Bill.

Let us be clear: there is no SME exemption in the Bribery Act or in the Criminal Finances Act, and Parliament did not think there should be. The criminal law applies to all and if the defence of adequate or reasonable procedures is available, there is no conviction—and often no prosecution. What other criminal offence defines liability based on the size of the defendant? A small thief is every bit as much a thief as a tall one, and as liable under the law if the evidence and the public interest in their prosecution are made out. The public interest in requiring a company with a small turnover and only a few employees to prevent its associates committing fraud for its benefit is no lesser than in a far larger company. To limit the failure to prevent fraud offence to corporates that have at least £36 million in turnover, £18 million in assets and more than 250 employees is both absurd and incoherent. The Government have been persuaded by these lobbyists that my amendment to make all companies and partnerships equal before the law would create an unacceptable burden on business—it will not. When I last looked, we make laws through Parliament, not by taking dictation from lobbyists.

Let me help my noble friend the Minister. Under the law of England and Wales, and Northern Ireland, we exempt children under the age of 10 from criminal responsibility; in Scotland I believe it is children under the age of 12. The child could have committed an offence in London for which, had they been aged over 10, they could have received a lengthy period in secure accommodation. For entirely civilised and sensible public policy reasons we do not prosecute children under the age of 10. On that basis, and by that stretched analogy, I propose that we should exempt only the very smallest and newest commercial organisations—micro-businesses—from the failure to prevent regime. You will find the definition of a micro-business by looking at page 18 of the Marshalled List and Amendment 151C, which gives the figures for non-micro-organisations. If you imagine a company that has smaller figures for turnover, balance sheet total or number of employees, you will work out what a micro-business is.

As Barry Vitou, a highly respected white-collar crime solicitor at London solicitors Holman Fenwick Willan, pointed out in an article in City A.M. last Friday, 8 September, by exempting SMEs from the failure-to-prevent regime, we will, ironically, be creating an unintended but foreseeable consequence that could lead to unfairness. Criminal liability, under the identification principle, is much easier to establish in small companies than in large conglomerates. If they are exempted from the failure-to-prevent regime, prosecutors will be tempted to prosecute them for a direct fraud. So we are robbing them of their defence of having put in place reasonable anti-fraud procedures.

I gently submit that the argument I make is not anti-Conservative. Indeed, this whole discussion is not a party-political argument, but one about making good, coherent and sustainable criminal law in a pragmatic way. After all, it was a Conservative-led Government who enacted Section 7 of the Bribery Act and a Conservative Government who enacted the 2017 Act. Surprising as it may seem to my noble friends, I am not a socialist dedicated to the downfall of capitalism, but a Tory interested in the growth of good and honest business. I therefore urge my noble friends on my own government Front Bench to recognise the compromises that I have spoken to and to accept them with the willingness with which they are offered. I beg to move.

[Lord Faulks (Non-Afl)]

My Lords, I will take this opportunity to speak to my Motion H1 in the same group, which proposes, as an amendment to Motion H, to

“leave out from ‘161’ to end and insert ‘, do disagree with the Commons in their Amendment 161A in lieu, and do propose”

the amendment listed at page 24 of the Marshalled List.

However, I should explain that there is a mistake in this amendment, which is no doubt my fault. There were various communications between me and the Public Bill Office on Friday afternoon, in order to get the amendment in the appropriate shape, and a “not” features in the wrong place. I will explain where the omission is and why I submit that it does not ultimately matter.

The intention behind this amendment, under “Civil recovery: costs of proceedings”, was to try to give some protection to the agencies in the case of adverse costs orders made against them. This amendment was passed by your Lordships’ House; it went back to the House of Commons last Monday and was rejected.

My amendment is a softening of the original amendment put down by the noble Lord, Lord Agnew, and me—softening because it had to be softened somewhat to comply with the rules. Proposed new subsection (2) should read:

“The court should not normally make an order that any costs of proceedings relating to a case to which this section applies … are payable by an enforcement authority to a respondent or a specified responsible officer in respect of the involvement of the respondent or the officer in those proceedings, unless it would be in the interests of justice”.


So the “not” should be inserted earlier and removed later on.

The amendment that was drawn to my attention today did not entirely reflect my intention. I have been in communication with the Public Bill Office as to whether it was possible to amend it. Although it is possible to table a manuscript amendment—see paragraph 8.172 of the Companion—it is inelegant and I am told that the better course is to explain the purpose of the amendment. Were the House to be in favour of the amendment, the matter can be amended at the House of Commons stage. That appears to be the position.

Now perhaps I can come on to the merits, as I see them, of the amendment. The Minister says that my amendment—which is really not much more than a nudge; it does not compel the court to do anything in relation to costs—is intended to prevent any disincentive being provided to the agencies, who may seek to recover the proceeds of crime, often against very well-resourced defendants. Unexplained wealth orders, brought in by the Criminal Finances Act, were to be a powerful weapon in seeking to obtain recovery, ultimately, from those whose wealth was not easily explicable. The agency tried on one occasion to do that and was unable to surmount the hurdle the court said was appropriate in these cases—and, indeed, which Parliament said was appropriate. The result was an order of £1.5 million-worth of costs against the agency.

Perhaps unsurprisingly, there has not been great enthusiasm to take up unexplained wealth orders on the part of the Serious Fraud Office. So your Lordships’ House, during the last economic crime Bill proceedings, very sensibly produced an amendment that, broadly speaking, reflected the amendment we are now discussing in relation to unexplained wealth orders, so as not to provide such a disincentive to the authorities seeking to obtain one of these orders. The rationale behind my amendment is precisely the same. The Minister says that this offends the “loser pays” principle. He is right that the starting point in most civil cases is that the loser pays—for very good reason. If A brings a claim against B that proves to be unjustified, and B has been put to expense thereby, why should B not recover his or her or its costs from A?

However, that rule is subject to many exceptions, as all those who are familiar with the law will know. For example, on some occasions the court orders each side to bear its own costs, having regard to the facts. Sometimes there will be no orders as to costs; sometimes there will be issue-based costs. There will be a variety of different orders to meet the justice of a particular case. Sometimes Parliament even specifically weights the cost in one particular direction. An egregious example is Section 40 of the Crime and Courts Act, which is a controversial issue but shows that Parliament is perfectly capable of deciding who should pay the costs in particular circumstances.

What will happen if this particular provision becomes part of our law? I suggest what will happen is that a judge looking at the end of a case will see that Parliament has decided that normally there should not be an order that the agency pays the costs. However, if the agency quite unreasonably, without proper evidence, seeks to pursue somebody for the proceeds of crime, there is of course the saving provision—“in the interests of justice”—which is part of our amendment. So a court is perfectly able, as it will always do, to look at the particular circumstances of the case and decide that, in this case, the agency has been inappropriately pursuing somebody, seeking a remedy when they should not have done. But this is a nudge towards the judge, and a very qualified exception to the “loser pays” principle.

It is, however, an important amendment. Those giving evidence towards the Bill Committee included Bill Browder, who may be well known to your Lordships for his particularly vigorous pursuit of justice in this particular area, and representatives of the Serious Fraud Office. I would be interested to know from the Minister what the approach of the agencies is to this. If he tells me firmly that they do not want this power, that is of course a powerful argument. It would be somewhat at odds with the evidence and the information I have, but I do not have a complete and total understanding of what their approach should be.

It seems to me that someone running the Serious Fraud Office or the NCA, when deciding whether or not to pursue somebody, would bear very much in mind their budget and the cost consequences of taking a particular course of action. If they knew that there was a degree of protection—and that is all this is, a degree of protection—provided in this, it would act as much less of a disincentive. If they thought that, should they fail to recover what they thought they were entitled to, there would be a very heavy hit on their budget, it might mean that they would not do so, which might be contrary to the interests of justice.

16:45

The Minister quite rightly says that it is complicated, but I suspect that we can trust our judges on this. With great respect to him, the Government’s response is that we should have a report. During the debate in the other place on Monday, when discussing the problem that I have outlined, the former Lord Chancellor, Sir Robert Buckland MP, said:

“We know that it is a problem. We know that it is a disincentive to the bringing of civil proceedings under the Proceeds of Crime Act 2002. We should just get on with it. The particular rules and proposals about costs are well reflected in other parts of legal procedure and other types of proceedings, so this is nothing new. I think that it is time that we grasped the nettle rather than having yet another report”.—[Official Report, Commons, 4/9/23; col. 108.]

Who—which stakeholders, as the Government are wont to call them—do we seek to involve? I dare say that those against whom these orders might be sought will be reluctant to have this amendment as part of the statute. Are they stakeholders? As to the agencies, I would need convincing that they would not be to some considerable extent assisted by this amendment. I am not sure that a report would help.

I respectfully submit to your Lordships’ House—and I will be testing the opinion of the House on this—that this amendment, once tidied up, would provide proper assistance to the agencies as well as proper protection, and would none the less provide an appropriate safety valve in case of circumstances where justice needs to be done.

[Lord Agnew of Oulton (Con)]

My Lords, I rise briefly in support of my noble friend Lord Faulks on this amendment. I am particularly grateful to him; I was involved in the earlier amendments, but I realised that it needed a premier division lawyer rather than a second division entrepreneur to get this through.

In our discussion with Ministers, we were often told that the enforcement agencies did not want this; that seemed disingenuous to me. I now have some information. For example, law enforcement agents have shown a strong appetite for cost protection and civil recovery. The chief capability officer of the Serious Fraud Office told the economic crime Bill committee that the SFO would like to see this, while the head of the National Economic Crime Centre told the same committee that they found cost protection “an attractive proposal”. I do not think that is a searing insight. Spotlight on Corruption has identified 60 high-risk cases, with the potential of £1 billion of frozen assets, and the chilling effect is palpable among them.

I respectfully disagree with the Government on this. I am grateful to my noble friends the Ministers who have spoken several times to all of us, but I think they are on the wrong side of logic.

[Baroness Noakes (Con)]

My Lords, I have some very real concerns about the impacts of the new failure to prevent offence on small and medium-sized entities. If my noble and learned friend Lord Garnier’s Motion E1 is agreed to, I think it could be very significant. I believe that the other place was wise to restrict the offence to larger companies only. Setting the threshold at the micro-entity level would still leave very many small and medium-sized entities within the scope of the offence.

I did try to find out how many companies would be affected. My noble friend the Minister said 450,000 companies would be brought within the net of the offence. According to Companies House statistics, around 3.1 million active companies filed accounts last year. Of those, 1.6 million were for micro-entities, and would therefore be excluded, but 1.4 million were for small companies that took advantage of the audit exemption. That, very broadly, is the group of companies that would benefit from the changes made by the other place; it is obviously rather more than 450,000. Whatever the number, there will certainly be regulatory costs for those companies, whether 450,000 or 1.4 million. My noble friend the Minister has given his estimate of what those costs will be. I have never placed much faith in estimates made by Governments of the direct costs of regulatory burdens that Governments try to impose. I generally put a multiplier against them to arrive at a more realistic figure.

However, I believe the most important cost is the opportunity cost that is imposed by regulation. Every time a new regulation is imposed, the people who run small businesses have to spend time away from thinking about their core activities, which should be wealth-generating. Every moment spent thinking about whether they have reasonable prevention procedures in place, or implementing those procedures, is a moment spent not thinking about how to grow the business or how to make it more profitable. Large companies have specialists to cope with all this. Small businesses often have no one beyond the proprietor of the business itself, but they are the very people who are supposed to be spending their time growing their businesses, thereby helping the UK economy to grow—and my goodness me, do not we need growth in our economy?

The cumulative effect of incremental regulation on individual businesses is huge, as any small businessman will tell you, but the cumulative opportunity cost for those businesses of missing out on that growth, and the impact that will have on UK plc, simply cannot be ignored when we are looking at any form of legislation that imposes burdens on businesses. I urge noble Lords to accept the pragmatic solution that the other place has put forward.

[Lord Hope of Craighead (CB)]

My Lords, I am greatly assisted by the correction made by the noble Lord, Lord Faulks; I had great difficulty in understanding the amendment on first reading. Now that he has corrected it, I would like to say from the point of view of a Scots lawyer that there is nothing startling in the proposition that is made. We in Scotland are quite used to the normal routine that law enforcement agencies are not liable in costs for the proceedings that have been taken, probably for the reasons that the noble Lord has clearly expressed.

[Lord Fox (LD)]

My Lords, we have benefited from two extremely detailed and learned speeches proposing Motions E1 and H1. On Motion E1, I am exercised by the idea that there is an opportunity cost in checking whether you are preventing or causing fraud. That seems to be a strange discussion. The analogy made by the noble and learned Lord, Lord Garnier, with HSE and health and safety, is a good one: yes, it is a cost to make sure that you are doing something safely but it is a much wider benefit. The notion that 95% to 98% of the business community should be allowed not to consider their impact on fraud because that would get in the way of their growth is strange, because that growth would then be predicated on very shaky circumstances. I am not persuaded by the counterarguments, but I have been persuaded strongly by the noble and learned Lord.

Similarly, on the Motion from the noble Lord, Lord Faulks, causing agencies to be too tentative and restricted in how they go about prosecuting people is an important issue. It is clear from what we have heard from the outside world that this gets in the way of prosecutions. It also causes the prosecuting authorities to go for low-hanging fruit—that is, easier propositions—and avoid harder and often more severe prosecutions. That is a chilling effect which we should be worrying about when we look at this issue.

These two important amendments have been trimmed in the light of the rejection of the last set by the House of Commons. Noble Lords and Baronesses on these Benches will be happy to support them, if and when they are moved to a vote.

[Lord Coaker (Lab)]

My Lords, we have been pleased to support the legislation, which overall we think is very good, and we have said that to the noble Lord, Lord Sharpe. Indeed, the Government have listened, as have all the Ministers on the Bill, and made significant changes. Now we are left with just two amendments, put forward by the noble and learned Lord, Lord Garnier, and the noble Lord, Lord Faulks, which deal with two issues that remain outstanding but are of significant importance and deserve our support and consideration.

I want to reference one or two points made by the noble and learned Lord, Lord Garnier, because he made them particularly well. It is a proportionate and reasonable amendment to ask of the Government. There are all sorts of regulations and legislation—the noble and learned Lord referenced them—to which we say small businesses should be subject to, because we believe that it is the right thing to do and the right climate in which those businesses should operate. When it comes to the failure to prevent, the Government point out that 50% are covered by their legislation, which of course leaves 50% that are not.

Throughout the passage of the Bill, many of us have sought to ensure that the failure to prevent—which is a good step forward—applies, as far as possible, to as many businesses as it possibly can. The noble and learned Lord, Lord Garnier, asked why we would exclude many small businesses when they are not excluded from other legislation that may be seen as a burden. The argument is hollow and does not cut through. For that reason, and because the noble and learned Lord has put forward an amendment that takes into account what was said in the Commons, it deserves our support. Should he put it to a vote, as I think he suggested he would, we will support him.

Similarly, the noble Lord, Lord Faulks, notwithstanding the correction he made to the amendment, brings forward a very important point indeed. One of the great criticisms that is often made about dealing with fraud is that somehow law enforcement agencies are frightened of taking on the people who are committing fraud. I always thought it should be the other way around; the fraudster should be frightened of the law enforcement agency. Yet, for some bizarre reason, it is that way around—that cannot be right. It is not something that any of us want to be the case. Through his amendment, the noble Lord, Lord Faulks, has tried yet again to push the Government to do better and to do more than what is currently in the Bill. His amendment says to the Government, “Surely we should do better”. Indeed, the Treasury itself should be confident in the work of the law enforcement agencies. Some have suggested that those agencies should be indemnified against any costs they may incur.

I go back to two simple points. First is the point in the amendment from the noble and learned Lord, Lord Garnier: why should small businesses be excluded from this legislation, other than the micro-businesses to which he referred, when we do not exclude them from other legislation that we think is important? Small businesses adhere to that legislation in the same way as other businesses. Secondly, the amendment from the noble Lord, Lord Faulks, gives us an opportunity to turn the tables and ensure that, rather than the law enforcement agencies being frightened of costs they may incur in ensuring that fraudsters are brought to book, the fraudsters are frightened. That is why, if the noble and learned Lord, Lord Garnier, and the noble Lord, Lord Faulks, put their amendments to a vote, we will certainly support them.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank all noble Lords who have spoken in this debate. I will respond relatively briefly; I think I have rehearsed the majority of the arguments widely and frequently, and there is not much point in saying more to some of them. However, the precise point I was trying to make in my opening remarks is, in essence, about proportionality. My noble friend Lady Noakes referred to that extremely eloquently.

My noble and learned friend Lord Garnier oftens points out that 99.5% of business is exempted, but I repeat that this is very much a judgment call because 50% of economic activity is captured. My noble friend Lady Noakes referred to the opportunity cost and the noble Lord, Lord Faulks, suggested that perhaps this is about businesses not checking whether they in some way have the right procedures in place to prevent fraud, but it is not about that. It is about many other factors that do not involve the business at hand, as my noble friend Lady Noakes referred to. Those other burdens are obviously partially financial, but not fully.

17:00

My noble and learned friend Lord Garnier referenced the fact that there are different thresholds for this offence in the failure to prevent bribery or the criminal evasion of tax, to give two examples. The noble Lord, Lord Coaker, also referred to that. We considered the threshold in the light of the nature of fraud and the need to support struggling small businesses. The Law Commission identified a disparity, as it is easier to prosecute smaller organisations under the current law, which this failure to prevent offence will address. The new offence is less necessary for smaller firms. It is easier to prosecute individuals and businesses for the substantive fraud offence; it would therefore be disproportionate to impose the same burdens on them. As I pointed out in my opening remarks, the Bill also includes a power to amend the threshold via secondary legislation in future if evidence suggests that such a change would be appropriate.

I go back to the financial burdens. As I say, the Government recognise the need to consider the cumulative compliance costs for small and medium entities across multiple government regulations, rather than seeing these fraud measures in isolation. The cost of extending the measures to cover SMEs is significant: up to £4 billion from £487 million. The cost of reducing the threshold to cover only micro-entities, I repeat, would also be vast. It would increase the one-off cost on businesses from around £500 million to £1.5 billion. The annual recurrent costs would increase from £60 million to more than £192 million. I am afraid that the Government’s position has not changed; we regard this as disproportionate.

I thank the noble Lord, Lord Faulks, for his clarification on his amendment. He has partially provided an answer as to why we need a review, because it is a complex area of law. Looking at these things and amending them at speed can obviously have unintended consequences. We do not believe that there has been a chilling effect. No agency has told us that this is the case and, as I explained, it is the evidential burden that proves more of a barrier to prosecuting some of these cases, which are, by their very nature, exceptionally complex.

We worked with law enforcement in putting together the Bill, and the content included many of its key requests such as powers on crypto assets, changes to corporate criminal liability, more accurate Companies House data and greater pre-investigation powers for the SFO. All those agencies will have significantly more tools in their armoury to go after the people who are committing economic crime and, as I say, no agency has told us that this particular lack has a chilling effect.

The noble Lord, Lord Faulks, asked about unexplained wealth orders. They are an investigatory tool for law enforcement, so do not directly result in individuals being permanently deprived of their assets. UWOs are exceptional investigations that can be used only against PEPs or those reasonably suspected to be involved in serious crime, where there are reasonable grounds to suspect that they have assets that are disproportionate to their legally obtained income or have been obtained through unlawful conduct. UWOs can apply only to property that is more than £50,000 and are often used in complex, lengthy cases. Given this and the other factors that I have set out, it was deemed justified to introduce cost protection in UWO cases—but, as the noble Lord pointed out to me earlier today, they are used a lot less frequently than in other cases. Having said all that, I agree that it may well be in the interests of justice to look at this again, which is why we would like to do the review and report back to Parliament in 12 months. That is the right way to do it.

I urge all noble Lords to note the improvements that the Government have made to the Bill and I thank them for their extensive engagement on all these and other matters. We believe that these provisions strike the right balance between promoting economic growth and the all-important job of tackling economic crime, so I ask noble Lords to consider that when voting.

[Lord Garnier (Con)]

My Lords, I wish to press my Motion E1 and test the opinion of the House.

17:04

Division 1

Ayes: 211

Noes: 185

17:15

Motion F

Moved by

[Lord Sharpe of Epsom]

That this House do agree with the Commons in their Amendments 153A, 153B and 153C.

153A: In subsection (1), after “(Failure to prevent fraud)(1)” insert “and (2)”

153B: In subsection (6), after “(Failure to prevent fraud)(1)” insert “and (2)”

153C: In subsection (7)(a), after “(Failure to prevent fraud)(1)” insert “and (2)(c)”

Motion F agreed.

Motion G

Moved by

[Lord Sharpe of Epsom]

That this House do not insist on its Amendment 159, to which the Commons have disagreed for their Reason 159A.

159A: Because the law already makes sufficient provision in relation to the prevention of money laundering.

Motion G agreed.

Motion H

Moved by

[Lord Sharpe of Epsom]

That this House do not insist on its Amendment 161 and do agree with the Commons in their Amendment 161A in lieu—

161A: Page 172, line 44, at end insert the following new Clause—
“Report on costs orders for proceedings for civil recovery
Report on costs orders for proceedings for civil recovery
(1) The Secretary of State must assess whether it would be appropriate to restrict the court’s power to order that the costs of proceedings under Chapter 2 of Part 5 of the Proceeds of Crime Act 2002 are payable by an enforcement authority and, if so, how.
(2) In carrying out the assessment, the Secretary of State must consult such persons as the Secretary of State considers appropriate.
(3) The Secretary of State must publish and lay before Parliament a report on the outcome of the assessment by the end of the period of 12 months beginning with the day on which this Act is passed.
(4) In this section “the court” means the High Court in England and Wales.”

Motion H1 (as an amendment to Motion H)

Moved by

[Lord Faulks]

Leave out from “161” to end and insert “, do disagree with the Commons in their Amendment 161A in lieu, and do propose Amendment 161B in lieu—

161B: After Clause 187, insert the following new Clause—
“Civil recovery of proceeds of crime: costs of proceedings
Civil recovery: costs of proceedings
After section 313 of the Proceeds of Crime Act 2002 insert—
“313A Costs orders
(1) This section applies to proceedings brought by an enforcement authority under Part 5 of the Proceeds of Crime Act 2002 where the property in respect of which the proceedings have been brought has been obtained through economic crime.
(2) The court should normally make an order that any costs of proceedings relating to a case to which this section applies (including appeal proceedings) are payable by an enforcement authority to a respondent or a specified responsible officer in respect of the involvement of the respondent or the officer in those proceedings, unless it would not be in the interests of justice.”””

[Lord Faulks (Non-Afl)]

My Lords, I wish to test the opinion of the House.

17:16

Division 2

Ayes: 218

Noes: 186

Procurement Bill [HL]

Consideration of Commons amendments
Monday 11th September 2023 Lords Chamber

Commons Amendments

Scottish Legislative Consent granted, Welsh Legislative Consent granted in part.

17:29

Motion on Amendment 1

Moved by

[Baroness Neville-Rolfe]

That the House do agree with the Commons in their Amendment 1.

1: Clause 2, page 2, line 13, leave out “including the NHS”

[The Minister of State, Cabinet Office (Baroness Neville-Rolfe) (Con)]

My Lords, in moving this Motion I will speak to Amendments 1, 4, 5, 81 and 82. I am very pleased to bring this important Bill back to the House today for consideration of amendments made in the other place. It is, I believe, a key Brexit dividend, making it possible for us to develop and implement our own procurement regime, which will be simpler, more transparent, better for small businesses and better able to meet the UK’s needs. I thank noble Lords on all sides of the House who contributed to the lengthy discussion on the original Bill, first introduced to this House in May last year.

In the other place, we made a number of important changes to the Bill, including a debarment appeals process, clarification of the City of London’s status under the Bill, at its request, and provisions to address trade disputes relating to procurement. Importantly, we also took significant steps to strengthen national security provisions in the Bill, creating a new mechanism that will allow us to protect public procurement from risky suppliers. We also committed to removing Chinese surveillance equipment from government departments’ sensitive sites and dedicating additional resources within the Cabinet Office to scrutinise suppliers for potential national security threats. It is now crucial that we take the Bill through to Royal Assent, so that we can implement its many useful provisions.

This first group of amendments focuses on procurement rules for healthcare services and the national procurement policy statement. They overturn amendments made to the Bill on Report in this House. Amendments 1, 81 and 82 are necessary to ensure the proper functioning of the Bill and the regulation of healthcare procurements. Engagement with the NHS has identified the requirement for a bespoke regime for healthcare services to drive the integration of healthcare and the development of better, more joined-up patient pathways through healthcare systems. This responds to the idiosyncrasies of the health system, as identified by those who work in it.

The forthcoming provider selection regime is a free-standing regulatory scheme of procurement rules which commissioners of healthcare services in the NHS and local government will follow when arranging healthcare services in their area. Parliament accepted this when passing the Health and Care Act 2022, which was debated for many days in this House. The DHSC published the results of its latest consultation in July and aims to lay the regulations in Parliament this Autumn. It would be incredibly unhelpful at this critical stage for both schemes, when both the healthcare regulations and the Procurement Bill are on the cusp of delivery, to start attempting to unpick it all. Doing so would add unacceptable and entirely avoidable costs and delays to both programmes for no tangible benefit.

Amendment 1 removes from the definition of a public authority in Clause 2(2)(a) the words “including the NHS”. This addition is unnecessary because it clearly meets the test for a public authority set out at Clause 2(a), which is that it is publicly funded. This is backed up by the fact that the relevant NHS bodies to be covered by this Bill as central government authorities are identified in draft regulations to be made under the power at Schedule 1(5). These regulations were consulted on over the summer and have been welcomed in this regard. Setting out the list of central government authorities in regulations is appropriate, as updates are needed from time to time as organisations inevitably change. Moreover, the NHS is not a single legal entity and does not have a clear meaning in law, so the naming of the NHS as a public authority in Clause 2 would have reduced clarity.

I turn now to Amendments 81 and 82. The version of what was then Clause 116 inserted on Report in this House needed to be removed and replaced with a provision that enables the DHSC to proceed with the provider selection regime. This is crucial for the reasons I have already set out, and I emphasise that this House will have the opportunity to scrutinise the new affirmative regulations when they are laid. I hope that I have been able to provide the noble Baroness, Lady Brinton, whose Motions 1A and 81A deal with these matters, with sufficient reassurances and that she will not press her amendments today.

Amendments 4 and 5 removed two amendments from Report stage in the Lords relating to the national procurement policy statement. These required that, prior to publishing an NPPS, the Minister must give due regard to a number of specified principles and mandated the inclusion of a number of priorities in the NPPS itself. In respect of the first amendment, the noble Baroness, Lady Hayman of Ullock, has subsequently tabled a modified version of it—in Motions 4A and 4B in lieu—which, as before, would require the Minister drafting the NPPS to have regard to a set of principles. The modification suggests a set of principles more in line with those we have already established in Clause 12, and I am happy to set out the Government’s stance on this issue now.

The Government recognise that these principles are important to procurement, which is why they are already reflected throughout the Bill. For example, value for money, integrity and maximising public benefit are set out as procurement objectives in Clause 12, which I have already mentioned. Contracting authorities must have regard to these when carrying out procurements, and transparency requirements already run throughout the Bill.

[Lord Lansley (Con)]

Before we proceed further in relation to Clause 12, will my noble friend confirm that the procurement objectives in Clause 12 relate to covered procurement only—that is, procurements that are in excess of the threshold—and therefore does not include exempt contracts, whereas the national procurement policy statement applies to all procurement?

[Baroness Neville-Rolfe (Con)]

If I may, I will come back to that when I have finished presenting. I did ask that question today; I do not think there is that much difference, but I will come back to my noble friend.

There are other specific requirements in the Bill that place obligations on contracting authorities regarding the fair treatment of suppliers and non-discrimination in decision-making. On value for money, I know there is concern from across the House that it is often interpreted to mean lowest cost. We have sought to address this through the move from most economically advantageous tender to most advantageous tender at Clause 19, which stakeholders tell us is a powerful signal in this regard.

Including a similar set of principles in respect of the NPPS risks creating duplication and confusion when we are looking to simplify the regime. However, while the NPPS should focus on the priorities of the Government of the day, many of them are already reflected in the current non-statutory NPPS introduced by this Government, and we have consistently demonstrated our commitment to them through measures such as the strengthening of social value policy following the collapse of Carillion and the procurement policy on carbon reduction introduced in 2021. In addition, the Public Services (Social Value) Act 2012 will continue to exist alongside the new regime established by the Bill. I hope that this will satisfy the noble Baroness.

The second amendment made by this House added a sub-section which required the inclusion of specific priorities in the national procurement policy statement relating to achieving targets set under the Climate Change Act 2008 and the Environment Act 2021, meeting the requirements set out in the Public Services (Social Value) Act 2012, promoting innovation among potential suppliers and minimising the incidence of fraud. I believe that these issues are already addressed in the Bill—for example, in Clause 12—or elsewhere outside of this legislation. For example, the Public Services (Social Value) Act 2012 requires contracting authorities to consider the economic, social and environmental well-being of an area when planning specified procurement, and there are additional obligations imposed by the Environment Act 2021. From 1 November 2023, Ministers will be under a statutory duty to have due regard to the environmental principles policy statement when making policy and will be subject to this duty when preparing the NPPS.

Finally, the scope and extent of the NPPS needs to be flexible, and these things should not be set in stone. Noble Lords have highlighted net zero, social value and innovation, but new challenges arise, such as the security threat from the Russia-Ukraine war. The Government of the day need to be able to respond to each major new challenge in an appropriate manner, without needing to change primary legislation. I beg to move.

Amendment to the Motion on Amendment 1

Moved by

[Baroness Brinton]

Leave out “agree” and insert “disagree”.

[Baroness Brinton (LD)]

My Lords, I start by thanking the Minister for our meeting last week. I have listened carefully to what she has said today and during that meeting; I am afraid that she has not convinced me that the procurement rules for the NHS would be as strong, clear, transparent and accountable as we find in this Procurement Bill. My Amendments 1A and 81A would ensure that the NHS is included.

During the passage of the Health and Care Act 2022, the very short Clauses 79 and 80 gave the NHS exemption from this Bill, with procurement rules to be introduced in secondary legislation by the Health Secretary. Seventeen months on, this still has not happened. When she spoke just now, the Minister relied on government Amendment 82. However, in the consultation—it is, I believe, still open—the NHS provider selection scheme that she referred to sets out some general principles only. During an earlier stage of this Bill, in response to my earlier amendments, the noble Lord, Lord True, referred to clinical contracts being exempt. However, that is not so; in fact, I note that, today, the Minister has been referring to healthcare. Every single time I ask a Minister a question, the definition changes.

In the NHS provider selection scheme, the flexibility rests with NHS bodies to make their own decisions about which scheme they use. The consultation document says:

“This is intended to remove unnecessary levels of competitive tendering … the Provider Selection Regime is intended to make it straightforward to continue with existing arrangements for service provision where those arrangements are working well and there is no value for the patients, taxpayers, and population in seeking an alternative provider”.


Those phrases—“remove unnecessary levels of competitive tendering”, “working well” and “no value in seeking an alternative provider”—are worrying, frankly. The problem, as we have discussed at length in our debates on this Bill, is that poor practice creeps into a culture where people believe that things are working well. The rules that this Bill sets out are there to ensure that every public body putting out a tender has carefully thought through what is appropriate, not just working well.

There is evidence that the current practice in NHS procurement has a mixed record, whether at the highest level or right down at the level of local trusts and CCGs, which is often covered by the specialist press. Despite a blunt National Audit Office report in 2011 on value for money in NHS procurement, the experience during the pandemic showed that some of the deep-seated culture of things not being value for money and not being completely open and transparent continues. The NAO has commented on this and the NHS recognised it in its response paper, Raising Our Game, in which it said:

“Recent reports suggest NHS procurement is lagging behind industry procurement performance”.


Unlike Ministers, the Civil Service and staff at many other public bodies, who are constrained by conflict of interest rules, it is possible for NHS staff, including directors, to use a revolving door to move from the NHS and join a company that contracts with the NHS without a gap. Last year, a deputy director and the head of AI at NHS Digital both left and immediately joined the technology firm Palantir just as it was bidding for further contracts, some without open tendering; Palantir is known to be bidding currently for the federated digital platform contract, which is worth an estimated £360 million and is due to be awarded imminently. Only 10 days ago, the chief operating officer of the NHS left on a Friday and joined Doccla, the virtual ward company that is bidding for substantial NHS contracts, the following Monday. It was also reported in July this year that NHS Digital had spent £7 million on “irregular” payments to external contractors while, last year, the Treasury flagged “irregular” spending by the Department of Health and Social Care and the NHS worth £1.3 billion. Let me say that again: £1.3 billion. Last year, the Technology and Construction Court found that staff from three CCGs in the south-west had manipulated a £2 million contract knowing it to be improper.

Many of these incidents are not reported widely. I thank in particular the Health Service Journal and other technology and health reporters for shining a light on this poor practice, even if it is not regular, wherever it has happened. This is not about those individuals nor the contracting companies. It is about the culture of procurement in the NHS. My amendment would ensure that by including the NHS in this Procurement Bill it would share robust regulations with other bodies and would be accountable and transparent even if there is a need for some subsequent special arrangements for complex clinical contracts. Not doing this will not change the culture of NHS procurement but including it in this Bill will. I beg to move.

17:45

[Baroness Hayman of Ullock (Lab)]

My Lords, Amendment 4A in this group is in my name. My amendment in lieu would insert a number of priorities and principles into the Bill. I will be fairly brief because we discussed these issues at length both in Committee and on Report but we felt that they were important enough—and were considered important enough by noble Lords during those debates—to bring the amendment back once again.

My amendment asks that due regard be given to a number of priorities and principles. The first is “maximising public benefit”. Public benefit is mentioned in the Bill but we feel that it is too vague, which is why we want to pin it down more within another amendment. Maximising public benefit would include

“the achievement of social value, through the securing of environmental objectives”;

many noble Lords were concerned at the lack of environmental objectives in the Bill. It would also include

“promoting innovation amongst potential suppliers”.

We also think that it is important to have

“value for money, by having regard to the optimal whole-life blend of economy, efficiency and effectiveness that achieves the intended outcome of the business case”.

In our previous debates, the Minister spoke strongly about the importance of value for money, so I hope that she understands why the second part of our amendment is clearly important and would strengthen the Bill.

The next part of my amendment deals with transparency. We think that it is important that we act

“openly to underpin accountability for public money”,

tackle corruption and ensure that all procurement is fully effective in achieving this. We also think that good management should be in place in order to have proper integrity, prevent misconduct and exercise

“control in order to prevent fraud and corruption”.

Importantly, we have added in “fair treatment of suppliers”. I thank the Minister for her work on improving the Bill for small and medium-sized enterprises, but we feel that more could be done to ensure that

“decision-making is impartial and without conflict of interest”.

The final part of my amendment concerns non-discrimination—that is,

“ensuring that decision-making is not discriminatory”.

The reason why we have had such a debate about this matter is that the principles were originally in the Government’s Green Paper and were consulted on. Our concern is that those principles were then left out of the Bill even though the objectives were included. So, my amendment would bring those principles back into the Bill.

We believe that social and public value are important requirements for any contracting authority to consider in order, for example, to encourage anyone contracting to work with local suppliers; to encourage contractors to reduce their CO₂ emissions; to encourage the hiring of more apprentices; and to encourage greater diversity. We believe that, if the Government are to deliver their ambitions of levelling up and net zero, it will be important to include these principles in the Bill. We know that social value is included in the national procurement policy statement—the Minister made much of the NPPS in our previous debates—but it is not referred to in the Bill. We also know that public benefit is mentioned in the Bill, but it is not clear to us how social value would sit within that framework. How will it all come together to ensure that it works for the public benefit? We know that the NPPS will include the Government’s strategic priorities but, again, we do not know clearly what those are. Further, the Bill does not mention innovation, which is why it is an important part of my amendment. As the noble Lord, Lord Lansley, said when we previously debated the Bill:

“When our current Prime Minister was Chancellor of the Exchequer, he put innovation at the forefront of his economic approach to improving productivity”.—[Official Report, 28/11/22; col. 1619.]


So why not include it in this Procurement Bill?

As the Minister said in her previous response to similar amendments, innovation and competition have an important part to play here. Procurement should be an enabler of innovation. It is important that there is clarity around these principles and objectives. How will innovation be part of it, for example? The Bill will shortly become legislation. We must revisit these concerns and we want to persuade the Minister to consider very carefully what we have been saying and why we are saying it. From her responses, we do not believe that at previous stages there was adequate explanation of how all this would operate. Good sentiment from the Government and the Minister, and promises around an NPPS we have not seen, are not sufficient to ensure that we have the best procurement legislation possible, which we all want to see. Our amendments would help achieve that end.

Sadly, the Minister has again disappointed me with her introduction on these issues, although I thank her for all the work she has done as we have progressed so far. It is my intention to move my amendment.

[Lord Lansley (Con)]

My Lords, I will contribute on Amendments 4A and 4B in particular. As noble Lords will recall, the structure of Amendment 4A, as an amendment in lieu of the Commons Amendment 4, incorporates to an extent some of the issues raised in the strategic priorities that your Lordships sent to the Commons to be included in the national procurement policy statement. I will explain how that works in a minute.

Like other noble Lords, I am grateful for the time and effort that my noble friend the Minister has given to listening to what we had to say. On Commons Amendment 5—which would get rid of the reference to “strategic priorities”—I was focused on innovation, as she knows. Innovation is essential to the quality and effectiveness of procurement. Also, public procurement is a substantial part of this country’s economic activity. If it promotes innovation, it can make a significant difference to our overall economic performance and to reconciling our productivity problems. The fact that, in the absence of Amendment 4, the Bill would make no reference to innovation is such an omission that, on those grounds alone, Amendment 4A should be added back to the Bill.

When we tabled our amendment, the noble Earl, Lord Devon, the noble Baroness, Lady Worthington, and I tried to ensure that the national procurement policy statement was clear about what we regarded as enduring strategic priorities. We have backed off from that. My noble friend and the Minister in the other place were clearly told that we must have maximum flexibility. I still do not understand why the Russian invasion of Ukraine might mean that public procurement in the United Kingdom should not have regard to social value; none the less, leaving that to one side for a moment, I accept that there is an ideological commitment in government to the idea that everything that government does must be so flexible that you cannot even predict some of the basic principles within it.

We have dropped the strategic priorities; we have made them principles. As the noble Baroness, Lady Hayman, rightly has it, we have moved from “must include” to “have regard to”. Therefore, Ministers are not constrained to include in the statement innovation, the achievement of social value, the achievement of environmental objectives or, for that matter, transparency, integrity, fair treatment, non-discrimination and value for money. However, the idea that any of these things would be left out of a national procurement policy statement is wholly unacceptable.

I come back to the essential question: what are we trying to do? We are trying to set the framework for contracting authorities to undertake public procurement. From our point of view, the statement should include whatever the Government think it should include but it should not exclude such basic central principles of public procurement. We have only to ask ourselves what conclusion we would draw if the Government were to send a draft of an NPPS to Parliament which left these things out. In my view, we would have to reject it. What is the benefit of that? Better to put it in the Bill now, make it clear to Ministers and, frankly, officials, that it should be in the statement so that, when the draft of the NPPS comes, we can tick the box, send it forward and approve it.

The noble Earl, Lord Devon, will add matters on social value. I just say that we may have left the EU public procurement regime but, when you look at the centrality of social value to public procurement in other jurisdictions across Europe, the idea that you would not seek social value through public procurement seems wholly unacceptable.

I was quite struck by the paucity of argument presented in Committee in the other place when our amendment to the Bill was deleted. In addition to:

“It needs to be as flexible as possible”,—[Official Report, Commons, 31/1/23; col. 54.]


which was predictable, what irritated me especially, as my noble friend on the Front Bench is now aware, was that references to integrity, transparency and value for money are already in the Bill, in Clause 12. The Committee in the other place clearly paid no attention to the Bill in front of it, since Clause 12 relates to covered procurement. As we noticed in our debates in Committee, the national procurement policy statement is not confined to covered procurement. It extends to all procurement by government, though not including the NHS, which for these purposes seems to be excluded from “public authorities”, which is a curious definition in itself.

We knew that the NPPS was wider. The Committee at the other end seemed somehow to imagine that covered procurement was enough, but it excludes everything under about £112,000 in value. Therefore, many small procurements would not be affected by it. It simply is not acceptable. We need to go back and ask the Commons to think again about the exclusion of such central principles from the national procurement policy statement. It has been a long time coming back. We are nine months on from the point at which we sent the Bill to the Commons. We took some time getting it to the point that we did. Noble Lords will recall that on the first day in Committee we received 50 government amendments, this clever idea of covered procurement arising only at that point and not in the original draft of the Bill.

To make a final, acerbic comment, I find it somewhat astonishing that during the passage of the Bill the Government have been able to make many hundreds of amendments that they chose to make. At this stage, we are asking for only a small handful that the Lords want to make. The Government at this point might just bend and accept those amendments.

[The Earl of Devon (CB)]

My Lords, I regret that due to professional commitments I was unable to contribute as much as I would have liked to earlier stages of the Bill. However, I added my name to two amendments on Report, both of which focused on the importance of recognising social value in the development of the national procurement policy statement. I am grateful to the noble Lords who led on those amendments with such success—the noble Baronesses, Lady Hayman and Lady Worthington, and the noble Lords, Lord Coaker, Lord Fox and Lord Lansley—a truly cross-party team.

The recognition of social value now returns for our consideration with Amendments 4A and 4B. I am again grateful to the noble Baroness, Lady Hayman, for taking the lead and so succinctly gathering in one place the essential priorities and principles to which regard should be given. Chief among them from my perspective is public benefit through the achievement of social value.

I should at this stage disclose my membership of the APPG for Social Enterprise and explain that I was privileged to chair its inquiry into the performance of social enterprise during the dark days of the pandemic. The conclusions of that report were compelling, revealing without doubt that social enterprises—that is, enterprises committed to the delivery of social value alongside more commercial ambitions—performed considerably better during the pandemic than their competitors, be they charities or strictly commercial enterprises. Social enterprises were more resilient, lighter on their feet and more diverse in their employment and service delivery. They delivered a lot more of the smaller contracts—which, as the noble Lord, Lord Lansley, identified, would not be covered by Clause 12—and they performed better economically.

Where they performed much worse than their competition was in their ability to secure support and funding from local and central government through public procurement. We noted that this was a particular issue in England, as compared with Wales and Scotland, because in those jurisdictions social enterprises and social value are identified as priorities within their public procurement strategies. With this amendment we will achieve the same and ensure that the delivery of social value is a priority for government. I urge that it is supported.

18:00

[Baroness Noakes (Con)]

My Lords, I have much sympathy with Motion 1A in this group, tabled by the noble Baroness, Lady Brinton, because I believe that treating the NHS as a special case in any area of public policy has the effect of insulating the NHS, which is a seriously underperforming organisation that desperately needs change.

Having said that, I am afraid I cannot support the noble Baroness’s amendments. Parliament has already decided, in the shape of the Health and Care Act 2022, that the NHS should be subject to a bespoke regime. In effect, the other place was asked to think about that again when this House sent the Procurement Bill there for consideration, and it has sent it back with its response—it wants to keep a bespoke regime for the NHS—so I think we have the answer to that. My noble friend the Minister has made clear that much work has already been done on the interface between the two regimes to make sure that nothing will fall through the cracks.

This boils down to a simple difference of view; the Government want to do it one way and the noble Baroness, Lady Brinton, wants to do it another way. I wonder whether this is really the kind of issue that should be the subject of a prolonged battle between the two Houses. I cannot see that there is a real point of principle here. Also, as my noble friend the Minister pointed out, implementation of that new system in the NHS is already quite a long way advanced and it would appear wasteful to try to undo all that.

I turn to Motion 4A in the name of the noble Baroness, Lady Hayman of Ullock. She has tabled a list of what she calls “priorities and principles” that Ministers must consider before publishing a national procurement policy statement. At first sight these look wholesome and unobjectionable, as one might expect. I have two main reasons for not supporting her amendment.

First, the amendment is unnecessary. Government Ministers and their officials are already focused on value for money, transparency, integrity and even, I say to my noble friend Lord Lansley, innovation. It is government policy to pursue innovation; it is already part of the day-to-day life of government. Many of these items are either implicitly or explicitly already in the law, either administrative law or general law. As has been pointed out, some already feature in the objectives for covered procurements. My noble friend the Minister explained all this in her introductory remarks. Thinking that the Government need a special list of things to think about, in statute, misunderstands the processes of government.

Secondly, the list of items always reflects today’s concerns and is not future-proofed. While some issues such as transparency seem like eternal issues, they were not always unambiguously so. Today’s obsessions with things such as environmental matters will, I predict, be overtaken by other issues of concern, whether Russia and Ukraine or something that we have not yet thought about. I am not clever enough to predict what those other things will be; I just know that the world changes and the orientation of government policy will change with it. The inclusion of a list runs a real risk of being overtaken by events, which is why it is not good legislative practice to put such lists in statute. I hope that both noble Baronesses will not feel it necessary to pursue their amendments and divide the House.

[Baroness Neville-Rolfe (Con)]

My Lords, I begin by sharing my appreciation for the number of incisive contributions we have heard in the course of this short debate. It is always a pleasure to debate these things here. Of course, they have now been reviewed in the other place, as my noble friend Lady Noakes said, and there was a long discussion, including a long Committee stage attended by my friend in the other place Alex Burghart. I particularly thank noble Lords for all the work that has gone into this across the House, including these important provisions.

My noble friend Lord Lansley is correct that the objective in Clause 12 applies to cover procurement. The NPPS clause allows an NPPS to cover all procurement, but in practice its scope will be determined by the contents of the statement. In my opening remarks I explained at some length the position on the coverage of the NHS. I will come back to one or two of the questions from the noble Baroness, Lady Brinton.

I particularly thank the noble Baroness, Lady Hayman, for all that she said. Concerning principles that need to be considered by Ministers in preparing the NPPS, these principles are already covered through other commitments and legislation, as I have already set out. The amendment is therefore not necessary, as my noble friend Lady Noakes said. In addition, our fundamental view is that the Government of the day should not be constrained by the Bill in their ability to prescribe something more specific. They are free to do so—and I think this is the charm of the Bill—through the NPPS rather than through primary legislation. The Bill is about clarity and simplicity, not layering rules on rules.

To understand how it works in practice, I refer my noble friend Lord Lansley—I think I have already discussed this with him—to the current non-statutory NPPS, which covers innovation and social value. Attempting to drive innovation, which I am as keen on as he is, in every single procurement will not always be relevant or proportionate. Our Bill drives innovation through, for example, our new competitive flexible procedure, pre-market engagement and our duty for contracting authorities to have regard to reducing barriers for SMEs—which will also benefit social enterprises, as the noble Earl, Lord Devon, referred to. Future NPPSs will also be subject to parliamentary scrutiny and consulted on as appropriate.

The consideration of environmental targets and objectives relating to social value in preparing the NPPS, and the other principles set out in this amendment, are duplicative and would render the Bill more complex and confusing for contracting authorities and suppliers. Singling out specific objectives for Ministers to consider will create the impression that they trump others, which could unduly constrain flexibility for a Government to set priorities in future, which they will do through the NPPS. This is a principle seen in other legislation, where you have framing legislation and then statutory guidance.

Finally, regarding environmental considerations—as highlighted in discussions during the REUL Bill debates, although perhaps I should not remind noble Lords of those as they took a long time—Ministers will now be under a legal duty to have due regard to the environmental principles policy statement when making policy, including the development of policies in accordance with the Bill.

On the NHS amendments championed by the noble Baroness, Lady Brinton, I am grateful for the meetings that we have had but I believe that they stem from a confusion. NHS bodies are contracting authorities and therefore already covered by the Bill; we had a good conversation about mixed contracts and so on, which I think was helpful to us both. It would be inappropriate to remove the power to make the provider selection regime regulations, especially given the benefits that they will bring to patients.

In response to a question about the definition of healthcare services, the scope of services in the PSR has been consulted on and will be further supported by reference to a list of common procurement vocabulary codes, set out clearly in the PSR regulations. An indicative list of those codes was included in DHSC’s recent consultation on the PSR.

The noble Baroness made a point about conflicts of interest. Our Bill strengthens existing legal duties on conflicts of interest and embeds greater transparency throughout the commercial life cycle. This has been welcomed and, I think, is important. Furthermore, the provider selection regime regulations will clearly set out provisions for the effective management of conflicts of interest. The PSR is designed to ensure transparency across all procurement decisions to which it applies, including how the decisions were made. This transparency will help ensure that there is proper scrutiny and accountability of decisions to award contracts for healthcare services.

Finally, an independently chaired panel will provide expert review and advice concerning decisions made under the PSR, helping to ensure that procurement processes are transparent, fair and proportionate. I very much hope that that additional information about our plans for the PSR will enable this debate about just how these two regimes, both of which have been discussed constructively and at length in this House, fit together, and that noble Lords feel able to support the government amendments and withdraw the amendments that they have put forward.

[Baroness Brinton (LD)]

My Lords, I thank everybody who has spoken in this brief debate. I particularly thank the noble Baroness, Lady Noakes, for at least agreeing with the principle, even if she cannot support me in the Division Lobby, because it is really important.

For all the reasons that the Minister outlined, we are where we are. When we were working on the Health and Care Bill, it was absolutely evident that the secondary legislation changes would be outlined quickly thereafter—I am looking at others who were in the Chamber at the same time—and agreed by last autumn. We are now 17 months on and there is no sight of them at all.

The Minister outlined the NHS provider selection scheme and all its arrangements. That it is not looking for a culture change worries me most. In my earlier speech I gave examples of the behaviour of three senior managers at three CCGs, which the public would not have known about if the losing company had not gone to the Technology and Construction Court. This revealed that it is all too easy, where the culture is poor, for people to believe that the rules are being followed when they are not.

I appreciate that we have a point of difference on this, but on our Benches we believe that there is much benefit in this Procurement Bill and do not understand why the NHS is excluded. It is perfectly possible to include some special arrangements for it, but nothing has happened since the Health and Care Act was enacted. At the moment, nothing we are hearing from the NHS is about that culture change. On that basis, I wish to test the opinion of the House.

18:13

Division 3

Ayes: 76

Noes: 187

18:23

Motion on Amendment 1 agreed.

Motion on Amendments 2 and 3

Moved by

[Baroness Neville-Rolfe]

That the House do agree with the Commons in their Amendments 2 and 3.

2: Clause 2, page 2, line 16, leave out “subsection” and insert “subsections (8A) and”

3: Clause 2, page 3, line 12, at end insert—
“(8A) In this Act, a reference to a public authority includes a reference to the
Common Council of the City of London.”

[Baroness Neville-Rolfe (Con)]

My Lords, in moving this Motion I will speak to the other amendments in the group.

Amendments 2, 3 and 99 ensure that the City of London is appropriately regulated by the Bill and that its private sector activities are not inappropriately captured.

Amendments 6 to 12 deal variously with abnormally low and unsuitable tenders, and the definition of disabled and disadvantaged people in contracts specifically directed to help them.

Amendment 10, which I know is of interest to the noble Lord, Lord Fox, who I thank for his co-operation on this large number of amendments, requires that any procedural breach that results in a tender being unsuitable must be material. This tightens the circumstances in which a switch to direct award can be made. The transparency notice will ensure that any awards under Clause 43 are publicised, and, if the provision is abused, there will be opportunity for suppliers to bring a challenge and for the procurement review unit to investigate.

Amendments 13 to 22, 48 to 56, and 61 to 64 deal with the publishing of KPIs, tendering timescales for utilities and non-central government contracting authorities, standards and accreditation, electronic communications, e-invoicing and payment compliance, and contract change notices.

Amendment 60 and the consequential amendments—Amendments 76, 85, 88, 90, 91 and 92—introduce an enabling power which gives the UK the ability to take retaliatory action as a result of a procurement-related dispute with a country with which we have a free trade agreement on procurement.

Amendments 65 and 66 strengthen the record-keeping obligations with the Bill, to reflect obligations under our international agreements.

Amendments 83, 87 and 89 relate to financial thresholds, ensuring that, where thresholds for the publication of KPIs need to be changed, the affirmative procedure will apply.

Amendments 95 and 96 clarify the reasonableness test in Schedule 2, following feedback from the Local Government Association.

Amendment 104 extends the new power that the Bill will insert into the Defence Reform Act by allowing regulations to ensure that, under specified circumstances, certain existing contracts, when amended, can be treated as new contracts and brought within the scope of the single-source regime. Amendment 104 relates to single-source defence contracts entered into after the Act came into force but which were below the regime threshold and are subsequently amended to a contract value above that threshold.

Amendments 23, 24, 26 to 28, 30, 32, 35, 36, 39, 43, 44 to 46, 68, 72, 73, 75, 84 and 103 strengthen and ensure that the debarment and exclusion regimes in the Bill function as intended by inserting a substantive debarment appeals regime to replace the enabling power. Noble Lords will remember that, in this House, we thought it was better to have that in the Bill rather than in regulations.

Finally, the Government introduced Amendments 58, 59, 69, 70, 71, 74, 77 to 80, 86 and 93 in the other place at the request of the devolved Administrations. These amend how the legislation applies in relation to devolved procurement in Wales or Scotland and ensure that the regime runs effectively. They reflect constructive discussions.

I apologise for the number of amendments but we have sent out a letter explaining exactly what these all entail. I beg to move.

[Lord Fox (LD)]

My Lords, when the noble Lord, Lord Lansley, was being uncharacteristically acerbic, he mentioned the number of amendments to which this legislation has been subjected. I believe that the Deputy Speaker was present in the Grand Committee when we were wading through some of the 450 or so amendments that were laid before us. It is therefore quite appropriate that, as we wave goodbye—probably—to this legislation from this House, your Lordships are confronted with another 85 amendments. However, in this particular case they have been well explained—for which I thank the Minister—and are non-controversial. In that respect, we can leave in perhaps a slightly less acerbic way than we arrived.

I expect His Majesty’s loyal Opposition to press the amendment of the noble Baroness, Lady Hayman. We on these Benches will support that, in the event that she so does.

18:30

[Lord Aberdare (CB)]

My Lords, I played a very small part in the Committee stage of this Bill, mostly seeking to protect and promote the interests of small and medium-sized enterprises, and I welcome its provisions in that regard.

I take this opportunity to welcome Amendments 8 and 9 from the Commons and to thank the Minister, her colleagues and her officials for getting them included in the Bill. The Bill as it originally stood had the unintended effect of reducing the scope of existing provision for reserving certain contracts for supported employment providers. These amendments ensure that no such reduction will occur. I am most grateful to the Minister for listening to the concerns raised by Aspire Community Works—itself a supported employment provider—to address and, indeed, resolve this issue.

Amendments 2 and 3 agreed.

Motion on Amendment 4

Moved by

[Baroness Neville-Rolfe]

That the House do agree with the Commons in their Amendment 4.

4: Clause 13, page 10, line 9, leave out paragraph (b)

Amendment to the Motion on Amendment 4

Moved by

[Baroness Hayman of Ullock]

At end insert “and do propose Amendment 4B instead of the words so left out of the Bill—

4B: Clause 13, page 10, line 8, at end insert—
“(b) have regard to the following priorities and principles—
(i) maximising public benefit, including by the achievement of social value, through the securing of environmental objectives and from economic benefits, including by promoting innovation amongst potential suppliers,
(ii) value for money, by having regard to the optimal whole-life blend of economy, efficiency and effectiveness that achieves the intended outcome of the business case,
(iii) transparency, by acting openly to underpin accountability for public money, anti-corruption and the effectiveness of procurements,
(iv) integrity, by providing good management, preventing misconduct, and exercising control in order to prevent fraud and corruption,
(v) fair treatment of suppliers, by ensuring that decision-making is impartial and without conflict of interest, and
(vi) non-discrimination, by ensuring that decision-making is not discriminatory,””

18:31

Division 4

Ayes: 173

Noes: 187

18:41

Motion on Amendment 4 agreed.

Motion on Amendments 5 to 24

Moved by

[Baroness Neville-Rolfe]

That the House do agree with the Commons in their Amendments 5 to 24.

5: Clause 13, page 10, line 29, leave out subsection (4)

6: Clause 19, page 14, line 21, at end insert—
“(ba) may disregard any tender that offers a price that the contracting authority considers to be abnormally low for performance of the contract;”

7: Clause 19, page 14, line 23, at end insert—
“(3A) Before disregarding a tender under subsection (3)(ba) (abnormally low price), a contracting authority must—
(a) notify the supplier that the authority considers the price to be abnormally low, and
(b) give the supplier reasonable opportunity to demonstrate that it will be able to perform the contract for the price offered.
(3B) If the supplier demonstrates to the contracting authority’s satisfaction that it will be able to perform the contract for the price offered, the authority may not disregard the tender under subsection (3)(ba) (abnormally low price).”

8: Clause 32, page 23, line 22, after “operates” insert “wholly or partly”

9: Clause 32, page 23, line 24, leave out from “individuals” to end of line 26 and insert “where—
(a) disabled or disadvantaged individuals represent at least 30 per cent of the workforce of the organisation,
(b) if a particular part of the organisation is to perform the contract, disabled or disadvantaged individuals represent at least 30 per cent of the workforce of that part of the organisation, or
(c) if more than one organisation is to perform the contract, disabled or disadvantaged individuals represent at least 30 per cent of the combined workforce of— (i) those organisations,
(ii) where a particular part of each organisation is to perform the contract, those parts, or
(iii) where a combination of organisations and parts is to perform the contract, those organisations and parts.”

10: Clause 43, page 29, line 40, leave out “19” and insert “19(3)(a), (b) or (c)”

11: Clause 43, page 30, line 1, leave out paragraph (c)

12: Clause 43, page 30, line 4, after “notice” insert “or associated tender documents”

13: Clause 52, page 35, line 24, leave out “and publish”

14: Clause 52, page 35, line 28, at end insert—
“(2A) A contracting authority must publish any key performance indicators set under subsection (1).”

15: Clause 54, page 37, line 14, at end insert—

“The contract— (a) being awarded is a utilities contract, or (b) is being awarded by a contracting authority that is not a central government authority, and is subject to a negotiated tendering period	No minimum period
The contract— (a) being awarded is a utilities contract, or (b) is being awarded by a contracting authority that is not a central government authority, and tenders may be submitted only by preselected suppliers	10 days”

16: Clause 54, page 37, line 35, at end insert—
““central government authority” has the meaning given in paragraph 5 of Schedule 1 (threshold amounts);
“negotiated tendering period” means a tendering period agreed between a contracting authority and pre-selected suppliers in circumstances where tenders may be submitted only by those preselected suppliers;”

17: Clause 54, page 38, line 2, at end insert—
““pre-selected supplier” means a supplier that—
(a) has been assessed as satisfying conditions of participation before being invited to submit a tender as part of a competitive tendering procedure, or
(b) in the case of a contract that is being awarded by reference to suppliers’ membership of a dynamic market, is a member of that market;”

18: Clause 56, page 38, line 24, at end insert—
“(za) the standard adopts an internationally-recognised equivalent, or”

19: Clause 56, page 38, line 26, leave out paragraph (b)

20: Clause 56, page 38, line 29, at end insert—
“(3A) If the procurement documents refer to a United Kingdom standard, they must provide that tenders, proposals or applications that the contracting authority considers satisfy an equivalent standard from another state, territory or organisation of states or territories will be treated as having satisfied the United Kingdom standard.
(3B) In considering whether a standard is equivalent to a United Kingdom standard for the purposes of subsection (3A), a contracting authority may have regard to the authority’s purpose in referring to the standard.
(3C) A contracting authority may require certification, or other evidence, for the purpose of satisfying itself that a standard is satisfied or equivalent.”

21: Clause 56, page 38, line 36, leave out “such matters” and insert “the matters mentioned in subsection (4)”

22: Clause 56, page 39, leave out lines 9 to 12 and insert—
“(b) are primarily developed for use in the United Kingdom, or part of the United Kingdom.”

23: Clause 57, page 39, line 20, after “are” insert “continuing or”

24: Clause 57, page 39, line 28, after “are” insert “continuing or”

Motion agreed.

Motion on Amendment 25

Moved by

[Baroness Neville-Rolfe]

That the House do agree with the Commons in their Amendment 25.

25: Clause 57, page 39, line 30, at end insert—
“(2A) If a supplier is an excluded supplier on the basis of the supplier or an associated person being on the debarment list only by virtue of paragraph 34A of Schedule 6 (threat to national security), the supplier is to be treated as an excluded supplier only in relation to public contracts of a kind described in the relevant entry.

[Baroness Neville-Rolfe (Con)]

My Lords, with the leave of the House, I will also speak to Amendments 29, 33, 34, 37, 38, 40, 41, 42, 57, 100 and 101 in this group. These amendments significantly strengthen the exclusions and debarment provisions on national security grounds. I hope they will further assure noble Lords that the Government are taking the issue of national security seriously and are ready to take action. I thank particularly the noble Lord, Lord Alton, who I see in his seat and who has worked tirelessly to raise this issue in the House, for our constructive meetings.

The new amendments will enable a Minister of the Crown to take a stronger approach in response to a specific risk profile of a particular supplier and make targeted decisions about whether the debarment should be mandatory for particular types of contracts, depending on the nature of the risk. If the supplier poses an unacceptable risk in relation to selected goods—for example, networked communications equipment—the Minister will be able to enter on the debarment list that the supplier is an excluded supplier for contracts for the supply or support of that type of equipment.

The entry may also, or as an alternative, stipulate that the supplier is excluded from contracts relating to certain locations or sites, or from contracts let by certain contracting authorities. This removes discretion from contracting authorities regarding exclusions where a supplier poses a threat for particular contracts, thereby reducing the risk of a supplier being allowed to participate in those procurements. By allowing this type of targeted and proportionate approach, we can direct that suppliers must be excluded where the risks are unacceptable and allow contracting authorities to make appropriate choices where the risk is manageable—for example, for the provision of pencils or plastic furniture.

Amendment 31 commits a Minister of the Crown to keep suppliers under review for potential investigation for debarment on national security grounds. This amendment commits Ministers to proactively consider new debarment investigations where there is evidence of risk so that the Government can act effectively and on time. We believe this would be highly advantageous in minimising the risk of those who pose a threat to our national security being awarded public contracts.

18:45

I am pleased to announce that the Government will create a new specialist unit, with dedicated resources within the Cabinet Office, to take on and manage this new approach. The new national security unit for procurement will regularly monitor government supply chains and review pertinent information to determine which suppliers should be investigated for debarment on national security grounds. It will be able to draw on the full range of expertise within government, access the latest intelligence, including that from Five Eyes partners, and respond swiftly to emerging threats. It will also carry out investigations of suppliers for potential debarment on national security grounds. The new unit will consider the findings and propose recommendations to the Minister for the final decision on whether the supplier should be added to the debarment list.

The unit will also have a role in supporting and upskilling contracting authorities. By directly engaging with them and providing guidance, it will help contracting authorities confidently to implement the national security exclusion and debarment regimes, maximising their effectiveness. The amendments constitute significant steps to strengthen our approach to national security in procurement. They have been welcomed by the other place and I believe this House should also welcome them.

Amendment 47 removes Clause 65, which was agreed to on Report in the Lords. The original amendment required the Government to publish a timetable for the removal from the Government’s procurement supply chain of surveillance equipment or other physical technology where there was evidence that a provider had been involved in modern slavery, genocide or crimes against humanity.

The noble Lord, Lord Alton, has tabled a revised version of the amendment—amendments in lieu, Amendments 47A and 47B—which would require the Government to publish a timeline for the removal of networked physical technology or surveillance equipment from the Government’s procurement supply chain where there was established evidence that a provider had been involved in modern slavery or the crime of genocide, or was subject to the People’s Republic of China’s national intelligence law.

I am sure the noble Lord will want to speak to his amendment in lieu but, before he does, I hope he may allow me to make a few points. First, I agree with the intent behind the amendment, but the Bill’s new debarment regime makes huge progress on excluding suppliers who are unfit to deliver public contracts, including on modern slavery grounds.

Secondly, I take this opportunity to remind the House that last year the Government published a WMS asking departments to consider the removal of visual surveillance equipment from government sensitive sites to ensure that no such equipment is connected to departmental core networks, and to cease any future procurement for such equipment. In the other place we committed that, within six months of Royal Assent for the Bill, the Government would set out the timeline for the removal of surveillance equipment supplied by companies subject to the national intelligence law of China from sensitive sites. I reiterate that promise today.

Thirdly, the key issue here is where those cameras are located. The level of risk in recycling centres, leisure centres, schools or hospitals does not match the level of threat that we potentially face on sensitive sites. These are not the sites that would typically be of interest to a hostile state, and they do not contain the type of material that would be particularly useful to them.

Lastly, replacing devices is not the only method for mitigating risk. We should look to strengthen protective measures to ensure that devices are less vulnerable to attack. The Government are working with the National Cyber Security Centre and the newly-formed National Protective Security Authority to provide organisations with a library of advice and guidance, enhancing the protection of these devices and reducing the likelihood of compromise.

I thank the noble Lord for his constructive engagement since tabling his amendments. While regrettably I cannot support his amendment, I am happy to offer a clear definition of the sites that our commitments regarding physical surveillance will apply to. Our commitment will apply to government departments and cover their sensitive sites, which are: any building or complex that routinely holds secret material or above; any location that hosts a significant proportion of officials holding developed vetting clearance; any location which is routinely used by Ministers; and any government location covered under the Serious Organised Crime and Police Act 2005. While our commitment does not extend to the wider public sector, public sector organisations may choose to mirror our action—indeed, I believe that some of them have chosen to do so.

I am also happy to commit—and this is important—to an annual written report to Parliament detailing progress on our commitment to remove from government departments’ sensitive sites physical surveillance equipment subject to the national intelligence law of China. I hope that these commitments satisfy the noble Lord and that he will not be pressing his amendments. I thank him again for his contribution on this important matter.

Amendment 102 removed an amendment which was added to Schedule 7 on Report in this House creating a discretionary exclusion ground for suppliers engaged in forced organ harvesting. Forced organ harvesting is an abhorrent practice and we are in full agreement that complicity in the abuses associated with the overseas organ trade must not be tolerated. The noble Lord, Lord Hunt, has subsequently tabled two amendments in lieu, Amendment 102B in Motion 102A. I take this opportunity to reiterate the Government’s stance on this important issue. The UK has been explicit that the overseas organ trade, or complicity in it, will not be tolerated. For example, it is an offence to travel outside of the UK to purchase an organ, by virtue of the Health and Care Act 2022. The Government continue to monitor and review evidence relating to reports of forced organ harvesting in China and maintain a dialogue with leading non-governmental organisations, and with international partners, which is equally important, on this very important issue.

I do not believe that these amendments are necessary as the issue is already dealt with under the existing exclusion grounds. Under the Procurement Bill, any suppliers failing to adhere to existing ethical or professional standards that apply in its industry, including relating to the removal, storage and use of human tissue, could be excluded under the grounds of professional misconduct.

To further reassure noble Lords, as far as I am aware no supplier to the UK public sector has been involved in forced organ harvesting—though if they were, the exclusion grounds would apply. Although I sympathise with the noble Lord’s concern—he has been very eloquent in this area in successive debates on the Bill—I am not convinced of the case for this amendment. I hope that, in the light of what has been said, he may decide not to press this amendment today, bearing in mind all that I have said about our approach to this abhorrent practice. I beg to move.

[Lord Alton of Liverpool (CB)]

My Lords, I begin by thanking the Minister. I will come back to that in a few moments, because she has been extraordinarily helpful, and I know we have made significant progress from when the first amendment was moved on this issue.

In parenthesis, before I begin—and because I will not weary the House with a second speech later, even if the opportunity is there—I would like to say how much I support what the noble Lord, Lord Hunt of King’s Heath, is trying to achieve with Motion 102A and Amendment 102B. Again, I have spoken on those previously, along with the noble Baronesses, Lady Northover and Lady Brinton, the noble Lord, Lord Ribeiro, from the Conservative Benches, my noble friend Lady Finlay—who is unable to be with us this evening—and many others who want to support what the noble Lord is trying to achieve.

I turn to Clause 65 and Amendment 47B in Motion 47A in my name. As the Minister said, it would require a timeline for the removal of surveillance equipment that is connected to the internet and subject to the People’s Republic of China’s national intelligence law. I did say that I would like to start my remarks, and I do, by paying tribute to the Minister’s own efforts and those of her officials, who have met with me now on several occasions—most recently on Thursday last—to discuss the concerns of Members of both Houses when it comes to the presence of Chinese-made surveillance cameras in our public procurement chain.

As recently as yesterday, the Sunday Telegraph reported that the Co-op has decided to ban Chinese CCTV for “ethical and security reasons”. Given the Minister’s professional background in a previous life, she will know that, in doing this, it is following the example of Tesco. It would indeed be odd if supermarkets were ahead of public bodies in recognising the dangers posed by the CCP’s surveillance state. I was also very struck that the Deputy Prime Minister, the right honourable Oliver Dowden, speaking in another place this afternoon about allegations concerning espionage on the estate of your Lordships’ House and that of another place, made a point of saying that one of his first actions in Whitehall had been to have surveillance cameras linked to Hikvision removed from his department. This is something that Sajid Javid also said when he became Secretary of State for Health. I simply say that, if supermarkets and departments of state are not suitable places for these cameras, where is? It would indeed be odd if we did not think about the 60% of public bodies that are estimated to have Hikvision cameras in use.

This is not a new question that I am putting to your Lordships’ House; this is something I have raised on over 40 occasions in the House or in Grand Committee since 2020. Both the Minister and the Leader of the House, the noble Lord, Lord True, have taken this issue seriously. When the noble Lord was in charge of this Bill, in its earliest stages, we had a meeting to discuss Hikvision. Because I want to get on with seeing a resolution of this issue, I am able to welcome the clear commitment from the Minister, given at the Dispatch Box, for a timetable for the removal of this surveillance equipment and these cameras from sensitive sites. However, it is worth noting, as I have said, how we got here.

As the Government have recognised, there are at least a million Hikvision and Dahua cameras in the UK, installed across our high streets, job centres, schools, police forces, hospitals, universities, local government buildings and even government departments. I gently say to the Minister that, although she is right that military barracks or GCHQ are clearly far more sensitive sites than, say, hospitals or schools, some of this is about data collection. That involves every single citizen of this country, so it poses dangers for them too. I commend to her the recent Channel 4 documentary on Hikvision and the fantastic work of IPVM, Big Brother Watch, Hong Kong Watch—of which I am a patron—and other organisations that have outlined the security risk that these cameras pose, particularly in those sensitive public sector sites, but not exclusively so.

It is quite something to consider that, as a country, we have willingly handed over the majority of our surveillance infrastructure, which watches the often public and sometimes intimately private moments of our lives, not just to the police or local authorities but to an authoritarian Government that the House of Commons has found, on a resolution of the House, credibly accused of genocide. I declare a non-financial interest as vice chair of the All-Party Parliamentary Group on Uyghurs.

How ironic it is that we are debating this on the day we have learned that an alleged CCP spy has been operating across Parliament, based in the office of a Member of another place. We urgently need a bicameral group of senior parliamentarians to investigate this shocking lapse. The Intelligence and Security Committee of Parliament has warned against the infiltration of our universities and other institutions. Only last week, the University of Cambridge ended a partnership with a subsidiary company developing Chinese weapons and military hardware. The line between crass naivety and outright collaboration is a fine one. We recall the Cambridge spies and the Soviet Union, and some of the disastrous consequences. It should send a shiver down the spine of every freedom-loving person to see swathes of the public surveillance procurement supply chain handed over to Chinese companies that are blacklisted for complicity in gross human rights violations by the United States and which are legally compelled under the PRC national intelligence law to pass on data to the Chinese Communist Party state.

As we debate the timeline for their removal from our public procurement supply chain, the definition of what we should consider “sensitive sites” and the oversight that Members of this House and another place will have should be high on our agenda. Surely, for too long government policy towards China has favoured investment and trade at the expense of our national security, our values and human rights. We have underestimated the PRC, ignored the voices of those Uighurs, Hong Kongers, Tibetans and others who have been persecuted by the CCP and know it best, and failed to produce a coherent strategy to deal with the threat that the PRC poses. I am always struck by the phrase used by the noble Lord, Lord Patten of Barnes, who knows a thing or two about China. He describes it as cakeism—wanting to have your cake and eat it—to want trade deals on the one hand, but recognise the country as a threat to your national interest on the other.

19:00

Despite the ongoing human rights crackdown in Hong Kong, China’s flagrant breaches of the Sino-British Joint Declaration and the recent targeting of Hong Kong activists living in the UK, the Government have failed to hold any Hong Kong or Chinese official to account with targeted sanctions. I suppose at this juncture I should say that I have a sort of interest, in being one of two Members of your Lordships’ House who have been sanctioned by the CCP. Most Ministers would privately concede, if pushed, that they share the view of this House that the treatment of Uighur Muslims is credibly genocide, yet they dare not publicly state it or take the kind of actions that the US is taking to ensure that the goods that we import from China are not made by Uighur forced labour. That is why I raised that very issue, linking it not just to slave labour but to genocide, in moving my original amendment.

Last week, along with the noble Baroness, Lady Kennedy of The Shaws, and Sir Iain Duncan Smith MP, who has championed this cause in the Commons, I met US Customs and Border Protection officials to discuss customs enforcement preventing goods coming to the US from China’s Uighur region where forced labour is present. It is striking how much the US is doing to tackle the issue of modern slavery, in comparison to our own rather lacklustre approach.

These views are not mine alone but shared by the Foreign Affairs Committee in its recent report on the Indo-Pacific and the integrated review, and the joint Intelligence and Security Committee’s report on China, which both bemoan the woeful lack of a China strategy and seriousness from the Government over the security threats posed by the PRC. I commend to the Minister last week’s op-ed by Juliet Samuel, which made a forensic examination of what she described as the “King Kowtow” approach to trade with China—where, incidentally, instead of resilience we have a huge dependency and a trade deficit of over £40 billion.

Procurement and a renewal of our own industrial capacity would make a dent in that. We need a national resilience strategy, not dependency. Surely that is one of the lessons that we should have learned from Ukraine. Sadly, the Foreign Secretary’s recent visit to Beijing reflects the wrong approach. He has embarked on a fixed pathway of engagement with the PRC at all costs, failing to protect our national security at home while being unwilling to learn the lessons from our key allies, who have far more developed strategies for dealing with the PRC.

The commitment by the Government this evening will not change consecutive Governments’ woeful lack of a China policy overnight, but it does offer a glimmer of hope for the publication of a timeline for the removal of what the former Biometrics and Surveillance Camera Commissioner has described as “digital asbestos” from our public procurement supply chain. The Government should reflect on the worrying reasons for the resignation of the commissioner, Professor Fraser Sampson.

When it comes to the Government’s commitment to prioritise the removal of this equipment from “sensitive sites”, which I welcome, I favour the clearest definition to cover our police forces, NHS trusts, schools, universities, government departments, military sites, transport networks and local government buildings. This clear definition will make it easier for the Government to readily identify the extent of the problem, and put in place a practical timetable for the removal of surveillance equipment that falls under the jurisdiction of the PRC’s national intelligence law after six months from the Bill receiving Royal Assent.

I welcome the commitment from the Government—the most important thing of all in the concessions that the Government have offered—to a role for Members of this House and the other place in scrutinising annually the progress the Government have made in the removal of these cameras and this equipment, and hope that the responsibility for this will be given to the Joint Intelligence and Security Committee. Finally, it is my sincere desire that we can avoid such a public procurement supply chain fiasco in the future. I hope that civil servants and Ministers will learn the lessons from allowing Hikvision and Dahua cameras to spread across the public sector and avoid such a costly mistake for the taxpayer again.

I started my speech by paying tribute to the noble Baroness, Lady Neville-Rolfe, and the departmental officials who have worked on the Bill. I should like to end it in that spirit as well. I greatly appreciate the concerted engagement from the Minister, the quiet diligence of officials and the Government’s openness to moving on this important issue. In conjunction with that, I also thank Sam Goodman of Hong Kong Watch, of which I am a patron, as I have said, for some helpful background work. Given the commitment today by the Minister at the Dispatch Box to the publication of a timeline, a definition of sensitive sites and the allowance of some parliamentary oversight, I will not be moving this amendment to a Division. However, the House can be sure that I will watch this with an eagle eye and return to it, should the need arise in the future.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I will speak to my Amendments 102A and 102B. It is a great pleasure to follow the noble Lord, Lord Alton. I very much agree with the thrust of what he said and look forward to the results of his eagle eye, which I am sure will come to your Lordships’ House over the next months and years. Like him, I also thank the Minister for her stewardship of the Bill. It has taken so long that I recollect that on our first day in Committee, the noble Baroness herself had laid many amendments which she seemed to have to refute later on in proceedings on the Bill. At least she knows how it feels to have a government Minister reject so many well-argued points.

I thank the Minister also for what she said about the Government’s view of the appalling atrocities being committed in China, with the removal of organs from a living prisoner of conscience for the purpose of transplantation, killing the victim in the process. It is state sanctioned and widespread throughout China. The victims at the moment are known to be primarily Falun Gong practitioners, but most recent evidence suggests that Uighur Muslims are also being targeted on a massive scale, particularly in Xinjiang.

My amendment was supported by noble Lords all around the House on Report. Essentially, it gave a discretionary power to exclude suppliers from being awarded a public contract if they have participated in forced organ harvesting or unethical activities relating to human tissue, including where they are involved in providing a service or goods relating to such activities. The effect of the amendment would have been to prevent any service or goods that may have been involved in, or developed off the back of, the forced harvesting trade entering the UK. When it went back to the Commons, the Government took the provision out in Committee. This was challenged on Commons Report, led by my honourable friend Marie Rimmer. Despite support from MPs of all parties, that was not successful, so I am asking noble Lords to send it back to the Commons for further consideration.

My reasons, briefly, are threefold. First, the scale of the atrocities being carried out in China, specifically in Xinjiang, are becoming ever clearer and more horrific. Secondly, I believe that Ministers were wrong in dismissing the need for the amendment, both in the response they gave in the Commons to my colleagues and in the comments that the Minister has given tonight. Thirdly, I have to agree with the noble Lord, Lord Alton, that the context in which this is being debated is, frankly, that government policy towards China is completely inadequate to the threats that country poses to the interests of the United Kingdom.

On the scale of the atrocities, I can do no better than to quote what Sir Iain Duncan Smith said on Report in the Commons. He referred to the 2022 UN report, which found serious human rights violations in Xinjiang. He said:

“They seem to be about the most significant human rights abuses currently happening in the world,”—[Official Report, Commons, 13/6/23; col. 205.]


whether we use the term “genocide” or not.

What the Minister has essentially said is first that we do not need to do this because there is a discretionary power in the Bill already, and secondly that there is no evidence, as far as the Government are aware, that a supplier to the UK public sector has been involved in forced organ harvesting. On the first point, I believe that there is considerable merit in making explicit reference in the Bill to this matter, so that public authorities are in no doubt whatever that they can use a discretionary power to deal with companies that may be dealing, maybe inadvertently, in this abhorrent trade. Secondly, I think there is evidence of taxpayers’ money being spent on companies involved in forced organ harvesting. For example, pharmaceutical companies may be supplying immunosuppressant drugs to hospitals that have been reported to remove organs from prisoners of conscience.

As I have said, we cannot consider these matters without seeing them in the context of UK policy towards China. I am not going to repeat what the noble Lord, Lord Alton, said, nor to requote. We have now had our Lordships’ Select Committee, then chaired by the noble Baroness, Lady Anelay, the Intelligence and Security Committee and the Commons Foreign Affairs Select Committee, in its report only last month on the Indo-Pacific tilt policy. They all draw attention to the Government’s woefully inadequate response to the threat that China presents and to the very ambiguity there is in policy. We can see the obvious tension between our security, on one hand, and the willingness and wish of the Government to trade with China and to encourage Chinese investment, but I am afraid that, in trying to get a balance, we have ended up with a Government with a wholly inadequate and incoherent policy.

My amendment is very modest. All it does is give the decision-maker discretionary powers to exclude a supplier from a procurement contract if it

“or a connected person has been, or is, involved in … forced organ harvesting, or … dealing in any device or equipment or services relating to forced organ harvesting”.

It would be the first piece of UK legislation to include and define forced organ harvesting. It would be a huge step in preventing UK complicity in forced organ harvesting, and I urge the House to support it.

[Baroness Northover (LD)]

My Lords, I was a signatory to earlier amendments and we have just heard the noble Lord, Lord Hunt of Kings Heath, make a very cogent case for the Commons to think again about his amendments. I will be very brief, given the hour. The noble Lord built on what the noble Lord, Lord Alton, outlined just now, and his case is backed by international investigation and evidence. Thus, for example, the Office of the UN High Commissioner for Human Rights, not an institution that would say this lightly, concludes in relation to Xinjiang:

“Allegations of … torture … including forced medical treatment … are credible”.


The Minister in the Commons and now the Minister in the Lords have argued that current legislation covers the problem identified in this amendment, but noble Lords will have heard the noble Lord, Lord Hunt, make a very persuasive case that this is not so. My noble friend Lord Fox will comment further shortly but, if the noble Lord decides to put this to a vote, from these Benches we will support him.

[Lord Fox (LD)]

Very shortly, it seems.

I thank the noble Lords, Lord Alton and Lord Hunt, for bringing forward these two amendments. I shall address them sequentially. I do not share the surprise of the noble Lord, Lord Alton, about supermarkets being able to lead. I am sure the Minister will probably agree that supermarkets are in contact with their customers. They sense the morality and the feelings of their customers, so they do not just lead—they follow. Perhaps we are a bit slow in picking up the moral revulsion that people have out there, and also the fear of scrutiny from a totalitarian regime. I think both those issues play with the public, the public play those back to the supermarkets and the supermarkets have very good antennae for picking them up. We should share their sensitivity to these issues.

The noble Lord made an excellent speech for which he is to be congratulated because, working from here back to the Commons, we have seen significant progress. We have seen a great deal of progress, and I support him in not having to move his Motion this time. He mentioned en passant the role of the Intelligence and Security Committee, and I endorse what he said. The Cabinet Office is now responsible for the National Security and Investment Act—there is a team there working on that—and it now has a team working on this. It behoves those teams, if they are not the same people, certainly to be close to one another, close to the ISC and able to feed off the intelligence that the ISC can give them, which no other committees can. I hope the Minister is able to reinforce that.

19:15

I think the noble Lord, Lord Alton, is right in not pressing the Motion, but he is wrong to describe his eye as evil.

[Noble Lords]

Eagle!

[Lord Fox (LD)]

Eagle—thank goodness. I thought it was an evil eye. I was going to describe it as beady. I thought his “evil eye” was going to be upon the Minister and I was a little concerned for her safety. It is getting late.

Moving on, as my noble friend set out, we will support the amendment from the noble Lord, Lord Hunt. There can be no place in the UK supply chain for businesses that engage in this behaviour, and we have to be absolutely sure that there is no place, which is why the noble Lord is right to want to explicitly write this in. I regret that the fact that my noble friend Lady Brinton’s amendment was not accepted means that if the noble Lord is successful, his amendment will not apply to the National Health Service, which seems rather unfortunate as it would probably be the prime customer. None the less, getting it in writing and putting it in there is very important and will be enthusiastically supported.

[Baroness Hayman of Ullock (Lab)]

My Lords, I will be very brief. I thank both noble Lords for such excellent speeches on really important issues and important amendments that have been brought back for further discussion. The noble Lord, Lord Alton of Liverpool, again and again draws our attention to where we need to act on wrongs in this world. Clearly, we must do all we can to tackle modern slavery, genocide and crimes against humanity. He is right to draw our attention to the serious examples he gave us in his speech of where this is happening. We believe that procurement policy can and should contribute to that end where it can. I say to the Minister that the Government have listened to much of what the noble Lord has said; we have moved forward to some extent on this.

My noble friend Lord Hunt’s amendment clearly spells out why we need to be doing something about this. Reading his amendment, what struck me was the definition. I will read it, because I think it is at the crux of this:

“‘Forced organ harvesting’ means killing a person without their consent so that their organs may be removed and transplanted into another person”.


I cannot think of many things more appalling than that, so we fully support my noble friend. He deserves the thanks of the House for bringing this forward. He has our full support, but I wish the Government would consider amending the Bill in this way.

[Baroness Neville-Rolfe (Con)]

My Lords, I agree with the noble Baroness on the excellence of the two speeches we have had during this important debate. I thank the noble Lord, Lord Alton, again for his contribution. I am delighted that we have been able to agree on this matter so that the changes we have agreed can be moved forward. I thought his speech, ranging from what the Co-op and Tesco are doing, through the Cambridge spies, the absolute horror of what is being imposed on the Uighurs, and all the other things he said that I will not repeat, bears reading and reflecting on.

On the use of surveillance equipment—to respond to one point the noble Lord made—in the wider public sector, I should add that if the Government consider the risk to be intolerable, they are able to take action. That does not have to be enshrined in primary legislation. On the point about parliamentary scrutiny, the Government carefully consider and respond to all Select Committee recommendations. The annual written report on surveillance cameras, once laid in Parliament, will be available to all committees. I am sure it will receive appropriate scrutiny and a great deal of interest.

Turning to the remarks made by the noble Lord, Lord Hunt, and the noble Baronesses, Lady Northover and Lady Hayman, we all agree that organ harvesting is a horrific practice. However, given that we already have provisions in this Bill relating to professional misconduct—which will cover organ harvesting—it would seem inappropriate and odd to single out this particular, albeit horrific, practice in this Bill, and not others, especially given that the risk of this practice occurring in public contracts is low. While the issue is of key importance, the amendment itself largely duplicates the Government’s existing efforts. I cannot agree with the criticism of this given all we have done to try to improve this Bill and make the arrangements better. As I have said, there is a reference to organ harvesting in the NHS legislation. To pick up on the various security areas we have now in the Cabinet Office, they will work closely together. That is how you defeat the enemy on these things.

The Deputy Prime Minister has spoken in the other place on these issues today, and the Leader of the House will be repeating the Statement shortly when we finish this business. Obviously, that is some context. This Government have already taken steps to act on the risk from foreign influence and demonstrated that they are willing to act when the risk is intolerable. Our action on the risk of using certain surveillance equipment on government-sensitive sites was necessary and proportionate. This Bill will help us further, as the national security debarment provisions will enable us to act in public procurements where we see malign influence. This is a major change that has been made to this Bill. It is very encouraging that this House has influenced it and then welcomed it on its return from the other place. This is how good legislation is made, I hope.

It is crucial that we bring this most important Bill to Royal Assent as quickly as possible. I hope noble Lords will back us today, and I hope that in view of what I have said, the noble Lord will consider withdrawing his amendment. In any event, we need to move forward and get this Bill on the statute book.

Commons Amendment 25 agreed.

Motion on Amendments 26 to 46

Moved by

[Baroness Neville-Rolfe]

That the House do agree with the Commons in their Amendments 26 to 46.

26: Clause 58, page 39, line 40, after “are” insert “continuing or”

27: Clause 58, page 40, line 5, after “circumstances” insert “continuing or”

28: Clause 59, page 40, line 43, leave out “on the basis” and insert “—
(i) under section 57(1)(a) or (2)(a) by virtue”

29: Clause 59, page 40, line 44, at end insert “, or
“(ii) on the basis of being on the debarment list by virtue of paragraph 34A of Schedule 6 (threat to national security).”

30: Clause 60, page 41, line 29, after “may” insert “, for the purpose of considering whether an entry could be added to the debarment list in respect of a supplier,”

31: Clause 60, page 41, line 32, at end insert—
“(1A) A Minister of the Crown must—
(a) have regard to the fact that contracting authorities may be unknowingly awarding public contracts to suppliers that—
(i) could be excludable suppliers by virtue of paragraph 14 of Schedule 7 (threat to national security), or
(ii) are sub-contracting to suppliers that could be excludable suppliers by virtue of that paragraph, and
(b) in light of that fact, keep under review whether particular suppliers or sub-contractors should be investigated under this section.”

32: Clause 60, page 41, line 33, leave out subsection (2)

33: Clause 61, page 42, line 36, leave out from “out” to end of line 45 and insert—
“whether the Minister is satisfied that the supplier is, by virtue of a relevant exclusion ground, an excluded or excludable supplier, and if the Minister is so satisfied—
(a) in respect of each applicable relevant exclusion ground— (i) whether it is a mandatory or discretionary ground,
(ii) the date on which the Minister expects the ground to cease to apply (see paragraph 43 of Schedule 6 and paragraph 16 of Schedule 7), and
(iii) whether the Minister intends to make an entry to the debarment list,
(b) in respect of the exclusion ground in paragraph 34A of Schedule 6 (if applicable), the description of contracts in relation to which the Minister—
(i) is satisfied the ground applies, and
(ii) intends to refer to in a relevant entry in the debarment list, and”

34: Clause 62, page 43, line 30, leave out from “section” to end of line 39 and insert “and, as part of that entry, must include the relevant debarment information.
(3A) In this section, the “relevant debarment information” means—
(a) the exclusion ground to which the entry relates;
(b) whether the exclusion ground is mandatory or discretionary;
(c) in the case of an entry made on the basis of paragraph 34A of Schedule 6 (threat to national security), a description of the contracts in relation to which the supplier is to be an excluded supplier;
(d) the date on which the Minister expects the exclusion ground to cease to apply (see paragraph 43 of Schedule 6 and paragraph 15 of Schedule 7).”

35: Clause 62, page 43, line 43, leave out “section (Debarment decisions: appeals)” and insert “sections 63 to section (Debarment decisions: appeals)”

36: Clause 62, page 43, line 44, at end insert—
“(5A) The Minister may not enter a supplier’s name on the debarment list before the end of the period of eight working days beginning with the day on which the Minister gives notice to the supplier in accordance with subsection (5) (the “debarment standstill period”).
(5B) The Minister may not enter a supplier’s name on the debarment list if—
(a) during the debarment standstill period—
(i) proceedings under section (Debarment decisions: interim relief)(1) (interim relief) are commenced, and
(ii) the Minister is notified of that fact, and
(b) the proceedings have not been determined, discontinued or otherwise disposed of.”

37: Clause 62, page 44, line 1, leave out from “review” to end of line 5 and insert—
“(b) may remove an entry from the debarment list,
(c) in the case of an entry added on the basis of paragraph 34A of Schedule 6 (threat to national security), may revise an entry to remove a description of contracts, and
(d) may revise a date indicated under subsection (3A)(d).
(7) If a Minister of the Crown voluntarily removes or revises an entry in connection with proceedings under section (Debarment decisions: appeals), a Minister of the Crown may reinstate the entry only after the proceedings have been determined, discontinued or otherwise disposed of.
(7A) A Minister of the Crown must—
(a) remove an entry if the Minister is satisfied that the supplier is not an excluded or excludable supplier by virtue of the ground stated in the entry, and
(b) in the case of an entry added on the basis of paragraph 34A of Schedule 6 (threat to national security), revise the entry to remove a description of contracts if the Minister is satisfied the exclusion ground in that paragraph does not apply in relation to contracts of that description.”

38: Clause 62, page 44, line 11, leave out “an entry from the debarment list” and insert “or revising an entry”

39: After Clause 62, insert the following new Clause—
“Debarment decisions: interim relief
(1) A supplier may apply to the court for suspension of the Minister’s decision to enter the supplier’s name on the debarment list.
(2) Proceedings under subsection (1) must be brought during the debarment standstill period.
(3) The court may make an order to—
(a) suspend the Minister’s decision to enter the supplier’s name on the debarment list until—
(i) the period referred to in subsection (3)(b) of section (Debarment decisions: appeals) ends without proceedings having been brought, or
(ii) proceedings under that section are determined, discontinued or otherwise disposed of, and
(b) if relevant, require that an entry in respect of the supplier be temporarily removed from the debarment list.
(4) In considering whether to make an order under subsection (3), the court must have regard to—
(a) the public interest in, among other things, ensuring that public contracts are not awarded to suppliers that pose a risk,
(b) the interest of the supplier, including in relation to the likely financial impact of not suspending the decision, and
(c) any other matters that the court considers appropriate.
(5) In this section—
“the court” means—
(a) in England and Wales, the High Court,
(b) in Northern Ireland, the High Court, and
(c) in Scotland, the Court of Session;
“debarment standstill period” has the meaning given in section 62
(debarment list).”

40: Clause 63, page 44, line 16, leave out from “for” to end of line 17 and insert “the removal or revision of an entry made on the debarment list in respect of the supplier.”

41: Clause 63, page 44, line 21, leave out from “since” to “, or” and insert “the entry was made or, where relevant, revised”

42: Clause 63, page 44, line 23, after “subsection (1)” insert “in relation to the entry or, where relevant, revision”

43: Clause 63, page 44, line 26, at end insert—
“(3) After considering an application under subsection (1), the Minister must—
(a) notify the supplier of the Minister’s decision, and
(b) give reasons for the decision.”

44: After Clause 63, insert the following new Clause—
“Debarment decisions: appeals
(1) A supplier may appeal to the court against a decision of a Minister of the Crown—
(a) to enter the supplier’s name on the debarment list,
(b) to indicate contracts of a particular description as part of an entry made in respect of the supplier on the basis of paragraph 34A of Schedule 6 (threat to national security),
(c) to indicate a particular date as part of an entry in respect of the supplier under section 62(3A)(d), or
(d) not to remove or revise an entry made in respect of the supplier, following an application under section (63).
(2) Proceedings under subsection (1)—
(a) may only be brought by a United Kingdom supplier or a treaty state supplier,
(b) may only be brought on the grounds that, in making the decision, the Minister made a material mistake of law, and
(c) must be commenced before the end of the period of 30 days beginning with the day on which the supplier first knew, or ought to have known, about the Minister’s decision.
(3) Subsection (4) applies if, in proceedings under subsection (1)(a) or (b), the court is satisfied that—
(a) the Minister made a material mistake of law, and
(b) in consequence of the mistake, a contracting authority excluded the supplier from participating in a competitive tendering procedure, or other selection process, in reliance on section 57(1)(b) or (2)(b).
(4) The court may make one or more of the following orders—
(a) an order setting aside the Minister’s decision;
(b) an order to compensate the supplier for any costs incurred by the supplier in relation to participating in the procedure or process referred to in subsection (3)(b).
(5) Otherwise, if the court is satisfied that the Minister made a material mistake of law, the court may make an order setting aside the Minister’s decision.
(6) In this section—
“the court” has the meaning given in section (Debarment decisions: interim relief) (interim relief);
the reference to a supplier being excluded includes a reference to—
(a) the supplier’s tender being disregarded under section 26;
(b) the supplier becoming an excluded supplier for the purposes of section 41(1)(a), 43(1) or 45(6)(a).”

45: Clause 64, page 44, line 27, leave out Clause 64

46: After Clause 64, insert the following new Clause—
“Debarment proceedings and closed material procedure
Part 2 of the Justice and Security Act 2013 (disclosure of sensitive material) applies in relation to proceedings under sections (Debarment decisions: interim relief)(1) (interim relief) and 64 (appeals) as if, in each of the following provisions, each reference to the Secretary of State included a reference to the Minister for the Cabinet Office—
(a) section 6(2)(a), (7) and (9)(a) and (c);
(b) section 7(4)(a);
(c) section 8(1)(a);
(d) section 11(3);
(e) section 12(2)(a) and (b).”

Motion agreed.

Motion on Amendment 47

Moved by

[Baroness Neville-Rolfe]

That the House do agree with the Commons in their Amendment 47.

47: After Clause 64, page 44, line 34, leave out Clause 65

Amendment to the Motion on Amendment 47 not moved.

Motion on Amendment 47 agreed.

Motion on Amendments 48 to 80

Moved by

[Baroness Neville-Rolfe]

That the House do agree with the Commons in their Amendments 48 to 80.

48: Clause 66, page 45, line 30, at end insert—
“(5A) The implied term does not prevent a contracting authority—
(a) requiring the use of a particular system in relation to electronic invoices;
(b) in the case of a defence authority (as defined in section 7(5)), requiring the use of a system that requires the payment of fees by the supplier.”

49: Clause 67, page 46, line 33, at end insert—
“(za) “electronic invoice” and “required electronic form” have the meanings given in section 66(3);”

50: Clause 67, page 46, line 36, after “address” insert “, or through an electronic invoicing system,”

51: Clause 68, page 47, line 18, at end insert “, or
(d) in relation to a concession contract.”

52: Clause 74, page 51, line 5, leave out paragraph (c)

53: Clause 76, page 51, line 40, after “modification” insert “—
(a) in respect of which the contracting authority is required to publish a contract change notice under section 74, and”

54: Clause 76, page 51, line 43, leave out paragraphs (a) to (c)

55: Clause 76, page 52, line 3, leave out “or a transferred Northern Ireland authority”

56: Clause 76, page 52, line 7, leave out “or a transferred Northern Ireland procurement arrangement”

57: Clause 78, page 53, line 43, at end insert—
(1) A relevant contracting authority may not terminate a contract by reference to the implied term in section 77 on the basis of the mandatory exclusion ground in paragraph 34A of Schedule 6 (threat to national security) unless the authority has notified a Minister of the Crown of its intention.”

58: Clause 90, page 60, line 32, at end insert—
(1A) Regulations under subsection (1) may only include provision that is equivalent to provision in—
(a) subsection (1), (2), (5) or (6) of section 88 (treaty state suppliers),
(b) section 89 (treaty state suppliers: non-discrimination), or
(c) Schedule 9 (specified international agreements).
(1B) Regulations under subsection (1) may not be made unless a Minister of the Crown considers, or the Scottish Ministers consider, that the regulations are necessary in order to ratify or comply with an international agreement to which the United Kingdom is a signatory.
(1C) In subsection (1B), the reference to being a signatory to an international agreement includes a reference to having—
(a) exchanged instruments, where the exchange constitutes the agreement;
(b) acceded to the agreement.”

59: Clause 90, page 60, line 34, at end insert—
“(b) a reference to discrimination is a reference to discrimination as defined in section 89.”

60: After Clause 90, insert the following new Clause—
“Trade disputes
(1) This section applies where there is, or has been, a dispute relating to procurement between the United Kingdom and another state, territory or organisation of states or territories in relation to an international agreement specified in Schedule 9.
(2) An appropriate authority or the Scottish Ministers may by regulations make such provision relating to procurement as the authority considers, or the Scottish Ministers consider, appropriate in consequence of the dispute.
(3) Any provision made by the Scottish Ministers under subsection (2) must relate to procurement—
(a) carried out by devolved Scottish authorities, or
(b) under devolved Scottish procurement arrangements.
(4) Regulations under this section may include provision modifying primary legislation, whenever passed (including this Act).
(5) In subsection (1), the reference to an international agreement specified in Schedule 9 does not include a reference to the Trade and Cooperation Agreement between the United Kingdom of Great Britain and Northern Ireland, of the one part, and the European Union and the European Atomic Energy Community, of the other part, signed at Brussels and London on 30 December 2020.”

61: Clause 94, page 62, line 37, after first “a” insert “covered”

62: Clause 94, page 62, line 42, at end insert—
“(2A) Subsection (2)(a) does not apply in relation to an electronic communications system used, or required to be used—
(a) after the award of the public contract, or
(b) in relation to a utilities dynamic market.”

63: Clause 94, page 63, line 1, leave out “Subsection (1)” and insert “This section”

64: Clause 94, page 63, line 2, after “communication” insert “, or the use of an electronic communication system meeting the requirements of subsection (2),”

65: Clause 95, page 63, line 13, leave out subsection (3)

66: After Clause 95, insert the following new Clause—
“Record-keeping
(1) A contracting authority must keep such records as the authority considers sufficient to explain a material decision made for the purpose of awarding or entering into a public contract.
(2) For the purposes of subsection (1), a decision is “material” if, under this Act, a contracting authority is required—
(a) to publish or provide a notice, document or other information in relation to the decision, or
(b) to make the decision.
(3) A contracting authority must keep records of any communication between the authority and a supplier that is made—
(a) in relation to the award or entry into of a public contract, and
(b) before the contract is entered into.
(4) A record under this section must be kept until—
(a) the day on which the contracting authority gives notice of a decision not to award the contract (see section 55), or
(b) the end of the period of three years beginning with the day on which the contract is entered into or, if the contract is awarded but not entered into, awarded.
(5) This section does not apply in relation to defence and security contracts.
(6) This section does not affect any other obligation under any enactment or rule of law by virtue of which a contracting authority must retain documents or keep records, including for a longer period.”

67: Clause 97, page 64, line 6, at end insert—
“(6A) A supplier may not bring proceedings under this Part on the grounds that one or more of the following decisions of a Minister of the Crown was unlawful—
(a) a decision to enter a supplier’s name on the debarment list;
(b) a decision relating to the information included in an entry on the debarment list;
(c) a decision not to remove an entry from the debarment list, or revise information included in such an entry,
(see section (Debarment decisions: appeals)).”

68: After Clause 103, insert the following new Clause—
“Part 9 proceedings and closed material procedure
Part 2 of the Justice and Security Act 2013 (disclosure of sensitive material) applies in relation to proceedings under this Part as if, in each of the following provisions, each reference to the Secretary of State included a reference to the Minister for the Cabinet Office—
(a) section 6(2)(a), (7) and (9)(a) and (c);
(b) section 7(4)(a);
(c) section 8(1)(a);
(d) section 11(3);
(e) section 12(2)(a) and (b).”

69: Clause 107, page 70, line 3, leave out “only” and insert “wholly or mainly”

70: Clause 107, page 70, line 12, leave out paragraph (b)

71: Clause 107, page 70, line 14, after “section” insert “and section 123 (commencement)”

72: Clause 107, page 70, line 16, at end insert—
“(4A) Subsection (1) does not apply in relation to a power under sections 59 to 66 (Debarment proceedings and closed material procedure).”

73: Clause 108, page 71, line 3, at end insert—
“(5) Subsection (1) does not apply in relation to a power under sections 59 to 66 (Debarment proceedings and closed material procedure).”

74: Clause 109, page 71, line 12, after “section 66” insert “or section 121”

75: Clause 109, page 71, line 30, at end insert—
“(za) sections 59 to 66 (Debarment proceedings and closed material procedure);”

76: Clause 109, page 71, line 32, at end insert—
“(ba) section (Trade disputes) (trade disputes);”

77: Clause 111, page 73, line 4, leave out “A Minister of the Crown or”

78: Clause 111, page 73, line 5, leave out from “of” to end of line 7 and insert—
“(a) applying it in relation to procurement carried out by contracting authorities under devolved Scottish procurement arrangements;
(a) disapplying it in relation to procurement carried out by devolved Scottish authorities under—
(i) reserved procurement arrangements,
(ii) devolved Welsh procurement arrangements, or
(iii) transferred Northern Ireland procurement arrangements.”

79: Clause 111, page 73, line 8, at end insert—
“(za) the Procurement Reform (Scotland) Act 2014 (asp 12),”

80: Clause 111, page 73, line 13, leave out “those regulations” and insert “that legislation”

Motion agreed.

Motion on Amendment 81

Moved by

[Baroness Neville-Rolfe]

That the House do agree with the Commons in their Amendment 81.

81: Page 74, line 16, leave out Clause 116

Amendment to the Motion on Amendment 81 not moved.

Motion on Amendment 81 agreed.

Motion on Amendments 82 to 101

Moved by

[Baroness Neville-Rolfe]

That the House do agree with the Commons in their Amendments 82 to 101.

82: After Clause 116, insert the following new Clause—
“Power to disapply this Act in relation to procurement by NHS in England
(1) A Minister of the Crown may by regulations make provision for the purpose of disapplying any provision of this Act in relation to regulated health procurement.
(2) In this section—
“regulated health procurement” means the procurement of goods or services by a relevant authority that is subject to provision made under section 12ZB of the National Health Service Act 2006 (procurement of healthcare services etc for the health service in England), whether or not that provision is in force;
“relevant authority” has the meaning given in that section.”

83: Clause 118, page 75, line 21, at end insert—
(da) section 52 (key performance indicators);”

84: Clause 118, page 75, line 23, leave out paragraph (f)

85: Clause 118, page 75, line 29, at end insert—
(la) section (Trade disputes) (trade disputes);”

86: Clause 118, page 75, line 39, at end insert—
“(ua) section 123(6) (exclusion of devolved Welsh authorities);”

87: Clause 118, page 76, line 21, at end insert—
“(ca) section 52 (key performance indicators);”

88: Clause 118, page 76, line 26, at end insert—
(ha) section (Trade disputes) (trade disputes);”

89: Clause 118, page 76, line 47, at end insert—
“(ca) section 52 (key performance indicators);”

90: Clause 118, page 77, line 1, at end insert—
“(da) section (Trade disputes) (trade disputes);”

91: Clause 118, page 77, line 15, leave out from “under” to end of line 16 and insert “any of the following provisions”

92: Clause 118, page 77, line 18, at end insert—
“(a) section 90 (treaty state suppliers: non-discrimination);
(b) section (Trade disputes) (trade disputes);
(c) section 111 (powers relating to procurement arrangements).”

93: Clause 123, page 81, line 14, leave out subsection (3) and insert—
“(3) A Minister of the Crown may not make specified regulations under subsection (2) without the consent of the Welsh Ministers.
(4) In this section, “specified regulations” means regulations to bring into force provisions regulating procurement by a devolved Welsh authority other than procurement under—
(a) a reserved procurement arrangement, or
(b) a transferred Northern Ireland procurement arrangement, but “specified regulations” does not include regulations to bring into force provisions in Part 7 (implementation of international obligations).
(5) In this section, “devolved Welsh authority” has the meaning given in section 157A of the Government of Wales Act 2006.
(6) A Minister of the Crown may by regulations make such provision as the Minister considers appropriate for the purpose of ensuring that—
(a) Parts 1 to 6 and 8 to 13, or particular provisions in those Parts, so far as not already brought into force under subsection (2) do not regulate procurement by a devolved Welsh authority other than procurement under—
(i) a reserved procurement arrangement, or
(ii) a transferred Northern Ireland procurement arrangement;
(b) existing legislation continues to regulate procurement by devolved Welsh authorities and procurement under devolved Welsh procurement arrangements.
(7) Regulations under subsection (6) may modify this Act.
(8) In this section—
“existing legislation” means any enactment, other than this Act or regulations made under this Act, that is passed or made before section 11 (covered procurement only in accordance with this Act) comes into force;
a reference to a provision regulating procurement includes a reference to a provision conferring a function exercisable in relation to procurement.”

94: Clause 124, page 81, line 18, leave out subsection (2)

95: Schedule 2, page 84, line 11, leave out from “in” to end of line 17 and insert “this Part of this Schedule.”

96: Schedule 2, page 85, line 39, at end insert—
“PART 2
SUBJECT-MATTER EXEMPTED CONTRACTS
General
3A (1) A contract is an exempted contract if it is—
(a) a contract of a kind listed in this Part of this Schedule;
(b) a framework for the future award of contracts only of a kind listed in this Part of this Schedule.
(2) But a Part 2-only contract is not an exempted contract if, on award of the contract, a contracting authority considers that—
(a) the goods, services or works representing the main purpose of the contract could reasonably be supplied under a separate contract, and
(b) that contract would not be a contract of a kind listed in this Part of this Schedule.
(3) In considering whether goods, services or works could reasonably be supplied under a separate contract, a contracting authority may, for example, have regard to the practical and financial consequences of awarding more than one contract.
(4) In this paragraph “Part 2-only contract” means a contract of a kind listed in this Part of this Schedule that is not of a kind listed in Part 1 of this Schedule.”

97: That paragraph 25 of Schedule 2 be transferred to the end of line 39 on page 85

98: That paragraphs 31 and 32 of Schedule 2 be transferred to the end of line 39 on page 85

99: Schedule 2, page 91, line 22, at end insert—
“Commercial contracts of the City of London
37 A contract for the supply of goods, services or works to the Common Council of the City of London other than for the purposes of its functions as a local authority, police authority or port health authority.”

100: Schedule 6, page 102, line 11, at end insert—
“National security
34A (1) A mandatory exclusion ground applies to a supplier in relation to contracts of a particular description if an appropriate authority determines that the supplier or a connected person—
(a) poses a threat to the national security of the United Kingdom, and
(b) would pose such a threat in relation to public contracts of that description.
(2) In sub-paragraph (1)—
(a) the reference to an appropriate authority is a reference to the appropriate authority that is considering whether the exclusion ground applies;
(b) the reference to a particular description includes, for example, a description by reference to—
(i) the goods, services or works being supplied;
(ii) the location of the supply;
(iii) the contracting authority concerned.
(3) Sub-paragraph (1) applies only for the purpose of an appropriate authority’s functions under sections 59 to 66 (debarment), and cannot otherwise be relied on by a contracting authority when considering whether a supplier is an excluded supplier under section 57(1)(a).”

101: Schedule 6, page 105, line 20, at end insert—
“(d) paragraph 34A (threat to national security).”

Motion agreed.

Motion on Amendment 102

Moved by

[Baroness Neville-Rolfe]

That the House do agree with the Commons in their Amendment 102.

102: Schedule 7, page 110, line 33, leave out paragraph 15

Amendment to the Motion on Amendment 102

Moved by

[Lord Hunt of Kings Heath]

At end insert “and do propose Amendment 102B instead of the words so left out of the Bill—

102B: Schedule 7, page 110, line 31, at end insert—
“Involvement in forced organ harvesting
14A (1) A discretionary exclusion ground applies to a supplier if a decisionmaker determines that the supplier or a connected person has been, or is, involved in—
(a) forced organ harvesting, or
(b) dealing in any device or equipment or services relating to forced organ harvesting.
(2) “Forced organ harvesting” means killing a person without their consent so that their organs may be removed and transplanted into another person.””

19:25

Division 5

Ayes: 156

Noes: 151

The Tellers for the Contents reported 158 votes, the Clerks recorded 156 names. The Tellers for the Not-contents reported 153 votes, the Clerks recorded 151 names.

19:35

Motion on Amendments 103 and 104

Moved by

[Baroness Neville-Rolfe]

That the House do agree with the Commons in their Amendments 103 and 104.

103: Schedule 7, page 111, line 44, at end insert—
““event” means a conviction, decision, ruling, failure or other event by virtue of which a discretionary exclusion ground would apply to a supplier;”

104: Schedule 10, page 116, line 18, leave out “subsection (4) or (5)” and insert “this section”

Motion agreed.

Lord Speaker’s Statement

Monday 11th September 2023 Lords Chamber

19:36

[The Lord Speaker (Lord McFall of Alcluith)]

My Lords, before we begin the next item of business, I wish to make a brief statement on security. Noble Lords will have seen media reports yesterday about a security issue relating to the Chinese state and access to Parliament. I understand that the Metropolitan Police have now confirmed that two men were arrested in March on suspicion of offences relating to espionage, and that they are on police bail until early October.

As you know, we do not typically discuss the details of security issues on the Floor of the House, for reasons which are well understood. However, I wish to reassure noble Lords that Parliament follows the same vetting procedures as the Government, the issues raised in media stories are being addressed, and that the House administration is working closely and effectively with other relevant authorities. The extremely small number of people who needed to know about this issue were immediately briefed on a strictly confidential basis, given the national security sensitivity of this matter. Security arrangements are kept under review at all times, in order to deal with evolving threats.

Ahead of the statement repeat by the Lord Privy Seal, I remind all noble Lords of the importance of not discussing security issues on the Floor of the House. This is particularly important in this ongoing and sensitive case, where commenting on the identities of those alleged to be involved, engaging in speculation about the case, or discussing other details runs a serious risk of prejudicing any future prosecutions. If any noble Lords have security concerns, they are of course welcome to raise them outside of this Chamber with me or with the Parliamentary Security Department.

Security Update

Monday 11th September 2023 Lords Chamber

Statement

19:39

[The Lord Privy Seal (Lord True) (Con)]

My Lords, with the leave of the House I shall now repeat a Statement made earlier in another place by my right honourable friend the Deputy Prime Minister. The Statement is as follows:

“With permission, Mr Speaker, I would like to make a Statement on claims relating to an ongoing counterterrorism police investigation that were reported in the Sunday Times yesterday, Sunday 10 September. The story alleged that two individuals, including a parliamentary researcher, had been arrested on charges of conducting espionage on behalf of China.

These are serious allegations, and it is right that they are being thoroughly investigated by the police and relevant agencies. We must not hamper their work or prejudice any future legal processes by what we say today—as I believe, Mr Speaker, you said at the beginning of today’s proceedings. As you would expect me to say, it would therefore be inappropriate for me to comment on any specific aspect of the active investigation itself. I would, however, point the House to what the Metropolitan police said in their own statement:

‘The investigation is being carried out by officers from the Met’s Counter Terrorism Command, which has responsibility for investigations relating to allegations of Official Secrets Act and espionage-related offences’.


Of course, any decision on whether to proceed with a prosecution under the Official Secrets Act, and related legislation, would be a matter for the Crown Prosecution Service.

It remains an absolute priority for the Government to take all necessary steps to protect the United Kingdom from any foreign state activity which seeks to undermine our national security, prosperity and democratic values. The Government have been clear that China represents a systemic challenge to the United Kingdom and to our values. That has been evidenced in China’s continued disregard for universal human rights and international commitments in Xinjiang, its erasure of dissenting voices and stifling of opposition under its new national security law in Hong Kong, and disturbing reports of Chinese coercion and intimidation in the South China Sea. We are clear-eyed about that challenge, and we must be able to look the Chinese in the eye and call out unacceptable behaviour directly, just as our Prime Minister was able to do this with Premier Li at the G20 summit in New Delhi this weekend—an approach that has also been taken consistently by our Five Eyes allies.

Actions speak louder than words, and that is why I took the decision to instruct departments to cease deployment of all surveillance equipment subject to China’s national intelligence law from sensitive government sites in November last year. It is one of the reasons why I banned TikTok from government devices; the Government investigated and called out the so-called Chinese overseas police service stations and, as my right honourable friend the Security Minister set out in a Statement to this House in June, instructed the Chinese embassy to close them; we significantly reduced Chinese involvement in the UK’s civil nuclear sector, including taking ownership of China’s stake in the Sizewell C nuclear power project; and, as Digital Secretary, I took the action to ban Huawei from our 5G networks.

This afternoon the Procurement Bill is being debated in the other place. The Bill will include national security debarment provisions that will enable us to act when we see malign influence in our public procurement. In taking this approach, we are aligned with our Five Eyes allies and other G7 partners—indeed, every single G7 partner.

The UK will deploy, again, an aircraft carrier to the Indo-Pacific in 2025; we have announced AUKUS, a new security partnership that will promote a free and open Indo-Pacific that is secure and stable; and we will work with Italy and Japan through the global combat air programme to adapt and respond to the security threats of the future, through an unprecedented international aerospace coalition.

These Houses of Parliament stand as a monument to the freedoms of expression and belief that underpin our values, but just as these institutions have provided the paradigm for so many modern democracies, there are still those who fear such freedoms, and who seek to undermine them and to interfere in our society. We maintain constant vigilance in our efforts to understand and root out that interference, and we will always take action to address it, whatever its source.

In 2022, the Government established the Defending Democracy Taskforce, a group that works to co-ordinate across Government to protect the integrity of our democracy from threats of foreign interference. It is engaging across government, with Parliament, the UK’s intelligence community, the devolved Administrations, local authorities, the private sector and civil society on the full range of threats facing our democratic institutions. Those threats include any foreign interference in the electoral process, disinformation, physical and cyber threats to democratic institutions and those who represent them, foreign interference in public offices, political parties and our universities, and transnational repression in the United Kingdom.

Earlier this year, Parliament passed the National Security Act, which has overhauled legislation applicable to espionage, sabotage and any persons acting for foreign powers against the safety and interest of the United Kingdom. The measures in the Act will enable our law enforcement and intelligence agencies to deter, detect and disrupt the full range of modern-day threats, including threats from China. New offences in the Act will enable the disruption of illegitimate influence conducted for, or on behalf of, foreign states, whether designed to advance their interests or to harm the United Kingdom. The United Kingdom Government will do whatever it takes to protect our national security and this nation’s democratic institutions, which have stood for centuries as a beacon of liberty—from wherever the threat may come.

I commend this Statement to the House.”

19:46

[Baroness Smith of Basildon (Lab)]

My Lords, I thank the Lord Privy Seal for repeating the Statement in a timely way on the same day as it was made in the other place. I have often said from this Dispatch Box that the first duty of any Government is to ensure the safety and security of its citizens, but, when you look at it, it is more than that. In doing so, we must ensure that we uphold the integrity of our democracy and values.

I am sure that everyone in your Lordships’ House can recall where they were when we heard the news of the attacks on the twin towers, 22 years ago today. It is an appropriate time to recognise and pay tribute to the work of the intelligence and security agencies, who work alongside the police and other public sector organisations. I thank them for their work to protect us, in which they face unprecedented challenges and risks. Those risks are evolving in size, volatility and complexity. Security threats now appear through threats to our economy and technological systems, at our borders and through interference in our democracy. It is a huge challenge, and our security response must evolve to ensure that it is cohesive, comprehensive and able to adjust to face the changing nature of those threats.

In the last week, we have heard of two serious security issues: the escape from prison of a man facing charges for terrorism and the serious allegations of espionage on behalf of China. The police, intelligence agencies and justice system have our support in carrying out their investigations and should be left to do so. That also means that we have to be honest about the challenges faced and mistakes made; we have to recognise where there are gaps and take action to address them.

The Lord Privy Seal will understand that there is some incredulity that a man suspected of terrorism was able to escape from a category B prison under a van. It is extraordinary that he was in a category B prison—HMP Wandsworth—in the first place, that he had access to an area from which he could escape, and that it was not immediately noticed that he had absconded. I doubt that the Lord Privy Seal will be able to answer questions on this matter today, but I am sure that he recognises the importance of those questions that need to be investigated. Can he say whether the review into the security status of national security prisoners has been completed?

In response to the arrests made for espionage, there are questions about the actions the Government are taking to combat the threats posed by other states which seek to interfere in our democracy. MI5 issued an alert about Chinese attempts to influence Parliament 20 months ago. Our security services have long warned about interference in our democracy and in our elections, and there have been previous alerts and warnings about foreign actors seeking to penetrate parliamentary security. Can the Lord Privy Seal say anything about the actions they are taking in response to those specific warnings, and are they observed across government by both Ministers and those in their departments?

The Lord Speaker mentioned it in his introduction, but I ask the Lord Privy Seal to clarify whether the two men who have been arrested, and, I understand, charged with espionage, have been released on bail.

MI5 has also warned about commercial espionage from China, cyber risks and the threat to supply chains. The Intelligence and Security Committee has noted the Government’s lack of a long-term strategy towards China and is currently waiting for a response to the report it published in July. Can the Lord Privy Seal say anything more today about the specific threat posed by China? Can he more specifically say when the Government’s response to the ISC report will be published?

We must be able to work with China on key issues, such as climate change, but at the same time we must protect our national security and oppose attempts to infiltrate our democracy. In your Lordships’ House, we on the Labour Benches introduced an amendment to the National Security Bill to create stronger checks on donations to political parties which would have closed a loophole that allows shell companies to be used to hide political donations. The Government opposed that amendment. Can the Lord Privy Seal explain why, and will the Government now reconsider their position?

We know that the threats are not limited to China. For example, we saw the attack from the Russians in Salisbury, and we know there have been further cyberattacks and misinformation campaigns. In response to the shocking and terrible attacks on 9/11, the then Labour Government created a comprehensive strategy in response to state threats to national security. The UK counterterrorism strategy Contest established new links between the counterterrorism police, intelligence agencies and our public services, with the Home Office and the Government at the centre at the helm. The scale of the response that is needed today is certainly no less than that which was needed 22 years ago.

We are committed to extending this approach, if we are fortunate enough to be in government, by creating an equivalent strategy today to deal with such state threats. I can assure the Lord Privy Seal that the Government would have our support if they were to commit to introducing such a strategy and response now. I am not asking him to answer that at the Dispatch Box today, but will he commit to take this back to his Cabinet colleagues and report back to your Lordships’ House?

I end where I started. Nothing is more important in government than ensuring the safety, security and well-being of citizens. To fulfil that obligation, we need the right policies, strategies and collaborations. If we are to protect our democracy, we need to have a strategy in place, but we also need our citizens to have confidence in our democracy if they are to properly and effectively participate in it. This should be a joint endeavour across all parties and both Houses, and I hope the Lord Privy Seal will be able today to reassure us on the actions the Government are taking, and commit to going forward on this in a way that protects our democracy and security and unites the country, rather than creating division.

[Lord Newby (LD)]

My Lords, there are two distinct but related aspects to this Statement. The first relates to the arrest of two people on charges of conducting espionage on behalf of China. The second relates more generally to our posture towards the security risks which China poses to the UK.

On the charges, I fully understand why it is inappropriate to comment at this stage. However, I confess to be bemused as to the nature of the spying which the parliamentary researcher might have undertaken. According to media reports, one of his crimes seems to be to have organised regular drinks sessions at a Westminster pub. This may not be a meritorious activity but it is hardly a serious offence. I think everybody will be fascinated to discover, if charges are pursued, exactly what kind of secrets the parliamentary researcher might have had access to. But for today, we must simply compose our souls in patience until further details of any charges emerge.

There is the more serious question of whether parliamentarians should have been told about the arrests at an earlier stage, so that they could take particular care in their dealings with China and Chinese entities. It is not clear when the Home Secretary and Prime Minister were aware of this case and why they decided to remain silent about it with parliamentary colleagues. Perhaps the noble Lord the Leader can enlighten us.

The broader issue which this case exemplifies relates to our overall posture towards China. The Statement says that the Government believe that China presents a systemic challenge to our values. It lists a number of actions which they have taken to counter these challenges, but it fails to convince. In July, Parliament’s Intelligence and Security Committee issued an excoriating report on China which said that the Government do not have a “clear strategy” on China and have not devoted sufficient resources to tackling the threat that it posed. The actions listed in today’s Statement do not constitute such a strategy. The Government should be making protecting our democracy a national security priority—something, incidentally, which they have already consistently failed to do in respect of Russia—and accept the recommendations of the ISC’s China report.

More generally, the Government’s record on standing up to China is weak. From the genocide against the Uighurs to Hong Kong, and from Taiwan to interference in our democracy, the Government have failed to take China seriously. The Prime Minister may have meetings in Delhi with his Chinese counterpart, but the suspicion is that he is more interested in trade, rather than these broader concerns.

Developing a clear overall approach to China should now be an urgent priority. One specific question which such a strategy must cover is the extent to which we designate China formally as a security threat. The Prime Minister originally claimed that China was such a threat during the Conservative leadership contest—and on this we agree—but since then, he has back-pedalled. The spying case illustrates the broad challenge which China now poses to the UK, yet the Government have failed to take Chinese interference seriously. They surely must now do so.

[Lord True (Con)]

My Lords, I am grateful for the general tone of the response. It is invidious to choose, but although I am grateful for the response of the noble Lord, Lord Newby, I am particularly grateful for the very statesmanlike tone of the noble Baroness. I of course underline her tribute to the work of the Security Service, and indeed all the law enforcement services. On the day of 9/11, I was occupying the office which is now that of the Lord Convener, and I remember vividly watching what was going on in a position of disbelief. We must support their work, which sometimes, of its very nature—often, perhaps normally—has to be done on a confidential and secret basis. I think all noble Lords understand that matters cannot be avowed and addressed in detail while cases are ongoing.

I heard what the noble Baroness said about the prison escape and, fortunately, the individual concerned was recaptured—after I had had a sleepless night as the police helicopters circled over Richmond Park. I did not resent that at all; it was essential that that man be retaken.

The Lord Chancellor certainly said that these matters would be looked into. I shall not expand on that; nor would I want to anticipate where the examination of those events might lead. I will make sure that the Lord Chancellor is made aware of her comments on that.

On the question of MI5’s alerts and concerns, of course we are concerned about China. I thought a disappointing aspect of the response from the noble Lord, Lord Newby, was that he rather belittled the range of action taken by this Government in relation to China. I repeated that in the Statement and do not wish to weary the House by repeating it again but a look at Hansard will see the significant actions we have taken, which, in addition to those in the Statement, include reducing Chinese involvement in the UK’s civil nuclear sector by taking control and ownership of China’s stake in the Sizewell C project. We have also passed the National Security Act, which I referred to in the Statement.

The director-general of MI5—since MI5 was referred to specifically—called this

“a game changing update to our powers”.

Those are his public words. He said:

“We now have a modern set of laws to tackle today’s threats”.


These will give law enforcement and intelligence agencies new and updated tools to deter, detect and disrupt foreign influence, including a foreign influence registration scheme that criminalises those acting covertly for states that pose the greatest threat to the UK.

There were various comments and I have to say that not everything said in this House derived from newspaper reports was entirely accurate. But I shall not be led to comment on what was or was not. I think all noble Lords will understand that this is an ongoing investigation and it is extremely important that we do not jeopardise any proceedings that may follow.

I was asked about the response to the ISC report. I think it may not be the first time I have been asked that very legitimate question. I was told that I was permitted to say “very shortly” in response. I am now telling everybody not to betray secrets but I did say that I could not say that again and was assured that “very shortly” really does mean “very shortly” in this case. My noble friend Lady Neville-Rolfe will have heard those comments.

Information to Members of Parliament is again a matter for the relevant authorities. I shall not go down that road or say who knew what when. Noble Lords will have heard the Lord Speaker assure the House that:

“The extremely small number of people who needed to know about this issue were immediately briefed on a strictly confidential basis”.


That was held to be the responsible approach.

The noble Lord, Lord Newby, said that our approach to China does not convince. The noble Baroness also said that we must have a serious response to China. I believe that was implicit in the Statement and explicit in the Statement made by my right honourable friend in the other place. I underline what he said and what the House feels: China is a country that—sadly—has fundamentally different values from us and therefore represents a systemic challenge to the world order.

I agree with the noble Lord, Lord Newby, that China’s behaviour is increasingly concerning. It is becoming more authoritarian at home and more assertive overseas. We are alert to that challenge and I would say, as I often say in this House, how much we feel fortified by the support across the Chamber. We must take the necessary steps to stand up for our values and protect our interests.

On the other hand, China is also a permanent member of the UN Security Council. It is the second largest economy in the world and has an impact on almost every global issue of importance to the UK. Our overall approach, therefore, must be rooted in our national interest and co-ordinated with like-minded partners, as I referred to with the AUKUS arrangements, the long-standing Five Eyes arrangements and the work on a new aerial provision with Italy and Japan. We will go on working with like-minded partners. We are sending the aircraft carrier presence to the East again to assure our allies there that we will go on working with them to maintain a stable international order. The integrated review refresh set out a new approach and measures to respond to the increasingly concerning actions of Chinese authorities.

I agree with the noble Lord, Lord Newby, that it is an epoch-defining challenge for our country and the world. We have been clear that China remains the biggest long-term question and threat to the UK’s economic security, but it is not smart foreign policy to reduce our entire approach to China to one word. Our approach should be measured in our actions rather than our words. We in the Government are confident that, with the support of the party opposite and others, we are taking the right actions to keep the United Kingdom safe and prosperous.

20:05

[Lord Alton of Liverpool (CB)]

My Lords, the noble Lord will be aware that I, along with the noble Baroness, Lady Kennedy of The Shaws, and our families, have been sanctioned by the Chinese Communist Party for, among other things, speaking out against the treatment of the Uighurs in Xinjiang, the atrocities committed in Tibet, the threats almost daily to Taiwan and the terrible destruction of democracy and incarceration of lawmakers and pro-democracy advocates in Hong Kong, including the British citizen, Jimmy Lai. Here at home, we have spoken—as many have today in the House in the preceding debates—about issues such as forced organ harvesting and the surveillance state that comes through the installation of cameras by companies such as Hikvision and Dahua, in which the noble Lord himself has taken such a keen interest.

In the light of all that, the Leader of the House will not be surprised to hear me reiterate a point made by the noble Lord, Lord Newby. In another place earlier today, my good friend Tim Loughton MP, who is also one of those who has been sanctioned, expressed surprise that those of us who had been put in this invidious position were not told anything about the activities that were said to be taking place across the Parliamentary Estate. Will the Leader look at that issue again and have some regard to those who obviously have a direct interest in this?

The foreign influence registration scheme contains a power to place a foreign power in the enhanced tier. That will require parliamentary approval. What is the proposed timetable? Can it be accelerated? Will the Chinese Communist Party regime be on that list? The Leader referred to the “very shortly” assurance that he was asked to give concerning the excellent report from the Intelligence and Security Committee, which says that China has penetrated

“every sector of the UK’s economy”.

This House’s Select Committee on International Relations and Defence has also said that China is not a strategic competitor but a threat. Although it cannot be reduced to one word, as the Leader of the House said, surely it is time for us to schedule a debate. I hope that, as soon as the response from the Government is forthcoming, we will have in government time the chance to discuss the Intelligence and Security Committee’s report, along with our own reports.

Finally, will the Leader urgently consider establishing a small Joint Committee of both Houses to review infiltration, espionage, the subversion of our democratic institutions, the effects on places such as our universities, and these attempts to silence those of us who have been sanctioned by the CCP and our families?

[Lord True (Con)]

My Lords, I pay tribute to the persistence and courage of the noble Lord—I will call him my noble friend—Lord Alton in his long-standing witness against the brutalities that he has described and the assault on democracy; for example, I refer to the oppression that we have seen in Hong Kong. I also deprecate, as the Government do, the absurd concept of people in your Lordships’ House and the other place being sanctioned—and by whom? The Chinese Communist Party. By what right do people who do not understand our freedoms in this place and our right to speak purport to sanction or threaten us?

We are very alert to some of the activities, which is why the so-called police service stations that perhaps should never have been allowed to grow in the first place have been closed down. We do not assume that they are being closed down; we are checking that they have been closed down.

The noble Lord asked specific questions about the FISA provisions, including timing and scale. If I may, I will be advised on that and write to the noble Lord, but I can say that those powers are there. I quoted the director-general of MI5 saying how welcome they are; I can assure your Lordships that we will pursue them.

[Baroness Berridge (Con)]

My Lords, this is an unusual situation. We are dealing with a matter of great sensitivity. There is a prosecution currently ongoing and there are national security issues; a review of parliamentary security is also ongoing, as the Lord Chancellor mentioned in the media yesterday.

I have given notice of my concern to the Lord Privy Seal and my noble friend the Cabinet Office Minister by way of email; I have also communicated previously with the Lord Speaker about it. I am talking about the current practice, which is well known to all noble Lords—this is not a personal point at all—of noble Lords’ spouses and partners being issued with security passes without any security vetting. Due to the overlap between these issues, which is a rare circumstance, I ask my noble friend the Minister whether this review gives us an opportunity to think about whether we need to reconsider that policy in light of the matters raised, particularly the safety of our staff and the fact that we are well aware of how clever and wily our enemy is. We need to make sure that any loophole or avenue is closed off.

[Lord True (Con)]

My Lords, I am grateful to my noble friend for giving advance notice. I am not sure how helpful that means I can be. Obviously, although I have the indescribable honour of being the Leader of your Lordships’ House, a review of security vetting in Parliament is a matter for Parliament and the authorities here. I am sure that they will have taken note of what my noble friend says, but the Parliamentary Security Department is responsible for the delivery of security vetting in Parliament. Like all security policies, we expect this to be kept under constant review; I hope that will be informed.

I did not answer the point from the noble Lord, Lord Alton, about people being informed about what had happened. I said that I had nothing to add to what was said in the Lord Speaker’s Statement about the extremely small number of people who needed to know being briefed immediately.

[Viscount Stansgate (Lab)]

My Lords, I thank the Leader of the House for repeating the Statement. I fully endorse all the comments made by my noble friend on the Opposition Front Bench. I declare an interest as a member of the Joint Committee on the National Security Strategy; it involves Members of both Houses, some of whom have been mentioned in the course of press reporting on the case that we are discussing—or not discussing. We are fully aware of the fact that certain countries, such as China, are engaged in what I have heard described as the hoovering up of as much information and intelligence as possible for purposes of their own that may be a threat to us.

The Statement refers to the Official Secrets Act and related legislation. Do I take it from the Leader of the House’s answers so far that the Government take the view that the National Security Act now provides a much more appropriate legal framework for considering a case of this kind? Secondly, we now know of events that took place as long ago as March, but that have only become widely known this week. Is there any connection between this and the fact that the Prime Minister chose to raise with Premier Li at the G20 summit the case that has given rise to this Statement?

[Lord True (Con)]

My Lords, the Prime Minister will have an opportunity to discuss the G20 Statement tomorrow, when I fear that your Lordships will suffer the pain of me answering again from this Dispatch Box. Perhaps I can then say a little more, if asked, about the engagement with Premier Li. However, I assure the House that the Prime Minister has certainly addressed the substance of Chinese activity and China’s efforts to undermine our democratic procedures so far as they are concerned.

On the question of the Official Secrets Act and the National Security Act, I would not wish to relate those to the ongoing investigation and was not seeking to do so. Obviously, I referred to the National Security Act, as did the director-general of MI5, as a further building block in the tools we have. That was in response to the question asked by the noble Lord, Lord Newby. So far as the current investigation is concerned, the Met has said that due to the active and ongoing nature of the investigation, it will not provide further details at this stage. It would not be right for me to comment on these reports. A statement was put out by the Metropolitan Police; I refer noble Lords to that statement.

[Lord Campbell of Pittenweem (LD)]

My Lords, I begin by declaring that I was previously a member of the Intelligence and Security Committee, although that is not a reason for urging the Minister to re-read the report, since it contains a lot of conclusions that are entirely relevant to our discussion this evening.

I direct his attention to paragraph 7, which carries the description “whole-of-state threat”. The committee concludes that the Government’s policy has enabled China

“to advance its commercial, science and technology, and industrial goals in order to gain a strategic advantage”.

Given what we know of China’s tactics, why are we so surprised that there are now allegations of spying? Indeed, there would be surprise had there been no such allegation, given China’s previous record. Respectfully, it seems that the Government should be not only responding to the contents of the Intelligence and Security Committee’s report but implementing the various opportunities it identifies for putting a proper control over the activities of China against the United Kingdom. It is not a matter of “as soon as we can”; it should be a matter for immediate implementation.

[Lord True (Con)]

My Lords, the committee’s report is obviously of great significance and importance, and the Government regard it in that way. I have nothing to add to what I have said about hoping that the government response will come very shortly. Some people suspect that I am part of the usual channels. but I am not going to say from this Dispatch Box whether there will be a debate on this subject. However, at some point Parliament will require that we have a chance to take stock.

The only thing I would say—this is a statement of fact rather than a political point—is that if one goes back to the coalition years, when we shared time in government, the rhetoric was very different. Some of the facts on the ground were different. The nature of the Chinese regime has evolved since those times and the nature of our response is evolving. It is often easy to be wise after the event, but as my right honourable friend said in the Statement, we are very open-eyed about this and clearly recognise the nature, scale and uniqueness of the position of China, led by the Chinese Communist Party, with its ambitions, not all of them potentially pacific. We recognise that reality in the modern world and I hope that Parliament and the country as a whole will rise to that. Certainly, the Government will play their part.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I declare my position as co-chair of the All-Party Parliamentary Group on Hong Kong. The reports this weekend and the allegations that have emerged are of great concern to the large and growing community of refugees, exiles and students from Hong Kong in the UK. This follows a few months after a bounty of 1 million Hong Kong dollars was put on the heads of eight activists around the world, three of whom live in the UK. What reassurance, services and support are the UK Government planning to provide to ensure that people know where to go if they have had a concerning, dangerous or worrying experience on social media or in person? The many students, particularly post-graduates, who might be studying issues around China, may be approached, perhaps innocently or not so innocently, by someone who may be an agent of the Chinese state. Do the Government have advice for them on what steps they should take to make sure they are able to act appropriately in that situation to protect themselves and the rest of us?

[Lord True (Con)]

My Lords, I thank the noble Baroness for her question. I believe she will acknowledge that the action of Her Majesty’s Government, as it then was, in opening the door to so many people from Hong Kong, which was supported across the House, was the right and wise thing to do—I hope that she will recognise that. In that region we are seeking to be active to constrain China as it seeks to extend its malign influence, and I know from her background that she will welcome the AUKUS arrangement—I am very disappointed to see her shaking her head, because that is a reaction that might be shared in quarters that we are now discussing.

The Hong Kong bounties are intolerable and unacceptable. Anybody who receives any sort of threat should let that be known to the authorities; we take that extraordinarily seriously. We will not tolerate any attempts by China to intimidate and silence individuals in the UK or overseas. The UK will always defend the universal right to freedom of expression—why are we here in this Chamber?—and stand up for those who are targeted. We strongly object to the national security law that China imposed on Hong Kong, including its extraterritorial reach, which was in breach of the legally binding Sino-British joint declaration. We suspended the extradition agreement with Hong Kong on 20 July 2020 in response to the imposition of the national security law by Beijing. I assure your Lordships that we will give the most vigorous support to those intimidated by China who come from the remarkable territory of Hong Kong.

[Viscount Waverley (CB)]

My Lords, I have listened carefully to the Statement, with which I am obviously at one, as I did the Front Benches and the call for a renewed strategy. I propose that procedures of verification and enhanced vetting be considered. As a matter of course, and for the purpose of disclosure and information, is the Minister aware that the press have been referring to a spy

“at the heart of power”?

In doing so, they were referring to Parliament. I was concerned, and ask what explanation there is, that a Russian spy now expelled from the UK—and so presumably known about—was at a high-level reception, including ambassadors from a range of countries friendly to the UK, at which I was also present. That person was expelled shortly after the meeting to which I refer. I bring this to the attention of the Leader only so that all these matters be considered by the relevant authorities as we clean up what is going on.

[Lord True (Con)]

My Lords, I am not going to comment on press reports. It is unfortunate that I am not the most regular reader of the press—much to its annoyance. All I say in response to the noble Viscount is that this country is always vigilant against espionage threats from whatever quarter. Over many decades, there has been a record of incidents of bad actors being expelled from the United Kingdom, and I am sure there will be more in the future.

House adjourned at 8.24 pm.