Motion A Moved by Lord Sharpe of Epsom That this House do agree
with the Commons in their Amendment 151A and do not insist on its
Amendments 151B and 151C in lieu to which the Commons have
disagreed for their Reason 151D. 151D: Because it would be
disproportionate to apply the new clause inserted by Lords
Amendment 151 to bodies other than large organisations. The
Parliamentary Under-Secretary of State, Home Office (Lord Sharpe of
Epsom) (Con) My Lords,...Request free
trial
Motion A
Moved by
That this House do agree with the Commons in their Amendment 151A
and do not insist on its Amendments 151B and 151C in lieu to
which the Commons have disagreed for their Reason 151D.
151D: Because it would be disproportionate to apply the new
clause inserted by Lords Amendment 151 to bodies other than large
organisations.
The Parliamentary Under-Secretary of State, Home Office () (Con)
My Lords, in moving Motion A I will also speak to Motions B and
B1.
It is a great pleasure to bring this Bill before your Lordships’
House once more. I hope it is for the last time, as I know that
Companies House and law enforcement agencies are keen to use the
important changes made by it. Without it, we will not be able to
fund the recruitment of hundreds of new staff at Companies House
to deliver the transformation that we all agree is needed. We
will not be able to tackle SLAPPs, fraudsters will continue to be
able to take advantage of vulnerable victims via fake companies,
and we will not be able to go after the assets of criminals as
effectively as we might. I could go on.
The Government have listened carefully to noble Lords during the
Bill’s passage and have already moved significantly. This is an
extensive and comprehensive Bill, standing now at nearly 400
pages of drafting, and it is imperative that we see it become
statute. Noble Lords will of course be aware that the end of the
Session is fast approaching.
I start by discussing Motion A, which seeks to reinsert the SME
exemption for the failure to prevent fraud offence. I am grateful
that my noble and learned friend has moved closer yet again to
the Government’s position by exempting microentities and smaller
organisations from the offence. However, I am afraid that the
burdens that this would place on medium-sized enterprises are
simply too great, and so the Government cannot and will not
support any lowering of the SME threshold that we have
introduced. The threshold proposed by my noble and learned friend
would cost medium-sized
enterprises £300 million more in one-off costs and nearly £40
million more in annual recurring costs.
However, it is not just about these costs—although they fully
justify the Government’s position in their own right.
Undoubtedly, a chilling effect also occurs with the imposition of
a criminal offence. I have spoken before about my experience of
working in the City. I know from that experience that, when this
type of new regulation shows up, a whole industry of lawyers,
consultants and accountants cranks into action, telling
businesses what they can and cannot do. All this distracts
businesses from what they should be doing, which is creating jobs
and growing their businesses, which benefits the whole economy.
As , the Member for North West Hampshire, put it in the
House of Commons, the SME threshold is
“a level at which companies can absorb the step up in
responsibility, and without a disproportionate amount of
cost”.—[Official Report, Commons, 13/9/23; col. 947.]
I therefore urge noble Lords to support the government Motion to
reinsert the SME threshold, to ensure that we take a
proportionate approach and do not impose unnecessary measures
that will curb our economic growth.
I now move on to discuss government Motion B, focusing on the
amendment tabled by the noble Lord, , on cost protection in civil
recovery cases. The Government remain of the view that this type
of amendment will be a significant departure from the loser pays
principle, and therefore not something that should be rushed into
without careful consideration. However, that is not to say that
this type of amendment is necessarily a bad idea, and I am
grateful to the noble Lord for bringing it to our attention. With
that being said, it would not be responsible for us to rush into
making such a significant change at the tail-end of a Bill
without full consideration by the Government and commensurate
scrutiny by Parliament. That is why we previously added a
statutory commitment in the Bill to review the payment of costs
in civil recovery cases in England and Wales by enforcement
authorities, and to publish a report on the findings and to lay
it before Parliament within 12 months. I hope noble Lords will
agree that this is the responsible approach to take and therefore
support government Motion B.
In conclusion, I encourage noble Lords to agree with the
Government’s position in these two areas. It is vital that we
achieve Royal Assent without delay so that we can proceed to
implement the important reforms in this Bill as quickly as
possible. I beg to move.
Motion A1 (as an amendment to Motion A)
Moved by
Leave out from “House” to end and insert “do insist on its
disagreement with the Commons in their Amendment 151A, do not
insist on its Amendments 151B and 151C, to which the Commons have
disagreed for their Reason 151D, and do propose Amendments 151E
and 151F in lieu—
151E: As an amendment to Lords Amendment 151, in subsection (1),
after first “body” insert “which is not a small organisation or
which is a large organisation (see sections (Section (Failure to
prevent fraud): small organisations), (Section (Failure to
prevent fraud): large organisations) and (Large organisations:
parent undertakings))”
151F: After Clause 180, insert the following new Clause—
“Section (Failure to prevent fraud): small organisations
(1) For the purposes of section (Failure to prevent fraud)(1) a
relevant body is a “small 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
Not more than £10.2 million
Balance sheet total
Not more than £5.1 million
Number of employees
Not more than 50.(2) For a period that is a relevant body’s
financial year but not in fact a year, the figure for turnover
must be proportionately adjusted.
(3) In subsection (1) the “number of employees” means the average
number of persons employed by the relevant body in year P,
determined as follows—
(a) find for each month in year P the number of persons employed
under contracts of service by the relevant body in that month
(whether throughout the month or not),
(b) add together the monthly totals, and
(c) divide by the number of months in year P.
(4) In this section—
“balance sheet total”, in relation to a relevant body and a
financial year—
(a) means the aggregate of the amounts shown as assets in its
balance sheet at the end of the financial year, or
(b) where the body has no balance sheet for the financial year,
has a corresponding meaning;
“turnover”—
(a) in relation to a UK company, has the same meaning as in Part
15 of the Companies Act 2006 (see section 474 of that Act);
(b) in relation to any other relevant body, has a corresponding
meaning;
“year of the fraud offence” is to be interpreted in accordance
with section (Failure to prevent fraud)(1).
(5) The Secretary of State may by regulations modify this section
(other than this subsection and subsections (6) and (8)) for the
purpose of altering the meaning of “small 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 not a small organisation or” in
section (Failure to prevent fraud)(1), and
(b) make any modifications of this section (other than this
subsection) that the Secretary of State thinks appropriate in
consequence of provision made under paragraph (a).
(7) Before making regulations under subsection (5) or (6) the
Secretary of State must consult—
(a) the Scottish Ministers, and
(b) the Department of Justice in Northern Ireland.
(8) Regulations under subsection (5) or (6) may make
consequential amendments of section (Failure to prevent fraud:
minor definitions).””
(Con)
My Lords, the cracked record is up and at it yet again, but I
make no apology because, although I fully understand the
timetabling difficulties that the Government face—namely, that
they would like to see this Bill receive Royal Assent before the
close of the Session—I think we all ought to agree that it is
better that, if we are to give this Bill a route through to Royal
Assent, it should be a good Bill.
Most of the Bill is good, but this particular provision in
relation to failure to prevent fraud offences falls down. I will
not make the same speech that I made on 11 September, nor the
same speech that I made in July, nor the same speech that I made
in the spring, nor the same speech that I have made probably half
a dozen times since I came into this House and probably a dozen
times when I was a Member of the other place. Suffice to say that
nothing I have heard from the Government, and nothing I have
heard from those representing the Government in the other place,
has come anywhere near meeting the case that has to be met.
First, it seems to me as a matter of straightforward principle
that the criminal law should be uniform. It should apply to all
in exactly the same way, and any defence that is available to a
criminal offence should also be the same and applied to all
uniformly. Of course, it will be up to the prosecuting
authorities to consider the evidence and whether it is in the
public interest to bring a prosecution on the evidence available,
but we should not leave this Bill in a position where there is a
different failure to prevent fraud offence for most companies
than there is for 0.5% of the corporate and partnership
economy.
I add this. There should be a form of consistency between each of
the Government’s Bills dealing with failure to prevent. The
Bribery Act 2010 has a failure to prevent bribery offence. The
Criminal Finances Act 2017 has a failure to prevent the
facilitation of tax evasion offences. Neither of those two
failure to prevent offences is limited in its scope, in so far as
neither of those Acts of Parliament provide an exemption for
anybody, still less for 99.5% of the corporate economy. For some
extraordinary reason which is yet to be explained this Bill
provides that only 0.5% of the corporate and partnership economy
should remain liable for any failure to prevent fraud offences. I
have yet to find an answer.
I read in Hansard the House of Commons debate of 11 September
which overturned my successful amendment. My right honourable
friend Mr said that, clearly, I do not understand anything
since I have never run a business. Well, he is wrong about that,
quite apart from being offensive, because I have run my own
business as a self-employed barrister for nearly 50 years.
Furthermore, I have been a head of a set of chambers, which is,
if I may say so, quite a respectable business to run.
Noble Lords
Hear, hear!
4.00pm
(Con)
If one wants to learn anything from the speeches made in the
House of Commons, I suggest that my noble friends on the Front
Bench— and other noble Lords if they have a moment—read those of
Sir and Sir , two former law officers.
They agree with my remarks of 11 September and find it puzzling
that their own Government, a Government who are in favour of
producing cogent and cohesive criminal law, have come up with
this dog’s dinner.
I have done my best to be accommodating. It is not an accusation
that is often levelled at me, but on this occasion, I think that
it can be, justly. I have done my best to meet some of the
Government’s less organised thinking. As I said at the outset, as
a matter of principle. I cannot understand why there should be an
exemption for anyone from the proposed criminal law, just as
there is not under the Bribery Act and the Criminal Finances Act.
However, to make life easier for the Government, on the last
occasion I suggested that microbusinesses should be exempted from
the failure to prevent fraud offences provision. I abandoned my
provisions relating to the failure to prevent money laundering.
The Government did not find that attractive, even though I tried
to explain my abandoning of the principle on the basis that just
as we have an age limit for criminal responsibility—10—we could
perhaps also, by a rather clumsy analogy, exempt microbusinesses
from criminal responsibility under the failure to prevent
provision. That did not seem to go down very well with the
Government—certainly not with Mr .
I have now moved a little further towards the Government. You may
say, “Well, that’s a bit wet. If you’ve got any principles, why
not stick to them?” Well, okay, accuse me of being wet, but I am
doing my best to help the Government get out of an unnecessarily
sticky hole. I have amended my proposal so that rather than
microbusinesses being exempted, “small” businesses should be
exempted—I define a small business on page 5 of the amendment
paper, which states that, for the purposes of this provision,
“a relevant body is a ‘small organisation’ only if the body
satisfied two or more of the following conditions in the
financial year of the body … that precedes the year of the fraud
offence”.
Those conditions are that the turnover of the business should
be
“Not more than £10.2 million”,
the balance sheet should be
“Not more than £5.1 million”
and the number of employees should be “Not more than 50”.
In speaking against my own case, I rather wish that I had not put
that down, but I have because I am trying to assist my noble
friend on the Front Bench in getting his Bill enacted before the
end of this Session.
I repeat that the criminal law should be uniform. Defences to the
criminal law should be uniform. We should not have exemptions
based on the size of the business. The Theft Act applies to all
suspects—I am seeing whether my noble friend still enjoys my old
joke about the six feet six burglar—regardless of whether they
are six feet six or five feet six. We do not exempt people on the
basis that they are small people or do not fit a particular
height, so why are we doing it here? I have yet to find out. I am
afraid that unless the Government move a little closer to me, I
will invite your Lordships to join me in the Division Lobby.
(Non-Afl)
My Lords, I shall speak to my Motion B1, as an amendment to
Motion B, which is being debated within this group. It would
“leave out from ‘House’ to end and insert ‘do insist on its
disagreement with the Commons in their Amendment 161A, do not
insist on its Amendment 161B, to which the Commons have disagreed
for their Reason 161C, and do propose Amendment 161D in
lieu’”.
That is very clear.
We return to what has been described as a cost-capping amendment.
Since this is not the first time that we have had the debate, I
will try to be brief. This Bill has been a welcome, if late,
addition to the government agencies in their fight to combat
fraud. The scrutiny of the Bill through your Lordships’ House has
been thorough and constructive. It has also been non-party
political. I do not think that either the noble and learned Lord,
, or I would consider ourselves
to be natural rebels.
All noble Lords have participated in this debate—and I very much
include the Ministers in this—with a common purpose: to make this
legislation as effective as it can be. Two themes emerged during
the many debates. The first was the scale of the problem. The
Government estimate, for example, that £100 billion was laundered
through the United Kingdom last year, and yet under the Proceeds
of Crime Act assets of only £345 million were recovered: that is
0.3%. The second theme was the frequent imbalance that exists
between the resources available to enforcement agencies and those
of the fraudsters, who may well employ expensive lawyers and have
significant resources to enable them to do so. This modest
amendment tries to do a little to restore that balance. I would
have liked the enforcement agencies to have had complete
protection against costs orders in the event that they lost a
recovery claim, but in the course of ping-pong I have had to
compromise somewhat, hence the form of the current amendment
before your Lordships’ House.
The amendment does not prevent a judge from doing what is fair on
costs in any particular case, but it is a nudge towards him or
her to take into account the reasonableness of the agency
bringing proceedings at all and the potential impact on its
ability to carry out its functions if left with a substantial
costs order. I struggle to understand the Government’s objection
to this amendment and its predecessors; they seem, with respect,
to be adopting a somewhat tender approach to fraudsters.
There is a clear precedent for this sort of amendment: when your
Lordships’ House introduced a provision concerning the
much-underused unexplained wealth orders. If it loses a case, the
enforcement authority will have to pay costs only if it has acted
unreasonably. As to the objection that it offends the “loser
pays” principle, that is a misconceived argument. Judges
regularly, in ordinary cases, make orders that each side bear
their own costs, or make issue-based costs orders, or other
orders which reflect the justice of the individual case.
Parliament has legislated in ways that depart from this so-called
principle: for example, QOCS—that is Qualified One-Way Costs
Shifting—in personal injury litigation; or by Section 40 of the
Crime and Courts Act; or in relation to unexplained wealth
orders. This amendment is intended to reduce the possibility of
an agency saying to itself, “We cannot afford the risk to the
budget if we lose a case, even when we’ve got good evidence to
bring it”.
Spotlight on Corruption suggests that a number of cases are in
the pipeline which bear costs risks. These are said to include
over 60 cases being reviewed by one agency, and close to £1
billion in assets frozen by an enforcement body.
Another advantage to this amendment is that those defendants or
respondents to an application who defend these cases will know
that, even if their legal strategy prevails, they may not recover
their costs. This may mean that they are keener to reach a
compromise.
The amendment has the support of all those bodies that are
concerned with anti-corruption. Incidentally, it also has the
support of Bill Browder, who regards it as one of the most
significant potential improvements to the Bill. Let us please not
kick this into touch and have yet another report, which is the
Government’s suggestion. If necessary, I will move Motion B1 and
test the opinion of the House.
(Con)
My Lords, I support both Motion A1 and Motion B1. I turn first to
my noble and learned friend Lord Garnier’s Motion and offer three
reasons why I believe the Minister is completely wrong.
First, the smallest SMEs include some of the most unscrupulous
enablers. Take estate agents, for example: they are a conduit of
bad money into this country from all over the world. The gaps
that the Minister is proposing to leave in the Bill will ensure
that this continues. I have seen one case, for which I had to
sign an NDA, of an individual who spent £150 million buying
property but is apparently allowed to take only $12,000 a year
out of the country. How did he manage that? That is a perfectly
good example and no doubt we will hear more like it.
Secondly, on this set of rules, I offer the Minister an example.
We do not say to the manufacturers of small cars that they do not
need seat belts and that for some reason they are exempted. That
would be an absolute nonsense and the same applies here. He
mentioned costs—£300 million and £40 million—but they are
entirely specious. We have seen no proper analysis of these
figures; they are just waved around as a convenient excuse not to
do something.
My last reason is that these smaller businesses need to be most
alert to fraud. A failure to prevent helps them to make sure that
their own systems are able to face these risks. We know that 40%
of crime in this country is economic crime, but we deploy less
than 1% of our resources on dealing with it. Surely smaller
businesses should be equipped to know when they are dealing with
crooks. I will have to support my noble and learned friend if the matter is put to a
vote.
In relation to the Motion in the name of the noble Lord, , we again pursued this
relentlessly for six months. Bill Browder said to me on several
occasions that, if this Bill is to go through, we must make sure
that we have some cost capping in it. It is a war of very unequal
proportions. We know that the agencies have small budgets and
that they have to go cap in hand to the Treasury if they need
more money, which is never given. They even have to return the
costs they recover to the Treasury. All this is doing is sending
a message to these bad actors that, if they take on this kind of
behaviour, they will have significant risks. We have amended this
on several occasions to give more discretion to the courts to
ensure that, if an agency overreacts and behaves rapaciously or
capriciously against individuals, those individuals are not
penalised.
If we are serious about dealing with the tidal wave of economic
crime that is coming to this country, the Minister will give us
the assurance that this is being dealt with. If not, I will have
to support the noble Lord, , in his Division.
of Tredegar (Con)
My Lords, we have heard two different reasons for the proposed
Motion from the noble Lord, . He said that it was to give
the courts a gentle nudge, but my noble friend Lord Agnew said
that it would give fraudsters a significant warning that they
might not get their costs. The same words cannot do both. The
problem lies in the amendment being entirely unnecessary.
The previous version of the amendment said:
“The court should normally make an order that any costs of
proceedings … are payable by an enforcement authority … unless it
would not be in the interests of justice”.
We now have a list of factors—proposed new paragraphs (a) to
(d)—but a court would always take those factors into account in
its general discretion to make an appropriate costs order in a
particular case.
My concern with this list is that it appears to be exhaustive and
therefore does not include, for example, the result of the case
or the effect on the successful party of not getting the legal
costs which he has expended. I declare an interest as a lawyer,
although not an expensive one in the category identified by the
noble Lord. I therefore respectfully suggest that this amendment
is entirely unnecessary. It reduces the discretion that we
generally give the courts on matters of costs and omits factors
that the courts should take into account in particular cases when
considering costs. Therefore, I suggest that the House leaves
this well alone and does not accept the amendment.
4.15pm
(LD)
My Lords, I will talk a little about the role of the House as a
revising Chamber and the legislative process. I am not an expert
on the legalities of combating fraud, although I am well aware of
the international dimensions of economic crime as someone who
worked in the international sphere.
We have had a thorough committee process which was largely
non-partisan; indeed, the way this House has treated the Bill has
been almost entirely so. I have learned a great deal from a
number of former Conservative Ministers and Cross-Benchers on the
Bill, and I am interested to hear that two other former
Conservative Ministers in the House of Commons supported the
approach of these two Motions.
We are a revising Chamber, and the parliamentary process should
be one in which reasoned amendments are taken into account by the
Government and, where the Government are not entirely sure of
their ground, compromises are made. The role of a Lords Minister
is partly to act as a mediator between the reasoned arguments in
this Chamber and the insistence of Cabinet Ministers that
whatever they had thought of in the first place should absolutely
go through unchanged. I have a strong memory of talking to
Cabinet Ministers when I was a Lords Minister about why perhaps
they might not wish to insist on their full original, because the
reasoned arguments made in the Lords were sufficiently
persuasive. That is the process that should be taken on. This is
not an attempt to delay the Bill further: we are all committed to
it going through. We are also committed to future-proofing it, so
that it does not have to be amended, and to producing a Bill that
commands as wide a consensus of support as possible.
I remind the Minister that we have not followed that for some
Bills we have seen in recent Sessions. I am sure that he is well
aware of the issue of party finance, which came up in the
Elections Act and the National Security Act. He was sufficiently
firm in resisting some of our arguments as to accuse me at one
point of spreading rumours about a non-problem. I have now
learned that the Leader of the Commons, , has just written to the
Security Minister to ask for the assistance of the intelligence
agencies in investigating the origins of donations to political
parties from foreign sources, so clearly there is now recognition
within government that there is a real problem. There are other
aspects of that Elections Act, particularly the insistence on a
strategy statement from the Secretary of State, which the
Government also appear to have had second thoughts on. Sadly,
whoever become the next Government will have to introduce another
elections Bill to put right some of the things that this House
wished to amend but that the Government resisted.
Here we are with a Bill that has been improved and carefully
scrutinised, and on which I, certainly, am persuaded by having
listened at length and in succession to the arguments made by
former Conservative Ministers wanting simply to improve the Bill
to improve the fight against international fraud and economic
crime.
Having been persuaded by that, I and the team on these Benches
will recommend that Members of the Liberal Democrat group in the
House support both the noble and learned Lord and the noble Lord
in pressing their amendments, if they wish to do so, because we
believe in a legislative process in which this House has a role
to play, in carefully scrutinising and improving Bills, and
making sure that when a Bill becomes an Act, it lasts for some
time, because it commands a widespread consensus.
(Lab)
My Lords, I listened carefully to the case that the Minister
advanced against these amendments. The core of that case seemed
to be that the cost of a company actually responding to this
legislation would make the company less efficient, and that it
should be concentrating, as he said, on increasing its production
and activities, and not be bothered with issues such as fraud,
perhaps. What was peculiar about the Minister’s argument was that
it was an argument which could be placed against any regulation
whatever. It could be placed against the need, as has been
commented already, to have seatbelts in cars. That increased the
costs of production of the vehicle and, indeed, the cost of the
vehicle. It could be argued that most financial regulation, which
seeks to increase the stability and respectability of the
financial system in this country, increases costs. Yes, it does,
but the benefit far exceeds the cost.
If the Minister feels that the amendment of the noble and learned
Lord, , increases costs and damages
production, why is he accepting it at all, even for larger
companies? It seems to me that this is an empty argument. The
Minister has not produced any data or argument for the
cost-benefit trade-off on which he has rested his entire case. In
fact, I think he has no case at all.
(Lab)
My Lords, I start by echoing something that the noble Lord, Lord
Wallace, said: overall, we all believe that this is a good Bill.
It is a step forward, and we welcome the changes that the
Government have made over a number of months to improve it, and
that they have listened to the various points that have been
made. It would be churlish not to say that to the Minister at the
outset, but that does not alter the fact that the amendments
tabled by the noble and learned Lord, , and the noble Lord, , seek to address two omissions
where, even at this late stage, the Government could act to
further improve the Bill. I say to both that should they choose
to test the opinion of the House, we certainly will support them
in the Lobbies to do that.
I will not repeat the arguments. It was interesting; sometimes,
when you are constrained by time, the argument distils down to
its essence. I think that what the noble and learned Lord, , said, supported by the noble
Lords, Lord Agnew, and Lord Wallace, really
summed it up with respect to his amendment. As he said, the
failure to prevent bribery offence applies to everyone; there is
no opt-out or exemption. The Government do not think that that is
too burdensome for anyone. As he also said, no company is too
small to be exempted from the failure to prevent tax evasion
offence. But on this particular emphasis, the failure to prevent
fraud, the Government come forward and say: “We need to protect a
certain number of businesses”.
The noble and learned Lord, , has moved amendment after
amendment to try to come closer to the Government’s position. As
the noble Lords, Lord Agnew and , have just said, if you took
that to its extreme, you would impose no costs on business at
all, and they used the seatbelt argument. So we are very happy to
support the amendment of the noble and learned Lord, , should he choose to test the
opinion of the House.
I shall pick out one aspect of the amendment of the noble Lord,
. It was a feature of all our
debates and discussions that we wanted law enforcement to take
tougher action against those who committed fraud. We believed
that the state could and should take more action, that the amount
of money lost with respect to fraud was enormous and that we need
to do something about it. What I picked out from what the noble
Lord said was about reducing the possibility of action not being
taken by law enforcement agencies because they were frightened of
the possibility of costs —not on the merits of the case that they
might seek to pursue but simply because they were frightened that
they may incur costs. As such, both amendments are simple but
important ones that would do what this House, and I believe the
public, expect Parliament to do, which is to give as much power
as possible within the Bill to tackle the problem of fraud, which
is what we all want.
(Con)
My Lords, I thank all noble Lords who have contributed to this
relatively short debate. Like my noble and learned friend , I am in danger of sounding
like a cracked record on this subject, so I will keep my remarks
brief. I reassure my noble and learned friend that I still find
his joke funny and I am glad he keeps making it. I thank him for
being incredibly gracious although we continue to disagree on
these matters. I have to say I do not believe the Bill is a dog’s
dinner or that these arguments are dog’s-dinnery. We are not in a
sticky hole on this; it is a difference of opinion, and I will
make a couple of the arguments that I have rehearsed before in
support of that.
I shall deal with my noble and learned friend’s amendment by
first reminding him and the House that this may be a relatively
small number of companies but, as I have said many times before
from this Dispatch Box, they account for 50% of economic output
in this country. The heart of the argument comes down to why
there is a threshold for this offence but not for the offences of
failing to prevent bribery or the criminal facilitation of tax
evasion. As I have reminded the House on numerous occasions, the
Law Commission has identified the disparity here: it is easier to
prosecute smaller organisations under the current law, which this
failure to prevent offence will address. The new offence is less
necessary for smaller firms, where it is easier to prosecute
individuals and businesses for the substantive fraud offence. The
Government therefore believe it would be disproportionate to
impose the same burden on them. The fact is that this is not an
exemption from the law; the law applies in a different way to
these smaller companies, as we have tried to explain on a number
of occasions. I think I will leave that there.
On Motion B1 in the name of the noble Lord, , I do not think that this
represents a tender approach to fraudsters. As we have said and
made the case on a number of occasions, fundamental changes are
being proposed here, and the review that we have proposed seems
like a fair way of assessing precisely the implications of making
those changes.
I thank my noble friend for highlighting some of the
complexities in this area in his particularly acute legal way,
which I am not equipped to follow. However, I can perhaps answer
the question about the difference in introducing the cost
protection amendment for civil recovery compared with unexplained
wealth orders. This issue has come up in previous debates as
well. The fact is that the difference between the changes made to
the unexplained wealth order regime by the first Economic Crime
Act last year and what is proposed in this amendment is that
unexplained wealth orders are an investigatory tool that do not
directly result in the permanent deprivation of assets, whereas
the civil recovery cases covered by the amendment could do so.
There could therefore be a host of serious unintended
consequences of such a change to the wider civil recovery regime,
so the Government cannot support the amendment. A review is the
appropriate way to look at this issue. As I tried to make clear
in my opening remarks, that may well be a very good idea, but we
would like to be convinced of that and to do the work before we
actually accept it.
I thank the noble Lord, , for generously accepting that
we have made significant improvements to the Bill through its
passage. I say to the noble Lord, , that we have engaged
extensively with all noble Lords in this House on the Bill. I
thank him for his explanation of how he believes a revising
Chamber should operate. The fact is that we are not sufficiently
persuaded of the arguments against this, so there is a genuine
difference of opinion. I do not think the noble Lord would mean
to imply that this House should necessarily have a veto where
there is such a difference of opinion. I think that is a fairly
straightforward argument and a perfectly respectable one.
Throughout the passage of this Bill, the Government have worked
hard to ensure the right balance between tackling economic crime
and ensuring that the UK remains a place where law-abiding
businesses can flourish without unnecessary burdens. The Motions
tabled by the Government today achieve that balanced and
proportionate approach. I therefore urge all noble Lords to
support them.
(Con)
My Lords, I will make one point in total agreement with my noble
friend the Minister—we are not having a row, we are having an
argument. He and I have a different view about the merits of our
respective arguments. If the House listens to no other speeches,
and if it wishes to forget mine, I urge noble Lords to remember
what the noble Lord, , and my noble friend Lord
Agnew said. From both sides of this House, they perfectly summed
up the lacuna in the Government’s case.
I thank all noble Lords who have taken part in this short debate.
Despite the fact that this is not an argument about party
politics—it has nothing whatever to do with the Salisbury
convention—I regret that I am insufficiently persuaded by my
noble friend the Minister that he has quite got the point. I must
therefore ask the House if it will join me in agreeing with my
Motion by testing the opinion of the House.
[Division 1
Division on Motion A1
Content
245
Not Content
204
Motion A1 agreed.
Held on 18 October 2023 at
4.31pm](/Lords/2023-10-18/division/421789C2-5F82-488B-9CB0-E512514CAC6C/LordsChamber?outputType=Names)
4.42pm
Motion B
Moved by
That this House do agree with the Commons in their Amendment 161A
in lieu and do not insist on its Amendment 161B in lieu to which
the Commons have disagreed for their Reason 161C.
161A: Page 172, line 44, at end insert the following new
Clause—
“Report on costs orders for proceedings for civil recovery
Report on costs orders for proceedings for civil recovery
(1) The Secretary of State must assess whether it would be
appropriate to restrict the court’s power to order that the costs
of proceedings under Chapter 2 of Part 5 of the Proceeds of Crime
Act 2002 are payable by an enforcement authority and, if so,
how.
(2) In carrying out the assessment, the Secretary of State must
consult such persons as the Secretary of State considers
appropriate.
(3) The Secretary of State must publish and lay before Parliament
a report on the outcome of the assessment by the end of the
period of 12 months beginning with the day on which this Act is
passed.
(4) In this section “the court” means the High Court in England
and Wales.”
161C: Because the Lords Amendment would alter the financial
arrangements made by the Commons, and the Commons do not offer
any further Reason, trusting that this Reason may be deemed
sufficient.
Motion B1 (as an amendment to Motion B)
Moved by
Leave out from “House” to end and insert “do insist on its
disagreement with the Commons in their Amendment 161A, do not
insist on its Amendment 161B, to which the Commons have disagreed
for their Reason 161C, and do propose Amendment 161D in lieu—
161D: After Clause 187, insert the following new Clause—
“Civil recovery of proceeds of crime: costs of proceedings
Civil recovery: costs of proceedings
After section 316 of the Proceeds of Crime Act 2002 insert—
“316A Costs orders
(1) This section applies to proceedings brought by an enforcement
authority under Part 5 of the Proceeds of Crime Act 2002 where
the property in respect of which the proceedings have been
brought has been obtained through economic crime.
(2) When assessing what order to make in relation to the costs of
proceedings, the court should take into account—
(a) the merits of the case,
(b) whether the enforcement authority acted reasonably in
bringing proceedings,
(c) whether costs were reasonably incurred by any party to the
proceedings, and
(d) the impact of any order on—
(i) the enforcement authority, and its ability to carry out its
enforcement functions, and
(ii) any other party to the proceedings.”””
(Non-Afl)
My Lords, I will not amplify what has already been said. I am
grateful to all noble Lords, including the Minister, for engaging
in this debate. He said that it was not a bad amendment, which
was kind of him; I would say that it is an amendment that this
House, for the reasons that I have already given, should welcome.
It is an improvement to the Bill and I beg to test the opinion of
the House.
[Division 2
Division on Motion B1
Content
245
Not Content
209
Motion B1 agreed.
Held on 18 October 2023 at
4.43pm](/Lords/2023-10-18/division/5A8BDADF-99CE-48FF-9AD6-21DC56A34B59/LordsChamber?outputType=Names)
|
