Criminal Finances Bill

Baroness Kramer Excerpts

Committee: 2nd sitting (Hansard): House of Lords
Monday 3rd April 2017 Lords Chamber

[Baroness Kramer (LD)]

My Lords, I speak very much in support of my noble friend Lady Bowles on this occasion. The issue she is attempting to tackle is that of delay. There are serious gaps in the Bill—as they have just finished a consultation, I suspect that the Government recognise that. The “failure to prevent” focus which it has brought on a limited number of issues should have been applied to the broader range of very serious business and economic crimes. On these Benches, our great fear is that if occasion is not taken in this Bill to put in place the structure that will enable action to be taken on those issues, there will be a long delay, because bringing forward new legislation in the environment of Brexit will mean that everything is very seriously delayed. In that time, we will find ourselves in a situation where companies believe that they are potentially able to get away with it.

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[Lord Judge]

My Lords, I add my voice to that. I support the general idea behind Amendment 165 but it proposes rather a bureaucratic new clause. Why cannot the court simply have power to make orders in accordance with its subsections (2)(a) and (2)(b), where it thinks it appropriate? Why do we need subsections (3) and (4) at all, as company B has already been convicted? It is a matter for the court to decide what sentence should be imposed; it does not need permission or an application by the prosecution. If I may say so, it seems that this would make a complex process to deal with something very straightforward. The court needs to be vested with the powers which are understood to be included on the basis of this amendment. Its compliance procedure would require an external body and, if we are doing that, can we perhaps add that there should be a report to the court about whether the appointed verifier is satisfied that verification has taken place?

As to Amendment 170, I am just a little troubled about subsection (2ZB) in its proposed new clause. It says:

“The court must not make any order under this section unless it is satisfied that the person bears responsibility”.


Fine—I understand that—but this is a penal decision. Are we saying that the court must be satisfied to a criminal standard or to a civil standard?

[Baroness Kramer]

My Lords, perhaps I may add one phrase only to this debate. I want to speak to Amendment 170 and suggest to the Government that this is frankly a no-brainer. We cannot afford to have inappropriate directors continuing to run companies, particularly when their inappropriate or inadequate behaviour has been exposed in the kind of circumstances discussed under Amendment 170. It is really important that the courts have a full range of tools. We no longer live in a world where the old-school tie and friendships determine who the appropriate directors of companies are. They have to be held to professional and appropriate standards. This proposed new clause would enable that to happen and I frankly cannot see why it should present any difficulties to the Government.

[Baroness Williams of Trafford]

My Lords, I am pleased that the amendments in this group have allowed us to have an extended debate on the tax evasion offences in Part 3 of the Bill. I am pleased to say that the Government are supportive of the intentions of these amendments, although that is not to say that further legislation is necessarily required.

Amendment 164 seeks to require the Secretary of State to publish an annual report on the number of companies that have, under the Public Contracts Regulations 2015, been excluded from tendering for public contracts, or had existing contracts terminated after being charged under the new offences. I fully agree that contracting authorities should be able to exclude bidders that have been convicted under the new offence. The Public Contracts Regulations allow for this in appropriate cases. They grant contracting authorities discretion to refuse to award a public contract to an entity that has been involved in grave professional misconduct. Such misconduct may include committing the new offences of corporate failure to prevent the criminal facilitation of tax evasion. However, government does not collect information centrally on the number of organisations that have been excluded from public contracts under the 2015 regulations. This is because these decisions to exclude are taken by individual contracting authorities on a case-by-case basis, and this may include the new corporate offences.

Introducing a reporting requirement would create a burden on contracting authorities. Each contracting authority would have to make a return to central government, detailing the occasions that exclusion from a bidding process has occurred, and central government would then have to collate all these reports in order to compile national statistics to be published in the report. Such a reporting requirement would go against the Government’s drive to simplify the public procurement process and to cut red tape.

Current efforts are focused on ensuring that contracting authorities have the necessary information to know whether those bidding for contracts have relevant convictions so that contracting authorities can make more informed decisions on whether to exclude them. This includes the introduction of a robust conviction-checking process to prevent bidders with convictions for relevant offences—including the new offences—winning public contracts. This was announced at last year’s anti-corruption summit and is about to be piloted by the Crown Commercial Service.

Amendment 165 seeks to introduce a system of corporate probation orders. This would allow a court to require relevant bodies found guilty of the new corporate offences to amend their prevention procedures. I welcome the noble Lords’ amendment. It is absolutely right that relevant bodies convicted of the new offences, and thus found to have inadequate prevention procedures, should be required to implement changes to those procedures. In response, I draw noble Lords’ attention to Clause 48(2) of the Bill, which adds the corporate offences to the list of offences for which a serious crime prevention order can be imposed under the Serious Crime Act 2007. This enables a court passing sentence on a person, including a legal person such as a corporate body, to impose a serious crime prevention order to prevent, restrict or disrupt their involvement in serious crime by imposing prohibitions, restrictions or requirements on them. The terms of these orders may require the relevant body to allow a law enforcement agency to monitor how it provides services in the future.

Relevant bodies convicted of the new offences are criminals. They do not require special or different sentencing powers. They can be adequately sentenced under the existing criminal law, using a serious crime prevention order to enforce change to prevention procedures. Such an order can do anything that a corporate probation order would. Alternatively, similar provision can be included within the terms of a deferred prosecution agreement. I trust therefore that noble Lords will see that their commendable objective can already be achieved within existing law.

I thank the noble Baroness, Lady Bowles, for Amendment 170. I share concerns about ensuring that those who are unfit to be directors are identified and disqualified from holding such posts. The amendment seeks to amend the Company Directors Disqualification Act 1986 in order to allow a company director to be disqualified by the court when a relevant body is found to have committed one of the new corporate offences, or a similar failure to prevent an offence under the Bribery Act 2010.

At present, under the Company Directors Disqualification Act 1986, a company director can be disqualified on conviction by the sentencing court. Alternatively, the Secretary of State for Business, Energy and Industrial Strategy can apply to the High Court for an order that a company director be disqualified. In either case, the company director would be a party to the proceedings, and thus given the opportunity to present their defence.

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[Lord Hodgson of Astley Abbotts]

My Lords, the theme of corruption and the damage it does to society has been the thread running through all our debates this afternoon and, indeed, on our first day in Committee last week. When you have powerful speeches from the noble Baronesses, Lady Stern and Lady Meacher, the right reverend Prelate the Bishop of Peterborough and my noble friend Lord Kirkhope, you have to be influenced by what they are telling you. When they link it to the idea of a gold standard of a publicly available register—although after the noble Lord, Lord Eatwell, had finished with Companies House, gold was no longer the metal that I would associate with that institution—you feel that there may be an exceptionally strong case. Equally, as you reflect on it, you begin to wonder whether the best may not become the enemy of the good.

In trying to clarify my thinking on this very difficult issue, I ask my noble friend on the Front Bench to focus in her reply on three points that are important to me. They relate to the big three of the overseas territories mentioned in the amendment: Bermuda, the British Virgin Islands and the Cayman Islands. The others are much smaller; they may be important in the future but the major difficulties will arise with the first three.

First, can my noble friend confirm what the noble Lord, Lord Beith, said—that those three territories are going to have an up-to-date register of company ownership—and the date by which it is going to be in place? If it is going to be in place, are the Government satisfied that each register operates effectively and accurately?

Secondly, I come to the verification point raised by the noble Lords, Lord Eatwell and Lord Naseby. Since information is put into these registers by third parties, which have titles such as corporate service providers—CSPs—trust or company service providers, and so forth, are the UK Government satisfied that the regulatory regime in each of these territories ensures that the CSPs operate to timely and accurate standards? Are there adequate checks on their performance? For example, are there, as we have in the City of London, fit and proper person tests to make sure that those who are providing the information have decent standards of behaviour imposed on them?

Thirdly and finally, as my noble friend Lord Kirkhope said, are UK law enforcement agencies satisfied with the level of co-operation and assistance provided by these regulatory authorities? Do they get prompt and helpful responses or are the responses dilatory and evasive? If my noble friend was to say that she could give the Committee assurances on those points, my concerns about the best being the enemy of the good would rise in significance. Of course we are seeking a gold standard but surely in the short term what is vital is not that I or other Members of your Lordships’ House should be able to interrogate the register but that the relevant law enforcement agencies should be able to do so, and should be able to do so promptly and to get information promptly. Then, I hope, as enforcement standards rise and, as my noble friend Lord Naseby said, the United States begins to bring all parts of its dominion into proper behaviour, the gold standard of full public disclosure may well be appropriate.

I quite understand why the noble Baroness wishes to do this but my concern is that if we go too far, too fast now, the malfeasant—and it will be those who go first—will drift away to still murkier regimes. We may have only half a loaf and the noble Baroness would like the full loaf, but at least we have half a loaf. If we go to murkier regimes, there will be no way of getting any sort of collaboration, co-operation or help at all to tackle what I think everybody in your Lordships’ House agrees is a really important problem and is imposing terrific damage and harm on our fellow citizens, particularly in the developing world.

I hope my noble friend can answer my questions. Are there going to be prompt and accurate registers in the major territories—and, if so, by when—or are they there now? Are those who upload information into the registers properly checked, verified and regulated? Do our law enforcement agencies really get wholehearted collaboration and assistance from their opposite numbers in those three territories?

[Baroness Kramer]

My Lords, I am a signatory to Amendment 167, which was moved so eloquently by the noble Baroness, Lady Stern. I have signed that amendment because I struggle to see any effective way forward other than a route that essentially follows the lines that she outlined.

In this House, I think that every Member is utterly dismayed by the level of corruption in many countries across the globe, particularly those with some of the poorest and weakest populations. But there are also kleptocracies with sophisticated developed populations which do huge damage to their countries and to international affairs. If we look at the strife that drives people to become refugees and migrate across borders, on a scale that we have hardly seen in the past, there are criminal groups which manage themselves so effectively. All of those groups are enabled—indeed, can survive—only because they can find a portal with which to interface with the legitimate financial services community.

The work we are trying to do with these amendments is to close down those portals because the impact of that would be phenomenal, and not just for developing countries. It would have a great impact on the developing world and potentially on us. There is almost nothing we could do that would have more impact in bringing peace, opportunity and prosperity across the globe. This takes great courage, but it is also a great prize.

On the argument being made today, first, I congratulate many of the countries which have moved forward, for example to establish central registers. Work is being done in the overseas territories—I know it is true in the Crown dependencies as well but I understand their different constitutional position, which is why they are not included in Amendment 167—to establish a powerful relationship with UK enforcement authorities. If that were sufficient to close down those portals to the people who we know should not be able to use them, I would be happy to stop at that point. But I have found no one who believes it is true that enforcement authorities would be able to act through those central registries in ways sufficient to close down the routes and effectively shut out so many of the people who we think should be shut out from the legitimate financial world.

The only route I can see to make this reasonably or wholly effective is transparency. I fully accept that transparency at the global level is the obvious ideal, but I am a realist. I do not think anybody in this House believes that a global standard of transparency, with public access to central registers, will be available in my lifetime—and probably not in my children’s lifetime. Achieving that global standard is near impossible, so how do we move forward and at least create the reality that more and more portals will be closed down to those who try to use them? I was proud of this country when it took a very strong and difficult position to lead not only on central registers, for example, but on transparency. It said that if nobody takes the lead and moves out in advance, the rest will never follow. There is no basis if one waits for everybody to move together. We still face that situation.

I have met with representatives of the BVI and Bermuda and I hear the case presented for the Cayman Islands, and others such as Jersey and Gibraltar. I fully understand that every country on our list, even those that think they are touched by the underlying principle of the amendment, are quite offended. They feel that they are reputable places which have done a great deal to make progress on the elimination of corrupt practices. I understand their sensitivity on that issue, but the problem with which we are dealing is so much bigger.

Criminal Finances Bill

Baroness Kramer Excerpts

Committee: 1st sitting (Hansard): House of Lords
Tuesday 28th March 2017 Lords Chamber

[Lord Brown of Eaton-under-Heywood]

My Lords, I start with a very pedantic point. If this amendment is to go ahead, it needs to begin with an “or”. As the noble and very clever though not technically learned Lord points out, this is a further alternative to the two already listed in new Section 362B(4). The next point is that of course the property here envisaged, registered in the name of an overseas company in which the respondent has an interest, is not—I repeat, not—the same property as referred to in subsection (1), in respect of which one seeks to have an unexplained wealth order made. It is a different property altogether.

I have great sympathy with the amendment and the policy underlying it. Like the noble Lord, Lord Deben, I deplore the extent to which London properties are in foreign ownership nowadays. But I respectfully wonder how far the amendment would go—if any distance—in actually dealing with that problem and with money laundering. Surely with regard to most of the people who buy and own these London properties—if they are not already PEPs, or politically exposed persons, and we know that a lot of them probably are—nobody questions how much money they have. But would it not then be rather difficult to satisfy the earlier requirement —which, again, has to be satisfied to make one of these orders—in new subsection (3)? Each of the various requirements set out in proposed new subsections (2), (3) and (4) has to be satisfied. First you have to show that they hold property of the relevant value; then, in new subsection (3) you have to be satisfied that,

“there are reasonable grounds for suspecting that the known sources of the respondent’s lawfully obtained income would have been insufficient for the purposes of enabling the respondent to obtain the property”.

The property there being referred to is not property in London registered in the name of an overseas company, it is the property in respect of which you are seeking a UWO.

Those points need to be borne in mind before one goes down this particular road. It is not going to be the panacea that some who have contributed to the debate thus far seem to think it is likely to be.

[Baroness Kramer (LD)]

My Lords, I do not pretend for a moment to have the drafting skills of the noble and learned Lord, Lord Brown of Eaton-under-Heywood, but I associate myself with all the other comments that have been made on the amendment. Rather than repeat the issues that have been so well described, I want to pick up the point that the noble Lord, Lord Faulks, made—that this Bill is a real and rare opportunity to tackle this problem, which, as he will have heard, exercises Members on all sides of the Committee and is essentially a non-partisan series of concerns.

When I had the privilege of sitting where the Minister is sitting, I brought a Bill through this House which was fondly and informally known as the “Dump it in here” Bill. It is perfectly possible, even at this stage, for the Government to come forward with some well-drafted language that would achieve the goals that have been described by various noble Lords today and by others who have been concerned about this issue. The Government have been looking at it for a long time. Given the fact that it will be difficult to get new legislation through in the next couple of years, I urge the Government to look at drafting that language—they have the capacity to do it and would be in a position to do it—that would bring into the Bill the kinds of remedies that would require the public register of beneficial interest for property ownership that presently we do not have in the UK. I met representatives of the British Virgin Islands the other day. The British Virgin Islands actually has such a register and would be delighted to provide mechanisms and recommendations to the British Government if they felt they needed advice in this area.

[Lord Leigh of Hurley]

My Lords, I have touched on this subject already. As president of Westminster North Conservative Association, I have spent many long evenings tramping along the streets of Westminster North, knocking on doors of properties that are clearly unoccupied and turn out to have no registered voters so are probably owned by offshore companies. While I am not convinced that the amendment, placed where it is, achieves the effect that the noble Lord, Lord Faulks, wants, I echo the remarks of the noble Baroness, Lady Kramer, that this might be an opportunity to seek to make progress.

The point made by the noble Lord, Lord Deben, about not wanting to be xenophobic is well taken, not least because of the concerns that some people have that the actual beneficial owner of these overseas companies is in fact a person in the UK who might well allegedly be the tenant. The fact that it is an overseas company does not mean that it has an overseas owner. Noble Lords ask whether their children will be able to afford to live in the house that they live in. Invariably, the answer is no.

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Moved by

[Baroness Kramer]

71: After Clause 11, insert the following new Clause—
“Whistleblowing
(1) The Secretary of State must by regulations made by statutory instrument establish an Office of the Whistleblower.(2) The functions of the Office shall be the administration of arrangements to facilitate whistleblowing in respect of corrupt or suspected corrupt practices in systematically important financial institutions including in particular with regard to fraud, tax evasion, money laundering or miss-selling. (3) The Office shall have powers—(a) to give directions as to the records kept by each institution and to check compliance with its directions including by audit;(b) to award financial compensation to any person voluntarily providing information to—(i) the Financial Conduct Authority;(ii) the Prudential Regulation Committee of the Bank of England;(iii) the Serious Fraud Office; or(iv) any other organisation designated by the Secretary of State;leading to enforcement action against the institution sanctioned by way of penalty of not less than £500,000; and(c) to set the level of compensation awarded in each case between 10% and 30% of the total collected.(4) The Secretary of State must by regulations made by statutory instrument make provision with regard to retaliatory action against whistleblowers.(5) For the purposes of this section a “systematically important financial institution is an institution” designated by the Bank of England in consultation with the Financial Stability Board and the Basel Committee on Banking Supervision.”

[Baroness Kramer]

My Lords, this amendment is designed to strengthen the protection for whistleblowers but also to provide for mandatory compensation for them following the example of the United States in this area, most recently under Dodd-Frank. It also proposes an office of the whistleblower, both to enshrine the importance of whistleblowing and to provide the necessary oversight of the broader regime. It is a probing amendment and I hope that the Minister will not waste her time in discussing drafting issues, when the core issue of whistleblowing and how we support it is so critical to making the financial system clean and fair and to rebuilding public trust.

Being realistic, so much money swirls though the financial system that the potential for ill-gotten gains from misbehaviour is huge. My amendment mentions fraud, tax evasion, money laundering and mis-selling, but ingenuity in this area is boundless, as evidenced by the fixing of the LIBOR benchmark rate, which involved many banks over several years distorting billions of dollars of transactions, for which very few have paid the price, and those who have are primarily junior staff. With money on this scale, no regulator or enforcement agency can begin to tackle these issues without inside information. That means a positive culture of whistleblowing, which in itself then becomes a deterrent.

We do this notoriously badly. The recent RBS GRG scandal is an example. I have spoken to only two of the whistleblowers but they have both been treated atrociously by RBS and the regulators and face an end to their careers and personal disaster. This is despite endless warm words from the banking industry, individual banks, the regulators and the Government on how important the whistleblower is and promises of protection. It is why I am calling on the Government in subsection (4) of the proposed new clause to act much more directly to stop retaliatory action.

I was a member of the Parliamentary Commission on Banking Standards. Among our work, we looked at the whistleblowing regime and recommended some enhancements. To be fair, those have, for the most part, been adopted, but they were modest changes: for deposit takers, PRA-designated firms and insurers a non-executive director or senior manager is required to be named as responsible for whistleblowing under the senior managers regime; a system to protect employees is required to be in place in each institution; the rules are to be disseminated; and employment tribunals are meant to provide protection. The banking industry is very satisfied with this approach. Indeed, it has always been satisfied with its approach and, in the evidence and testament we took, it was very satisfied with the prior approach, even though rarely was whistleblowing taking place even under the most egregious circumstances, and whistleblowers were receiving little, if any, protection. It is clear the industry was shocked that, with all of its whistleblowing measures in place, no one came forward to tell the authorities about money laundering, LIBOR or mis-selling.

The revised system appears to be fraught with problems. In an email from the charity WhistleblowersUK, I heard that a few days ago a staff member called to speak to the whistleblowing champion at a major bank only to be told that they did not exist. When the caller persisted by providing the name from a letter, the bank told them that that person did not exist. Whistleblowers themselves complain that the regulators provide them with advice and then renege, and that they have no comeback against the regulators, whom no one can compel to respond to FOIs or subject data access requests.

In March this year the Financial Conduct Authority confirmed that the number of whistleblowing reports has fallen for the second year in a row, down to 866, of which just over 100 were of “significant value”. That is not a successful system. In the United States, by contrast, whistleblowers are far more appreciated. They are a core tool for exposing wrongdoing, whereas in the UK they are merely incidental. The key difference is reflected in compensation, which underscores the complete cultural difference in the attitude towards whistleblowers. In my amendment I have essentially lifted the simple principles of compensation available under Dodd-Frank and drafted them into UK law. Compensation is mandatory for those providing original information leading to a sanction, and the compensation is a hefty 10% to 30% of the sanction paid. This is a recognition that for most people whistleblowing puts a career, lifestyle and family at risk.

Let me quote the evidence of Erika Kelton, a US lawyer dealing with whistleblowing cases, describing the impact of US whistleblowing incentives schemes to the Parliamentary Commission on Banking Standards. She said:

“Tens of billions of dollars otherwise lost to illegal practices that cheat the public fisc have been recovered as a direct result of whistleblower information. But the impact and importance of whistleblower matters goes far beyond the large dollar amounts recovered for US taxpayers. Whistleblowers have exposed grave wrongdoing, leading to changes that promote integrity and transparency in financial markets. Whistleblowers have helped stop massive mortgage frauds, gross mischarging practices, commodity price manipulation, and sophisticated money laundering schemes, among other misdeeds”.


She argued that,

“meaningful, non-discretionary financial incentives are critical to establishing robust and successful whistleblower programs”.

In the UK, the objection of the regulator to such incentives is one of “moral hazard”—that whistleblowing is simply somebody doing his or her job and deserves no special reward. I simply look at the lack of whistleblowing and the situation for whistleblowers in the UK and disagree. The Parliamentary Commission on Banking Standards directly called on the FCA to research the impact of financial incentives in the US in encouraging whistleblowing. I have yet to hear any substantive report on that issue; perhaps somehow I have missed it and the Minister has seen it.

I fully accept that issues around whistleblowing extend beyond financial services and impact many other business sectors and areas of our lives. But we could start here with financial services. We need action that is game-changing, not tinkering around the edges. It is vital that we use every reasonable tool to increase our chances of keeping the financial sector clean, protect the public and restore trust in an industry that is key to the functioning of our economy. I beg to move.

[Lord Phillips of Worth Matravers]

My Lords, I support this amendment. I suggest that whistleblowers need to be both protected and rewarded in order to encourage them. The Mauritian legislation of which I spoke earlier makes provision for rewards to be paid to whistleblowers whose information leads to the confiscation of unexplained wealth. Indeed, the board that I chair has the function of making such awards. In my view this is a salutary provision as one of the weapons in the fight against crime and corruption. Therefore, I support in principle this amendment, but as a starting point because I suggest that it is a principle that should be applied much more widely in the case of action taken that leads to the recovery of the proceeds of crime.

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[Baroness Williams of Trafford]

The Government are never complacent in any area of law they introduce; I would never say that everything is perfect.

[Baroness Kramer]

My Lords, obviously I am going to withdraw the amendment, but I want first to make a couple of points. I am not going to give up on this issue. Let me point out that a moment ago the Minister talked about an office for money laundering to be set up within the FCA. As far as I am concerned, that is an ideal pattern to follow. The notion that this proposal would create an extraordinary and hefty bureaucracy is not credible because, frankly, the entire bureaucracy would probably be paid for by one whistleblower revealing one scandal on the scale that we have seen in recent years. I reject the idea that this is onerous. There are plenty of templates to follow that would allow us to do this sensibly.

On the financial incentive, I do not believe for a moment that whistleblowers do it for the money. The money is a recognition that they have destroyed their future. There may be some protection within the company they work for which ensures that they are not dismissed, but neither I nor anyone else can be persuaded that people do not look at whistleblowers and decide that they are not quite right for this promotion, that project or opportunity. If they try to change companies they go with what is almost a black spot on their hand, marking them out as someone it is perhaps better not to take a risk on. That is a reality which the Government have never faced up to.

When dealing with detriment, I would recommend the Minister and others who are interested to connect with the charity Whistleblower.co.uk, which would be delighted to provide them with a great deal of detail. I hesitate to mention individuals without their specific permission, but all the protections have turned out to be completely useless for them. People’s lives have been wrecked. Frankly, even the regulator would agree that despite all the systems that are in place, people’s lives have been wrecked, and there has only been some tinkering at the edges. Nothing has happened to bring about fundamental change. All this comes together in the poor statistics that I set out when moving the amendment. Very few people are coming forward and blowing the whistle on substantive issues that can affect our absolutely massive financial services sector. This allows the industry to be rather complacent, and that is exceedingly dangerous.

I hope that the Minister will recognise that while I will withdraw the amendment, we are nowhere near coming to the end of this issue.

Amendment 71 withdrawn.

Criminal Finances Bill

Baroness Kramer Excerpts

2nd reading (Hansard): House of Lords
Thursday 9th March 2017 Lords Chamber

[Baroness Kramer (LD)]

My Lords, like the Labour Benches, we are supportive of the overall purpose of the Bill and the majority of its clauses, in particular as amended by the Magnitsky amendment with its powers to freeze the UK assets of those suspected of abusing human rights. Our goal both at Second Reading and in the stages that follow will be to strengthen the Bill. We have a number of what I would say are relatively small but significant issues that we want to tackle, but most of our conversation will be about issues that are not in the Bill but which we think it should address. I will just say in this context that several of my colleagues are speaking in this Second Reading debate and so quite a number of issues, from corporate governance to POCA, will be covered by them. We thought that the House would appreciate not hearing repetition where it is avoidable.

As we all recognise, the purpose of the Bill is to crack down on both corruption and tax evasion. It seems impossible to address those issues without looking at the overseas territories and Crown dependencies. I do not want to repeat what was said by the noble Lord, Lord Rosser, but we all understand that everybody’s ideal would be a central register of beneficial ownership that is publicly available in every location.

We on this side feel that this is an opportunity to push the issue further and we hope that the Government will consider taking advantage of that, but we also recognise that the overseas territories and Crown dependencies are in different positions both with regard to the authority of the UK Government and in the degree to which they have progressed along this track. As I understand it, all three Crown dependencies have a central register, which, although not publicly available, can be examined by UK tax and law enforcement authorities—but the picture is much more varied for the overseas territories, while the particular issues with regard to Gibraltar are made even more complex by our upcoming exit from the EU. But we all recognise that the Panama Papers were a serious wake-up call for anybody who was complacent in this area and we look to the Government to treat this as an opportunity to act.

We also want to raise questions with the Government about our capacity to investigate and enforce, both under the relevant clauses in this Bill and more generally, across the area. Only today OLAF, the anti-corruption body of the EU, made it clear that the UK may be liable for a €2 billion fine for its failure to crack down on customs fraud by Chinese clothing importers—an issue that apparently has been brought to the Government’s attention on many an occasion.

I do not know the rights or wrongs of that, but when we look at the range of issues we are all aware that many people are concerned about the mechanisms of property ownership, in particular the ownership of high-value properties in areas such as central London. The All-Party Parliamentary Group on Anti-Corruption has drawn our attention to more than £4 billion-worth of properties that have been bought with suspicious wealth. That surely has to be an area of concern.

Some have raised concerns over the care sector and the structure of its ownership. I remember the shock in this House in 2015 when Barclays, which you would think would be totally aware of these issues, was fined £72 million by the FCA over what was known as the “elephant deal”, a £1.9 billion deal in which it elected to provide confidentiality for politically exposed people engaged in that deal by outrunning its own procedures. As I remember, the documents were typed on a typewriter so that they would not be in the computer and internal compliance system, and the cash was put in a safe brought in to the team’s offices for that purpose. How any institution would think it should be able do that is quite shocking and reflects the lack of respect in many areas for our actual capacity to enforce. That must surely be addressed.

An issue very close to my heart that I want to engage with in the Bill is the protection that we offer—or rather, do not offer—to whistleblowers. It seems entirely pertinent across the whole range of issues covered by the Bill. When I was a member of the Parliamentary Commission on Banking Standards, we looked at whistleblowing, but I do not think that we came out with recommendations that were strong enough or pushed hard enough for action on this front.

For anybody who doubted it, the issues with RBS and its global restructuring group will underscore the risks that whistleblowers face. As many in this House will know, the whistleblowers who exposed what was happening with RBS and its GRG typically found that it was a career-ending move. They lost their jobs, suffered great personal stress and personal crisis and have not received protection as a consequence. Others will be very well aware that in the United States the career-ending impact of whistleblowing is widely recognised. That is why compensation schemes for whistleblowers who expose real fraud or misuse are in place. That is an area we have to explore.

Every one of us will agree, I think, that profiting from crime, funding terror and evading tax have absolutely no place in the UK. It is our purpose to row in behind the Government and then strengthen the Bill, which provides an opportunity to tackle those egregious and completely unacceptable forms of behaviour and criminality.

Gender Pay Gap

Baroness Kramer Excerpts

Tuesday 20th December 2016 Lords Chamber

[Baroness Williams of Trafford]

My Lords, the Government, starting with the previous Prime Minister, are most certainly committed to the very ends that the noble Baroness seeks. Not only are women contributing to tax, but they also bring the huge benefit of increasing GDP in this country.

[Baroness Kramer (LD)]

My Lords, recent reports by Deloitte and the British Computer Society have underscored that where women are educated in STEM subjects and then pursue careers in that field, the gender pay gap is at its narrowest. Does the Minister agree that there are still huge cultural, social and other barriers that discourage many women from pursuing those opportunities and avenues? Would the Government be willing to put some resources behind trying to break down those barriers in an effective way, because leadership is surely required in this area?

[Baroness Williams of Trafford]

My daughter has just graduated in a STEM subject and is now working with one of the big four accountancy firms. That firm is going to great lengths to improve the diversity of its workforce. Some companies are much better than others at encouraging diversity, but I look forward to the day when diversity is the norm and those who do not engage in this agenda stand out by their lack of doing so.

Northern Powerhouse: Airports

Baroness Kramer Excerpts

Monday 23rd November 2015 Lords Chamber

[Lord Ahmad of Wimbledon]

I do not agree with the noble Baroness’s conclusion, although I do agree that there was a lack of investment in the north. The previous Government and now this one have given the commitment to ensure that there is investment, with £13 billion of transport investment going forward in this Parliament. As regards connectivity from north-east to north-west, the noble Baroness is aware that Transport for the North has extensive connectivity plans and I am sure that she welcomes the fact, as I do, that we now have regional airports such as Manchester serving not just the domestic European community—she throws her arms up, but I do not agree with her. The Chinese President himself made a positive announcement, which I think that she should appreciate.

[Baroness Kramer (LD)]

My Lords, the Minister is well aware that any owner of a new runway in the south-east will need to fill it rapidly to repay the cost of having built it and that the fastest route is to persuade the international airlines not to fly directly to Birmingham, Manchester and other regional airports, but to come through Heathrow, with a hub relationship only with those airports. Has he examined what this will do to undermine the northern powerhouse, which is seeking international investment and needs direct international connectivity?

[Lord Ahmad of Wimbledon]

The northern powerhouse is not being undermined but supported by the Government, as the recent announcement about the link to direct flights to China indicates. As regards the decisions that airlines take, the noble Baroness is aware from her time as a Minister for transport that that is very much up to the airlines themselves.

Shared Spaces

Baroness Kramer Excerpts

Thursday 15th October 2015 Lords Chamber

[Baroness Kramer (LD)]

My Lords, first, I congratulate the noble Lord, Lord Holmes, on obtaining this debate and on the work that he has done in the whole area of disability and shared space. The noble Lord, Lord Low, has also been extremely active in this area, as have the national charities: the RNIB, Guide Dogs, and the National Federation of Blind People. Today, an issue of great significance is being brought before this House.

I am not a particular fan of shared space, but the Armageddon picture that has just been painted may not fully reflect the experience up and down the country. There are definitely supporters of shared space and many who look at schemes and explain that they work reasonably for all members of a particular community. That does not mean that there are not many significant issues. I very much support the specific recommendations made by the noble Lord, Lord Holmes, which seem to me to make a great deal of sense.

When I was in the department for 18 months, disability was within my portfolio. We made some significant progress in that area. To my mind, it is crucial that people who have a disability are accepted as a normal part of our society, needing all the opportunities and access that any normal person requires. In those areas where the department had complete control, I think that we made significant progress—for example, on accessible stations—and the industry began to change. The transport industry is culturally beginning to shift in its understanding that, as it plans and moves forward, it must see disabled people as a normal part of its user group, not as an afterthought, an added extra or an amendment to a plan. That is a really significant change.

However, when we tried to make progress on quite a number of issues, we were thwarted on two grounds which I am concerned remain in play. First was the group I call the “anti-red tape Red Guards”. They existed in government when I was there: Ministers for whom every regulation was by definition bad and had to be halted no matter what the benefits. Frankly, to provide opportunity and access for disabled people there is frequently a role for sensible, smart and appropriate regulation, and it is often very difficult to tackle a problem—shared space is a good example of this—when that is ruled off the table. I do not know whether that has changed—I hope it has—but it was a definite and complete obstacle. The number of times we got overturned still makes me frustrated to this day.

The other area where we had great challenges was whenever we tried to work in an area that also fell into the purview of DCLG. Of all the government departments that I dealt with, DCLG was the least sympathetic to disability. One reason we did not go ahead and attempt to revise the guidance is that we were very concerned it could end up worse at the end of that process because of the view DCLG took on that. Many of the people there have now changed and I hope that perhaps as we have a different Secretary of State there might be a different environment and a review of guidance could go ahead.

We provided to all relevant parties the charter and advice on shared space developed by the National Federation of the Blind in co-operation with all the other disability groups. I must say that local authorities who were sensitive to these issues immediately understood why they were being provided with that, and we created a link through to it from the department’s web page. They saw that they needed to broaden their views and to understand the implications if they looked at shared space opportunities. Of course, that does not deal with those local authorities that are simply insensitive to these issues and, frankly, probably to guidance on any front. So I hope that there is a real opportunity now to relook at that guidance.

Every time this issue was raised it would be pointed out to me by those who did not want to see change and were proponents of shared space that one disability group is in conflict with another. They would look at people in wheelchairs and with mobility issues for whom kerbs are an endless problem and say, “Look, that group benefits from accessibility when we have shared space, and you must keep those issues in consideration as well”. I am delighted that the noble Baroness, Lady Thomas, is here because I believe that all disability groups understand each other’s problems and the constraints that they have to live with. I want to see the whole disability community, whether that disability is around mobility, vision or hearing, come together to develop a common platform on this issue. That is the way to get past the constant obstacle put forward to re-examining and finding better ways to tackle this problem.

It is important to bring in the motoring community, which has been quite a strong proponent of shared space, and also the cycling community. Again, that is a potentially sympathetic community. However, so often when meeting cycling groups, they have not understood what it is like to be someone who depends on other people avoiding you as you try to cross a street, or to become disoriented because there is an absence of appropriate markers and to have to turn to other people and become dependent in order to move around. Engaging with the cycling community is absolutely key around this issue. That has not happened anything like enough.

Before I left government, the noble Lord, Lord Low, came to my office—I believe the noble Lord, Lord Holmes, was there as well. We agreed that the time had come to have what I would call a summit: essentially a gathering of all relevant parties—from the local authorities to the various voices from the disability community and the engineering, design and planning community—to start to really discuss these issues in great detail and come to a common platform and consensus.

It seems to me that something like that becomes the basis for guidance in the future, driven not just by a consultation by DfT which is then rewritten by DCLG. It offers a path forward—and not only on this issue: hopefully it also creates that ongoing dialogue. All the groups that we are talking about meet and cross each other in so many different environments. If we could get that common understanding, that communication and that exchange of ideas, we could craft a way forward. I hope very much that the Minister will be able to achieve it.

Economic Case for HS2 (Economic Affairs Committee Report)

Baroness Kramer Excerpts

Wednesday 16th September 2015 Lords Chamber

[Baroness Kramer (LD)]

My Lords, I supported HS2 in government and I support it out of government. I will deal with just a limited number of the issues as I have just six minutes.

That trains today are 60% to 75% full and that there will be no new source of capacity is probably the most frightening statement for anyone in the railway industry to hear. The forecasts for capacity are among the most conservative that anyone could imagine in the industry. Our year-on-year experience already overwhelms those forecasts. Without HS2, I dread to think what we will do with passengers who need to travel when we get to 2026.

I shall address capacity in terms not just of seats, but of train paths. This August, the west coast main line was able finally to offer six to seven additional services from London to Blackpool via Shrewsbury, only off-peak. That was done only by the most strenuous reworking of that timetable. We are out of train paths. With so many cities in the Midlands and the north telling us that they need additional train services for their business communities to grow and to remain viable, the department and the industry would be most grateful to know which trains Members wish to take off to free up the train paths that are very evidently needed. They are coming to the department with very significant business cases behind them. We are out of capacity.

The alternatives offer only about one-third of the capacity that HS2 offers. Consider the impact of delivering those alternatives. They require virtually every tunnel, viaduct, bridge and embankment to be rebuilt, taking virtually every weekend, year in, year out, causing the most extraordinary disruption. We live in a society in which people travel on weekends, not just on weekdays. We have the experience of the west coast main line to go by. A £10 billion investment over 10 years, causing disruption virtually every weekend and indeed on a significant number of other days, and delivering almost no increase in capacity because it is so challenging to deliver on the existing lines—very many of which, frankly, Brunel would recognise—constitutes a huge challenge and does not deliver very much. Living with it in the interim would be a nightmare as it would in effect shut down business for a significant number of communities. Of course, this project matters for regeneration. Even the methodologies used by the department, which are dictated by the Treasury, and which I think most of us would consider underestimate the benefits and the cost-benefit ratio, demonstrate that it would deliver a cost-benefit ratio of more than 2.3. However, that assumes that passenger numbers are frozen three years after phase 2 opens in 2036. I do not think that anybody in this Chamber believes that that is a viable scenario, so we are looking at a cost-benefit ratio far more like 4.5 or even higher, and that is phenomenal. The systems that we use to assess cost-benefit ratios significantly understate major long-term project benefits, and that is a reality which I think many in this House understand.

There is an argument that this project benefits only London. The people who say that should talk to those driving growth in the Midlands and the north who negotiate with investors who will come in and build new businesses, because they argue that they need local connectivity. I will come to that, and it is absolutely crucial. When we compete for an investment that could be placed in Poland, France or Spain, we have something to offer that those countries cannot, which is excellent access to London, the largest financial, legal, PR, advertising and technology market in Europe. That tips the balance in a highly competitive environment. When we compete for every penny of investment we get, it is a question of whether it goes not to another part of the UK but to another part of the EU. That is absolutely crucial. I have heard this from people involved in the day-to-day hard negotiations, and I take their word for it.

It is also true that we must build local connectivity but these issues are not alternatives. I will enjoy hearing from the Government how they are progressing with the review of electrification and other programmes in the north but I am very aware that Network Rail struggles with skills, capacity and management issues. That is entirely separate from the investment in HS2. I honestly do not believe that this is an investment issue: it is a capacity issue within the current system. It has to be resolved but these are not, frankly, alternatives.

This scheme should have been built 15 years ago. There is genuine opposition to it. It would go through beautiful countryside and many people are appalled by that. I understand that. However, we are at the point where we simply cannot delay any longer. People need to move to live the lives that they want and to generate the economy that we need.

Davies Commission Report

Baroness Kramer Excerpts

Wednesday 1st July 2015 Lords Chamber

[Lord Callanan (Con)]

My Lords—

[Baroness Kramer (LD)]

My Lords—

[Lord Gardiner of Kimble (Con)]

My Lords, it is sensible that the Liberal Democrat Benches should have an opportunity.

[Baroness Kramer]

My Lords, I declare that I have lived for 20 years under the Heathrow flight path and that I am a member of HACAN. Could the Minister tell us what the anticipated impact is on Manchester and Birmingham airports? The business plan for Heathrow includes a proposal to divert direct flights into those two airports to the third runway, which will have an impact on the northern powerhouse. In addition, my neighbours and I were told when the fourth terminal was approved that there would be no further expansion at Heathrow. There was then an effort to get a fifth terminal, and we were promised that there would be no expansion beyond the fifth terminal and no third runway. Within six weeks of planning approval, a campaign began for the third runway. Would the Minister tell me whether I am a fool to have believed those assurances from both the airport and the aviation industry, and whether I would be a fool to believe again promises about there being no plans for a fourth runway or indeed about the rather minor mitigations promised, many of which could have been implemented already?

[Lord Ahmad of Wimbledon]

As the noble Baroness knows, I have great respect for her opinions and I would certainly never suggest that she has been a fool in any respect. The important thing for Manchester is that it will benefit from the engagement and the statements we have made on the northern powerhouse and from the development of HS2. As I am sure the noble Baroness is aware, Manchester itself recently announced £1 billion of investment for Manchester airport and its expansion over the next 10 years.

I emphasise again that it is the Government’s opinion—and the commission has evaluated this in its report—that regional connectivity is important in ensuring that our regional airports are part and parcel of the development of our airport capacity nationally.

International Women’s Day

Baroness Kramer Excerpts

Thursday 1st March 2012 Lords Chamber

[Baroness Kramer]

My Lords, I have loved every minute of this debate and learnt so much across a wide range of issues that affect women in our society. Like all in this House, though, I have not agreed with everything. There were some comments about women on boards that particularly troubled me, and I shall address them briefly.

My noble friend Lady Bottomley suggested that a lot of work has gone on to get women on to boards, and now it is time to switch the energy and start looking at women in executive roles. Of course it is important to have women in executive roles, but so often when we start to make progress we stop way before we have won the prize, and I would be sad to see that happen here. It is perhaps the strongest promotion of women in executive roles to see those women sitting in non-executive slots, which then prompts the question of why they are not also filling the CEO’s seat and the other executive seats around the table.

The benefit that women are bringing to boards is real diversity and challenge. That challenge is partly because women are coming from non-traditional backgrounds, and in this House we see the benefit that comes when you get that challenge. If you want to see the effect of cosy consensus in the boardroom, you have only to look at the recent banking crisis to see what happens when challenge is absent.

I was rather more concerned by the comments from both my noble friend Lady Bottomley and the noble Lord, Lord Davies of Abersoch, on quotas. I give huge credit to the noble Lord for the work that he has done in changing the whole atmosphere of women’s appointments to boards in the UK, particularly to FTSE 100 companies, but I suggest that his powers of advocacy, persuasion and PR have been very much helped because companies have known that the threat of quotas sits in the back pocket and that, if change does not take place, politicians have seemed willing and inclined to carry out that threat.

I myself am in effect a beneficiary of something like quotas. I got my first banking job because I was a woman. I regard that as no shame: you get the job and then you prove yourself. However, I lived for years with that banking institution saying to me on so many occasions, “Isn’t it amazing that just when there were legal pressures forcing us to take women, capable women like you came forward?”. That is such a deeply embedded attitude that we should not be afraid to use the mechanisms that conventional wisdom says are in some way shameful or unacceptable or demean women. They do not demean women; we prove ourselves when we have opportunities.

The issue that I want very briefly to address is the role of women with small businesses. It is a rather troubling area, which does not get a great deal of attention, although the noble Baroness, Lady Byford, addressed it and it was certainly mentioned on the Floor today. Around 15 per cent of businesses in this country are women-owned and managed. The equivalent in the United States is roughly 30 per cent. Small businesses are defined rather differently there so the figure is probably higher than that. That troubles me hugely because there is no cultural difference that explains that difference in performance. Enterprising Women has done some very useful work and its survey suggests that women who start businesses find themselves locked in at the start-up level. The noble Baroness, Lady Byford, suggested that finance was a problem.

However, with that differential, I suspect that the problem is bigger than that. The Government have tried to put in place support and advisory programmes. There are certainly very effective routes such as Women in Business, but we are not getting to the bottom of this. Enterprising Women proposed in its work that if the full potential of just the women-owned businesses in place today was released, we would create more jobs than the Government’s whole regional growth programme. It is an absolutely crucial area and something that we have to get to the bottom of quickly.

It is interesting to look at this issue from an international perspective. The World Economic Forum’s 2011 report on the global gender gap found in its surveys that the biggest barriers to women’s access to leadership positions—which wraps in this and many other issues—are the general norms and practices in their country, masculine or patriarchal corporate culture and a lack of role models. It struck me that they apply as much here as they do anywhere in the developing world, to which we so often look with all these suggestions of how women can make a difference. We have to start taking some of that on board.

I believe that it ties back to the issue of women on boards. If we have those role models in place, we start to change the culture. The need for growth means that we need new women-run small businesses and the jobs that come from them. It seems to me that the whole change loops together in a fairly complex but significant package. I hope that we in this House and the other place can begin to make a real difference on these issues.

Police Reform and Social Responsibility Bill

Baroness Kramer Excerpts

Thursday 14th July 2011 Lords Chamber

By giving the police codes of guidance that will be public, a lot of these difficulties could be eased. There are many precedents. When I was in the Commons, we spent many weeks debating what became the Police and Criminal Evidence Act, under which numerous codes were made available to us by the then Minister in order that we could consider them in relation to the powers given in the Bill. It is perfectly sensible to ask the police to operate under certain codes of guidance. Such codes in any case would protect them, because they would be given much better information than they have at the moment on how to exercise the powers in the Bill.

[Baroness Kramer]

My Lords, I will ask the Minister for clarification on government Amendment 307ZA. My honourable friend Lady Hamwee referred to this a moment ago. The amendment has appeared for the first time in the Marshalled List on Report. It amends the Royal Parks (Trading) Act 2000. That was an eminently sensible Act. It targeted the renegade burger vans that were invading Hyde Park and gave the police powers to seize the vans and the various paraphernalia. I do not think that anyone has disputed the legislation or the way in which it works. If I read the amendment correctly—I may not have, which is why I seek clarification—it will allow seizure powers to be applied in any instance where a by-law in any Royal Park appears to be violated. That is a huge broadening of powers. As many noble Lords will know, many by-laws affect the Royal Parks. As far as I know, there is no problem that requires a fix—so in a sense this is a solution finding a problem, which itself raises issues.

The noble Lord, Lord Judd, put the point exceedingly well that the issue of democratic protest applies not just to Parliament Square. Many Royal Parks also have a tradition of allowing legal, peaceful demonstration and protest. The fact that there is public access at all to Richmond Park comes from public protest, which has a very long history. I am concerned that in an attempt to tidy up loose ends and provide a more sweeping basis for various powers, we are about to put in a piece of legislation that is not required because there is no problem to solve, and that puts across a problematic message that demonstration needs to be in some way curtailed. I seek reassurance and an explanation of why this appears in the Bill, what its purpose and intent are, and what the legal effect of it will be.

[Lord Newton of Braintree]

I had not intended to speak in this debate and I ought to confess that—how can I best describe it?—I copped out on the previous debate as I found my noble friend Lord Marlesford and all the other speeches very persuasive until I heard my noble friend from the Front Bench who I thought made some significant points that undermined the possible practicality of that amendment.

This amendment is also designed to modify the Government’s proposals. I say to my noble friend on the Front Bench that it seems to me that we have quite an awkward situation here. Almost no one believes that what the Government have in the Bill will work. Everyone believes that something needs to be done. I was persuaded that my noble friend Lord Marlesford’s amendment was not quite the ticket, so I landed up in the position I have described. Equally, I do not find myself very attracted by the proposition, which my noble friend on the Front Bench implied in her speech, that it might take four years to find out. Well, if it had not worked in four years, she would be disappointed.

The fact is that we are going to know quite soon following the passage of this Bill, if that is what happens, whether it has been effective in achieving the objective we all want, which is a situation in Parliament Square that is consistent with the buildings around it and its world status. I do not seek to persuade my noble friend to concede to the amendment or to put her in a very difficult position, but I would like her to acknowledge that in this debate points have been made by noble Lords, including the noble Lord, Lord Dubs, that need some further consideration. I would welcome an assurance that if what is in the Bill does not work, the Government will continue discussions with a view to coming forward with some other proposition that has a better chance of working in pretty short order.