Vagrancy Act 1824

Lord Sharpe of Epsom Excerpts

Wednesday 17th May 2023 Lords Chamber

[Baroness Kennedy of Cradley]

To ask His Majesty’s Government when they expect to commence the relevant provisions in the Police, Crime, Sentencing and Courts Act 2022 that repeal the Vagrancy Act 1824.

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

My Lords, as we made clear at the time of the PCSC Act and as was recently set out in the Government’s Anti-Social Behaviour Action Plan, we will repeal the Vagrancy Act when suitable replacement legislation is brought forward. This will be done at the earliest parliamentary opportunity.

[Baroness Kennedy of Cradley (Non-Afl)]

My Lords, the delay in commencing the repeal of the Vagrancy Act has left this matter unresolved for more than a year. In that time, more than 1,000 vulnerable people have been arrested under its provisions. The plans the Minister refers to recriminalise homelessness through new anti-social behaviour legislation and are contrary to the principles established in the Government’s rough sleeping initiative. That is, in effect, the Vagrancy Act by the back door. When will the Government move past criminalisation as a response to homelessness and offer genuine, workable support measures? When will they finally repeal the Vagrancy Act?

[Lord Sharpe of Epsom (Con)]

My Lords, at the start of the year the Home Office was asked to take forward provisions to repeal and replace the Vagrancy Act, as the noble Baroness has referred to. That builds on the Lords amendment to the PCSC Act 2022 to repeal the Vagrancy Act once replacement offences have been considered. That amendment received support across parties in both the Lords and the Commons. The Department for Levelling Up, Housing and Communities remains the policy lead on homelessness and rough sleeping. We are working closely with that department to determine the replacement legislation. That legislation is not ready yet. An extensive action plan for anti-social behaviour has been published, which goes into significant mitigations for homelessness. As soon as parliamentary time allows, we will do this.

[Lord Bird (CB)]

My Lords, between 1964 and 1969 capital punishment was not used. It was allowed to fall into non-use. Could we do the same with the Vagrancy Act, which is one of the most heinous crimes because it turns homeless people into criminals?

[Lord Sharpe of Epsom (Con)]

My Lords, the Government do not collect figures on the police usage of the Vagrancy Act and as the police are operationally independent, we cannot comment on figures. The Ministry of Justice figures on prosecution show that it is a very small number of people. There were four prosecutions for sleeping out in 2021 and 459 prosecutions for begging in 2021.

[Lord German (LD)]

My Lords, this is a very important piece of legislation which the Government are seeking to provide. Can the Minister give us an assurance that the Bill, or whatever the legislation is, will be delivered and completed by the next general election?

[Lord Sharpe of Epsom (Con)]

I cannot give that assurance but, as I said, last year we consulted on options for replacement legislation, along with other stakeholder engagement, and we are considering those complex issues carefully. The Government will publish responses to the Vagrancy Act consultation in due course. As soon as parliamentary time allows, that legislation will appear in front of your Lordships.

[Baroness Chakrabarti (Lab)]

My Lords, what is the Government’s approach to commencement orders more generally? There was an engagement in your Lordships’ House last week about the non-commencement of journalists’ protection in the Public Order Act. Do the Minister and the Government understand that to delay commencement indefinitely, and thus to thwart the will of Parliament, is an unlawful abuse of power?

[Lord Sharpe of Epsom (Con)]

Of course, commencement is not really within the spirit of the Question, but I understand where the noble Baroness is coming from. There was no suggestion that commencement would be delayed indefinitely under the circumstances to which she refers.

[Lord Best (CB)]

My Lords, the various charities which campaigned for this change, led by Crisis, were deeply grateful for the amendment your Lordships passed which led to this legislative change. But a year on from the Government agreeing to legislate accordingly, we do not have that commencement. We do have the Anti-Social Behaviour Action Plan, which seems to be mostly about a rather penal attitude towards people begging. It does contain some positive comments about new powers—I am not sure whether there will be new money too—to help people who are currently homeless and in need of extra support. Can we hear a little more about the positive aspects of what the Government are attempting to do? In the meantime, can we abolish this piece of legislation before its 200th anniversary?

[Lord Sharpe of Epsom (Con)]

I am happy to give a bit more detail on the positive aspects of this. So far, we have invested up to £500 million through our flagship rough sleeping initiative 2022-25 so that local authorities can provide tailored support to end rough sleeping. We have launched the £200 million single homelessness accommodation programme, which will deliver up to 2,400 homes for vulnerable people sleeping rough or at risk of rough sleeping. In addition to the 6,000 homes being delivered by rough sleeping accommodation programmes, we have committed £42 million of funding since 2018 towards the subregional Housing First pilots in various regions. We have also committed up to £186.5 million in funding for substance misuse treatment services.

[The Lord Bishop of Gloucester]

My Lords, I thank the Minister for those statistics and for his assurance of an eventual commitment to no one being criminalised simply for having nowhere to live. Is he aware of the Ministry of Justice data which shows that people released from prison to homelessness are over 50% more likely to offend within a year? What more is being done to ensure that prison leavers have a home on release?

[Lord Sharpe of Epsom (Con)]

I cannot specifically answer as regards all prison leavers. I know that a lot of work is being done with the rehabilitation of drug addicts in an effort to prevent recidivism. I will come back to the right reverend Prelate with more detail, if I can find it.

[Lord Ponsonby of Shulbrede (Lab)]

My Lords, the 1824 Act makes reference to “idle and disorderly” persons, “rogues and vagabonds”. I would be grateful if the Minister could confirm that this is not a reference to Conservative Peers. The 2019 manifesto committed the party opposite to ending rough sleeping by 2024, yet it continues to rise. It is up by 74% in the last 10 years and may be up by a quarter in the last year. What do the Government intend to do to reverse this trend?

[Lord Sharpe of Epsom (Con)]

The noble Lord is a magistrate. I will not comment on his first point, other to say that I am sure most of my colleagues would prefer not to appear in front of him. The statistics he gives are not quite as bad as he made them sound. The numbers are much lower than when homelessness peaked in 2017. Although there was a slight spike last year, they are significantly below previous peak levels.

[Lord Watts (Lab)]

My Lords, is it not a bit rough for the Government to massively increase the number of homeless people in this country and then do nothing to stop them being arrested?

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[Lord Sharpe of Epsom (Con)]

I think I have already answered questions around this particular line of inquiry.

[Lord Shipley (LD)]

My Lords, I have listened carefully to the Minister’s replies to all the questions so far. I am still none the wiser as to why the Government are not delivering the repeal of the Vagrancy Act. It should have been repealed. I do not understand what is stopping the Government moving forward.

[Lord Sharpe of Epsom (Con)]

My Lords, as noble Lords know and as I have tried to explain, we are hard at work on coming up with a suitable replacement, which is not a like-for-like replacement of the Vagrancy Act in its current form. But it is right that the police, local authorities and so on have the tools that they need to respond effectively to begging and rough sleeping. That work is ongoing.

[Lord Grocott (Lab)]

My Lords, the Minister said two or three times that one of the factors is as soon as parliamentary time becomes available. We are already in an inordinately long Session, with no date yet announced for when it will end and when the King’s Speech will be. So is it not a pretty lame excuse to say that it is just a matter of finding parliamentary time? What we really need to see is the Government getting their act together.

[Lord Sharpe of Epsom (Con)]

I shall pass on the noble Lord’s comments.

[Lord Kamall (Con)]

My noble friend the Minister said that it is important to think about what could possibly replace the Vagrancy Act. Could he enlighten us about the thinking on why there needs to be a replacement, rather than purely repealing it?

[Lord Sharpe of Epsom (Con)]

It is felt that certain other types of activity associated with vagrancy should be looked into, including things such as nuisance and organised begging.

[Lord Baker of Dorking (Con)]

My Lords, is the Minister aware that the Vagrancy Act 1824 was introduced because many soldiers who had fought in the Napoleonic Wars had no employment and resorted to begging? As far as I know, from our recent war in Iraq, no vagrants are now begging. Does the Minister not think that he ought to catch up with what has happened in the last 200 years?

[Lord Sharpe of Epsom (Con)]

I thank my noble friend for the history lesson.

[Lord Hunt of Kings Heath (Lab)]

My Lords, can the Minister explain why the Government need to spend an inordinate amount of time looking at what to replace the Vagrancy Act with, having said that they will rescind it? Why will they not spend a similar amount of time on EU regulations?

[Lord Sharpe of Epsom (Con)]

That is well beyond the scope of this Question, but I am sure that everyone will have heard the noble Lord’s point.

National Crime Agency Investigation: Javad Marandi

Lord Sharpe of Epsom Excerpts

Wednesday 17th May 2023 Lords Chamber

[Lord Coaker (Lab)]

My Lords, the National Crime Agency investigation into the Azerbaijan laundromat is extremely serious, with an alleged $2.9 billion in stolen money laundered through UK companies. An individual with alleged links to this is also being investigated—an individual who gave three-quarters of a million pounds to the Conservative Party and who got an OBE and access to government Ministers. Can the Minister confirm whether this is accurate? In the other place, the Minister said that the National Security Bill is to be considered again in the Lords on ping-pong, as we know, and we may see it return to us. In the light of this investigation, what amendments are the Government going to support in the Lords, or what amendments are they going to bring forward themselves, in order to deal with this and ensure that we all have confidence that there is no dirty money in our politics and that this issue will be addressed at last?

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

The noble Lord will be aware that I cannot comment on ongoing investigations; no Minister at the Dispatch Box would. With regard to Mr Marandi’s status in the United Kingdom, he is a citizen of this country, as I am sure the noble Lord is aware, and his honours and so on are a matter of public record. As for political donations, UK electoral law already sets out a robust regime of donations and controls to ensure that only those with a legitimate interest in UK elections can make political donations, and that political donations are transparent. It is an offence to attempt to evade the rules on donations by concealing information, giving false information, or knowingly facilitating the making of an impermissible donation. I think this structure is pretty robust already, and a large number of various Bills, strategies and so on have recently been published which contribute to this debate.

[Lord German (LD)]

My Lords, all political parties have had problems with political donations. For that reason, the Liberal Democrats have put in place a stringent, robust system to protect our integrity. I think the Minister was referring to an Answer given by the Minister in the House of Commons, when he said that our

“electoral law sets out a stringent regime of donation controls”.—[Official Report, Commons, 16/5/23; col. 701.]

Manifestly, it does not do that. It specifies who can give donations but not where that money might come from. So far from being stringent, there is now a danger that laundered money may have been introduced into our democratic processes. If the system is as stringent as the Government make out, how was it possible for the Conservative Party to accept donations from this individual while the laundromat investigation was ongoing?

[Lord Sharpe of Epsom (Con)]

My Lords, I am going to repeat what I have said: there is a long-standing principle, first introduced by the Committee on Standards in Public Life in 1998, that if you are eligible to vote for a party in an election, you are also eligible to donate to that party. That includes overseas electors, as noble Lords will be aware, with reference to the Elections Act. Coming back to that Act, I remind the House that the Government have already taken significant steps to strengthen the integrity of our elections and update our electoral law. This was done to ensure that our democracy remains secure, modern, transparent and fair. I could go on in considerable detail about the Elections Act, but it has been much debated in this House.

[Lord Carlile of Berriew (CB)]

Is not the case referred to in this Question an illustration of the opacity, rather than transparency, of the financial system relating to political parties? Is it not very important that we should put all protections in place to ensure that political parties have a well-understood and common system of ensuring that donations, in particular those emanating from foreign powers, are dealt with in a proper way? In those circumstances, would the Minister agree to meet me to discuss the amendment in lieu—replacing Lords Amendment 22—which I tabled last Friday for the next stage of the National Security Bill?

[Lord Sharpe of Epsom (Con)]

I would be very happy indeed to meet the noble Lord to discuss his amendment. I remind noble Lords that, as I say, any suspected breaches of the law are a matter for the Electoral Commission or the police. It is not appropriate to comment on individual cases or ongoing investigations, but if a donation is from a permissible donor, it is for the recipient to decide whether or not they want to accept that donation.

[Lord Browne of Ladyton (Lab)]

My Lords, the Minister will be aware of Operation Branchform, the Scottish police investigation into the finances of the Scottish National Party. What he will not be aware of is that earlier today, Alexander Burnett, the Conservative Whip in the Scottish Parliament, wrote to the Presiding Officer demanding a parliamentary inquiry into that while that investigation is going on. In a published statement, he said that such a new committee would

“give the public confidence that the whole truth around this increasingly murky affair involving Scotland’s ruling party will be laid bare once and for all”.

What advice would the Minister give his parliamentary colleague, who speaks for the party: that maybe he should have removed the plank from his own eye before suggesting that, or that this is a good idea, and what is sauce for the goose is sauce for the gander?

[Lord Sharpe of Epsom (Con)]

The noble Lord will not be surprised to know that I was not aware of the Scottish dimension to this subject, so I will refrain from further comment.

[Lord Evans of Weardale (CB)]

My Lords, I declare an interest as the chair of the Committee on Standards in Public Life, and I am grateful to the Minister for his reference to the report made by my predecessors in 1998. I draw the Minister’s attention to a 2021 report, made by that same committee, which looked at electoral finance. The Minister may remember that the committee made a number of recommendations for reinforcing the provisions to ensure that improper funds were not coming into the electoral system, and it is a cause of great regret to myself and the committee that the Government decided not to take forward any of those recommendations. In the light of the most recent suggestions that there are problems, might the Government wish to revisit that decision and take into consideration more positively the recommendations of the independent and cross-party Committee on Standards in Public Life?

[Lord Sharpe of Epsom (Con)]

My Lords, the Government responded to the report published by the noble Lord’s committee, Regulating Election Finance, in September 2021, and the Elections Act 2022, to which I have already referred, contains measures which closely link to recommendations made in the report; for example, the new requirement on political parties to declare their assets and liabilities over £500 on registration, and a restriction of third-party campaigning to UK-based or otherwise eligible campaigners. The Government have stated that the recommendations in the report deserve full consideration, electoral law is complex, and more work is required to consider the implications and practicalities.

[Lord Forsyth of Drumlean (Con)]

Just to follow on from that question from the noble Lord, Lord Evans, does my noble friend accept that all organisations, however properly conducted, can find themselves in difficulty over the money laundering regulations—as, for example, happened with HSBC, of which the noble Lord, Lord Evans, was a director?

[Lord Sharpe of Epsom (Con)]

Yes; I absolutely accept my noble friend’s point. Certainly, in relation to the question that has been asked, it is incumbent on all parties to be vigilant about all donations at all times.

[Lord Wallace of Saltaire (LD)]

My Lords, I am sure that the Minister shares the general concern about maintaining public confidence in the integrity of our electoral process, including political finance. He must be aware that there have been persistent rumours, with a good deal of circumstantial evidence, that there have been flows of money indirectly from the Russian state into Conservative Party funds. So long as that suspicion is maintained and we do not have transparency about what really happened, there will be questions about the integrity of our political process. Should the Government not ensure that there is full transparency about these various reports and publish some of the redacted parts of the ISC’s Russia report?

[Lord Sharpe of Epsom (Con)]

My Lords, we have gone back and forth on this issue on a number of occasions. The noble Lord refers to rumours, but he is prone to starting some. I remind the noble Lord that, as my right honourable friend the Policing Minister pointed out in the other place, an MP from the noble Lord’s party in the other place accepted sizeable donations from somebody who was later identified by MI5 as a foreign agent. Those in glass houses.

[Lord Watts (Lab)]

My Lords, it would be more effective if the political parties had to repay that money. That might be an incentive not to accept money that we think is dodgy.

[Lord Sharpe of Epsom (Con)]

My Lords, I do not believe that was a question.

Licensing Act 2003 (Liaison Committee Report)

Lord Sharpe of Epsom Excerpts

Wednesday 17th May 2023 Grand Committee

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

My Lords, I start by congratulating my noble friend Lady McIntosh of Pickering on securing this important debate. I am very well aware of her long-standing interest in this topic. I also thank all noble Lords who have participated for their contributions. I echo the noble Lord, Lord Ponsonby, in agreeing with my noble friend Lord Smith that the vast majority of people enjoy responsible drinking, and I reassure the noble Baroness, Lady Walmsley, that I often drink with great joy and will do very soon, I hope.

The Government recognise that the majority of people drink responsibly and enjoy alcohol as part of socialising, as has been noted, but we also recognise the significant contribution that the alcohol industry makes to the economy and the job market, as all noble Lords mentioned.

Despite some encouraging trends, we know that the harms associated with alcohol remain too high. Appropriate regulation is therefore essential. We believe that the Licensing Act sets out a clear and effective national framework for regulating licensable activities, while allowing considerable local autonomy. It strikes the right balance between providing safeguards to prevent nuisance, crime and disorder, while recognising the important contribution that licensed premises make to thriving night-time economies. Having said all that, we keep the Act under review to ensure that the regime remains fit for purpose and meets emerging challenges. We work closely with licensing practitioners and the alcohol industry to achieve this.

As your Lordships are aware, in 2017 a House of Lords Select Committee carried out post-legislative scrutiny of the Act. Last year the House of Lords Liaison Committee carried out further scrutiny, so I offer my thanks to everyone involved in that work. The Government have carefully considered the recommendations that the Liaison Committee made in its detailed and thoughtful report last year, and I will update your Lordships on work that the Government have been doing in connection with the reports.

Since the publication of the original report in 2017, the Government have worked to reinforce expectations that licensing and planning should work effectively together. The then Minister for Crime and Policing wrote to licensing authorities to reinforce this expectation. We held workshops and published a revision of the Section 182 guidance, making mention of the relationship between licensing and planning systems. I will come back to both of those things.

In response to the Select Committee’s original recommendation to extend all provisions of the Licensing Act 2003 to airside premises, the Government held a call for evidence, because we of course agree that disruptive incidents caused by excessive alcohol consumption at airports or on aeroplanes are unacceptable. However, as noted in the Government’s response to the call for evidence published in December 2021, the information and evidence submitted did not make a compelling case for extending the provisions. We therefore do not intend to revisit that decision. We were impressed with the information provided following the call for evidence on the voluntary measures already under way by airside premises and airport authorities.

The Liaison Committee expressed concern that removing the GOV.UK licence application system without a replacement system being in place would cause significant difficulties. The Government agree. Your Lordships will be pleased to know that the Cabinet Office has extended the provision of the licensing service for two years, until the end of March 2025. The Government Digital Service will continue to support the online licensing service during this period and is working closely with government departments with an interest in this service. It is exploring options for a long-term solution that meets the needs of licensing authorities and users. At the same time, it is exploring options for a register of licence holders.

I will get into some of the specific points that have been raised, with perhaps a little more detail on one or two of the things that I have already mentioned. With regard to co-ordination between licensing and planning, the Levelling-up and Regeneration Bill will, as has been noted, modernise our planning system and put local people in charge of it, so that it delivers more of what communities want. The Government acknowledge that co-ordination between planning and licensing is important. Planning authorities are involved in licensing applications in their role as a responsible authority under the Licensing Act, but the systems are separate and have different objectives and approaches. The powers are there to enable planning and licensing to work together to support the needs and aspirations of local communities. We do not intend to introduce an additional mechanism.

My noble friend Lady McIntosh made very considered and useful points, particularly regarding agents of change, but these relate to planning rather than the Licensing Act, which is the regime under discussion today. Our response, to both the original report and the subsequent follow-up, has set out our commitment to working with partners to support efforts to improve how these systems work together on the ground. We continue to do that, building on our previous workshops and the clear expectations set out by previous Ministers in this regard. I will obviously share the detailed points my noble friend has made with the relevant department. As she will be aware, the Levelling-up and Regeneration Bill, as I have said, will modernise our planning system and put local people in charge, so I will certainly take back the points that have been made on that.

I think the word “ambiguity” was used with regard to words such as “effective” and “unreasonable”. As signalled by the December 2022 consultation on reforms to national planning policy, the Government will undertake a full consultation on a revised National Planning Policy Framework and proposals for national development management policies once the Levelling-up and Regeneration Bill has completed its passage through Parliament. The Government agree, as I have said, that co-ordination between the planning and licensing regimes is crucial to protect these businesses in practice. That is why, in December 2022, the Home Office published a revised version of the guidance under Section 182—which I have already referred to—of the Licensing Act 2003, cross-referencing the relevant section of the National Planning Policy Framework for the first time. Combined with our wider changes in the Levelling-up and Regeneration Bill, we will make sure that our policy results in better protections for affected businesses and delivers on the agent of change principle in practice.

As regards planning balance, we recognise that raising awareness of this principle, how it can be applied and how it should work in practice are vital in ensuring that the two systems work together at a local level. We will therefore continue to work together with key partners and experts in this area and will continue to hold detailed discussions with them in a workshop setting in June. These discussions will inform what more we can do to further strengthen the licensing guidance, as well as asking practitioners directly what they would find helpful from us.

To go back to the words “effective”, “suitable”, and “unreasonable” being potentially ambiguous, these terms appear frequently in legislation and accompanying guidance. Obviously, circumstances will be different in every case; no law could precisely prescribe what should or must happen in every case. It is for Parliament to legislate to set out the principles, which are applied very much on a case-by-case basis.

My noble friend Lord Smith and others referred to the late-night levy. I am very pleased to say that the Government have delivered their commitment to consult on the level of late-night levy to be applied to late-night refreshment premises. The majority of respondents to the consultation were in favour of local authorities having the option to offer a 30% reduction to late night refreshment providers that qualify for small business rate relief. This reduction is already available in relation to premises that supply alcohol for consumption on the premises.

Now that the consultation is complete, we plan to commence the wider changes made via the Policing and Crime Act 2017 intended to make the levy more flexible for local areas, fairer to business and more transparent. We will continue to collect data on the number of areas introducing a levy via the alcohol and late-night refreshment statistical bulletin.

The night-time economy is obviously incredibly important to the nation and to a number of businesses, but we also continue to take action to improve the safety of women at night, tackle drink-spiking in licensed premises and work with partners to reduce incidents of violence in the night-time economy. To support that work further, we are working with policing and licensing partners to reduce alcohol-related offending in the night-time economy, focusing on sharing good practice, exploring innovative approaches and maximising the use of existing licensing powers.

This leads neatly on to the subject of training, as mentioned by the noble Lord, Lord Ponsonby, and my noble friends Lady McIntosh and Lord Smith. Obviously, we recognise the importance of training for those involved in licensing work at every level. We continue to work closely with the Institute of Licensing and the Local Government Association to ensure that training resources are used widely and consistently, and to explore whether any additional signposting could be included in the Section 182 guidance. I am pleased to say that we will be holding a joint workshop on this issue in June, as I have already mentioned.

The police contribute to licensing decisions and can object to licence applications. In addition, the National Police Chiefs’ Council—the NPCC—remains committed to delivering a training package to all police licensing officers to improve standards and deliver a consistent approach. The NPCC lead for alcohol licensing and harm reduction, Deputy Chief Constable Scott Green of West Midlands Police, is overseeing this programme of work, working with Home Office officials, policing partners and representatives of the hospitality industry to ensure that the training meets the standards of all interested parties.

Noble Lords—among others, my noble friend Lord Holmes, the noble Baroness, Lady Walmsley, the noble Lord, Lord Ponsonby—have brought up the subject of access to licensed premises for disabled people. The Licensing Act regulates the sale of alcohol and should not be used to control other aspects of licensed premises as this is outside the scope of the licensing regime. The Equality Act 2010 already provides robust protections for disabled people who may encounter difficulties in accessing licensed premises.

Pubs, bars and restaurants are under a duty to make reasonable adjustments to enable disabled customers to use their premises and facilities. It is not, however, consistent with how the Equality Act is intended to work for it to set specific accessibility standards for particular industries, nor would such arrangements be workable for obvious reasons. However, we have committed to reviewing Part M of the Building Regulations. As part of our review, we have commissioned research to support it; we will publish this in due course.

I say to the noble Lord, Lord Ponsonby, and the noble Baroness, Lady Walmsley, that I would hope that all premises would strive to be as inclusive as possible. I would certainly take that into account when making personal decisions on where to visit, as I am sure the vast majority of responsible drinkers would.

The noble Lord, Lord Holmes, asked about the consultation period for licensing applications. This is being discussed as part of the levelling up Bill. There is obviously a balance to be struck between ensuring the appropriate time for consultation and helping the licensed sector. Of course, the licensed sector has suffered greatly during the pandemic, as has been noted. It is still in somewhat straitened circumstances.

Regarding minimum unit pricing, after the publication of the 2012 strategy, the then Government carried out a consultation on minimum unit pricing. The evidence was not conclusive. However, Members will be aware that MUP was the subject of a lengthy court case before subsequently being introduced in Scotland and, later, in Wales. The Government are keen to see the full findings from the formal evaluation by the Scottish Government, which we are expecting in June. We will consider those findings and report back in due course. I believe that that is the five year anniversary of the minimum unit pricing experiment in Scotland.

As the noble Baroness, Lady Walmsley, pointed out, we need to be very careful with things of this sort. It seems to me, from a common-sense point of view, that this sort of process could very easily end up being a tax on the poor, which I am sure we would all rather avoid.

On wider issues, the Government are working on tackling alcohol-related harms. Preventing these requires a sustained commitment from government, local authorities, the police, health partners and businesses. There is no easy answer to tackling alcohol-related harms: all parts of the system have to work together, including early identification and intervention, treatment access and criminal justice powers. We have an ambitious programme of work in train across departments to tackle these harms.

My noble friend Lord Holmes asked about digital ID. There are currently no plans to introduce digital age verification for alcohol sales, but we are exploring what is permissible within the Licensing Act and whether the legislation should be amended. We also plan to consult on this over the next few months.

Alcohol is a recognised driver of crime, as has been noted by all noble Lords, and can adversely impact individuals, communities and services. We have seen some encouraging trends over the last few years. For example, members of the public perceiving people being drunk or rowdy as a problem in their local area nearly halved between 2009-10 and 2019-20.

Despite a reduction in alcohol-related violence over the last decade, around four in 10 violent incidents are alcohol related. This is also the case in around a third of domestic violence incidents. When thinking about their latest incident of serious sexual assault experienced, 39% of victims believed the perpetrator to be under the influence of alcohol. This increased to 49% when the incident occurred between strangers.

Work is of course under way across government to tackle alcohol-related crime. As I have said, we have focussed on equipping the police and local authorities with the right powers to take effective action. We continue to take action to improve the safety of women at night, tackle drink spiking in licensed premises and work with partners to reduce these incidents in the night-time economy.

The noble Lord, Lord Ponsonby, asked about the new group on alcohol-related crime and homicide, which brings together the police and other key players. It has been established and has already held its first meeting. Beyond that, I am afraid that I do not have very much information. As and when I find more, I will make sure to share it with him.

I think that I have answered all the questions. Again, I thank my noble friend for securing this debate and all noble Lords who have contributed. We all agree that there is more to do, but I hope that I have provided reassurance that progress is being made to address the recommendations in the report and that some of the work has already concluded. The Government recognise the importance of these issues. I look forward to continued engagement and discussion on them.

Coronation: Policing

Lord Sharpe of Epsom Excerpts

Thursday 11th May 2023 Lords Chamber

[Lord Harris of Haringey (Lab)]

My Lords, I refer to my policing interests in the register and beg leave to ask the Question standing in my name on the Order Paper—which of course was submitted before the decision on yesterday’s UQ was made.

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

My Lords, the policing of the Coronation was a tremendous success. The event passed off without incident and tens of thousands of people were able to witness it, while hundreds who do not support a monarchy were able to express their views. I am grateful for the opportunity once again to pay tribute to the police, volunteers, staff, military and everybody else who was involved in delivering such a momentous day on behalf of the nation.

[Lord Harris of Haringey (Lab)]

My Lords, I would want to be associated with precisely that tribute, as I think would all the Members who spoke yesterday in the UQ. I think the Minister said to us yesterday that some 600 people had been arrested under the Public Order Act.

[Lord Sharpe of Epsom (Con)]

Sixty-four.

[Lord Harris of Haringey (Lab)]

The Minister corrects the figure. I am sure I listened, but it does not really matter. My point remains this: one of those who was arrested was a 59 year-old woman volunteering for Night Stars, which is run by Westminster City Council, providing slippers, vomit bags and rape alarms for vulnerable women coming out of nightclubs. She was arrested in the early hours of Saturday morning and held for 14 hours. I suggest that this sort of incident—I am not privy to the sort of intelligence that the Metropolitan Police may have had—suggests that we need to look at how the powers, which were highly criticised in this House, are used in practice. Will the Minister ask the Home Office to ask His Majesty’s Inspectorate of Constabulary to look at all the cases of people arrested and charged under the new Public Order Act—not just at the Coronation but over the next few months—so that this can be reported publicly, we can see whether the actions were proportionate and appropriate and whether new guidance needs to be issued or the law itself needs to be tweaked?

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[Lord Sharpe of Epsom (Con)]

There were a number of questions there and I will go into the detail. There were 64 arrests. Only six were under the new powers in the Public Order Act, all of which were under Section 2, which is about locking on. Regarding the specific case the noble Lord referred to, and in particular rape alarms, as I mentioned yesterday at the Dispatch Box, there was serious intelligence that was enough to disturb the military—it provoked a call between the Metropolitan Police Commissioner, the Home Secretary and the mayor quite late on Friday night—suggesting that rape alarms would be used in an effort to cause disruption to the procession. That may have included disturbing horses, which were on display in large numbers. I will not comment on the operational background to this particular arrest because I cannot, but obviously there are powers of redress and if a person thinks they were wrongfully arrested, they should absolutely use those. It will then be for the police to justify their reasonable suspicion and to prove that it was proportionate.

[Lord Robathan (Con)]

Will my noble friend the Minister pass on the congratulations of the majority of people in this House and the overwhelming majority of people in the country on a very well policed and very important occasion? I do not think anybody can doubt that it was well done. Can he also pass on the feeling that, while we all allow peaceful demonstrations, the idea that such an important occasion should have been disrupted by self-indulgent young people—or indeed middle-aged people—is outrageous? I think the majority of people in this country support that.

[Lord Sharpe of Epsom (Con)]

I agree with the thrust of my noble friend’s remarks, but of course it is important that people are aware of the powers the police have. I should have said yesterday, in answer to a question from the right reverend Prelate, that the College of Policing did issue guidance on the day of Royal Assent. The police chiefs’ lead on public safety also wrote to chief constables and the Police Powers Unit in the Met wrote to five particular organisations it felt might be affected by this. Also, as Sir Mark said, the police explained in advance that there would be low tolerance of disruption and zero tolerance of security and safety threats. No one can say they were not warned, but I agree with my noble friend that, overall, the whole event passed off magnificently.

[Lord German (LD)]

My Lords, my question does not detract from the superb job the police did in managing what they had to do to make the Coronation work as it did. However, from the figures that the Minister has just given us and information we have received from the Metropolitan Police, there were some six of those arrests for which an apology was given. That is an apology rate—or an error rate—of between 10% and 12%. Does the Minister accept that that is an issue he would be concerned about? Does he also agree with the chief constable of Manchester that the powers in general given to the police force need to be re-examined because they are too broad?

--- Later in debate ---

[Lord Sharpe of Epsom (Con)]

My Lords, I do not agree that an apology was given for these arrests. The Metropolitan Police expressed regret that six people who were arrested were unable to join the protest—not that they were arrested but that they were unable to join the protest. This is what I agree with: “Most people say police need powers to deal with Just Stop Oil and some of their tactics. They do need powers to deal with that. Legislation needs to bed down. We need to let it bed in. We need to look at how it operates in practice”. That quote was from Sir Kier Starmer.

[Baroness Boycott (CB)]

My Lords, I want to ask particularly about one arrest, because in the Public Order Act it was agreed that people covering protests—journalists, film-makers et cetera—were not going to be arrested. However, Rich Felgate, who was filming both the wonderful ceremony as well as the protest, was stopped by a policeman. He said:

“He stopped my filming, they handcuffed me behind my back”.


He started to say,

“‘the police are arresting a journalist’ and they proceeded to rip off my press pass lanyard, I presume because they didn’t want it to be visible that they were arresting a journalist”.

He was taken into police custody, held for 18 hours, interviewed and released under investigation. Could I have the Minister’s comment on this case and whether what was passed in the Public Order Act actually does stand?

[Lord Sharpe of Epsom (Con)]

I failed to answer the question from the noble Baroness, Lady Chakrabarti, on when this part of the Act will commence. I can give her a better answer today. It is on 2 July this year. However, I can also say that this gentleman was not arrested under the Public Order Act. He was arrested for conspiracy to cause a public nuisance. I cannot go further in commenting on the specifics of the case.

[Baroness Chakrabarti (Lab)]

My Lords, why did the Government not bring in the protection at the same time that they brought in the new powers?

[Lord Sharpe of Epsom (Con)]

I cannot answer that, I am afraid. I do not know.

[Lord Bellingham (Con)]

My Lords, obviously the ability to protest is one we take incredibly seriously in a constitutional democracy. Weighed against that are the rights of the hundreds of thousands of people who turned up, queued patiently and filed behind barriers. Many actually camped out. They have rights as well. Would the Minister reflect on this very simple point? Had there been a major incident of any kind during this remarkable day of the Coronation, the police would have attracted a huge amount of castigation from many people—the same people who are criticising them for what they did with the arrests.

[Lord Sharpe of Epsom (Con)]

I entirely agree with my noble friend.

[Lord Coaker (Lab)]

We all supported the actions of the police in enabling the Coronation to take place and praised them for it yesterday, but we also said that certain questions arose. I did not ask yesterday who decided that the Home Office was the appropriate authority to write letters to individual protesters warning them of the consequences of the Public Order Act and telling them what it was about. The Minister always makes a great play of the operational independence of the police, and that it is Parliament that makes the law. What happened with respect to the Home Office doing that? Who signed the letters to individual protesters? Is this a new tactic? Can we now expect the Home Office to write letters to protesters, rather than it being a matter for the police, which I thought it would have been?

[Lord Sharpe of Epsom (Con)]

As I understand it, an operation called the Police Powers Unit wrote to five protest groups to inform them of the changes to public order legislation. It is obviously right that people who may fall foul of changes in legislation should be warned. As to who signed it and where that unit sits, I am afraid I do not know but I will find out.

[Lord Hogan-Howe (CB)]

My Lords, in general, would the Minister agree—I think he has already said this—that the operation seemed to go really well? I think over 11,000 officers were deployed. Hundreds of thousands of members of the public were able to attend and people were able to protest. There was a collection of heads of Government from many countries across the world, including our own, which always invites security issues, as well as protest and all the other things that go with it. The fact that so few people were arrested is pretty remarkable. If individual cases need looking into, people should take the opportunity to make a complaint or take civil action. That should not detract from the overall operation, which seems to have gone so well, together with the great ceremony on the day.

[Lord Sharpe of Epsom (Con)]

Well, I absolutely could not agree with the noble Lord more.

[Lord Beith (LD)]

The success of the police’s actions over the Coronation as a whole surely does not prevent us from considering the long-term dangers, which we started to learn about during the Covid regulation period, of creating situations in which police officers are felt by citizens to be interfering with legitimate rights, whether it is protest or just the ability to walk in the countryside during the Covid regulation period, or to take home a tube of glue to repair some domestic damage. Surely we have to consider those long-term issues, while rejoicing in the fact that a good job was done by so many police officers.

[Lord Sharpe of Epsom (Con)]

I agree with the noble Lord: all of those matters should stay under active consideration, particularly as the nature of crime, disruption, protest and what have you evolves. But, overall, I also agree with the noble Lord that last weekend was a magnificent one in the life of the nation, and all of those involved should be applauded, including the people who went and those who protested peacefully.

Economic Crime and Corporate Transparency Bill

Lord Sharpe of Epsom Excerpts

Committee stage
Thursday 11th May 2023 Grand Committee

[The Parliamentary Under-Secretary of State for Migration and Borders (Lord Sharpe of Epsom) (Con)]

My Lords, I thank the noble Lord, Lord Coaker, for this amendment. Of course, the Government take the compensation of victims of economic crime very seriously, as it is crucial for limiting the harm of these ruthless crimes.

The noble Lord referred to the fraud strategy. I will come back to that in a second. Of course, the object of that exercise, as well as going after stolen money, is to prevent it happening in the first place. So this has to be considered in the round. These are obviously anti-crime measures, as well as enforcement and mitigation measures.

I completely agree with the noble Lord, Lord Fox: fraud is an attack on growth and we should bear in that in mind. Fraud and the reimbursement of fraud, as we know, costs the banks many billions a year already under the existing arrangements, which I will come back to. Clearly, somebody has to pay for that and it is not easy for society to bear, never mind the banks themselves.

Asset recovery powers under the Proceeds of Crime Act 2002 already provide the court with the ability to prioritise the payment of compensation orders to victims. We have had extensive conversations on all manner of asset seizures and reimbursements, including on the Ukraine question, to which the noble Lord, Lord Fox, just referred. I have absolutely no doubt that those conversations will continue. We are looking at the situation that he described, which developed, as I understand it, overnight. I do not know the details—we will find out.

The Government are legislating, through the Financial Service and Markets Bill, to remove any regulatory barriers to the Payment Systems Regulator making reimbursement mandatory for victims defrauded through the faster payments system. We are therefore already taking active steps to improve compensation routes and consider that there are already means of redress available.

Having said that, I also point to the fraud strategy, which the noble Lord, Lord Coaker, referred to. There is only one relatively small paragraph on this but if he goes to page 24, he will see that the City of London Police

“are also working with the private sector on a limited pilot to explore whether civil debt recovery and other powers can recover more of victims’ money. As this pilot develops, we will review whether there are further civil enforcement powers that could be applied to fraud”.

I will come back to that in more detail, obviously, but clearly it is very much at the pilot stage at the moment. That is explicit in the text. But the interests of victims are being actively considered via the fraud strategy. Again, there is more to be said on that, which I will do shortly.

As I have said before in Grand Committee, victims’ interests are at the heart of the new powers introduced by Part 4 of the Bill, which will allow applications for stolen crypto assets or funds in accounts to be released to victims at any stage of civil forfeiture proceedings. This will ameliorate the negative impacts of criminal conduct, including economic crime.

More widely, and I have referred to this from the Dispatch Box in the Chamber, victims need to have the confidence and trust to come forward to report fraud and to know that their case will be dealt with. That is why we are providing £30 million to the City of London Police to upgrade Action Fraud, which, as noble Lords will know, has not been widely applauded in this House. The new service will use the latest technology to drastically improve reporting and support for victims and provide far greater intelligence to policing, which will allow greater prevention and disruption at scale. The upgrade is already happening. It will be fully operational in 2024 and we are implementing consistent support for victims across England and Wales by expanding the National Economic Crime Victim Care Unit, to which I have also referred.

Where there are overseas victims in bribery, corruption and economic crime cases, the Serious Fraud Office, Crown Prosecution Service and National Crime Agency compensation principles have committed law enforcement bodies to ensuring that compensation is considered in every relevant case, and to using whatever available legal mechanisms to secure it where appropriate.

The Government are also fully committed to utilising suitable means to return the proceeds of corruption to their prior legitimate owner and/or to compensate victims, in line with international obligations under the UN Convention against Corruption. This is set out in detail in the Government’s Framework for Transparent and Accountable Asset Return.

Of course, the private sector also has responsibility for the protection of its customers, and we are increasing that further. Victims of unauthorised fraud, where payment has been taken without the victim’s permission, are already reimbursed by payment service providers. The contingent reimbursement model code has improved the reimbursement by payment service providers of victims of authorised fraud where a fraudster has manipulated the victim into approving the payment.

On the subject of PSPs, the right reverend Prelate made a good point about consumers becoming more savvy. I recently read in a briefing—I cannot remember whether it comes from the Fraud Strategy or some other current initiative—about the level of information sharing by PSPs, which will enable potential victims to identify the platforms that tend to be the most used. If they can be appropriately savvy when looking at those platforms and, perhaps, a little more suspicious and questioning, that will help enormously in stopping this happening in the first instance. I will come back with more detail on that, because I cannot quite remember under which regime that sits.

On the contingent reimbursement model, in 2021, £583 million was lost to APP scams. According to UK Finance data, the faster payment system was used in 97% of APP scams by volume in 2021. Under the contingent reimbursement model code, which is the voluntary scam reimbursement code signed by several major banks, the level of reimbursement is just over 50% of total APP scam losses for those signatory firms. Following PSR action, we expect that consumers will be reimbursed more consistently and comprehensively.

I realise that there is a lot more work to do on this. Clearly, the picture is fast evolving, as I am sure all noble Lords would acknowledge. There is clear intent on the part of the Government to make sure that victims are front and centre in the current regimes and all future planning. With that, I hope that the noble Lord, Lord Coaker, feels reassured and able to withdraw his amendment.

[Lord Coaker (Lab)]

I thank the Minister for that response. I am somewhat reassured, because I believe he has his own personal commitment to this. However, as with many amendments that we have discussed here, you get the feeling that it needs a bit of a boost a surge of urgency.

There is clearly a lot of good will and a lot of good government policy. There is nothing in particular wrong with the Fraud Strategy, which has some really good stuff in it, but the example that the Minister gave from page 24, which was perfectly reasonable, is a pilot. It does not say, “We will change the law”, but “we will review” what the pilot tells us, whereas, if you go back to the much stronger commitment at the beginning of the Fraud Strategy, it gives you some expectation that something will happen. It does not say, “We will review” but “We will ensure”—which is the sort of language that people want to hear—that

“victims of fraud are reimbursed and supported”.

It does not say, “We will review the law” but

“We will … Change the law so that more victims of fraud will get their money back”.


I get what the Minister said—that it is a pilot and a review, which is good—but a pilot and a review is not the same as what is promised in paragraph 7 on page 4 of the Fraud Strategy. We are talking about colossal sums of money and, as the right reverend Prelate the Bishop of St Albans pointed out to us, people are embarrassed; large numbers do not know what their rights are under the current law and cannot get their money back. That is the reality. The simple question for the Government, who I am sure want to improve it—there is no doubt about that—is: what five practical things will it mean? We cannot change the past, but we could do something about the future.

I also take the Minister’s point that this is about prevention, too. I absolutely accept that; we need double authentication and so on. I thank the right reverend Prelate the Bishop of St Albans for his support and helpful comments in this short but important debate. I also thank the noble Lord, Lord Fox, for reminding us that businesses and enterprises are also subject to fraudulent activity and that this is about them too. That was an important point to make.

To conclude, I thank the Minister for his response but ask him to speak to his department about how we get that surge of energy into the Bill and make what the Fraud Strategy says a reality so that we make a real difference. With that, I beg leave to withdraw my amendment.

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[Lord Coaker (Lab)]

I was not going to say very much but I have been provoked by what the noble Baroness, Lady Bennett, and the noble Lord, Lord Agnew, have said.

I very much support the thrust of what the noble Baroness, Lady Kramer, said. One wonders why transparency is such a difficult notion for the Government. I suspect that the Minister will send up smoke by saying that we are all in favour of freeports, that they are a great way of generating employment, and so on. It is certainly what I would say if I were him—that freeports are a great thing for creating jobs and that we should not stand in the way of free enterprise, which is developing enterprise zones in some of the most difficult and challenging areas in the country. However, this is not about that—it is about transparency and knowing how this is funded—so I hope that the Minister does not send up smoke. The issue is transparency; the noble Baroness, Lady Kramer, was right to point that out.

I will not repeat the list from the noble Baroness, Lady Bennett, of concessions and allowances made to ensure that businesses can operate—perhaps in an area that they would not operate in—as that is something for the Minister to discuss.

On what the noble Lord, Lord Agnew, said, has the Minister had discussions with the noble Lord, Lord Johnson? Is it right that the Government are considering some concessions? Is that what the Minister is going to tell us—that he is going to go away and talk to the noble Lord, Lord Johnson, about what we have just been informed about? Is there hope for this amendment or will the Minister just reject it? Is it something that we will hear more about as we go to Report? Will we get a government amendment on transparency around this issue, if not from the Minister then from the noble Lord, Lord Johnson?

With those questions, I will listen to the Minister with care.

[Lord Sharpe of Epsom (Con)]

I thank the four noble Lords who have spoken in this debate. I also thank the noble Baroness, Lady Kramer, for her Amendments 106EC and 106ED. Amendment 106EC would require an overseas entity to apply for registration in the register of overseas entities if it is operating in a freeport. Amendment 106ED would require an overseas entity to apply for registration in the register of overseas entities if it is operating in an investment zone tax site. I thank the noble Lord, Lord Coaker, for his eloquent support for freeports.

[Lord Coaker (Lab)]

Can I clarify that I was saying what I thought the Minister would say, not what I think?

[Lord Sharpe of Epsom (Con)]

It was spot on so I suspect that the noble Lord has nobbled my notes at some point.

The economic merits of and progress in delivering freeports and investment zones remain at the heart of the Government’s levelling-up agenda, and good progress is being made. However, that is not quite within the scope of this Bill, so I will focus on the core points raised in relation to corporate transparency and illicit finance. I will endeavour to answer the questions asked of me while noting, as my noble friend Lord Agnew has, that this is not necessarily my specialist subject.

Turning first to Amendment 106EC, I am assured that, throughout the bidding prospectus and subsequent business case processes, freeports were required to set out how they will manage the risk of illicit activity. I will go into this in some detail because it is important and, as I am not a specialist in this subject, I asked for extra detail. These plans were approved by officials in the Border Force, HMRC, the NCA and other relevant crime prevention bodies, including the Home Office, the police, the Department for Transport and DLUHC.

At business case stages, freeports are required to commit to further requirements to mitigate risk. That includes commitments to the OECD’s code of conduct for clean free trade zones and they were required to establish robust local governance structures in place to monitor risk and ensure effective co-operation between relevant bodies with remits to prevent illicit activity. In most cases, that included most of the bodies I have already referenced—the police, NCA, and so on. Those plans were approved by officials who have responsibility for security and preventing illicit activity across government, and they are also required to carry out an annual audit of security each year to ensure that these structures remain effective and the risk mitigations remain robust and relevant. These audits will be reviewed by the Government annually.

Freeport status in no way undermines or weakens existing port security arrangements. Special customs status, which has been noted, builds on, rather than radically departs from, facilitations available elsewhere in the UK, and is available only on specific customs sites within the wider freeport footprint. These are secure sites administered by a specially authorised customs site operator—CSO. CSOs are required to obtain AEO or equivalent authorisation from HMRC, an international gold standard for safety and security, and remain subject to robust ongoing oversight from HMRC. Freeport customs sites therefore uphold the UK’s high standards on security and preventing illicit activity and should not be conflated with some entirely different international free trade zones.

I hope I have been clear that the Government require each freeport governance body to undertake reasonable efforts to verify the beneficial ownership of businesses operating within the freeport tax site. As I have said, freeports uphold the UK’s high standards on security, safety, workers’ rights, data protection, biosecurity, tax avoidance and evasion, and the environment. They are subject to the same legislation and regulation to protect them as the rest of the country. To impose additional requirements on businesses investing in freeport tax sites would directly undermine the objective of freeports: to facilitate investment and regenerate some of the most deprived areas of the UK. The Government therefore do not think it is proportionate to impose this additional cost and administrative burden on freeports compared to elsewhere in the UK, which would also risk acting as a disadvantage for bringing in investment.

I turn to investment zones. The Chancellor announced in the Autumn Statement that the investment zones programme was being refocused to catalyse the development of clusters in areas in need of levelling up in order to boost productivity, growth and jobs. At the Spring Budget, the Government announced eight areas in England that it had identified to co-develop an investment zone proposal with the Government, with a view to agreeing proposals by the end of the year, subject to requirements being met. The Government will work with these places to co-develop proposals, ensuring that the same high standards that are required for freeport tax sites are met for any investment zone tax sites designated.

Given the early stages of policy development on investment zones, it is too early to set out the governance arrangements in any detail. However, I am clear that businesses within investment zone tax sites will need to comply with the same laws and high standards regarding transparency as any other business investing in the UK. I am also afraid that both amendments would duplicate existing requirements on UK-registered businesses. If a business in either a freeport or an investment zone, once established, is a UK-registered company, it is already bound by the requirements to report its people with significant control to Companies House. This information is publicly available on the Companies House register.

It would also partially duplicate the requirements of the register of overseas entities. Any overseas entity owning, buying or leasing land or property in a freeport or an investment zone, once established, would be required to give information about their beneficial owners to Companies House. This information is also available to the public and would help law enforcement track down those abusing freeports for money laundering or other nefarious purposes. In both cases, all information held by Companies House is available to law enforcement, even information which is not publicly available; for example, the information about trusts.

I also draw noble Lords’ attention to the far-reaching impact of the amendments, which refer to “businesses operating” in free ports and zones. A “business” goes beyond companies and similar corporate entities and includes, for example, sole traders; “operating” is also an imprecise term. Let us imagine a truck of goods arriving at a freeport: the amendment would require the freeport governance board to determine the beneficial ownership of the haulage company owning the truck as well as the beneficial ownership of every business whose goods are being carried on that truck. One company may own the truck and another the trailer, both are caught. Under this scenario, even the delivery driver bringing sandwiches to the businesses located in the zone would be impacted by the amendment. I am sure that was not the noble Baroness’s intention and she will say that it could be improved at the drafting stage, but it is worth pointing that out.

--- Later in debate ---

Moved by

[Lord Sharpe of Epsom]

106F: Clause 189, page 173, line 21, after “Regulations” insert “made by the Secretary of State”
Member’s explanatory statement
This amendment is consequential on new clause (Fraud offences: supplementary) and ensures that the requirement that regulations under the Bill must be made by statutory instrument only applies to regulations made by the Secretary of State.

[Lord Sharpe of Epsom (Con)]

My Lords, these government amendments concern commencement and cut across several clauses. Amendments 106F, 106H and 107A are consequential on the regulation-making powers introduced by the new clause headed, “Fraud offences: supplementary”, which is one of the Government’s new clauses introducing a failure to prevent fraud offence. Amendments 106G and 107B, and the proposed new clauses to be inserted by Amendments 109 and 110, replace Clause 191 with a new commencement clause and a separate transitional provision clause. The clauses are being separated into two to make the commencement provisions easier to follow and avoid having one long and complex commencement provision.

They include a number of small, technical changes to ensure that the commencement provisions in the Bill work as effectively as possible and bring the devolution aspects of the commencement powers into line with previous similar legislation. They also bring into force, on Royal Assent, procedures in the Bill about the codes of practice which will govern the strengthened information order powers. This will ensure that those powers can quickly start to be used. Certain money laundering reporting measures are also being commenced on Royal Assent: the exemption for “exiting and paying away” and the new defence against failure to report, which we debated earlier in Committee. That will give certainty to businesses about their reporting duties as soon as the Bill is passed.

I hope noble Lords will support these amendments. I beg to move.

[Lord Fox (LD)]

My Lords, I will speak very briefly—I am sure the Minister will be glad to know that. I am intrigued by Amendment 109 because it complicates the process of bringing the Bill into being quite a lot. There are a lot of moving parts set out in Amendments 109 and 110 for the Bill to start to be effective. The simple question is: from start to finish—from Royal Assent to when everything is working and all parts are moving—what is the Government’s estimate as to long it will take to fulfil all the steps set out in these amendments?

[Baroness Blake of Leeds (Lab)]

I too will speak very briefly. I note the comments about consultation with devolved authorities. Given concerns about the extent of consultation in other areas, can the Minister reassure us that it is adequate, and deemed adequate by the devolved authorities? That is a clear theme running through some of the legislation.

We have discussed—we will revisit it, I am sure—the issue of failure to prevent and the specific mention of large organisations. We understand that keeping it to large organisations will not capture a broad enough spectrum of the businesses that we are covering. Having said that, I recognise that this is a tidying-up exercise. With further amendments we might revisit some of the issues at a future stage, but I would be grateful if the Minister could respond to those comments.

[Lord Sharpe of Epsom (Con)]

I thank noble Lords for their brief comments. In answer to the noble Lord, Lord Fox, about when the powers in the Bill will be brought into force, obviously I speak with authority only for the Home Office measures in the Bill. Certain measures in the Bill that are necessary to issue codes of practice will come into force on the day of Royal Assent, as will some of the money laundering reporting measures that we discussed previously in Committee. It is our intention for some of the remaining measures to be brought into force in autumn. This is subject to obtaining Royal Assent before summer.

The operalisation of these powers is a priority for the Government and our law enforcement partners. That is why we have taken steps to provide pre-commencement consultation for a number of measures in the Bill, to facilitate it coming into force as early as practically possible.

Some of the Companies House reforms will require consequential changes, including secondary legislation and guidance. Certain reforms, such as identity verification, will also require system development following Royal Assent. Some changes will be implemented almost immediately but others will take longer. We cannot commit to precise dates at present but work on implementing the measures is already under way at Companies House. Companies House is an executive agency of the Department for Business and Trade and there are various governance mechanisms to hold the agency to account on those reforms.

As I mentioned previously, these amendments are technical. They are designed to ensure that the Bill is effective and to make changes following amendments debated previously in Committee.

Before I wind up, I thank all noble Lords for their participation in the Committee, in particular the Front Benches. It has been a lively, extremely interesting and well-informed Committee. It will certainly improve the Bill over the course of its passage through Parliament. I thank my officials for the constructive spirit in which they have engaged with all interested Peers. From a personal point of view, I also thank them for guiding me through some fairly tricky questions. I hope that noble Lords are satisfied with the amendments.

[Baroness Blake of Leeds (Lab)]

My Lords, I asked—

[Lord Sharpe of Epsom (Con)]

My profuse apologies to the noble Baroness, Lady Blake. I am assured that all discussions have taken place with the devolved Administrations and that they are all content with it.

Amendment 106F agreed.

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Moved by

[Lord Sharpe of Epsom]

106G: Clause 189, page 173, line 21, at end insert—
“(2A) For regulations made under this Act by the Scottish Ministers, see section 27 of the Interpretation and Legislative Reform (Scotland) Act 2010 (asp 10) (Scottish statutory instruments).(2B) Any power of the Department of Justice in Northern Ireland to make regulations under this Act is exercisable by statutory rule for the purposes of the Statutory Rules (Northern Ireland) Order 1979 (S.I. 1979/1573 (N.I. 12)).”Member’s explanatory statement
This amendment is about the classification of certain instruments made by the Scottish Ministers or the Department of Justice in Northern Ireland.

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Moved by

[Lord Sharpe of Epsom]

109: Clause 191, leave out Clause 191 and insert the following new Clause—
“Commencement
(1) Except as provided by subsections (2) to (5), this Act comes into force on such day as the Secretary of State may by regulations made by statutory instrument appoint.(2) The following come into force on the day on which this Act is passed—(a) this Part;(b) any provision of, or amendment made by, Parts 1 to 5 so far as it confers a power to make regulations or relates to the exercise of the power;(c) paragraph 1 of Schedule 7 so far as it inserts section 303Z25 into the Proceeds of Crime Act 2002;(d) paragraph 16 of Schedule 7 so far as it relates to that section;(e) section 168 so far as it relates to the provisions mentioned in paragraphs (c) and (d);(f) section 170;(g) section (Money laundering: offences of failing to disclose);(h) section 172(12) and (13);(i) section 173(13) and (14).(3) Section 187 comes into force at the end of the period of 2 months beginning with the day on which this Act is passed.(4) The following come into force (so far as not brought into force by subsection (2)(b)) on such day as the Scottish Ministers may by regulations appoint after consulting the Secretary of State—(a) Part 2 of Schedule 6, and(b) section 167 so far as it relates to that Part.(5) The following come into force (so far as not brought into force by subsection (2)(b)) on such day as the Department of Justice in Northern Ireland may by order appoint after consulting the Secretary of State—(a) Part 3 of Schedule 6, and(b) section 167 so far as it relates to that Part.(6) No regulations may be made under subsection (1) bringing into force any of the following provisions, so far as they extend to Scotland, unless the Secretary of State has consulted the Scottish Ministers—(a) Schedule 7, and(b) section 168 so far as it relates to that Schedule.(7) No regulations may be made under subsection (1) bringing into force any of the following provisions, so far as they extend to Northern Ireland, unless the Secretary of State has consulted the Department of Justice in Northern Ireland—(a) Schedule 7, other than paragraphs 6(7), 10 and 11, and(b) section 168 so far as it relates to that Schedule, other than paragraphs 6(7), 10 and 11.(8) No regulations may be made under subsection (1) bringing into force section (Failure to prevent fraud) unless the Secretary of State has published guidance under section (Guidance about preventing fraud offences)(3).(9) Regulations under subsection (1) or (4), and orders subsection (5), may appoint different days for—(a) different purposes, and (b) where regulations under subsection (1) appoint a day for the coming into force of any provision of Schedule 7 or 8, different areas.(10) A power of the Department of Justice in Northern Ireland to make an order under subsection (5) is exercisable by statutory rule for the purposes of the Statutory Rules (Northern Ireland) Order 1979 (S.I. 1979/1573 (N.I. 12)).”Member’s explanatory statement
This amendment leaves out Clause 191 and inserts a replacement commencement Clause that provides for additional provisions to come into force at Royal Assent and for consultation requirements to apply in relation to certain cryptoasset provisions. See also the new transitional provision Clause to be inserted after Clause 191.

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Moved by

[Lord Sharpe of Epsom]

110: After Clause 191, insert the following new Clause—
“Transitional provision
(1) The Secretary of State may by regulations made by statutory instrument make transitional or saving provision in connection with the coming into force of any provision of this Act, other than a provision mentioned in section (Commencement) (4) or (5).(2) The Scottish Ministers may by regulations make transitional or saving provision in connection with the coming into force of a provision mentioned in section (Commencement) (4). (3) The Department of Justice in Northern Ireland may by order make transitional or saving provision in connection with the coming into force of a provision mentioned in section (Commencement) (5).(4) The power to make regulations under subsection (1) or (2), and the power to make orders under subsection (3), includes power to make different provision for—(a) different purposes, and(b) where regulations under subsection (1) make provision in connection with the coming into force of any provision of Schedule 7 or 8, different areas.(5) Transitional provision and savings made under subsections (1) to (3) are additional, and without prejudice, to those made by or under any other provision of this Act.(6) A power of the Department of Justice in Northern Ireland to make an order under subsection (3) is exercisable by statutory rule for the purposes of the Statutory Rules (Northern Ireland) Order 1979 (S.I. 1979/1573 (N.I. 12)).”Member’s explanatory statement
This new Clause contains the powers to make transitional provision that were previously in Clause 191. It also includes additional powers for the Scottish Ministers and the Department of Justice in Northern Ireland to make transitional provision and savings in connection with the coming into force of certain cryptoasset provisions.

Economic Crime and Corporate Transparency Bill

Lord Sharpe of Epsom Excerpts

Committee stage
Tuesday 9th May 2023 Grand Committee

Moved by

[Lord Goldsmith of Richmond Park]

91A: After Clause 187, insert the following new Clause—
“Sanctions enforcement: monetary penalties
(1) In section 143 of the Policing and Crime Act 2017 (interpretation), in subsection (4) (meaning of “financial sanctions legislation”), in paragraph (f)—(a) the words from “contains” to the end become sub-paragraph (i);(b) at the end of that sub-paragraph insert—“;(ii) makes supplemental provision (within the meaning of section 1(6) of that Act) in connection with any prohibition or requirement mentioned in sub-paragraph (i).”(2) The Sanctions and Anti-Money Laundering Act 2018 is amended as follows.(3) In section 17 (enforcement), in subsection (9), in paragraph (a), after “(2)” insert “or makes supplemental provision in connection with any such prohibition or requirement”.(4) After section 17 insert—“17A Enforcement: monetary penalties(1) The provision that may be made by virtue of section 17(2) (enforcement of prohibitions or requirements) includes provision authorising a prescribed person to impose a monetary penalty on another person if satisfied, to the prescribed standard of proof, that the other person has breached a prohibition, or failed to comply with a requirement, that is imposed by or under regulations.(2) Regulations authorising the Treasury to impose a monetary penalty in respect of a breach or failure for which the Treasury could impose a monetary penalty under Part 8 of the Policing and Crime Act 2017 may not be made unless the regulations also make provision of the kind mentioned in section 17(9) to disapply Part 8 of that Act in respect of that breach or failure.(3) Regulations authorising the imposition of a monetary penalty may make provision that, in determining for the purposes of the regulations whether a person has breached a prohibition, or failed to comply with a requirement, any requirement relating to the person’s knowledge or intention is to be ignored. (4) Regulations authorising the imposition of a monetary penalty must provide that—(a) a person is not liable to such a penalty in respect of conduct amounting to an offence if—(i) proceedings have been brought against the person for that offence in respect of that conduct and the proceedings are ongoing, or(ii) the person has been convicted of that offence in respect of that conduct, and(b) no proceedings may be brought against a person in respect of conduct amounting to an offence if the person has been given such a penalty under the regulations in respect of that conduct.(5) Where regulations authorising the imposition of a monetary penalty authorise a prescribed person to determine the amount of the penalty, the regulations must provide for a maximum penalty.(6) The maximum penalty may be a prescribed sum of any amount or may be calculated in accordance with the regulations.(7) In this section—“conduct” means an act or omission;“regulations” mean regulations under section 1.””Member’s explanatory statement
This clause makes it clear that Treasury can impose monetary penalties under the Policing and Crime Act 2017 for breaches of provisions that are supplemental to financial sanctions and that regulations made under section 1 of SAMLA 2018 can include provision conferring power to impose monetary penalties.

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[Lord Leigh of Hurley (Con)]

My Lords, I am prompted to rise by the words of the noble Lord, Lord Trevethin and Oaksey. I think he was referring to Amendment 106C, which we will come on to later this afternoon and which would extend the costs cap beyond UWOs. In the certainty that my noble friend the Minister will seek to ensure that Amendment 106C is agreed to, let me simply say that the amendment we are debating now, in the names of the noble Lord, Lord Faulks, and my noble and learned friend Lord Garnier, would be complementary and extremely helpful to Amendment 106C.

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

My Lords, I thank noble Lords for proposing their amendments. I thank the noble Lord, Lord Coaker, for moving Amendment 93 on behalf of the noble Lord, Lord Hunt of Kings Heath. I also thank the noble Lord, Lord Faulks, for Amendment 95, which was spoken to by my noble friend Lord Young. Both amendments relate to reports connected with unexplained wealth orders, henceforth known as UWOs.

I turn first to Amendment 93, which would require the Government to lay annual reports on UWOs where the property has been obtained through economic crime and taken from vulnerable adults. Economic crimes not only result in financial gain for criminals but leave a trail of suffering. They inflict financial and personal loss, including on the most vulnerable members of our society, which this amendment importantly recognises.

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[Lord Fox (LD)]

The Minister set out some interesting statistics. It is clear that UWOs have been accountable for a very small proportion of the total amount of money recovered. The Minister referred to them as a powerful tool. Is he satisfied that UWOs are reaching their potential, in which case we would conclude that they are relatively insignificant compared to the other tools in the hands of enforcement, or are UWOs failing to meet their potential and not as powerful as they could be? Clearly, they are not generating very much money compared to all the other tools available to the enforcement agencies.

[Lord Sharpe of Epsom (Con)]

I am not sure that the question is entirely valid with regard to generating money. The fact is that, since their introduction in 2017, four of these have been issued in relation to assets with a combined value of £143 million. In October 2020, property worth an estimated £10 million was recovered, following the use of a UWO, as I have already said. As for whether the scheme is succeeding or failing, it is not for me to say. I am unable to do so, because I do not have access to the operational decision-making that goes into issuing them, and so on. These are operational matters.

[Lord Fox (LD)]

I accept that it is not for the Minister to say; who does say whether they are succeeding or failing?

[Lord Sharpe of Epsom (Con)]

I have already said that we will publish a number of reports on this on 1 September, so I would hope for some more clarity then, but I shall endeavour to find out more information and report back to the noble Lord.

[Lord Leigh of Hurley (Con)]

I share the disappointment expressed by other noble Lords. When UWOs first came out, I was very pleased to see them. They are a classic accountancy tool to establish what is going on in respect of an individual who may have accumulated wealth in an unexplained way. It is incredibly disappointing to learn that so few have been issued with, frankly, teeny sums of money, given the nature of the world that we are discussing. Can my noble friend take back our concerns to his colleagues and, in particular, ask whether targets could be set for the coming year on the number of UWOs that might be issued and the amount of funds that they might realise?

[Lord Sharpe of Epsom (Con)]

I am certainly happy to take my noble friend’s concerns back but, as regards targets, that would invite me to stray into operational matters, which I will not do.

[Lord Coaker (Lab)]

I thank the Minister for his reply, although I also share that disappointment. I should have thought that the focus of the noble Lord, Lord Young, speaking on behalf of the noble Lord, Lord Faulks, and the noble and learned Lord, Lord Garnier—as I am speaking on behalf of my noble friend Lord Hunt—was to ask the Government to bring a report, even if that is not the appropriate way of doing it, and say to them that the operation of UWOs is simply not working as they expected. It is perfectly reasonable for a Minister of the Crown, while of course not interfering with the operational independence of the police or any other law enforcement agency, to look at the legislation and see whether it is working as the Government expected. Clearly, it is not, so it would be a perfectly reasonable response to say that nine applications, four cases and the odd bit since is simply not what anybody would have thought acceptable or thought would happen.

This happens with legislation; even if we had the Government of our dreams, laws would be passed that did not function or operate in the way we would want—but that is the purpose of Committees such as this. This is where, to be frank, Ministers listen to what is said and respond that they will take the matter back and that it is unacceptable, rather than come off saying that it is one tool in the box of government in dealing with the issue.

The Minister had a pop at me. I was only using the facts that are available in a government document called Fact Sheet: Unexplained Wealth Order Reforms. If the facts I am giving the Minister are wrong then, frankly, the Government should have updated the facts, because this is what all of us use in these debates. I have not made it up—I have read the Government’s material. The Minister then turns around and says that the noble Lord, Lord Coaker, has not got it right, because the up-to-date figures are X, Y and Z against POCA. It might have been helpful to have the key facts.

Again, I read out,

“the Proceeds of Crime Act 2002 is a complex and technical Act and reform requires careful consideration and consultation”.

Then the Minister had a go at me and laid out four Acts of Parliament that have been done since. Why were they not included in the key facts? It would have been helpful to everyone to understand the way in which it had been reformed to see whether it is now working and functioning as the Government want it to. I do not have five floors of civil servants providing me with a brief that says there are four pieces of legislation which have updated and improved it. The serious point is that, when I and other members of the Committee depend on the government document setting out the key facts in relation to what we are discussing, it should be up to date. That is the only point I want to make.

I do not know whether the figure that I was going to use is out of date. A number of members of the Committee made the point to the Minister that, if it is hundreds of millions that have been recovered over a number of year, that is peanuts. The reason I say it is peanuts—the Minister will correct me if I have got this wrong—is that Fact Sheet: Unexplained Wealth Order Reforms says under the heading “Key Facts”

“Serious and organised crimes … for example”—


and lays out various things—

“are estimated to cost the UK economy £37 billion per year”.

That is not my figure. The key facts document published by His Majesty’s Government says it is £37 billion a year. I should have thought that the response to what are clearly probing amendments about reports would be, “It is £37 billion a year, we are getting a few hundred million there, we are getting £100 million there, £50 million there”. Why are we not making more of a dent into what we all, including the Minister, regard as simply and utterly unacceptable? The Minister will think it is unacceptable that we have that.

Of course, I shall not move the amendments, but I hope the Minister will take back the bureaucratic point about ensuring that the key facts documents that we use in our deliberations are updated. I hope that he will also talk about the point that unexplained wealth orders were brought in as a way for the Government to address the problem, which the noble Lord, Lord Young, and others mentioned, that huge sums of money surround individuals who have no legal way of explaining how on earth they got them.

I shall raise one other point, because it drove me mad when I was a Member of Parliament and before that a local councillor. On estate after estate, on housing area after housing area, it drove people who went to work mad to look down the road and see somebody who did not go to work driving a Ferrari, or something like that. At an individual level, that is exactly what all of us feel more generally about what is happening nationally and internationally, where people are playing the system. The vast majority of law-abiding business men and women and businesses conform to the law, pay their taxes and do their best—but £37 billion a year is lost to fraud. In answer to the noble Lords, Lord Fox and Lord Young, and me, the Minister talked about getting £10 million here and £100 million there. I am pleased that we got that, but it is peanuts compared to the amount of money that we are talking about. I hope the Minister can take that back—

[Lord Sharpe of Epsom (Con)]

As the noble Lord has drawn on the key facts document, it is important for me to provide a bit of clarification. It was published on 4 March 2022 for the previous Bill, not this Bill. Those numbers were correct at the time of publication. On UWOs, they have been applied for—I have said how many times—and two of the applications have been made since the Government reformed the UWO regime last week, which I should have said while I was answering noble Lords. Perhaps that provides a bit more clarity. On the key facts, the three floors of civil servants are in the clear.

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[Lord Leigh of Hurley (Con)]

My Lords, I rise briefly to urge the Minister to not allow the concept of a tier 1 investor visa scheme to be rubbished. This country has benefited enormously from foreign direct investment. I have seen a large number of UK small and medium-sized businesses benefiting from individuals coming to and living in the UK and putting money into and running the businesses, and those businesses flourishing thereafter. It is an important part of what we offer overseas investors, if done correctly.

I am a little disappointed that the noble Lord, Lord Fox, seemed to imply—and probably stated it; I may have missed it—that the reason that this information has not been published is that the Home Secretary is worried about disclosure of people who may have made donations to the Conservative Party. I do not think that is in the spirit of the debate; I do not think it is correct. The noble Lord laughs, but it is particularly surprising from the Lib Dems, which took money from Michael Brown, to make allegations like that, and it is a shame because I think there is great consensus in the Committee about the purpose and merits of the Bill.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank all noble Lords, who have made some extremely thought-provoking points in this debate. I will do my best to address them all.

Scrutinising the activity of government is obviously a key function of Parliament, and of course the Government are entirely supportive of it. I reassure the noble Lord, Lord Browne, that this particular part of the government machinery is always grateful for any help that is offered and will receive it in that spirit. However, the amendments in this group are unnecessary, as they are duplicative of existing reporting arrangements and scrutiny structures.

On investor visas, I take my noble friend Lord Leigh’s points. If done in the right way, they are potentially an important engine of economic growth—that should be acknowledged. Of course, we should not forget that they were introduced by a Labour Government and maintained during the coalition years. However, on Amendment 102, tabled by the noble Lord, Lord Wallace of Saltaire, and moved by the noble Lord, Lord Fox, I am aware that there are concerns about how the now-closed tier 1 investor route operated—in particular, that it was used by those relying on funds that had been illegitimately acquired and those who may have posed a wider risk to the UK’s national security.

It was because of those concerns that the Government committed in the first place to the review of the visas issued under the route between 2008 and 2015. As has been acknowledged, the Home Secretary made a Written Ministerial Statement on 12 January setting out the findings of that review. This included that the review had identified a minority of individuals connected to the tier 1 investor visa route who were potentially at high risk of having obtained wealth through corruption or other illicit financial activity or being engaged in serious and organised crime. The Statement of 12 January represents the Government’s substantive response to the commitment to undertake a review and publish its findings, including its findings in respect of economic crime.

Obviously, there was a delay; we are aware that considerable time elapsed between the commissioning of the review and the setting out of those findings. However, delay is regrettable but not unreasonable when issues of national security are at stake. Let me expand on that a little, if I may. It would have been preferable had the review been able to include more information about specific individuals but we have had to act sensibly and responsibly with regard to the UK’s national security; this includes striking the right balance between setting out the review’s broad findings and observing the constraints on disclosing sensitive details, which must be withheld, at the request of our operational partners, to protect our border and the vital work of our law enforcement agencies.

The noble Lord, Lord Fox, raised the subject of party-political donations. Without getting into a slanging match on this subject, I think it is worth restating that UK electoral law already sets out a stringent regime of spending and donation controls that prioritise transparency and safeguard the integrity of our elections. All political parties recognise that third-party campaigners and candidates must record their election spending and report it to either the Electoral Commission or their local returning officer. This information is all publicly available. The measures in the Elections Act 2022 also updated the political finance regulatory framework by increasing transparency and fairness and strengthening the controls against ineligible foreign spending on electoral campaigning. That is a fairly comprehensive transparency regime concerning the funding of political parties.

The House has considered similar amendments to other legislation, most recently during the passage of the National Security Bill. As before, the Government’s view is that this amendment is not necessary. The Government have set out the key findings of the review of the operation of this route and have acted to close it. I therefore ask the noble Lord, Lord Fox, to withdraw the amendment.

[Baroness Bennett of Manor Castle (GP)]

My Lords, the Minister suggested that it was the inability to identify individuals that meant that some aspects of the report could not be released. I think that everyone understands the retraction of names where necessary, but surely that would not prevent the release of absolute figures rather than a summary of the figures.

[Lord Sharpe of Epsom (Con)]

As I said, it was also to do with the disclosure of sensitive details related to operational partners—the sorts of things that protect our border and the work of law enforcement agencies.

I thank the noble Lord, Lord Fox, for tabling Amendment 104, to which I will now speak. The impact of fraud and economic crime affects the whole of our society. The cost of fraud to the UK runs into the billions and is assessed by the National Crime Agency to be the most common crime type in England and Wales. We take this threat type seriously and have delivered a strengthened approach to reduce its impact. Obviously, as I referenced, the fraud strategy is one part of that; I will come back to it in a moment. The NCA currently leads the national response to serious and organised crime, including economic crime. As predicted, the NCA’s director-general is accountable to the Home Secretary and, through the Home Secretary, to Parliament.

The agency already publishes an annual plan and an annual report. The annual plan sets out how it intends to exercise its functions in co-ordinating the operational response to serious and organised crime, having regard to the Home Secretary’s strategic priorities and the director-general’s operational priorities. The annual report details its performance over the previous financial year, including efforts to tackle economic crime. The NCA also reports annually on the impact of suspicious activity reports in tackling economic crime and, as I set out earlier in response to Amendments 93 and 95 in the previous group, in respect of UWOs. Given this current reporting and the potential for duplication, the Government do not believe that this amendment is required at this time, so I ask the noble Lord, Lord Fox, not to press it.

I thank the noble Lord, Lord Coaker, for his Amendment 106B. Before I get into the amendment itself, let me say that I take the noble Lord’s points about the diversity of response to the sorts of crime that are being discussed. Of course, that partly reflects the diversity of the crimes being investigated, as he will be aware. The fact is that this is a fast-moving, rapidly evolving space; there is no doubt that the operational response to it reflects that particular set of circumstances.

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[Lord Coaker (Lab)]

Does that committee do an annual report? How often does it meet?

[Lord Sharpe of Epsom (Con)]

I do not know. I will find out and write to the noble Lord. For now, I hope he will accept that it is not the role of the Government to set up parliamentary committees and so will not seek to press his amendment.

I turn now to Amendment 106EB concerning the Serious Fraud Office. Once again, I thank the noble Lord, Lord Coaker, for tabling this amendment, which would require the Government to lay in Parliament an annual report on the Serious Fraud Office. The effectiveness of the agencies tasked with fighting economic crime, including the SFO, is of critical importance and of interest to both Houses. That is why the SFO annual report and accounts—these set out much of the information in which the noble Lord is interested—are routinely laid in Parliament.

The law officers of England and Wales superintend the SFO. They oversee the performance of the SFO, including steps that they can take to improve that performance. Through the superintendence process, the law officers identified the need to expand the SFO’s pre-investigation powers, a change that appears in Clause 185 of this Bill. The law officers take steps to ensure transparency, including participating in Attorney-General’s Questions in the other place; publishing summaries of minutes from SFO ministerial strategic boards online; and addressing issues promptly through Written Ministerial Statements.

This is complemented by the work of HM Crown Prosecution Service Inspectorate, which inspects the SFO and publishes its findings alongside a set of recommendations. HMCPSI recently published an inspection of the SFO’s case progression—that is, the organisation’s ability to deliver its cases efficiently and effectively. Given our previous discussions, the tone of the debate and the views expressed, I understand that the intention of this amendment is to probe the Government on the resourcing of the SFO.

The noble Lord, Lord Faulks, made a very interesting point; he may have noticed that I wrote my note on the wrong page when I referred to it earlier. I am coming back to it now; it is an interesting idea and I will definitely take it back. There is a process in place to recruit a new director-general of the SFO. I would imagine that acute matters, human resources and future resources are a part of the remit for that person but the noble Lord certainly makes an interesting point. To go back to a conversation during a debate that the Lord, Lord Browne, and I had last week, my personal point of view is that it is about time we all sat down and started to think about recruitment in law enforcement more generally.

[Lord Agnew of Oulton (Con)]

Given that my noble friend the Minister is going to take the comments made by the noble Lord, Lord Faulks, on recruitment back, I encourage him to look at the report by Andrew Cayley KC, Chief Inspector of the Crown Prosecution Service, who has also done a report recently. Some of the problems in the SFO are case workers not being paid enough, churn and so on, which led to the collapse of the case against G4S. There is big piece of work there that we could be doing stuff with.

[Lord Coaker (Lab)]

What is the Government’s view on whether the SFO is working?

[Lord Sharpe of Epsom (Con)]

Those are good questions; I will come on to them.

Funding and resourcing is a subject that is covered in the fraud strategy. I will not go over the details. At the most recent spending review, the SFO received an uplift to its core budget that is supporting its operations. In addition, the SFO continues to have access to reserve funding to fund specific high-cost cases if needed. This enables the SFO to obtain additional funding for any case that exceeds 4% of the core vote funding for the year.

My noble friend Lord Agnew and the noble Lord, Lord Coaker, referred to the G4S case. Obviously, it is always disappointing when a case has to be brought to an end before it is concluded but, like other agencies, the SFO is right to end an investigation or prosecution when it is no longer in the public interest. The SFO has acknowledged that there were disclosure challenges in the case that was closed earlier this year, R v Morris, Preston and Jardine. The SFO has made good progress on implementing the disclosure changes recommended by Sir David Calvert-Smith and Brian Altman KC in their independent reviews, published last year. The Crown Prosecution Service Inspectorate, the agency that inspects the SFO, has been asked to expedite a planned review of SFO disclosure, which will provide further independent assurance of the SFO’s processes.

Further to that, in Economic Crime Plan 2, which was published on 30 March, the Government set out their intention to explore reforms to the disclosure system to ensure that it supports a fair criminal justice system because cases that are lost on procedural grounds are, as noble Lords have noted, a loss to victims, taxpayers and, of course, society.

The noble Lord, Lord Coaker, just asked me whether the Government have faith in the Serious Fraud Office. The answer is yes.

[Lord Coaker (Lab)]

Is it working?

[Lord Sharpe of Epsom (Con)]

I would say that it is the same thing; perhaps we can debate that as well.

The Serious Fraud Office investigates and prosecutes the most complex cases of fraud, bribery and corruption. That is a very challenging remit. It has delivered some outstanding outcomes. For example, last year, it secured the conviction of Glencore for bribery and corruption in five countries, with the company ordered to pay £280 million—the highest ever ordered in a corporate criminal conviction in the UK—as well as eight convictions for five cases of fraud and bribery worth more than £500 million. It consistently recovers some of the largest amounts of proceeds of crime, despite being a fraction of the size of many other national agencies.

It is also important to note the SFO’s role in fighting economic crime globally. In the last financial year, the SFO took steps to assist overseas jurisdictions in their investigations by working on more than 60 incoming money-laundering requests. I think that the statistics answer the question—yes, we have faith, and yes, it is working. I hope that my explanations have provided some reassurance. I therefore ask the noble Lord not to press his amendment.

I turn to the final amendment in this group, Amendment 106EA, again tabled by the noble Lord, Lord Coaker. I come to this amendment last as it seeks to bring into one amendment much of what the other amendments in this group also attempt. I will not repeat myself too much here, especially considering how long I have gone on so far. The amendment would require the Government to issue a report on the performance of agencies and departments in tackling economic crime. However, I can assure noble Lords that this is already being done. As I have mentioned, the Government, regulators and law enforcement already regularly give evidence to parliamentary committees. The National Crime Agency is required under the Crime and Courts Act to publish an annual report and lay it before Parliament, further adding to the available scrutiny of operational bodies. The Government already conduct a range of threat and risk assessments to develop our understanding of economic crime. The NCA’s national strategic assessment assesses the economic crime threats facing the UK on an annual basis. As required under the money-laundering regulations, the UK also conducts periodic national risk assessments of money laundering and terrorist financing, which provide an overview of the risks and likelihood of an activity occurring. We have already discussed in detail the establishment of a fund to tackle economic crime so I will not repeat that debate again.

Regarding the amendment’s calls for a strategy on tackling economic crime, this March, the Government published Economic Crime Plan 2. Through 43 actions, it sets out how the public and private sectors will work together to transform the UK’s response to economic crime. Obviously, the fraud strategy is a part of that overarching economic crime strategy.

As regards the quality of the data in the fraud strategy, which was referenced by the noble Lord, Lord Browne, I have just had a quick flick through and it is more recent than six years. I should also reassure the noble Lord that one of the commitments in the fraud strategy is to improve the quality and collection of data, so this can be regarded as a baseline.

There are numerous ways in which the Government report on their performance with regard to tackling economic crime. This amendment is duplicative of them and therefore unnecessary. I ask the noble Lord to withdraw his amendment.

[Lord Fox (LD)]

My Lords, we are indebted to the noble Lord, Lord Coaker, for his amendments because they have inspired an interesting debate. The Minister has made a spirited defence of the Government’s position on this issue, but the very fact that these questions are being asked—and by a lot of people, not just the people in this Room—indicates that there is a lot of work for the Government to do in order to placate, explain or perhaps improve what is going on out there. The key element, which was highlighted earlier, is the alphabet soup of different agencies all interlinking in what is going on. The Minister has made a big effort in trying to calm nerves but I do not think that those nerves are calmed. Although the amendments will undoubtedly be not be moved, there is work to do; hopefully, the Minister has got that message from the nature of this debate.

I refer back to Amendment 102. Clearly, it ruffled some feathers. I note that in 2022 it was the Conservative Government who saw fit to withdraw this scheme because they felt that there were serious issues. We know that of the 6,000 such issues, a minority were problematic, but we still do not know exactly how many. I want to address the point made by the noble Lord, Lord Leigh that there is some use to encourage inward investment. This scheme clearly went off the rails, but by publishing the report properly, we would know how to encourage it without causing the issues that the Government clearly felt were sufficient to close the scheme. I am comfortable that I was not overstating the problem. The problem was there and the Government identified it, but now we have an issue in that we do not know the full scope of the problem.

In his response on party finance, the Minister referred to national security. The fact that there are issues is well covered. The Minister should know—I am sure that he does—that amendments to the National Security Bill that sought to enhance the scrutiny of the source of political donations have been thrown out by the Commons, so some of the things that the Minister said are not strictly there. There is still an issue between this House and the Commons when it comes to the National Security Bill and party funding, and it remains ongoing. I think that was the issue that my noble friend was anxious to state.

On the subject of the report and the reference to party funding, I remind noble Lords that I said that it makes it difficult not to conclude that there are embarrassing issues to hide because the report was not published. If there is no problem, as I am sure noble Lords believe, there is no reason not to publish the report. It is the non-publishing of the report that causes suspicion. That is the point that I was trying to make.

With that, I beg leave to withdraw Amendment 102.

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[Lord Ponsonby of Shulbrede (Lab)]

My Lords, this has been a very interesting debate; it is the first debate in which we have spoken on a more international level. As we heard in our earlier debates, a large proportion of the quantity of money involved in fraud—well over 90%; probably 99%—has an international element; that is at the core of so much of the fraud with which we are dealing.

I congratulate the noble Lord, Lord Oates, on the way in which he introduced this group. I found his introduction rich and compelling. He set out things very fully. The other noble Lords who have spoken have talked about the aspirational nature of this amendment. I do not think that that is a criticism. It is good to hear about the other countries that are already taking a lead in trying to get the IACC set up.

From the Labour Party’s point of view, I have looked at what David Lammy has said on this matter. He has spoken about working internationally—I know that my noble friend Lord Hain led the work on that when he was a Foreign Office Minister—and promised that an incoming Labour Government would fight against dirty money in the UK by creating a transatlantic anti-corruption council alongside the US, EU and other allies. That is a different model from the one proposed in these amendments.

I do not want to stand here as an opposition spokesman saying that we are against what the noble Lord, Lord Oates, and the noble Baroness, Lady Bennett, are proposing but there are other potential models for bearing down on corruption. I listened with some interest to what the noble Lord, Lord Faulks, said about the practicalities of doing this and using legislation such as this to do everything we can on a domestic level, and internationally where we already have direct interest, to bear down on this huge level of corruption. Nevertheless, I thank the noble Lord for introducing this amendment.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank the noble Lord, Lord Hain, and the noble Baroness, Lady Bennett, for their amendments in this group. I also thank all noble Lords for speaking in this debate.

I turn first to Amendment 103, which was tabled by the noble Lord, Lord Hain, but spoken to by the noble Lord, Lord Oates. If I may, I associate myself with the remarks of the noble Lord, Lord Ponsonby: the noble Lord, Lord Oates, made an incredibly powerful and eloquent case in moving this amendment 103, which also spoken to by the noble Baronesses, Lady Bennett and Lady Wheatcroft. Ensuring that those who are responsible for the most egregious acts of corruption are held to account is obviously vital. There should be no tolerance towards those who steal from the public to satisfy personal greed. The Government wholeheartedly endorse the premise that this amendment seeks to advance. The international community can and must do more to deter and punish acts of corruption.

The Government are taking robust action to ensure that the UK leads by example. That is why, in March, we published the second public-private economic crime plan, to which I referred in our debate on the previous group of amendments, which outlines ambitious actions to prevent the UK’s open economy being exploited by criminals and corrupt actors. The Government are also developing a new UK anti-corruption strategy to build on the progress made by the previous strategy and outline a refreshed approach to tackling corruption and illicit finance both in the UK and internationally.

The recently published fraud strategy also sets out the Government’s commitment to raise the priority of fraud on the international stage. We will drive forward global action through developing stronger relationships with international partners, culminating in a global fraud summit chaired by the Home Secretary and held in the UK next year. The summit will bring together leaders from Governments, law enforcement and the private sector to announce the ambition to deliver a comprehensive and co-ordinated approach to tackling fraud over the next five years.

The Government have consistently invested in efforts to bring those responsible for corruption to justice. The international corruption unit in the National Crime Agency is a specialist capability that investigates corruption cases with UK links.

[Baroness Bennett of Manor Castle (GP)]

On the summit, the problem with ideas such as that put forward by the noble Lord, Lord Ponsonby, about a transatlantic council or similar, is that it would be focused on global north countries. Can the Minister assure me that there will be full representation of global south countries at the summit he just outlined and that the UK will provide resources to ensure that some of the least developed countries, which are some of the biggest victims of this, are also able to participate in that summit?

[Lord Sharpe of Epsom (Con)]

I cannot provide that reassurance; I do not know who will be involved, but I will endeavour to find out and will write.

I shall return to where I was in my speech. In addition, the UK leads and hosts the International Anti-Corruption Coordination Centre—the IACCC—which brings together specialist law enforcement officers from multiple agencies around the world to tackle allegations of corruption. The IACCC has helped to secure convictions in high-profile money laundering cases, including in Malaysia and Angola. In 2022 alone, the IACCC identified more than £380 million of stolen and hidden assets.

I forgot to mention part of my previous paragraph. Since 2006, 30 people and companies have been convicted of corruption offences and more than £1.1 billion of stolen assets have been frozen, confiscated or returned to developing countries. That is in relation to the international corruption unit in the NCA.

--- Later in debate ---

[Lord Browne of Ladyton (Lab)]

I am conscious that I did not contribute to the debate on this, but is it too late to get the word “anti-corruption” into the communique for the pending G7, which takes place between 17 and 23 May in Hiroshima? That word is nowhere in the Foreign Ministers’ communique on 19 April after they met, I think, in Japan. The communique covers almost everything in which one can imagine we would be interested in involving those countries that share our values, but that is not there.

[Lord Sharpe of Epsom (Con)]

The noble Lord will not be surprised to know that I do not know, but I will ask.

The Government will endeavour to update your Lordships’ House on their plans for progressing international action on corruption in due course. I hope the noble Lord, Lord Hain, and the noble Lord, Lord Oates, on his behalf are reassured by the Government’s commitment to combatting corruption. We look forward to further discussions on this subject and to setting out our plans in further detail at an appropriate time. I therefore ask the noble Lord to withdraw his amendment.

Turning to Amendment 106A, tabled by the noble Baroness, Lady Bennett, the Government care deeply about tackling tax evasion and avoidance. My ministerial colleagues continue to work closely with the various sub-committees that sit within the UN’s Economic and Social Council. However, standard-setting powers on tax currently sit within the Organisation for Economic Co-operation and Development’s inclusive framework and global forum, and the UK believes that this is the mechanism best placed to deliver consensus-based reforms aimed at tax avoidance and evasion.

The inclusive framework and the global forum have wide and diverse memberships of more than 140 and 160 countries respectively. Furthermore, the OECD holds strong technical expertise in matters of international tax avoidance and evasion, and a potential UN convention on global tax evasion as envisaged by this amendment would duplicate and be likely to hinder the OECD’s work. This would delay the co-ordinated global response and effort to address tax evasion and avoidance and combat harmful tax practices, as well as creating divergence in international tax standards.

Having said that, the UK will engage constructively with the upcoming report by the UN Secretary-General. We want to find ways to improve international co-operation, as I have said, but to do that we want to ensure that this captures the full range of existing mechanisms for international tax co-operation and considers creatively how they could be improved better to meet developing countries’ needs. We have submitted evidence to the UN Secretary-General demonstrating these points.

Having said all that, obviously I ask the noble Baroness not to move her amendment.

[Lord Oates (LD)]

My Lords, I thank all noble Lords who have spoken in this debate; I particularly thank the noble Baronesses, Lady Wheatcroft and Lady Bennett, for their support. I am sympathetic to the amendment tabled by the noble Baroness, Lady Bennett. I am grateful to the Minister and the noble Lord, Lord Ponsonby, for their thoughtful responses. I am disappointed by the Minister’s conclusion, obviously, but I hope that, as he suggested, we can continue those discussions going forward.

I want to reassure the noble Lord, Lord Faulks, that my purpose was not to come as a critic of the Government. Indeed, I highlighted commitments made by the Government in the Integrated Review Refresh and I commend the Minister for Development and Africa on his real focus. He understands how important this is. Overseas development assistance is nothing compared to getting this right.

I am not sure that I share his views on the International Criminal Court and other international criminal tribunals. One of the great proponents of this international anti-corruption court is retired Justice Richard Goldstone. He was the chairman of the international criminal tribunal on the former Yugoslavia, which convicted a number of key figures including Ratko Mladić and Radovan Karadžić. It does have impact. We should be aware that, even for the non-signatories of the ICC, it has consequences. It has consequences for President Putin that he has been indicted, such as consequences on whether he can travel to BRIC countries that are signatories to that court.

On the charge of being aspirational, I plead entirely guilty. You cannot get real change in the world unless you are aspirational. Of course, as I said in my opening speech, this amendment is not a panacea; it is one tool. One of the most important things, as the noble Lord, Lord Faulks, said in his remarks, are the enforcement powers that we have in the UK, which, in my view, we are not using as much as we should be. I hope that, through this Bill and other means, we will do much more on enforcement.

As we have heard in the previous debate and amendments, this is really about the mechanisms to enforce lots of things; it is not about the laws. There are loads of laws on this stuff generally; it is about enforcement mechanisms. The international court would be another enforcement mechanism but, of course, we need enforcement mechanisms at home.

With that, I thank everybody who has taken part in the debate and I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Ponsonby of Shulbrede (Lab)]

My Lords, I support this amendment. As the noble Lord, Lord Agnew, said when he introduced it, cost exposure for prosecuting authorities can pose a real hurdle to their pursuing those prosecutions. As he also said, the Rubicon has been crossed in allowing cost capping, which the Government did in March 2022. This amendment has real legs—if I can use that phrase—and I hope the noble Lord presses the matter further, perhaps at later stages of the Bill.

I too was at the briefing with Bill Browder. I am currently reading his second book, having read his first, and it is compelling reading. He is a very brave man. I also agree with the comments made by the noble Baroness, Lady Bowles. I think she said: the precedent and the need are there, and the solution is here. I agree with those sentiments.

Finally, I thank the noble Lord, Lord Trevethin and Oaksey, who set out, interestingly, that some judges in the civil courts have developed their own law on this matter regarding the enforcement agencies not necessarily having to bear all their costs. He gave an interesting example of a further precedent, if you like. I too will be interested to hear the Minister’s response to that. The matter will be considered very carefully with regard to the later stages of the Bill.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank my noble friend Lord Agnew for tabling this amendment and all noble Lords for the points they have raised in this debate. Again, I reassure the Committee that the Government take economic crime very seriously and are taking the necessary steps to ensure that enforcement agencies can tackle illicit financial activities while upholding the fundamental principles that govern our entire civil justice system.

In civil legal proceedings the loser generally pays the legal costs of the winning party, as has been acknowledged. The “loser pays” principle is a fundamental pillar on which the whole basis of civil litigation operates. It helps to ensure that only stronger cases are brought and that the winning party is able to recover reasonable costs of vindicating their case, save for in exceptional circumstances, to ensure access to justice for individuals with very limited resources. While important, civil recovery proceedings brought by enforcement agencies are not so exceptional as to warrant undermining the “loser pays” principle.

Several noble Lords have raised with me, and during this debate, the changes made to the unexplained wealth order regime by the Economic Crime (Transparency and Enforcement) Act 2022. These amended provisions in the Proceeds of Crime Act—POCA—introduce “costs protection” for enforcement agencies in cases of UWOs, unless they act unreasonably. This aimed to remove barriers to the use of UWO powers by relevant law enforcement teams. This was done on the basis that they were exceptional and likely to be low in volume in comparison to other types of civil recovery and, furthermore, that the relevant cost rules would be positioned as a novel and unique proposal, thereby maintaining the overall integrity of the “loser pays” principle in all other civil recovery proceedings. In the last five years, agencies with civil recovery powers—the Crown Prosecution Service, the National Crime Agency, the Serious Fraud Office, the Financial Conduct Authority and HM Revenue and Customs—have not paid any adverse costs for civil recovery proceedings.

There is also no guarantee that the introduction of further costs protection would lead to enforcement agencies pursuing more cases, as they report that each case must be assessed on its own merits considering numerous factors independent of costs liability, including gathering sufficient evidence to pursue a case and internal resourcing capability.

It is also worth bearing in mind that the Civil Procedure Rules, which guide the courts in procedural matters—I think this goes some way to answering the points raised by the noble Lord, Lord Oates—

[Baroness Bowles of Berkhamsted (LD)]

As I interpret what the Minister has said, if the regulator is taking the costs risk into account, that means it will take into account the question: am I up against a really wealthy opponent? Therefore, we will not have equal justice. You are saying that if the person from whom you are trying to recover the asset is particularly wealthy, they will be able to string out the process and do more appeals. That increases your costs risk and, therefore, the wealthy will not be pursued as much as the less wealthy. That is a very bad precedent and another reason why the amendment in the name of the noble Lord, Lord Agnew, is surely needed.

[Lord Sharpe of Epsom (Con)]

The noble Baroness makes an interesting point. I was talking about unexplained wealth orders in respect of the Economic Crime (Transparency and Enforcement) Act 2022. To go over that again, it aimed to remove barriers to the use of UWO powers by relevant law enforcement teams, but it was done on the basis that these were exceptional and likely to be very low in volume in comparison to other types of civil recovery. I do not think that is inconsistent with the argument about this amendment.

Going back to the procedural rules, which guide the courts in procedural matters, these enable judges to use their discretion to limit legal costs in certain circumstances. In appropriate cases, they may be used by agencies when pursuing asset recovery cases and are therefore a more suitable way of limiting costs liability in the few circumstances where this may be needed rather than through wholesale reform of the loser pays principle in civil recovery.

The amendment would overturn the very basis on which the entirety of civil costs and funding is built. It would negatively affect every other category of civil litigation, all for minimal, if any, financial savings in a very limited number of cases—

[Lord Agnew of Oulton (Con)]

Could my noble friend explain why this overturns precedence, while the Act last year on unexplained wealth orders does not? That is why I am so confused.

[Lord Sharpe of Epsom (Con)]

My Lords, I think I have already explained it, but I will endeavour to do so in greater detail in writing, if that is acceptable.

In a very limited number of cases, law enforcement would be involved. If parties in civil litigation do not fear having to pay adverse costs, it risks encouraging spurious and unmeritorious claims. On this basis—and I will write—I ask my noble friend to withdraw his amendment.

[Lord Agnew of Oulton (Con)]

I thank my noble friend the Minister for his explanation. I am afraid that I do not accept it, but I understand the convention that I need to withdraw my amendment. However, I will need to bring this back on Report; it is fundamental to our attempts to get a grip of economic crime in the system. I ask the Minister to reflect not only on my comments but those of other Peers who have supported the amendment and, indeed, the noble Lord, Lord Trevethin and Oaksey, who has come up with yet another example that I was not familiar with.

I was clear in my amendment that there is absolute protection against overreach by government agencies that are seen to act unscrupulously, so I do not accept that there is a risk. We know that we are not going to fund these agencies properly. Common sense tells us that they have to do a very careful risk analysis of any case they take on. If they think they have less than an 80% chance of winning it, they will not do it. I know that from my own experience as a Minister. Time and time again, early on in my career as the Academies Minister when I was trying to root out fraud there, I was told that the risks were too high and that we did not have the budget if we lost the case. It is not complicated.

I urge my noble friend the Minister to reconsider. My noble friend Lord Leigh was right—when we heard from Bill Browder a few weeks ago, he was adamant that, if there is one thing this Bill should do, it is to bring in this costs cap so that we can weaponise the agencies to go after economic crime. I beg leave to withdraw my amendment.

Police: Restoring Public Confidence

Lord Sharpe of Epsom Excerpts

Wednesday 3rd May 2023 Grand Committee

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

My Lords, I too am grateful to my noble friend Lord Lexden for securing this debate. I salute his tenacity—an easier word to pronounce. I also thank all those who have contributed. I apologise to my noble friend that our meeting has unfortunately been postponed more than once, but I promise we will get there in the end.

I agree with my noble friend Lord Cormack that the noble Baroness, Lady O’Loan, delivered a thought-provoking speech about Northern Ireland. She will not be surprised that I am singularly unqualified to discuss the legacy Bill, but I will make sure that her remarks are passed on to my colleague, my noble friend Lord Caine.

Today’s discussion is another reminder of the importance of this topic and I am pleased to have the opportunity to outline the Government’s work in this space. I found the debate extraordinarily interesting, as have all other noble Lords, and of course I agree with many of the remarks that have been made. I have also found some of the personal reflections rather moving; I will come back to those.

All noble Lords are right: public confidence is absolutely essential to policing. Without it, the ability of the police to carry out their core functions is undermined, as per our model of policing by consent. My noble friend Lord Lexden rightly mentioned the foundational Peel principles and he had the two ex-policemen on the Government Front Bench today nodding in agreement.

As we are all well aware, recent high-profile cases and reports have underlined the need to root out unacceptable behaviour and to reset cultures. Officers must be held to the highest standards. Before I talk about the Government, I pay tribute to the vast majority of police officers in this country, who serve with considerable fortitude, tenacity—to use that word again—and diligence. They deserve our support and we should not forget that they are the vast majority. I am sure that noble Lords also speak on a regular basis to those who protect us in this place. I would like to say—I place this on record—that they have made it very clear to me that they are also extremely keen to see the sorts of reforms that we are discussing pushed through.

Before I respond to some of the points that have come up during the debate, I will set out briefly some of the steps that the Government are taking to drive change. I will try to avoid the blizzard of statistics that my noble friend referenced but I feel that I need to point out the latest Crime Survey for England and Wales statistics. Other noble Lords, including the noble Baroness, Lady Harris, have put it on the record today—and it would be remiss of me not to point out—that we are making progress in some areas. For example, the figures for hospital admissions for assault by a sharp object for people under 25 are 25% lower in the year ending December 2022 than they were in the year ending December 2019. I deliberately omit the pandemic years. Neighbourhood crime as measured by the crime survey is down 28% in the year ending December 2022 compared with the year ending December 2019. Obviously, we need police to work with partners to make sure that those numbers are maintained. On homicide, levels have been falling since the end of 2021 and are now lower than they were before the pandemic in March 2020. The current level is 11% below the pre-pandemic level in March 2020. There were 708 homicides then. The picture is not an unqualified dystopia, as perhaps some would have us believe.

I will now try to respond to some of the points that have been made—obviously, if I fail in responding to any of the specific ones, I will catch up in writing. We have done a number of things, starting with establishing the independent Angiolini inquiry, which is currently examining the appalling cases of two former Metropolitan Police officers that have been widely referenced. Part 2 of the inquiry will investigate issues in policing such as vetting, recruitment and poor culture, as well as the safety of women in public spaces, a subject to which I will return. In January, we launched a review into the process for police officer dismissals, to ensure that the system is fair and effective at removing those not fit to serve—I will also come back to that—and the Home Secretary has asked the College of Policing to strengthen the statutory code of practice for vetting.

Most speakers have referenced the Casey review and holding the Metropolitan Police to account, specifically my noble friends Lord Lexden and Lord Hunt, the noble Baroness, Lady O’Loan, and the noble Lords, Lord Browne and Lord Ponsonby. The Casey review made for very sobering reading. It is paramount that public trust in the Metropolitan Police is restored. Although primary accountability lies with the Mayor of London, I know that the Home Secretary will continue to hold the commissioner and mayor to account to deliver the necessary improvements. I very much welcome the scrutiny and transparency that HMICFRS brings to police performance and fully support its decision to escalate the Met to its enhanced monitoring phase of “engage”. I am reassured that both the commissioner and mayor are engaging constructively with HMICFRS’s police performance oversight group process. It is imperative that it begins the process to restore the public’s confidence that they are getting the high quality of service that they deserve and have every right to expect. We have confidence in the commissioner’s leadership and his plans to turn around the Met and ensure that the force is delivering for all communities. It is also worth noting that the noble Baroness, Lady Casey, observed that Sir Mark and the deputy commissioner, Lynne Owens, deserve a chance to succeed and she believes that they will do so, as do I.

I move on to the subject of institutional racism, misogyny and other forms of unacceptable discrimination. Without question, discriminatory attitudes and behaviours have no place at all in policing and allegations of racism, misogyny and homophobia are deeply disturbing. We expect police leaders to take urgent action to root out discrimination. Allegations of wrongdoing are dealt with under a comprehensive framework, either by police forces or the Independent Office for Police Conduct. By law, forces must refer certain allegations to the IOPC, including criminal offences or behaviour liable to disciplinary proceedings that is aggravated by discrimination on the grounds of race, sex, religion or other protected characteristics.

The Home Secretary has been consistently clear that culture and standards in policing need to improve, as a matter of urgency. Examining the root causes of poor and toxic cultures will be a key focus of part 2 of the Angiolini inquiry when it begins later this spring. The College of Policing is also currently updating the Code of Ethics, which plays a key role in instilling the right principles and standards from the start of an officer’s career.

All speakers, I think, have referred to the dismissals process. There is no disputing that officers have to be held to the highest standards; that is obviously vital to public trust and confidence in policing. To ensure that the system is fair and effective at removing those not fit to serve, the Government are, as noble Lords will be aware, carrying out a review of the dismissals process. Among other areas, the review will consider the composition of misconduct panels, the role of legally qualified chairs and the consistency of decision-making in cases of sexual misconduct and offences related to violence against women and girls. The process of a review is correct. In another context, my noble friend Lord Hunt pointed out that the police should not mark their own homework. Although I understand the superficial desirability of allowing chief constables the right to make the sackings, this subject still deserves to be considered in the round to ensure that all the possible consequences of those powers are thought through. That is what the review is doing and we will report back when it concludes, which I think will be at the end of this month.

On the subject of vetting, the public deserve to have confidence that the right people are recruited into policing. In order to strengthen the vetting regime, the Government have asked the College of Policing to strengthen the statutory code of practice for police vetting, making the obligations that all forces must have due regard to stricter and clearer. The public consultation for the updated Vetting Code of Practice closed on 21 March and the college is now considering the responses, before providing it to the Home Secretary to arrange for it to be laid in Parliament. The Home Secretary has also asked the policing inspectorate to carry out a rapid review of police forces’ responses to its November 2022 report, which highlighted a number of areas where police vetting can be strengthened. Separately, the National Police Chiefs’ Council—the NPCC—has asked police forces to check their officers and staff against the police national database to help to identify anyone who is unfit to serve. The data-washing exercise is now complete and forces are manually analysing the information received to identify leads for follow-up. This exercise is expected to be completed by September.

A number of noble Lords referred to violence against women and girls, in particular the very worrying statistics around the appalling offence of rape. With the Committee’s indulgence, I will go into what we are doing on this in a little more detail. The noble Baroness, Lady Harris, referred to Operation Soteria, which is the programme being rolled out to improve responses in this area. I can give her the statistics that she was seeking. In the year since the Metropolitan Police has been involved in Operation Soteria—the year ending September 2022—the number of adult rape offences recorded increased by 15%. The number of charges for adult rape offences increased by 79%. That number is still not high enough, certainly not relative to the number of offences, but the trend is in the right direction. The number of investigations closed because the victim did not support further action fell by 8%. Those numbers should give some reassurance that this is working as intended. It is intended to drive long-lasting, sustainable change.

The national operating model, which is being developed through the programme, will be available to all forces in England and Wales from June 2023. However, that is not the only action that we are taking. We are also bringing in new powers to stop unnecessary and intrusive requests for victims’ phones—a vital change in the law that puts an end to the practice of digital strip-searches, as they are known. We are supporting police forces to ensure that no victim of rape is left without a phone for more than 24 hours and we are committed to legislating to ensure that police requests for third-party material are necessary and proportionate. It is early stages, of course, but the trends are heading in the right direction, albeit that I would certainly like to see them speeded up, as I am sure all noble Lords and all police officers would, too.

The noble Lord, Lord Ponsonby, made a very good suggestion about domestic abuse victims, which I will definitely take back. It falls within the MoJ’s remit, so with his permission I will make sure that my colleagues there are well aware of his suggestion.

The noble Lord, Lord Browne, and my noble friend Lord Cormack referenced violence against women and girls, which I will go into in some more detail. We are doing a lot to improve the policing response to crimes of VAWG, as it is known. We recently published a revised strategic policing requirement which includes VAWG as a national threat for policing to respond to. We supported the appointment of DCC Maggie Blyth as the first full-time National Police Chiefs’ Council VAWG lead to co-ordinate and improve the police response to it. The NPCC published its first performance report in March 2023 using data obtained from forces and will publish a strategic risk assessment shortly to outline where forces should prioritise their resources going forward.

We have also committed up to £3.3 million to fund the rollout of domestic abuse matters training to police forces that are yet to deliver it or do not have their own specific domestic abuse training. This also includes funding the development of a new training module targeted at officers investigating domestic offences to improve charge rates. That is very good progress. As always, there is more to do, but the Government are not idle in this area.

The noble Lord, Lord Browne, made some extremely good points about police leadership. The Government are clear that strong leadership at every level is essential. Cultures must be reset and standards raised, and the Government will continue pushing for the necessary improvements to be made. However, the drive for change also needs to come from within, and strong leadership at all ranks is essential. We have invested in a new national centre for police leadership, which is being developed by the College of Policing. For the first time, from June 2023 there will be national leadership standards and a professional development framework linked to these standards at every level in policing. This means that every police officer will have a clear set of consistent leadership standards expected of them at every rank, and will know what training is available to help them achieve those standards. That goes some way to answering the questions of the noble Baroness, Lady Harris. In addition, the College of Policing’s reformed processes for progression to chief officer will increase transparency and open up access to senior-level development. The first cohort to undertake the new executive leaders programme, which is mandatory for those who want to reach chief officer level, will begin in June 2023.

The Government believe in local policing accountable to local communities. That is why we introduced police and crime commissioners in 2012. PCCs and mayors with PCC functions have been elected by the public to hold chief constables and the force to account, ensuring that the public have a stronger voice in policing. PCCs are central to the work to restore trust and confidence in the police. To do so, they must continue to be strong and visible leaders in the fight against crime. Implementing the Government’s two-part review into PCCs will strengthen their role, ensuring that they are accountable to the public and have the tools and levers they need to carry out their role effectively. It will sharpen local accountability, making it easier for the public to hold their PCC to account for their record on reducing crime, and will turn the dial on their involvement in the criminal justice system, giving them a more defined role. Ultimately, PCCs and mayors with PCC functions are directly elected by the communities they serve and are held to account at the ballot box. I am afraid I do not recognise the cost figures that the noble Baroness, Lady Harris, advanced.

The Government and the public rightly expect the highest standards from our police officers. The ability of the police to perform their core functions—tackling crime and keeping the public safe—is dependent on their capacity to maintain the confidence of the public. As part of the “Inclusive Britain” strategy, the Government are committed to developing a new national framework with policing partners, including PCCs, for how the use of police powers, such as stop and search and use of force, can be scrutinised at a local level. This will help create tangible improvements in trust and confidence between the police and the communities they serve by improving public understanding of how and why police use their powers and to help account for any disparities. Alongside this, the Home Office has committed to seek to remove unnecessary barriers that prevent the use of body-worn video, which will be implemented in the framework. Work is well under way on the community scrutiny framework, which we aim to publish later this year.

Last week, we announced that our unprecedented officer recruitment campaign has met its target. We said that we would recruit an additional 20,000 officers and we have. This means that we now have 149,572 officers across England and Wales. We recruited an additional 20,951 during the three-year campaign, which is testament to the hard work of forces and the brave men and women who have signed up join police forces. We know that there is work to do to improve trust and confidence in policing, but it is worth noting that, during this recruitment campaign, almost 275,000 people applied to join the police, showing that it really is a job like no other. However, let me be clear: there was never a question that this uplift should come at the expense of public safety. We have provided more than £3 billion to police forces to support the recruitment process, including enhancing vetting capabilities. Recruitment standards have been maintained, and this rigour is demonstrated by the fact that, for every 10 applicants, only one officer is hired. That ratio has been consistent throughout the campaign. I say to the noble Lord, Lord Browne, that this is not a tacit admission of anything. It is a reflection, as I said yesterday, that demand in policing has changed.

The Government have been clear about the need to return to common-sense policing, where the focus is on getting the basics right. This means making our neighbourhoods safer, supporting victims and taking tougher action. That is what the public expect, and what the public deserve. It is about attending every residential burglary. It is about targeting crime hotspots, whether that be to tackle anti-social behaviour or serious violence, and it is about bringing to justice those who break our laws.

On the subject of anti-social behaviour, which the noble Baroness, Lady Harris, asked me about, I will not go into too much detail, but the Government are committed to tackling and preventing ASB. Since taking up office, the Prime Minister has made it very clear that the people’s priorities are his priorities—and this is one of them. He was behind the publication on 27 March of an ASB action plan, which sets out the Government’s commitment to tackling ASB across six key areas—I will not go into them now. There is also a task force that is chaired, I think, by my right honourable friends the Home Secretary and the Secretary of State for Levelling Up, whose department is also looking at this particular subject.

On Operation Conifer, I really have heard what my noble friends in particular have said on this matter. One thing that I feel I must say is that, even though the accusations laid against some of the people who were investigated turned out to be those of a fantasist, that fantasist was given political cover and there was political pressure involved here; we should not forget that fact. We should also defend the police’s right to investigate accusations of this type. There has been a seriously large number of historical allegations that have been proved, including some into some very public personalities. I will not name names, but we should remember that. In saying that, I am not in any way justifying how that operation was done, some of the things that were said or any other subjects that my noble friends have rightly brought back into the public domain yet again. I completely understand why they are asking for that independent inquiry. However, the Government’s position is that there have effectively been four independent scrutiny panels and so on, which have checked and tested the decision-making and approach of the investigation. Two reviews by Operation Hydrant in September 2016 and May 2017, to which my noble friend Lord Hunt referred, concluded that the investigation was proportionate, legitimate and in accordance with national guidance. There was a review in January 2017 by Her Majesty’s Inspectorate of Constabulary, as it then was, of whether the resources assigned to the investigation by the Home Office were being deployed in accordance with value-for-money principles. The IOPC has also considered specific allegations related to a former chief constable.

On the subject of the former chief constable, arrangements concerning the establishment of a misconduct hearing are a matter for PCCs, as I have said from the Dispatch Box before. The management of the hearing itself is the responsibility of the independent legally qualified chair. As I have also said, legally qualified chairs must commence a hearing within 100 days of an officer being provided a notice referring them to proceedings, but may extend this period where they consider it is in the interests of justice to do so. That is obviously the case in this particular instance. It is regrettable, but that is the case. Decisions made within a hearing are done so independently of PCCs and the Government. The Government take accountability of the police very seriously and have delivered a number of reforms to strengthen the police disciplinary system. This included additional independence through the introduction of independent LQCs in 2016. The Government are also undertaking an internal review of the process of police officer dismissals, which is looking at the existing model and composition of panels, including the impact of the role of LQCs.

In answer to the specific comments and questions about anonymity from my noble friend Lord Lexden, I say that there is no specific legislative provision for the anonymity of legally qualified chairs. Decisions concerning the publication of an LQC’s name are a matter for the relevant PCC. Those decisions are made independently of government. I do not know why his or her identity is not public in this case, and I am not going to speculate on that subject.

In closing, I thank my noble friend Lord Lexden for securing this debate and thank all those who have participated. Just to conclude with a couple of other remarks, I thank my noble friend Lord Cormack for his nostalgia trip to Dock Green, but I think that there are enough national bodies with responsibilities in the oversight area, including, of course, the College of Policing, the HMICFRS, the IOPC and the NPCC. I note the comments of the noble Lord, Lord Ponsonby, about him being stopped and searched when he was younger, and I wonder who he was hanging around with in those days.

The noble Lord, Lord Browne, raised an interesting subject about the practical and philosophical arrangement of policing in this country, which I think might be a debate that he should impress on the Government to come back to in future days. It would be fun to conduct that debate, although I am probably going well beyond my brief here.

As I have made clear, if the police are to perform their critical functions with maximum effectiveness, they must have the trust and confidence of the people they serve. That is why the Government are taking the action that I have highlighted to drive change and why we will continue challenging forces to raise standards across the board—and, rest assured, the Government will not rest.

Police Uplift Programme

Lord Sharpe of Epsom Excerpts

Tuesday 2nd May 2023 Lords Chamber

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

My Lords, I shall now repeat a Statement made in another place:

“With permission, Mr Speaker, I will make a Statement about the Government’s police uplift programme.

Today is a significant day for policing. We can officially announce that our unprecedented officer recruitment campaign has met its target. We said we would recruit an additional 20,000 officers, and we have. We have recruited 20,951 additional officers. This means that we now have a record 149,572 officers across England and Wales.

This is the culmination of a colossal amount of work from forces, the National Police Chiefs’ Council, the College of Policing, the Home Office and beyond. They have my heartfelt gratitude and admiration. I feel honoured and privileged to be holding the baton as we pass the finishing line. I am especially grateful to my right honourable friends the Members for Uxbridge and South Ruislip, Witham and North West Hampshire. Their vision and leadership were instrumental in helping us reach this point, and I know they will share my delight today. I pay tribute too to my right honourable friend the Home Secretary, who has energetically steered the campaign to its successful conclusion, and to my right honourable friend the Prime Minister for his continued support and encouragement.

This was not a simple task. There have been challenges along the way and people doubted our prospects of success, but by sticking to the course and believing unequivocally in the cause, we have done it. To every single new recruit who has joined up and helped us reach our goal, I say thank you. There is no greater or more noble example of public service, and they have chosen a career like no other. Not everyone will be as happy as we are today. Criminals must be cursing their luck, and so they should, because we are coming after them.

Not only are there more officers than ever before but the officer workforce is more diverse than it has ever been. There are now 53,083 female police officers in post, compared with 39,135 in 2010. There are 12,087 officers identifying as ethnic minorities, compared with 6,704 in 2010. There are more officers working in public protection, in local policing and in crime investigations. There are now 725 more officers working in regional organised crime units tackling serious and organised crime, as we promised.

While it is right that today we pause and reflect on the success of the uplift programme, this is not the end. This is not just about hitting a number. It is about making a real and tangible difference to the lives of people we serve and the communities they live in. It is the latest step in our mission to crush crime and make our country safer. The public want to see bobbies on the beat; we have delivered. The public want courageous and upstanding public servants in whom they can have pride and, most importantly, whom they can trust. Now the public quite rightly expect forces to maximise the increased strength and resources available to them. They want to see criminals caught and locked up, and to feel safe and secure, whether in their homes, online or out and about. They want the police to focus on the issues that matter most to them.

We have made good progress already. Crime is going in the right direction, falling in England and Wales by 50% since 2010, excluding fraud and computer misuse, with burglary falling 56%, robbery by 57% and criminal damage by 65% over the same period. Figures also show reductions in homicide, serious violence and neighbourhood crime since December 2019. On homicide, reductions are being made, with the numbers 6% lower than in December 2019 as of September 2022. Now we need policing to work with partners to ensure that these reductions are maintained.

Crime is a broad and ever-evolving menace, which is why we are addressing it from all angles. We are acting to turn the tide on drugs misuse through our 10-year strategy, and our crackdown on county lines has yielded excellent results. We have stepped up efforts to tackle domestic abuse, violence against women and girls, and child sexual abuse. Our twin-track approach to tackling serious violence is bedding in and having a real impact. We are supporting law enforcement in the ongoing fight against serious and organised crime, terrorism, cybercrime and fraud. We have shown that when our constituents raise concerns about an issue, we listen and we act. That was demonstrated recently with the publication of our comprehensive plan to drive anti-social behaviour out of our communities and neighbourhoods.

We will keep up the momentum. We will challenge and support the police in equal measure. We expect police forces to maintain officer numbers at the levels delivered by the uplift and are pushing them to drive up standards and drive down crime. It is vital that forces seize this opportunity. As the Home Secretary has made clear, common-sense policing is the way forward. This is our mantra, and it should be a guiding principle for forces too.

For the Government’s part, we are holding up our side of the bargain. That includes measures I announced earlier this month to cut red tape that gets in the way of real police work. It includes the steps we are taking on ethics, integrity and conduct, as policing strives to secure and retain public trust, which has been shaken by recent reports and cases. Before I finish, I want to highlight that I will be holding a drop-in surgery here in the large ministerial room from 3 pm today for any colleagues who wish to discuss the uplift programme.

We said we would recruit 20,000 additional police officers; we have delivered. We said we would bear down relentlessly on crime; we have delivered. I am proud of what we have achieved, but there is more to come. To the decent, law-abiding majority, I say this: we have got your back. Your safety is our number one priority. My message to the criminals is this: we are coming for you, you will be caught and you will face justice.

More police, less crime, safer streets and common-sense policing: those are the pillars upon which our approach is built. Today, as we mark another hugely significant step forward in that mission, we reaffirm our commitment to do everything in our power to protect the public. I commend this Statement to the House.”

--- Later in debate ---

[Lord German (LD)]

My Lords, this is obviously a Statement that the Government are pleased to make but, unfortunately, the rhetoric does not lead to change, which is what the public will be looking for. A huge number of questions fall out of the programme and tell you something about the way in which policing takes place in this country.

What we are seeing, of course, is that record numbers of police are leaving the police force while new people come in. Does this record number of police leaving mean that we are basically trading inexperience for experience? In 2021-22, the last year for which figures are available, 8,117 police officers left the profession; that is a 20-year high. Can the Minister tell us whether that figure is reflected in the figures up to the end of March this year and whether, again, we are seeing that change? Clearly, what we need is an experienced profession.

The second thing that the uplift programme shows is the number of people in various age groups within the new police forces around the country. If you look carefully the figures for those aged 55 and over, you see that they represent only some 1.8% of the police force. Has that figure been shared, not in this financial year but in previous years? Is that an accelerating figure, with the number of older police officers declining? At present 38% of the force are aged 45 or over. Was that figure higher or lower in the past?

The other question that needs raising is how police officers are recruited. We have had a series of questions back and forth with the Minister about the way in which police officers are recruited and we know that some 50% of all recruited police officers do not have a face-to-face interview with another police officer. I know that the Minister has replied to my questions and said that this is being altered. I have read what the Government intend to do with the police college and to make that change work, but we certainly need to be reassured that the right people are getting into the police force and we are not seeing the sort of problems that we have seen in the very recent past.

If you want true community policing, what sense does it make to lose all the community support officers that we have had? Since 2015, 4,000 police support officer posts have been lost and since 2019, given that that is the bedrock date that the Minister wants to work from, 1,284 community police officer posts have been lost. The great advantage for those of us who remember the way in which those support officers worked around our communities is that they were seen on the streets; they were what you might call “bobbies on the beat”. They were an essential part of that. As the Minister knows, you do not put one policeman on the beat; you used to put a policeman with a PCSO. So it is two police officers now, because the number of PCSOs has dropped.

The real test of this measure is: will the quality and nature of the service that people get change? Some 275 car thefts per day in the past year went unsolved, and just 3.4% of car thefts resulted in a charge. Also, 574 burglaries went unsolved and only 6% resulted in a charge. The sort of result that people want to see is people being charged and found guilty of the crimes that are being committed against them. Clearly that has not happened. The test for the Government is how community policing is going to work in the future. A recent Savanta poll found that four in 10 UK adults have installed in the past year CCTV, stronger locks, alarm systems or camera doorbells, all of which demonstrates that people are worried about crime and about these crimes being detected, which they have not been as yet.

One thing absent from the Statement is any mention of cybersecurity. Those of us who have been privileged to hear what is happening in this Parliament will know of the battle against those who are trying to burst into the security of our nation. Can the Minister tell us what resource is going to go into the battle of the future against those who are causing cybercrime?

Finally, there is the issue of head count versus full-time equivalents. The Government in the published Statement say that there is little difference—some 1% or 2%. However, 1% or 2% of experienced people who are doing the work that we want to see done is a considerable number. What we are seeing here is a shell without the interior. The interior has to be made to work for the communities of this country and I am not certain that that is the progress which the Government have made.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank both noble Lords for their comments. Since I arrived in your Lordships’ House, every debate and Question has been a demand for more from the Government—money, resources and so on. We have finally delivered more, on time and on budget, and, if I am honest, I am a bit disappointed with the response. However, I will do my best to answer the questions that have been put to me.

To forestall any questions about fraud and the cybersecurity aspects that will be asked, I will alert noble Lords to the fact that the fraud strategy is going to be published this week. There will be more to be said on that, and as a consequence I am not able to go into detail about it.

Before I go into detailed answers to the questions, the data that I read out in the Statement was in fact a little out of date, because on Thursday last week the Crime Survey for England and Wales published its latest data, which takes us up to December 2022. That shows that all crime, excluding fraud and computer misuse, has fallen by 52% since March 2010, from 9.5 million incidents in the year ending March 2010 to 4.65 million in the year ending December 2022—a reduction of 4.978 million.

The latest data from the crime survey shows a 12% decrease in all CSEW crime since the year ending March 2020 and a 14% decrease in all crime since the year ending December 2019. There were 1.5 million incidents of neighbourhood crime estimated by the crime survey for the year ending December 2022, a fall of 26%, compared with the year ending March 2020. I could go on, but I think the data supports the fact that the police have been doing a good job and, hopefully, with this uplift in numbers, will continue to do so. I remind the House that there are now over 149,500—more than ever before. The Government are determined to cut crime and make our streets safer. Over the course of the police uplift programme, 46,505 new recruits have joined police forces. I will come back to that in a moment.

The noble Lord, Lord Coaker, asked about charge rates. I agree that the current data on charge rates is concerning. We expect police forces to get the basics right, to focus on common-sense policing and to work with partners across the criminal justice system to see more criminals charged and prosecuted. But that is a shared responsibility and the system needs to work better to catch criminals and help victims of crime.

With regard to online crime, as I said, the fraud strategy will be published this week. However, to put some numbers on that, we have already committed £400 million over the next three years to bolster law enforcement’s response to economic crime. The strategy will set out a co-ordinated response from government, law enforcement and the private sector to better protect the public and increase the disruption and prosecution of fraudsters.

The subject of vetting has quite rightly come up. The Government have been clear that all police forces must meet the high standards that the public expect, and that forces must root out those who are unfit for service at the very first opportunity. It is of the utmost importance that robust processes are in place to stop the wrong people joining the police in the first place, which is why we have invested in improving recruitment processes and supporting vetting as part of the £3 billion of funding provided to forces to recruit and maintain officers. New recruits will have been vetted in line with the College of Policing’s Vetting Code of Practice and relevant vetting APP, which were first established in 2017. The APP is due for an upgrade very shortly, as noble Lords will be aware.

On neighbourhood policing, there are now more officers working in public protection, local policing and crime investigations. Thousands of additional officers are already out on the streets, and the latest data available shows that overall 91% of police officers were in front-line roles. The uplift programme provides the opportunity to ensure that we have the officers that policing needs, both to respond to the increase in demand and to take a more proactive response to managing that demand, including crime prevention.

The noble Lord, Lord German, asked about the attrition rates. We have made it very clear to police forces that the large investment we have put into policing means that we expect officer numbers across England and Wales to be maintained throughout 2023-24. The police uplift programme was designed to provide a genuine uplift of 20,000 officers that accounts for attrition rates. Voluntary resignation rates in policing are at less than 3%, which is low compared to other sectors. Policing is obviously a career like no other, and the results of our latest survey of new recruits showed a positive onboarding experience overall: 82% of respondents are satisfied with the job, and 77% intend to continue as police officers for the rest of their working lives. Those numbers are very encouraging.

The noble Lord also asked me, perfectly reasonably, about face-to-face contact. In February, the College of Policing wrote to all chief constables with updated and reissued guidance on post-assessment in-force interviews. The college reiterated the importance of those interviews and that all forces should deliver them using college assessment standards to ensure the same quality nationally. The college expected forces to have implemented the updated guidance by the end of last month. Following the issuing of new guidance by the college on post-online assessment centre interviews, the latest data provided by the college shows that 38 forces are currently using a post-assessment interview and that four plan to do so with their next cohorts.

The noble Lord, Lord German, also mentioned CCTV—as if it somehow indicates against the quality of the data I have already shared with your Lordships’ House, and that there is more, shall I say, concern about crime in local areas. Of course, people are right to be concerned. However, perhaps it also demonstrates that this equipment and technology is cheaper and more readily available than ever before and, more to the point, that it can be installed on a Sunday afternoon by oneself.

The noble Lord, Lord Coaker, is quite right: the numbers have consequences for everyday lives, which is why I believe that your Lordships’ House should support them. I certainly do not believe that any of this is irrelevant.

[Lord Soames of Fletching (Con)]

My Lords, I welcome the tenor and content of the Statement my noble friend the Minister read out. However, does he agree with me that one of the principal problems our police forces have is the lack of quality in their leadership at middle-rank and senior-rank levels? Will he consider looking at the way the Armed Forces trains its officers to ensure that, when police officers take positions of senior command, they are prepared and wholly trained for such awesome responsibilities?

[Lord Sharpe of Epsom (Con)]

My noble friend makes some solid points. It is undeniable that some of the incidents which have been seen over the past few years, and which are coming to light now, are a consequence of a failure of leadership. I am pleased that the leadership of the country’s main police force is in very good hands, and I support Sir Mark Rowley of the Metropolitan Police in the work he has to do. My noble friend also makes some very good points about leadership more generally. I believe—and I will be asking about this more frequently—that the College of Policing is working on the reinstatement of a national police college to ensure rigorous, nationally consistent standards.

[Baroness Chakrabarti (Lab)]

My Lords, it is no fault of the Minister, but metaphors about passing batons and crossing finishing lines will be seen to be complacent and even insensitive by many victims of sexual and violent crime in particular. I share the concerns expressed repeatedly on all sides of your Lordships’ House that, when reversing drastic police cuts in a hurry, there will be issues with the quality of recruitment, vetting, training and discipline, as we have heard. So, rather than constantly batting this off to the College of Policing, will the Government take responsibility and propose a clear timeline for a legislative framework of standards across the nation for all those vital matters?

[Lord Sharpe of Epsom (Con)]

The noble Baroness will be aware that a number of ongoing reviews on matters such as dismissals are due to conclude very shortly. She makes some very good points about victims, and we are committed to delivering justice for victims and putting some of the vile offenders referred to behind bars for longer, but there is obviously still a long way to go. We have previously discussed at the Dispatch Box some of the factors the noble Baroness mentioned and, while I will not go into them in detail again, I note that programmes such as Operation Soteria are delivering meaningful results.

[Lord Vaux of Harrowden (CB)]

The noble Lord was quite right in saying that I was going to mention fraud. The Statement says that crime is falling, excluding fraud. Fraud remains a substantial growth industry and now accounts for over 40% of all crime against the individual. The noble Lord agreed last week that the current level of law enforcement resources aimed at it is insufficient. He skilfully shot my fox earlier by referring to the national fraud strategy that is to be issued this week, which is an improvement on “imminently” and “shortly”. How many of these 20,591 officers who have been recruited have specialist fraud skills?

[Lord Sharpe of Epsom (Con)]

The noble Lord asks a question which I cannot answer at the moment. I will endeavour to find out those statistics and I would hope that some of those questions about resourcing will be dealt with on publication of the strategy this week. As regards the overall uplift, as I said earlier, 91% of the new intake, as it were, are involved in frontline policing.

[Baroness Berridge (Con)]

My Lords, while the diversity statistics my noble friend outlined are encouraging, in terms of women and ethnic minorities they are still not proportionate to the population. Is not one of the issues that many police forces have, particularly the Met, retaining those staff? Can my noble friend outline how we are going to monitor—maybe with swifter inspections from His Majesty’s Inspectorate of Constabulary and Fire & Rescue Services—whether they retain their female and ethnic minority staff and promote them at the same rate as their white officers?

[Lord Sharpe of Epsom (Con)]

My noble friend makes some very good points. Obviously, as she would expect me to say, these are matters for local police forces themselves. However, I absolutely take the point, and we should all be involved in making sure that retention and lack of attrition remains as it is.

[Lord Grocott (Lab)]

My Lords, I find it pretty astonishing that the Government should call for national rejoicing that they have finally got the level of policing up to the level of 13 years ago, under the last Labour Government. An apology for all the cuts that were made in the early years of this Government would be in order. As for comments in the Statement such as criminals now “must be cursing their luck” because the figures have gone up, the inevitable response is that immediately after 2010, criminals must have been rejoicing at the savage cuts made to policing—to dangerous levels—in many cities in this country.

The Minister still has not answered a couple of specific questions that were put to him. First, we are told that these 20,000 new recruits have been recruited since 2019. How many people have left the police service during that precise period, and is that allowed for in describing the number of police officers available today? Secondly, this mass recruitment is obviously to be welcomed, but can he tell us how many of these new recruits actually leave the police service before they have completed their probationary period? It is no use having the police officers unless they give a substantial period of service after they have been trained.

[Lord Sharpe of Epsom (Con)]

My Lords, in fact there are more policemen than under the last Labour Government: 3,542 more, to be precise. The fact is that demand for policing has changed since 2010, which is why in 2019 the Government made this commitment to increase the number of police officers by 20,000, to help the police respond. I am afraid that I cannot say how many of this new intake will complete their probationary period, as, obviously, some will still be in their probationary period. I will endeavour to find out the statistics and come back to the noble Lord. On the number who left, I have already gone into the statistics in some detail on the number who were recruited, as well as the attrition statistics.

[The Lord Bishop of Gloucester]

My Lords, it is very good to hear the Minister speak about police uplift. I am certainly not asking for more and more but I am asking for more join-up. I am really concerned about the “we are coming for you” rhetoric being part of the solution, and the sense that if we simply arrest more people and send more people to prison, we will reduce reoffending. There was nothing in the data about the high rate of reoffending. Unless we look at what is going on in our prisons, at how we rehabilitate people and address some of the systemic issues relating to why people offend in the first place, we will not be doing that join-up across the criminal justice system. I am really concerned about the rhetoric whereby, if you arrest more people and lock them up for longer, our streets will be safer; the data simply does not reflect that. Will the Minister say more about the join-up across the whole of the criminal justice system?

[Lord Sharpe of Epsom (Con)]

The right reverend Prelate has made some very good points. The public would expect charge, arrest and prevention rates to increase from the current levels. However, without work on reoffending and the criminal justice system in the round, as the right reverend Prelate suggests, I think that things will fail to improve as much as we would all like. I cannot give her any precise details but, when it comes to the drug strategy, work is being done between the Ministry of Justice, the criminal justice system more generally and the Home Office on reoffending and referring people to preventive programmes at an earlier stage. That should yield some results.

[Lord Bellingham (Con)]

Will the Minister join me in paying tribute to Paul Sanford, who was appointed Norfolk chief constable in 2021? He made it among his priorities to clamp down on the county lines and low-level antisocial behaviour, and he has succeeded in both areas. However, is the Minister aware that rural counties such as Norfolk, Suffolk and Lincolnshire are facing quite profound problems with the police funding formula? As a consequence, Paul Sanford’s predecessor had to scrap the police community support officer programme. What can the Minister say about those counties that have suffered relative to other counties in funding and their desire to reinstate that programme in future?

[Lord Sharpe of Epsom (Con)]

I thank my noble friend for his question and I am happy to join him in congratulating the chief constable whom he has mentioned. As for the funding formula, I do not have the precise details in front of me. However, as I said in the Statement, the demand has changed over the past 10 years. If the funding has changed, that will be a reflection of the change in demand.

[Viscount Stansgate (Lab)]

My Lords, the Minister’s Statement refers to the importance of public trust. As the House will know, in the case of the Metropolitan Police, that is understandably very low—indeed, the Metropolitan Police is itself on probation. To follow up his answer to my noble friend a moment ago about probation, do the Government keep figures on the current number of police officers in the Metropolitan Police who are on probation? Do the Government have an estimate of those who are expected to pass through their probation to become finally qualified police officers?

[Lord Sharpe of Epsom (Con)]

I am glad that the noble Viscount has raised the subject of the Metropolitan Police. It is a little disappointing that it is one of the only forces—in fact, the only force—that did not meet its targets in police uplift, with only an additional 3,468 officers recruited, whereas the target was for 4,557, and the funding was there to do that. As for the probationary statistics that the noble Viscount asked for, as I said in answer to an earlier question, I am afraid that I do not have them to hand, but I shall endeavour to find them and communicate them to the noble Viscount.

[Lord Dholakia (LD)]

My Lords, the composition of police forces should reflect the community that they represent. Why has recruitment of those from ethnic-minority and diverse communities been so low in the Metropolitan Police?

--- Later in debate ---

[Lord Sharpe of Epsom (Con)]

That I cannot answer but, as I said, in the national picture, the fact is that we have more officers identifying as ethnic minorities than ever before.

[Baroness Blower (Lab)]

My Lords, as the Minister said, it is not just about hitting a target; it is also about public trust. How concerned is he about the media reports around police recruitment of unsuitable so-called rogue candidates being given jobs, precisely to meet government targets? The police inspectorate has said explicitly that hundreds of people have joined the police in the past three years who simply should not have. If the Minister recognises this, what is he going to do to address it?

[Lord Sharpe of Epsom (Con)]

I hope that I have gone into reasonable detail about the standards of vetting that are required and expected. I also point out that there were 10 applicants for every job, which implies—or should imply, at least—that there is a reasonable pool from which to choose and, I hope, get the right people. That is of course not a guarantee that there will not be a few bad apples in this particular barrel, but I sincerely hope that there are not—but perhaps I might be surprised if there are not as well.

[Baroness Lawrence of Clarendon (Lab)]

My Lords, even with the police uplift programme, since 2010 there are 9,000 fewer police officers, and 6,000 fewer on the beat in real terms. Does the Minister think that this programme is sufficient, given that 90% of crimes go unsolved every year, or are the Government considering further action?

[Lord Sharpe of Epsom (Con)]

My Lords, the noble Baroness asks me to comment on operational policing matters. I have talked a bit about neighbourhood policing activities; I have also, on a number of occasions, said that 91% of policemen are involved in front-line activities. These are really issues that should be debated between police and crime commissioners and chief constables, depending on the area.

[Baroness McIntosh of Pickering (Con)]

My Lords, as my noble friend Lord Bellingham said, rural crime takes on a life of its own. North Yorkshire was the first police force, I understand, to create a rural task force. Will the Home Office give a specific target for rural crime to ensure that the funding for such task forces is secured going forward?

[Lord Sharpe of Epsom (Con)]

My noble friend will be aware that, as I said in answer to the previous question, these are operational matters for chief constables and police and crime commissioners—and, of course, in the case of police and crime commissioners, the people who elect them.

[Lord Watts (Lab)]

My Lords, this will not wash. The people outside know that crime is going up; they know that there are not the police numbers on the street. How will the Government make sure that these criminals get longer sentences when there are no places in prison for them?

[Lord Sharpe of Epsom (Con)]

My Lords, the noble Lord is wrong: crime is going down and there are more police officers than ever before. That is according to the Crime Survey for England and Wales, which the Office for National Statistics recognises as the most reliable source of those statistics. As for inviting me to comment on sentencing practices and so on, which obviously stray into the responsibilities of other government departments, I am not going to do that.

[Baroness Wilcox of Newport (Lab)]

My Lords, the Minister has given us a great deal of data this afternoon. However, the proportion of front-line officers is lower today than in any year since 2011, while the proportion of officers in organisational support is higher today than in any year since 2011. Have the Government considered the merits of committing to a target for putting more police and PCSOs on the streets in our nations and regions?

[Lord Sharpe of Epsom (Con)]

I say to the noble Baroness that, again, that is an invitation to comment on operational policing matters, which depend very much on local circumstances. However, 91% of all police are currently in front-line roles and, as I have already said, the nature of that—the demand, if you like—has changed over the last decade and it would not be wise for me to speculate as to how that demand has changed in various local areas.

[Lord Watson of Wyre Forest (Lab)]

My Lords, just last week we heard that the Met Police may be failing to identify serial killers, in the wake of the appalling case of Stephen Port. The report identified five key failings: lack of training; poor supervision; unacceptable record-keeping; confusing policies; and inadequate intelligence procedures. How are the Government urgently supporting the Met to fix this?

[Lord Sharpe of Epsom (Con)]

The Government’s support for Sir Mark Rowley has been very clear indeed, and I am happy to wish him very well in his endeavours over the coming months. He has a very large set of responsibilities on his shoulders and, as far as I can see, he is discharging them well. The noble Lord asked me about operational policing in London. He will be aware that the responsibility for that, as the police and crime commissioner, is with the Mayor of London.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, 41% of crime is fraud, so why does the Minister keep using figures that do not include fraud?

[Lord Sharpe of Epsom (Con)]

The fraud strategy will be published this week.

[Lord Weir of Ballyholme (DUP)]

My Lords, while the Government make a virtue of the fact that police numbers in England have started to turn marginally upwards, in Northern Ireland we have reached a point at which the security threat is the highest it has been for many years from terrorist and dissident organisations, and yet the number of police officers in Northern Ireland is perhaps the lowest it has been in many decades, if not the entire history of the state. What representations have Ministers been making to their colleagues in the Northern Ireland Office to ensure that the citizens of Northern Ireland are given an equal level of protection from crime and terrorist actions?

[Lord Sharpe of Epsom (Con)]

The picture that the noble Lord paints is obviously concerning. I will say that this is not a marginal uplift but a substantial uplift. As regards specific circumstances in Northern Ireland, I am afraid I cannot answer his question on the numbers, but I will investigate and come back to him.

[Lord Brooke of Alverthorpe (Lab)]

My Lords, I think there is general agreement that trust has declined since 2010. We need to restore that as best we can. Knowing the Minister, I was rather surprised by his throwaway line in response to some of the questions about trust. When he said that there will be “a few bad apples”, I found that rather complacent. The police inspectorate has said that, of the people being recruited into the police force, some hundreds have come in within the past three years who should not be there. We know the plan that has been set in place to try to avoid a repetition of this in the future, but what is happening to try to root out the 300 or so that are around?

[Lord Sharpe of Epsom (Con)]

I am sorry if I sounded complacent to the noble Lord. It was really just a reflection on the statistics of this, as with any normal distribution—the noble Lord will know how normal distributions of population cohorts and so on work out. That is all that that comment was meant to reflect. As regards the numbers of police that have been recruited, I have commented extensively on the vetting processes. The dismissals review, which I referred to earlier, is concluding this month. I hope that we will have a lot more to say very soon on how that process will be strengthened.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I am sorry: the Minister has not answered my question about the fraud strategy. The Government have been consistently excluding fraud from the reporting of crimes —why?

[Lord Sharpe of Epsom (Con)]

My Lords, the noble Lord is quite right. I am sorry if I seemed to evade the question. The simple fact of the matter is that I cannot comment on the strategy because I have not seen it, it is due to be published this week, and it will address all the various questions that the noble Lord has asked me—in other words, I do not know.

[Baroness Taylor of Stevenage (Lab)]

My Lords, as we have heard from my noble friend Lady Lawrence, even with the police uplift programme, there is still a shortage of over 9,000 police officers. As well as the decimation of neighbourhood policing that that has caused, many of the officers lost in earlier rounds of cuts will have been among the most experienced and highly trained; for example, officers trained in specialist intelligence, firearms and dealing with sexual offences. This has put immense pressure on those left behind to hold the fort and may explain, for example, why only 1% of rape offences reach a conviction. What assessment have the Government carried out of the impact of this loss of experience, and how long will it take to build back up so that the specialist officer posts can be filled?

[Lord Sharpe of Epsom (Con)]

The noble Baroness is right to talk about specialist skills and experience. I do not recognise the 9,000 number: as I have said repeatedly this afternoon, we have record numbers of police. I am afraid I cannot answer, as with the question that the noble Lord, Lord German, asked, about age distribution and so on. I can say that certain specific programmes, such the one I referenced earlier, Operation Soteria, are delivering very strong results. The necessary people are being trained in the right way in dealing with some of the things that are of significant public concern.

Economic Crime and Corporate Transparency

Lord Sharpe of Epsom Excerpts

Committee stage
Thursday 27th April 2023 Grand Committee

Moved by

[Lord Sharpe of Epsom]

84A: After Clause 180, insert the following new Clause—
“Failure to prevent fraudFailure to prevent fraud
(1) A relevant body which is a large organisation is guilty of an offence if, in a financial year of the body (“the year of the fraud offence”), a person who is associated with the body (“the associate”) commits a fraud offence intending to benefit (whether directly or indirectly)—(a) the relevant body, or(b) any person to whom, or to whose subsidiary, the associate provides services on behalf of the relevant body.(2) But the relevant body is not guilty of an offence under subsection (1)(b) if the body itself was, or was intended to be, a victim of the fraud offence.(3) It is a defence for the relevant body to prove that, at the time the fraud offence was committed—(a) the body had in place such prevention procedures as it was reasonable in all the circumstances to expect the body to have in place, or(b) it was not reasonable in all the circumstances to expect the body to have any prevention procedures in place.(4) In subsection (3) “prevention procedures” means procedures designed to prevent persons associated with the body from committing fraud offences as mentioned in subsection (1).(5) A “fraud offence” is an act which constitutes—(a) an offence listed in Schedule (Failure to prevent fraud: fraud offences) (a “listed offence”), or(b) aiding, abetting, counselling or procuring the commission of a listed offence.(6) For the purposes of this section a person is associated with a relevant body if—(a) the person is an employee, agent or subsidiary of the relevant body, or(b) the person otherwise performs services for or on behalf of the body. (7) Whether or not a particular person performs services for or on behalf of a relevant body is to be determined by reference to all the relevant circumstances and not merely by reference to the nature of the relationship between that person and the body. (8) Where a relevant body is liable to be proceeded against for an offence under subsection (1) in a particular part of the United Kingdom, proceedings against the body for the offence may be taken in any place in the United Kingdom.(9) Where by virtue of subsection (8) proceedings against a relevant body for an offence are to be taken in Scotland—(a) the body may be prosecuted, tried and punished in a sheriff court district determined by the Lord Advocate, as if the offence had been committed in that district, and(b) the offence is, for all purposes incidental to or consequential on the trial or punishment, deemed to have been committed in that district.(10) A relevant body guilty of an offence under this section is liable—(a) on conviction on indictment, to a fine;(b) on summary conviction in England and Wales, to a fine;(c) on summary conviction in Scotland or Northern Ireland, to a fine not exceeding the statutory maximum.(11) In this section—“relevant body” means a body corporate or a partnership (wherever incorporated or formed);“sheriff court district” is to be read in accordance with the Criminal Procedure (Scotland) Act 1995 (see section 307(1) of that Act).(12) In this section “financial year”—(a) in relation to a UK company, has the meaning given by the Companies Act 2006 (see section 390 of that Act);(b) in relation to a relevant body that is not a UK company means—(i) any period in respect of which a profit and loss account of the relevant body is required to be made up (by its constitution or by the law under which it is established), whether that period is a year or not, or(ii) if the body is not required by its constitution or the law under which it is established to draw up a profit and loss account, a calendar year.”Member’s explanatory statement
This clause together with new clauses (Fraud offences: supplementary) to (Failure to prevent fraud: miscellaneous), Lord Sharpe of Epsom’s amendments at page 173 lines 21, 33, 36 and 37 and page 315 line 20 and new Schedule (Failure to prevent fraud: fraud offences) provide for a new offence of failure to prevent fraud.

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

My Lords, in moving government Amendment 84A, I will also speak to other government amendments in this group, which create a failure to prevent fraud offence. I first thank the many noble Lords in Committee today for their continued engagement on these amendments and corporate criminal liability more generally. These conversations have been robust but constructive, and I am sure that we will have a lively debate today.

Let me start by reiterating the Government’s commitment to reform of corporate criminal liability— CCL—and to tackling fraud. That is why, in 2017, the Ministry of Justice issued a call for evidence; then, in November 2020, the Government commissioned the Law Commission to explore further this area. The Law Commission report was published in June last year. The Government have been reviewing the report and its extensive consultation and working with relevant stakeholders, including prosecuting agencies, to explore options for reform. My ministerial colleagues and I are of course also grateful for the extremely helpful insight and input from various noble Lords in this House and Members in the other place.

The tabling of these amendments to introduce a new failure to prevent fraud offence is a major and tangible demonstration of action. This offence will crack down on fraudulent practices by corporations. It is one part of the Government’s wider fraud strategy, due for publication shortly. Under the new offence, a large organisation will be liable to prosecution where fraud was committed by an employee, for the organisation’s benefit, and the organisation did not have reasonable fraud prevention procedures in place. The new offence will help to protect victims and cut crime by driving a culture change towards improved fraud prevention procedures in organisations and by holding organisations to account through prosecutions if they profit from the fraudulent actions of their employees. We are giving law enforcement and prosecutors the powers they have asked for to tackle organisations that defraud consumers, other businesses, investors and the taxpayer.

The offence has been designed to drive change and facilitate prosecutions without duplicating existing regulation or placing unnecessary burden on legitimate business. It will therefore apply only to large organisations, to avoid disproportionate burdens on small and medium-sized enterprises. A strong UK economy must be an environment that supports people to open and grow businesses. Of course, we encourage small organisations to take steps to prevent fraud and learn from the guidance that the Government publish. There are also existing powers to prosecute them and their employees if they commit fraud, but we need to keep the burden on business in check. The new offence covers fraud and false accounting, while keeping money laundering responsibilities contained under the existing regulatory regime. This ensures that the offence is targeted, focused on offences most likely to be committed by corporations and where prevention can have the most impact, and not duplicative of existing regimes.

The amendments include a statutory duty to publish guidance to set out what would be considered reasonable fraud prevention procedures, making the expectations on business clear. There have been cross-party calls for this measure, both in this House and the other place. I look forward to debating the detail today, but I trust that your Lordships will overall welcome and support these amendments, to ensure that we tackle fraud in corporate bodies. I beg to move.

Amendment 84AA

Moved by

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[Lord Coaker (Lab)]

I said everyone on the Committee —with the possible exception of the noble Lord. I was talking about how people feel about the Bill as drafted, with the carve-out for small and medium-sized enterprises. The noble Lord was referring to something that might include not the small but the medium, and that is a matter for debate, but the general view of the Committee was that the Government’s current carve-out is not acceptable. Where you put the threshold—whether you apply to a little sweet shop at the end of the road with a turnover of a few thousand pounds the same regulation you apply to a multinational company—could be sorted out in regulations, and if we saw them, we could suggest that they take into account the small sweet shop to which the noble Lord referred.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank all noble Lords—too numerous to mention—who have participated in this debate, and I shall try to address all the points put to me, but I apologise if I do not name everybody individually.

I feel I should declare an interest: I have owned and been a director of small businesses, not all of them successful—like my noble friend, Lord Leigh—and to my noble and learned friend Lord Garnier, I declare an interest as a tall man.

I will start with the amendments linked specifically to failure to prevent offences. I welcome the broad support today for the government amendments, which would, I emphasise, cover all sectors, and that includes telecoms companies. I hope that they deliver most of what the other amendments intend. However, I have noted that concerns remain. Obviously, I listened to the debate very carefully, including on the scope and reach of the new offence.

Before I turn specifically to the amendments, I reassure my noble friend Lady Morgan that the fraud strategy really is imminent. She is absolutely right: I am really keen to see it. I say to my noble friend Lord Leigh that his point about accounting principles was very interesting, but the design of the definition of large companies comes from the Companies Act 2006.

I note the wider offence lists put forward in Amendments 96, 97, 98 and 99, tabled in the names of my noble and learned friend, Lord Garnier, my noble friend Lord Agnew, the noble Lord, Lord Faulks, and the noble Baroness, Lady Bennett of Manor Castle. In particular, noble Lords seek to ensure that money laundering is covered by the new failure to prevent offence. The Government have consulted with law enforcement and prosecutors, and we are satisfied that all the priority offences have been included.

We have carefully examined the wider offence list and determined that they are not appropriate to include because they would duplicate existing regimes, cause repetition with other existing offences, are too broad or relate to preparatory offences. It is also worth noting that the Law Commission report published in June 2022 agrees with this. It highlighted that Part 2 of Schedule 17 to the Crime and Courts Act 2013, as Amendment 98 suggests, while a good starting point for considerations, would be too broad.

I turn to the proposed failure to prevent money laundering offence, as in Amendment 99, tabled by my noble and learned friend Lord Garnier. The UK already has a strong anti-money laundering regime which requires regulated sectors to implement a comprehensive set of measures to prevent money laundering. Corporations and individuals can face serious civil and criminal penalties if they fail to do so.

A failure to prevent money laundering offence would duplicate the systems, controls and penalties of the existing regime. Furthermore, it would extend anti-money laundering obligations to organisations with very low risk, which would be disproportionate. Any necessary anti-money laundering measures can be implemented through the existing regime. The Law Commission agreed with this point, noting that any offences to cover breaches of money laundering would create additional positive duties on organisations which would overlap with the duties under the anti-money laundering regime.

The Government’s review of the UK’s anti-money laundering regime, published in June 2022, concluded that existing regulatory requirements allow for businesses to take a risk-based approach to their obligations, meaning their compliance activities can be targeted at areas of highest risk of money laundering and terrorist financing. The review also committed the Government to further analysis and public consultation to identify the best path for reform of the anti-money laundering supervisory regime. Further improvements to the UK’s anti-money laundering framework are therefore best targeted by strengthening and improving the existing regime, rather than by the creation of a new parallel regime. The Government have already committed to undertake further consultation on the anti-money laundering supervisory regime and continue to review the anti-money laundering framework.

Amendment 99 in the name of my noble and learned friend Lord Garnier also proposes a failure to prevent sanctions evasion offence. The UK can already impose a range of criminal and civil penalties against corporations and individuals for breaches of UK sanctions. Powers were strengthened last year when we moved civil penalties for financial sanctions on to a strict liability basis. Introducing a failure to prevent offence would duplicate the existing regime. On the scope of the offences, government Amendment 84B contains a power in secondary legislation to update the list when required.

I turn to Amendments 84AA, 84CA, 84CB and 84CC, on the threshold for the new offence, tabled by the noble Lord, Lord Fox. I thank him for talking me through his concerns last week and I note that most other noble Lords have supported its intention. I will endeavour to set out the Government’s position on this. Our analysis shows that small businesses would be disproportionately affected by the costs of complying with a failure to prevent fraud offence. The total cost to small and medium-sized enterprises would amount to billions of pounds in year one and hundreds of millions in each subsequent year. This would significantly increase the cost of the measure, which is £98.5 million per annum with the threshold included. An affirmative power—

[Lord Vaux of Harrowden (CB)]

If the Government have done some analysis on that, could they share it with us? That would be very helpful.

[Lord Sharpe of Epsom (Con)]

I am happy to investigate whether that is possible. If it is, I will do so.

An affirmative power to add a threshold in future, as proposed by the noble Lord’s amendments, would have limited impact on this burden, with the highest costs already borne should the offence apply to smaller organisations in year one. It is also important that we consider the cumulative compliance cost for SMEs across multiple government regulations, rather than seeing these fraud measures in isolation. Excluding SMEs from the new offence does not mean they can get away with fraud; powers already exist to prosecute small companies, their owners and their employees for criminal acts. It is currently easier to hold these companies to account than larger organisations with complex structures.

The Government’s proposed failure to prevent fraud offence will strengthen powers to tackle fraud by large organisations, ensuring that companies with the biggest customer bases which risk causing the most harm take extra steps to prevent fraud.

We will keep the threshold under review and can amend it through secondary legislation, if required. I know that some noble Lords argue that this power should be used the other way. However, given the potentially chilling impact on small businesses, I hope that noble Lords will agree that it is better to understand the impact on large companies once the measures are implemented, as my noble friend Lord Leigh has highlighted—as well as any trickle-down effect on smaller companies—before applying it more widely. The regulation-making power in the Government’s Amendment 84C enables this approach. The Government therefore firmly consider that the proposed failure to prevent fraud offence strikes an appropriate balance between the crime prevention benefits and the burden placed on business.

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[Lord Browne of Ladyton (Lab)]

I apologise to the Minister; I should have intervened slightly earlier. If the Minister has data on the likely cost of the extension of the provisions in the Government’s amendment to small and medium-sized enterprises, I think that all Members of the Committee would like to see it, including how it could be disaggregated. To make a proportionate decision, surely it would need to be accompanied by the Government’s estimate of the loss to small and medium-sized enterprises caused by fraud. Given the scale of fraud in this country, it must be significant. Personally, I would like to have the opportunity to compare what this is likely to cost against what fraud already costs small and medium-sized enterprises.

[Lord Sharpe of Epsom (Con)]

The noble Lord makes a good point. As I have said, I will endeavour to find some more figures and share them more broadly. I do not know whether it will take into account the precise analysis that the noble Lord seeks, but the fraud strategy is imminent and it would be strange to publish a strategy without saying what the strategy is there to address. Once again, I am piling all my faith into the fraud strategy—possibly misplaced faith, who knows?

[Lord Agnew of Oulton (Con)]

Can my noble friend confirm the figure the noble Lord, Lord Macdonald, put forward: that about 99% of businesses will be excluded? That was the figure that I found, but I would like to hear that from the Minister, as well as whether he thinks that is proportionate in the carve-out.

[Lord Sharpe of Epsom (Con)]

I am afraid that I cannot confirm that. I do not know, but I will find out.

I will go back to Amendment 100 and talk about the identification doctrine. As noble Lords are aware, prosecuting corporates for serious crimes is challenging, largely as a result of the identification doctrine. This principle dictates that the acts and minds of the individuals who represent the directing mind and will are treated as the acts and minds of the corporate itself. In practice, it can be difficult to determine the “directing mind and will” of a corporation. Large and sometimes opaque governance structures make it challenging to identify a senior manager in charge of specific operations. This means that the current law applies unfairly to smaller business. As set out at Second Reading, the Government are fully committed to addressing this problem and to bringing forward legislative reform to achieve it. However, as noble Lords are aware through the amendments that they have tabled, whereas the identification doctrine currently applies to all crimes, the scope of this Bill can permit reform only for economic crime offences. I am as frustrated about that as other noble Lords.

While this amendment would improve the law for economic crimes, it would not remedy the current issues faced by prosecutors for all other sectors of criminal law. However—and I take a partial deep breath here for my noble and learned friend Lord Garnier—given our shared overall ambitions for reform, I would welcome further conversations ahead of Report on this subject. My officials are working through the list of offences with practitioners to determine whether the offences can be reformed without impacting the wider criminal law. My noble and learned friend will also be aware that we are committed to introducing reforms that can be effectively used by prosecuting agencies over a broad range of business. I am sure that he will also agree that is vital that any unintended consequences or risks be identified and understood. I hope that noble Lords are satisfied that the Government are absolutely committed to reform in this area, but that we want to ensure that any reform can be effectively utilised.

Turning to Amendment 101—

[Lord Macdonald of River Glaven (CB)]

Before the Minister moves to another area, the figure I gave that SMEs account for 99.9% of all companies and business organisations in the UK comes from government statistics—namely, business population estimates for 2022.

[Lord Sharpe of Epsom (Con)]

I thank the noble Lord for that information; I will come back on that.

[Lord Fox (LD)]

Will the Minister go and count them again?

[Lord Sharpe of Epsom (Con)]

Absolutely; I shall get my abacus out. I turn to Amendment 101 on senior managers’ liability for failing to prevent economic crime, also tabled by my noble and learned friend Lord Garnier.

I agree that it is important that individuals, particularly the most senior ones, do not go unpunished for their involvement in committing economic crimes. Prosecutors already have a range of powers at their disposal to pursue decision-makers who enable or commit criminal offences in a corporate setting. This includes the power to prosecute individuals for substantive offending. For example, last year an individual was jailed for 12 years following a Serious Fraud Office investigation into a £226 million fraud.

Additional powers also exist which enable senior managers and directors to be prosecuted where they consent or connive in fraud, theft, money laundering or bribery. A director or manager who is convicted on the basis of their consent, connivance or neglect can be dealt with accordingly by the courts, including being sentenced to imprisonment. Also, under the Serious Crime Act 2007, a person, including a senior manager, is liable for encouraging or assisting the commission of a criminal offence. That includes fraud, false accounting or money laundering—the offences captured by the amendment tabled by my noble and learned friend Lord Garnier. The individual found to be encouraging or assisting the commission of the offence can be prosecuted in the same way as if they commit the offence itself.

This amendment seeks to extend liability for senior managers on a lower basis for culpability than is normally provided for. It would allow a senior manager who takes a decision to be imprisoned for taking that decision, even if the offence is the action of a rogue employee. That would place a disproportionate burden on corporations and their senior management, which is likely to deter legitimate business from seeing the UK as a fair and safe place to conduct business. This amendment is therefore not appropriate.

The noble Lord, Lord Coaker, asked about extraterritoriality. Our approach is focused on cutting crime in the UK and protecting UK victims. As he noted, the powers have sufficient extraterritorial extent to do this, even if the perpetrators or the organisation is based outside the UK. Other countries can take steps to prosecute fraud under their own law. As for the precise mechanics of how it would work, it would be on a case-by-case basis, so it is pointless to speculate.

The noble Lord also asked for more detail about guidance. As he knows, we intend to publish guidance setting out reasonable prevention procedures before the offence of failure to prevent fraud comes into force. It will give organisations clarity about what they need to do. It is important that we engage and consult the right stakeholders in this process and that we engage further with the organisations this will impact. Once the Bill has received Royal Assent, we will start engaging with law enforcement, prosecutors, relevant government departments, public sector organisations, trade associations for businesses, other organisations in scope and other experts to draft the guidance.

We anticipate that the guidance will follow similar themes to those seen in many regulatory regimes—albeit that in this case they are not requirements—and to guidance for existing failure to prevent offences. This includes regular risk assessments to establish the level and type of fraud risks to be addressed; establishing fraud controls and due diligence processes designed to prevent fraud or spot it in the early stages before the offence is carried out; leadership and training to ensure that employees implement controls and create a culture within the organisation that does not accept fraudulent practices as a route to boosting performance and profits; and monitoring and review to ensure that procedures remain effective. I am happy to hold further discussions on this subject at the noble Lord’s convenience.

[Lord Sandhurst (Con)]

I was waiting to hear the tenor of my noble friend’s response. He opened by saying that a relevant body includes a telecoms company. That is not my point. A telecoms company is obviously likely to be a relevant body. My complaint is that those within scope include only associated persons and not the fraudster who actually makes money indirectly or directly by paying charges to the telecoms company. That target is missed altogether by this Bill and the Online Safety Bill. Is it the intention that telecoms companies will continue to have no responsibility at all for spoof calls and so on?

[Lord Sharpe of Epsom (Con)]

We will come on to this in more detail on a later group. Perhaps we should leave the detail of this debate until the third group, which we will get to at some point.

[Lord Vaux of Harrowden (CB)]

The Minister referred earlier to questions about groups of companies and the fact that an employee of a subsidiary would still be an associate of a holding company. That does not address the question that I was asking. Are the thresholds in Amendment 84C on an individual entity basis or a consolidated basis? There is a big difference between the two. A group could happily have a small subsidiary and say, “An employee of that did it, so we are off the hook”.

[Lord Sharpe of Epsom (Con)]

I appreciate the point that the noble Lord was making and apologise for not addressing it more directly. I will refrain from answering that now and will write. I think I know how it is done, but I am not an accountant and I do not want to say something that he will pick apart. If he will indulge me, I will write on that subject with greater clarity to make sure that I am not making a mistake.

I thank all noble Lords for their participation in this debate and for their patience as I have taken them through a fairly long speech on the Government’s positions on these issues. We agree that reform is needed and, as we have made clear, the Government’s amendments represent a major step in delivering it. I hope that further explanation has reassured noble Lords on why we have presented the amendments with the scope and reach that they contain, and that the Government are committed to reform of the identification doctrine. I therefore very much hope that noble Lords will support the government amendments and not seek to move their own.

[Lord Leigh of Hurley (Con)]

I appreciate that my noble friend is at the Home Office, but none the less can he give us a commitment that the Government will look again at the definitions used in the Government’s clause for SMEs? I appreciate that they come from the Companies Act 2006, which themselves were cut and pasted from EU regs, but now that we are out of the EU we are free to choose definitions that suit our circumstances and our institutes’ accounting standards.

[Lord Sharpe of Epsom (Con)]

Yes, I am happy to give that reassurance.

[Lord Fox (LD)]

My Lords, I think I was right at the very beginning not to speak for long on this set of amendments. Your Lordships filled in for me very adequately and expertly.

The Minister came back with a couple of points that I want to refer to. He explained that aspects of the amendments from the noble and learned Lord, Lord Garnier, were not necessary because there would be duplication. It would be helpful for us to understand that duplication. Perhaps between now and Report he could provide a list of all the prosecutions that have happened with the existing legislation, proving that the new legislation would not be necessary, so that we can understand that his point is correct.

He also talked about the chilling effect on small companies. This legislation is designed to chill fraud. Taking up the challenge set by the noble Lord, Lord Leigh, about his perfectly innocent sweet shop, legislation that excludes that sweet shop will also exclude all the other small companies that are perpetrating fraud. The skill is in the proportionate application of this legislation. To pick up the point made by the noble Lord, Lord Coaker, it is also about the proportionate advice that is being given. Not all companies are getting the same level of advice on how they should approach this legislation. There is no one-size-fits-all approach, as my noble friend Lady Bowles said.

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Moved by

[Lord Sharpe of Epsom]

84B: After Clause 180, insert the following new Clause—
“Fraud offences: supplementary
(1) The Secretary of State may by regulations amend Schedule (Failure to prevent fraud: fraud offences) by—(a) removing an offence from the list in the Schedule, or(b) adding an offence to that list.(2) The power in subsection (1) is exercisable by the Scottish Ministers (and not by the Secretary of State) so far as it may be used to make provision that would be within the legislative competence of the Scottish Parliament if contained in an Act of that Parliament.(3) The power in subsection (1) is exercisable by the Department of Justice in Northern Ireland (and not by the Secretary of State) so far as it may be used to make provision that—(a) would be within the legislative competence of the Northern Ireland Assembly if contained in an Act of that Assembly, and(b) would not, if contained in a Bill for an Act of the Northern Ireland Assembly, result in the Bill requiring the consent of the Secretary of State.(4) An offence added under subsection (1)(b) must be—(a) an offence of dishonesty,(b) an offence that is otherwise of a similar character to those listed (on the passing of this Act) in paragraphs 1 to 6 of Schedule (Failure to prevent fraud: fraud offences), or(c) a relevant money laundering offence.(5) The Secretary of State may from time to time by regulations restate Schedule (Failure to prevent fraud: fraud offences) as amended by virtue of subsections (1) to (3) (without changing the effect of the Schedule).(6) For the purposes of section (Failure to prevent fraud) (1), where a fraud offence is found to have been committed over a period of 2 or more days, or at some time during a period of 2 or more days, and that period of days straddles the beginning of a financial year of the relevant body in question, the fraud offence must be taken to have been committed on the last of those days.(7) In this section “relevant money laundering offence” means an offence under any of the following sections of the Proceeds of Crime Act 2002—(a) section 327 (concealing etc);(b) section 328 (arrangements);(c) section 329 (acquisition, use and possession).” Member’s explanatory statement
See the explanatory statement for new clause (Failure to prevent fraud).

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Moved by

[Lord Sharpe of Epsom]

84C: After Clause 180, insert the following new Clause—
“Section (Failure to prevent fraud): large organisations
For the purposes of section (Failure to prevent fraud) (1) a relevant body is a “large 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 Balance sheet total Number of employees

More than £36 million More than £18 million More 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 (7)) for the purpose of altering the meaning of “large 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 large organisation” 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 paragraph (a).(7) Regulations under subsection (5) or (6) may make consequential amendments of section (Failure to prevent fraud: minor definitions).”Member’s explanatory statement
See the explanatory statement for new clause (Failure to prevent fraud).

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[Lord Sharpe of Epsom (Con)]

I beg to move.

Amendments 84CA to 84CC (to Amendment 84C) not moved.

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Moved by

[Lord Sharpe of Epsom]

84D: After Clause 180, insert the following new Clause—
“Offences under section (Failure to prevent fraud) committed by partnerships
(1) Proceedings for an offence under section (Failure to prevent fraud) alleged to have been committed by a partnership must be brought in the name of the partnership (and not in that of any of the partners).(2) For the purposes of such proceedings—(a) rules of court relating to the service of documents have effect as if the partnership were a body corporate, and(b) the following provisions apply as they apply in relation to a body corporate—(i) section 33 of the Criminal Justice Act 1925 and Schedule 3 to the Magistrates’ Courts Act 1980;(ii) section 18 of the Criminal Justice Act (Northern Ireland) 1945 (c. 15 (N.I.)) and Schedule 4 to the Magistrates’ Courts (Northern Ireland) Order 1981 (S.I. 1981/1675 (N.I. 26));(iii) sections 34(2), 66(6AA) and 72D(2) of the Criminal Procedure (Scotland) Act 1995.(3) A fine imposed on the partnership on its conviction for an offence under section (Failure to prevent fraud) is to be paid out of the partnership assets.”Member’s explanatory statement
This amendment supplements new clause (Failure to prevent fraud).

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[Baroness Altmann (Con)]

I too add my support, as a further person in the sanctioned party. I congratulate the noble Lord, Lord Alton, on moving this amendment and on his excellent speech. I also congratulate him on all the work he does in some most important areas.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank the noble Lord, Lord Alton of Liverpool, for his amendment and for his kind words. I echo the words of my noble friend Lady Altmann about his work in so many areas. I also thank the others who have spoken in this brief debate—the noble Baroness, Lady Bennett, the noble Lords, Lord Fox and Lord Coaker, and my noble friend Lord Leigh.

I reassure the noble Lord that the Government are sympathetic to using frozen funds to assist with Ukrainian reconstruction. Currently, government authorities have the powers to utilise various enforcement tools to investigate breaches of sanctions and, in criminal cases, to confiscate relevant assets. As has been noted, that has resulted in over £18 billion of Russian assets being frozen in the United Kingdom.

The Government are also considering lawful routes to making Russian assets available for Ukrainian reconstruction. We must ensure that any solution is legal, safe and robust, and we will continue to work with G7 partners to make progress.

--- Later in debate ---

[Lord Faulks (Non-Afl)]

Before the noble Lord sits down, during the passage of the first economic crime Bill, when the question of sanctions was discussed, much reference was made to the very lengthy Explanatory Notes which accompanied that Bill—the longest I have ever seen—particularly as regards the human rights implications of depriving people of their assets in the sort of way that the noble Lord, Lord Alton, envisages in his amendment, in particular A1P1 of the European convention and various other rights. Is it part of the Government’s position that the sort of suggestions made in this amendment are in fact stymied or may be frustrated by the provisions of the European convention and the Human Rights Act?

[Lord Sharpe of Epsom (Con)]

The noble Lord has strayed into an area with which I am not familiar. I shall have to write to him.

[Lord Alton of Liverpool (CB)]

My Lords, I think that the whole Committee would be interested to see the reply that the noble Lord receives from the Minister on that point.

I thank all noble Lords who participated in this short debate, including the noble Baroness, Lady Bennett, and the noble Lords, Lord Faulks and Lord Coaker, and thank the noble Lord, Lord Leigh, and the noble Baroness, Lady Altmann, for their brief but helpful interventions. I thank her especially for her personal remarks.

On Tuesday, some noble Lords will have seen sitting with me in the strangers’ area at the back of our proceedings a young man called Sebastian Lai. His father, Jimmy Lai, is incarcerated in a prison in Hong Kong. He had confiscated from him Apple Daily. He was a journalist, media owner and the leading voice for the pro-democracy movement in Hong Kong. Imagine how that family feel as their father, a British citizen, languishes in a jail in Hong Kong—likely, at the age of 75, to die there—knowing that some of those responsible for what has happened to him and who have brought about his incarceration in what is, and I use the word deliberately, a complete corruption of the once illustrious legal system in Hong Kong, have properties, portfolios and massive assets in the United Kingdom. It is high time that we took this issue even more seriously than we have hitherto.

I was not saying this for purely rhetorical reasons earlier—I mean it when I say that I know that the Minister is passionate about people such as Jimmy Lai and the terrible things that have happened in Hong Kong. I was pleased that he did not rule out the possibility that we might be able to overcome some of the issues, particularly around proportionality, which he raised and which we discussed yesterday—and maybe the need for other safeguards, perhaps to deal with the issue that the noble Lord just raised. I hope that, therefore, he will agree to a meeting with some of the legal team that I have met from Spotlight on Corruption, RUSI and the others to which I referred earlier. Sanctions must not just be about virtue signalling—they have to be real and have the teeth to which we have referred in today’s debate.

I am grateful that the noble Lord has not ruled out doing more, but I hope that what more we do will be truly effective and that we will pause and consider further action between now and Report. Perhaps a meeting could even be arranged in the margins of this Committee, where we can discuss this together, for those who are genuinely interested in finding a solution. Perhaps we could invite some of the Members from another place who are so interested in this issue, too. I know that the Committee has a lot of other business to attend to. On that basis, I beg leave to withdraw the amendment.

--- Later in debate ---

Moved by

[Lord Sharpe of Epsom]

86A: Schedule 9, page 315, line 20, at end insert—
“20A_ An offence under section (Failure to prevent fraud) of this Act (failure to prevent fraud).” Member’s explanatory statement
This amendment is supplementary to new clause (Failure to prevent fraud). It adds the new offence of failure to prevent fraud to the list of offences that constitute “economic crime” for the purposes of clauses 175 to 178.

--- Later in debate ---

Moved by

[Lord Sharpe of Epsom]

86B: After Schedule 9, insert the following new Schedule—
     “SCHEDULE 10FAILURE TO PREVENT FRAUD: FRAUD OFFENCESCommon law offences
1_ Cheating the public revenue.2_ In Scotland, the following offences at common law—(a) fraud;(b) uttering;(c) embezzlement.Statutory offences
3_ An offence under any of the following provisions of the Theft Act 1968—(a) section 17 (false accounting);(b) section 19 (false statements by company directors etc).4_ An offence under any of the following provisions of the Theft Act (Northern Ireland) 1969—(a) section 17 (false accounting);(b) section 18 (false statements by company directors etc).5_ An offence under section 993 of the Companies Act 2006 (fraudulent trading).6_ An offence under any of the following provisions of the Fraud Act 2006—(a) section 1 (fraud);(b) section 9 (participating in fraudulent business carried on by sole trader);(c) section 11 (obtaining services dishonestly).”Member’s explanatory statement
This new Schedule sets out the list of “fraud offences” for the purposes of new clause (Failure to prevent fraud).

--- Later in debate ---

[Lord Coaker (Lab)]

My Lords, given the time of day, I shall make a brief comment. I agree with Amendments 91 and 94. On Amendment 94, spoken to by the noble Baroness, Lady Morgan, I ask the Minister directly: why would he not ensure that this Economic Crime and Transparency Bill currently before Parliament did exactly what Amendment 94 suggests? It just does not seem logical. If the Minister and the Government do not do it, this will have been a missed opportunity, and we will come back to this issue and ask why we did not do it now. The amendment is reasonable and makes perfect sense and no doubt the Minister agrees with it, but it needs the Government to say, “We’re going to do it”. If it is flawed then the government lawyers can sort it out, but it is a perfectly reasonable amendment and, in my view, the Government should have no difficulty in accepting it. With that brief comment, I will sit down.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank the noble Baroness, Lady Bowles of Berkhamsted, and my noble friend Lady Morgan of Cotes for their amendments on failure to prevent economic crime, and all noble Lords who have spoken in this debate.

I hope that my comments during our debate earlier today will have provided some reassurance on the Government’s ambitions to take action in this area, including the introduction of a new offence of failure to prevent fraud. These amendments obviously cover some of the same ground so I will seek not to repeat myself too much on issues such as the scope and threshold of the Government’s amendments but to focus more on what I understand to be the wider thrust of Amendments 91 and 94.

Before I get on to that, I reassure the noble Lord, Lord Vaux, that the fraud strategy is a couple of hours closer. I remind noble Lords that there is an all-Peers drop-in session on 9 May to discuss the three Bills that are currently under way through Parliament: this Bill, the Online Safety Bill and the Financial Services and Markets Bill. That will bring some of the discussions together, as suggested by my noble friend Lady Morgan. I refute the allegation that the Government are not doing very much. Those three Bills themselves prove that we are indeed intent on fixing many or all of the problems that have been identified—the Government of course take these problems seriously.

I turn to the amendments in this group. The Government’s offence does not extend to services that facilitate fraud—that is, companies whose services are misused by third parties to carry out fraud. Examples include social media and telecoms companies whose services are used to promote fraudulent schemes, as has been pointed out, and banks and crypto exchanges, which fraudsters use to process the payments. If these companies or their employees commit fraud, they will be in scope, but not where their services are misused by others.

The Government agree that companies that facilitate fraud, even if they are not complicit in the offending, must do more to prevent and detect it. In doing so, they can protect their customers and the wider public from fraud, which, as has been discussed at length, causes significant damage to wider society and individuals —we must not forget them. However, we intend for this to be achieved by seeing through existing plans for regulatory and voluntary activity, rather than by creating a new offence which risks duplicating those existing approaches.

Amendment 91, tabled by the noble Baroness, Lady Bowles of Berkhamsted, proposes a regulatory duty to prevent economic crime, enforced by regulators. In relation to organisations that commit fraud, we can achieve a similar effect that incentivises organisations to put fraud controls in place through the Government’s approach: an offence enforced by law enforcement. Our approach allows all sectors to be in scope, not just regulated bodies, and is less resource-intensive for business and the public sector than establishing new regulatory approaches. In relation to the facilitation of fraud, I reassure the noble Baroness, Lady Bowles, that action is already under way to tackle this. I will address some of the sectors mentioned in today’s debate and Amendment 91, which I hope will provide some further reassurance.

The Online Safety Bill will require all in-scope tech companies, including social media companies, to take action to tackle fraud where it is facilitated through user-generated content or via search results. They must put in place systems and processes to prevent users encountering fraudulent content through their platforms and to swiftly remove any such content available through their platform. Without wishing to single out any particular company for attention, I reassure my noble friend Lady Morgan that Airbnb, which she referenced, would of course be in scope.

Additionally, there will be a duty on the largest social media and search engines requiring them to prevent fraudulent adverts appearing on their services. The Bill gives Ofcom, as regulator, robust enforcement powers, allowing it to impose significant financial penalties on services that do not fulfil its duties. Ofcom will publish codes of practice to set out further details on what platforms must do to meet their duties under the Online Safety Bill.

The “failure to prevent” offence operates in a similar way to the Online Safety Bill, by setting out reasonable steps to be taken, with the ability to fine companies that fail to fulfil their duties. Expanding the “failure to prevent fraud” offence in the ECCT Bill to cover facilitation of fraud would create duplication for tech companies, which would have to follow two parallel regimes in relation to facilitation of fraud, potentially creating confusion for businesses.

Noble Lords also raised the role of telecoms companies, including the content of messages passed over their networks. The telecoms industry is already extensively regulated by Ofcom, which is active in encouraging the industry to tackle scam calls and texts, including through regulation and guidance. This includes new measures that will take effect shortly to tackle the spoofing or disguising of UK telephone numbers from overseas. As it should be, the telecoms industry has been an active partner in the fight against scams, with broadband and mobile providers signing up to the Home Office’s Telecommunications Fraud Sector Charter and committing to work with the Government to reduce the use of their networks by criminals.

However, it is important to recognise that telecoms operators are not able to view the content of messages passing over their networks. While they employ sophisticated algorithms to identify and block hundreds of millions of fraudulent or scam messages and calls, the rapid evolution of threats creates challenges to pre-emptive action. This means that a facilitation offence could potentially have a disproportionate effect on the industry and the operation of telecommunications in the UK.

Amendment 91 also references the Financial Conduct Authority. The FCA is working closely with banks and other financial institutions to reduce the role they play in facilitating fraud and to identify further controls that can be put in place to protect the public from scams. In addition, the Payment Systems Regulator is introducing new requirements for financial institutions to reimburse fraud victims, which will create strong incentives to improve fraud controls, as noted by the noble Lord, Lord Vaux.

In respect of the Solicitors Regulation Authority, noble Lords will be aware from Tuesday’s debate that Clause 183 of the Bill already inserts a regulatory objective in the Legal Services Act 2007, focusing on promoting the prevention and detection of economic crime. This measure affirms the duties of the regulators, the Legal Services Board and the regulated communities to uphold the economic crime agenda.

The noble Lord, Lord Vaux, also referenced the Institute of Chartered Accountants in England and Wales. Amendment 91 also references that organisation and other relevant regulators of accountants. As I said, I am aware that several noble Lords have declared their association with that organisation.

As noble Lords will be aware, ICAEW is a professional and supervisory body for chartered accountants. Its work in areas regulated by law—for example, audit, anti-money laundering, local audit, investment business, insolvency and probate—is monitored by oversight bodies such as the Insolvency Service, the FCA, the Office for Professional Body Anti-Money Laundering Supervision, the Civil Aviation Authority and the Legal Services Board. ICAEW has been proactive in the industry fight against fraud, leading the sector in negotiating and delivering the Accountancy Fraud Sector Charter, published in 2021, and is an active member of the counter-fraud community, contributing to all levels of governance across the threat landscape. It is a co-signatory to the Economic Crime Plan and associated actions.

As I set out in our earlier debate, the offence introduced via the Government’s amendments covers fraud and false accounting, while keeping money-laundering responsibilities contained under the existing regulatory regime. That ensures that the offence is targeted, focused on offences most likely to be committed by corporations and where prevention can have the most impact and not duplicative of existing regimes.

I note the wider offence lists put forward under the noble Baroness’s amendment, but—as we debated at length earlier today—we are satisfied through discussions with law enforcement and prosecutors that all the priority offences have been included. There is a power in secondary legislation to update the list when required. We have also touched on the issue of the threshold in the government amendment that means it applies—at least initially—only to large organisations. As I set out earlier, this is to avoid disproportionate burdens on small and medium-sized enterprises and ensure our economy encourages people to open and grow businesses. Of course, we encourage small organisations to take steps to prevent fraud and there are, as I mentioned in an earlier group, existing powers to prosecute small organisations and their employees if they commit fraud, but we need to keep the total regulatory burden in check.

There have been cross-party calls for the Government’s failure to prevent fraud offence both in this House and in the other place, as well as across civil society. The Government have listened and introduced amendments. In addition to the legislative measures proposed, the Government continue to work closely with regulators and wider sectors to tackle fraud and set out the actions expected of industry. I am afraid that the Government therefore view these amendments as duplicative of measures already being taken forward—

[Lord Vaux of Harrowden (CB)]

I am a little confused, because we seem to be talking now about the previous amendments, where an associate of the body commits fraud with the intention to benefit the body, which is a very different thing to the amendments we are looking at at the moment. The situations we have been talking about—the scams, and so on—would not, as I think we established fairly clearly in debate on the first group, be covered by that. Will the Minister please address the issue of scams and what these amendments are trying to address, rather than the rather different offence that was created by the first group of amendments?

[Lord Sharpe of Epsom (Con)]

My Lords, I think I have already addressed that a little earlier when I was talking about the various codes that we are asking telecoms companies to sign up to via Ofcom. I am wrapping up now, so I am bringing it all together—or attempting to.

The Government therefore view these amendments as duplicative of measures already being taken forward and not achieving their intentions. I of course commit to read page 22, in answer to my noble friend, but I ask the noble Baroness, Lady Bowles, and my noble friend Lady Morgan not to press their amendments.

[Baroness Morgan of Cotes (Con)]

I thank my noble friend very much for what he said; I will read it very carefully. I wanted to wait for the end of his speech, but he mentioned a meeting that is being held on 9 May to bring together at least three pieces of legislation and, who knows, we might even have had the fraud strategy by that point and be able to talk about that. I suggest that he looks at that meeting the other way round and, as I suggested, go through the different types of fraud—they will not be exhaustive—and work out what the Government think the relevant legislation is tackling. Then we will be able to see what the gaps are. I think one of the gaps is exactly what the noble Lord, Lord Vaux, just said, which is where services are being used to perpetuate fraud that are definitely not caught by the Government’s proposed amendment. That would enable us to have a much better informed debate before and at Report about whether we will really use the opportunity of this Bill. I invite my mobile friend to say that he will ask officials to work that way round: looking at the frauds and then seeing what the Government have already proposed to tackle them.

[Lord Sharpe of Epsom]

My noble friend will be aware that this will be a cross-departmental meeting, and I have not seen the proposed agenda, but I will certainly take her comments back. I meant to say that the noble Lord, Lord Vaux, made reference to the technical meeting he had on the Online Safety Bill, and I obviously extend the offer of a similar meeting, if anyone else would like it.

Corruption

Lord Sharpe of Epsom Excerpts

Wednesday 26th April 2023 Lords Chamber

[Lord Hain]

To ask His Majesty’s Government what assessment they have made of the United Kingdom’s record in combating corruption.

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

My Lords, the Government are committed to the fight against corruption. Corruption and illicit finance undermine national security and global stability. They impede global prosperity and erode trust in institutions while harming their victims. Since 2010, the Government have led international efforts to combat corruption through the delivery of the United Kingdom Anti-corruption Strategy 2017-2022, and we will continue to build on this with the new anti- corruption strategy that is currently under development.

[Lord Hain (Lab)]

My Lords, in that case, why has the UK slumped to its lowest ever score in Transparency International’s latest global corruption index, falling sharply to number 73—a 10-place tumble from eighth to 18th over the last 10 years in its global rankings? Is it because of a collapse in government standards, or the recent scandalous government reversal of their previous admirable decision to suspend Bain & Company from UK Government contracts after Bain was found by a judicial commission to have been up to its neck in state corruption in South Africa? Are corruption and money laundering not now a real UK problem, and should not Ministers be utterly ashamed?

[Lord Sharpe of Epsom (Con)]

My Lords, I cannot improve on the words of the Prime Minister when he was asked about this subject. He pointed out that there has been

“widespread recognition and support for the UK’s approach to transparency and tackling corruption. … the most recent report from the Financial Action Task Force commended the UK for the steps it had taken”,—[Official Report, Commons, 1/2/23; col. 334.]

and those steps are significant. Obviously, a number of Bills going through your Lordships’ House and the other place at the moment deal with some of these issues. As for the specific question about Bain, I note that Bain has agreed to a period of rigorous monitoring for a minimum of two years during which its continuing compliance will be assessed. The UK arm of Bain has agreed that it will engage further with the Cabinet Office to provide evidence that its governance, organisation and internal processes are now working. I could go on, but I think that is enough.

[Lord Wallace of Saltaire (LD)]

My Lords, would it not be evidence of the seriousness of the Government in combating corruption if the agencies concerned with it were adequately staffed? Is not one of the fundamental problems of the Government’s approach to corruption and economic crime that the NCA and other agencies concerned with it are inadequately staffed to deal with this?

[Lord Sharpe of Epsom (Con)]

My Lords, the noble Lord will be aware that this subject has come up in discussion during the passage of the Economic Crime and Corporate Transparency Bill. The agencies are adequately resourced. The funding for the SFO is rising —gradually, but it is rising—and I know that people are being recruited into these operations.

[Lord Marlesford (Con)]

My Lords, can I remind my noble friend that there are in Hansard two Written Answers which list over 50 Home Office officials between 2005 and 2018 who were convicted of misconduct in a public office? Many of them were sent to prison—several for very long terms. Is this not a most disturbing figure?

[Lord Sharpe of Epsom (Con)]

It is a most disturbing figure. Public sector integrity is certainly a feature of the Transparency International downgrade of the UK, but that is being dealt with, as noble Lords will be aware.

[Baroness Chakrabarti (Lab)]

My Lords, it has been well over a year, as many of us remember, since the noble Lord, Lord Agnew, resigned in this House from that Dispatch Box. Noble Lords will remember that he did it over a government decision to write off £4.3 billion in fraudulent Covid loans. He went on to accuse the Government

“of arrogance, indolence and ignorance”—[Official Report, 24/1/22; col. 21.]

in dealing with fraud. What has improved since then?

[Lord Sharpe of Epsom (Con)]

My Lords, the noble Baroness will be aware that the publication of the new fraud strategy is imminent. As I referred to in my earlier Answer, the second iteration of the anti-corruption strategy is also being worked through at this moment. There will be a lot more to say on that in the very near future.

[Lord Vaux of Harrowden (CB)]

My Lords, may I push the Minister on resources, as 41% of all crime against the individual is fraud and 1% of law enforcement resources are applied to it? Is that really sufficient?

[Lord Sharpe of Epsom (Con)]

When put in numbers like that, no. However, as I have just said, the fraud strategy is due to be published next week. That is a multiagency approach to tackling fraud. It will be outlined in considerable detail.

[Lord Coaker (Lab)]

My Lords, can the Minister answer the question put by my noble friend Lord Hain? Why has the UK slumped to its lowest ever score in Transparency International’s global corruption index? How has that happened and what are the Government going to do about it?

[Lord Sharpe of Epsom (Con)]

I think I have already said what the Government are going to do about it. In terms of analysis, the data indicated that the drop is likely due to two factors. The first is heightened criticism on issues of public sector integrity, which I have already dealt with. The second is criticism of the public procurement processes during Covid. As the noble Lord will be aware, the Procurement Bill currently on Report is dealing with many of those issues. I could go on at significant length about PPE and so on if he wishes.

[Lord Pickles (Con)]

My Lords, one of the key parts of the Government’s anti-corruption policy was the register of beneficial ownership. Could my noble friend give us an update on how it is being brought in? It seems that it is still possible to hide true ownership behind companies and third parties.

[Lord Sharpe of Epsom (Con)]

I am unable to answer that question. I will have to write to my noble friend.

[Lord Allan of Hallam (LD)]

Further to the question from the noble Lord, Lord Pickles, a key element in fighting corruption is transparency around offshore companies which own property in the UK. Could the Minister supply to the House two figures? What is the number of offshore companies which own property in the UK, and what is the number of those which have failed to register their ownership details with Companies House, as they should have done by the end of January 2023?

[Lord Sharpe of Epsom (Con)]

Again, I am afraid I am going to have to write on this.