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House of Commons Hansard
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General Committees
05 December 2017

Delegated Legislation Committee

Draft Scottish Banknote (Designation of Authorised Bank) Regulations 2017

The Committee consisted of the following Members:

Chair: Mr Peter Bone

† Blackman, Kirsty (Aberdeen North) (SNP)

† Bowie, Andrew (West Aberdeenshire and Kincardine) (Con)

Bradshaw, Mr Ben (Exeter) (Lab)

† Clark, Colin (Gordon) (Con)

† Eagle, Maria (Garston and Halewood) (Lab)

† Fernandes, Suella (Fareham) (Con)

† Hardy, Emma (Kingston upon Hull West and Hessle) (Lab)

† Harrison, Trudy (Copeland) (Con)

† Jones, Andrew (Exchequer Secretary to the Treasury)

Lee, Ms Karen (Lincoln) (Lab)

† Lopresti, Jack (Filton and Bradley Stoke) (Con)

McGovern, Alison (Wirral South) (Lab)

† Reynolds, Jonathan (Stalybridge and Hyde) (Lab/Co-op)

† Ross, Douglas (Moray) (Con)

† Smith, Jeff (Manchester, Withington) (Lab)

† Stuart, Graham (Beverley and Holderness) (Con)

† Vara, Mr Shailesh (North West Cambridgeshire) (Con)

Sean Kinsey, Laura-Jane Tiley, Committee Clerks

† attended the Committee

Fourth Delegated Legislation Committee

Tuesday 5 December 2017

[Mr Peter Bone in the Chair]

Draft Scottish Banknote (Designation of Authorised Bank) Regulations 2017

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I beg to move,

That the Committee has considered the draft Scottish Banknote (Designation of Authorised Bank) Regulations 2017.

From 1 January 2019, the largest UK banks must separate core retail banking from investment banking. That ring-fencing is an important Government reform that will support financial stability and benefit the whole UK economy. As the Royal Bank of Scotland makes structural changes to prepare for ring-fencing, the draft regulations amend part 6 of the Banking Act 2009 and move the authority to issue banknotes in Scotland from one legal entity within the RBS banking group to another.

This is a technical change so that RBS can continue to issue banknotes. It has been agreed with RBS, the Bank of England and the Financial Conduct Authority, and it did not attract any controversy during consultation. If the draft regulations are passed, they will enable the issuance of banknotes in Scotland by RBS to continue. I commend the draft regulations to the Committee.

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Thank you for calling me to speak, Mr Bone. The Opposition are aware that these changes come about as a result of the ring-fencing of the banks. They are surely a positive sign that financial institutions are on track to implement ring-fencing regulations, which we hope will build a more sustainable and robust financial system, on schedule in 2018. We therefore have no objections to the changes, provided that the issuing party remains consistent in future.

I have no other matters to raise, but I will just say that I have always believed that, as we are one country and one United Kingdom—that is the will of everyone in each part of the UK—we should surely take steps to ensure that Scottish banknotes constitute legal tender not just in Scotland but in England, Wales and Northern Ireland. However, that is a little beyond the remit of the draft regulations.

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I am very glad that there is support across the House for these regulatory changes. It is important that currency continues to be issued. We have three issuing banks in Scotland and four in Northern Ireland, reflecting the financial history of those important parts of the United Kingdom. I hope that we can get the regulations in place without delaying Members too much further.

Question put and agreed to.

Committee rose.

Draft Criminal Justice (Scotland) Act 2016 (Consequential Provisions) Order 2017

The Committee consisted of the following Members:

Chair: Mrs Anne Main

† Costa, Alberto (South Leicestershire) (Con)

† Duguid, David (Banff and Buchan) (Con)

† Ellis, Michael (Deputy Leader of the House of Commons)

† Elmore, Chris (Ogmore) (Lab)

† Gaffney, Hugh (Coatbridge, Chryston and Bellshill) (Lab)

† Jack, Mr Alister (Dumfries and Galloway) (Con)

† Kerr, Stephen (Stirling) (Con)

† Killen, Gerard (Rutherglen and Hamilton West) (Lab/Co-op)

† Laird, Lesley (Kirkcaldy and Cowdenbeath) (Lab)

† McCarthy, Kerry (Bristol East) (Lab)

† McDonald, Stuart C. (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)

† Masterton, Paul (East Renfrewshire) (Con)

† Penrose, John (Weston-super-Mare) (Con)

Phillips, Jess (Birmingham, Yardley) (Lab)

† Reeves, Ellie (Lewisham West and Penge) (Lab)

† Shelbrooke, Alec (Elmet and Rothwell) (Con)

† Whittaker, Craig (Calder Valley) (Con)

Claire Cozens, Gail Bartlett, Committee Clerks

† attended the Committee

Seventh Delegated Legislation Committee

Tuesday 5 December 2017

[Mrs Anne Main in the Chair]

Draft Criminal Justice (Scotland) Act 2016 (Consequential Provisions) Order 2017

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I beg to move,

That the Committee has considered the draft Criminal Justice (Scotland) Act 2016 (Consequential Provisions) Order 2017.

The draft order was laid before the House on 13 September 2017. It will enable the full delivery of the policy set out in the Criminal Justice (Scotland) Act 2016, which was passed by the Scottish Parliament on 8 December 2015, with commencement now due on 25 January 2018.

The 2016 Act stems from a review of criminal justice in Scotland by the then Lord Justice Clerk, Lord Carloway, which reported in November 2011. The review, which arose from a decision of the UK Supreme Court that gave suspects a right to legal advice before questioning by police in Scotland, culminated in a series of recommendations aimed at modernising and enhancing the efficiency of the Scottish criminal justice system. Provisions of the Act developed from the review’s recommendations include reforms of arrest and custody laws, designed to provide flexibility for police in conducting investigations while ensuring fairness for suspects. The Act will build on 2010 reforms to allow suspects access to a lawyer regardless of whether they are to be interviewed by the police. It states specifically that the police have a duty not to deprive people of their liberty unnecessarily.

Many of the reforms that the 2016 Act will introduce give rise to the need to amend the law elsewhere in the United Kingdom, or to make provision in relation to Scotland where they apply to reserved matters. As neither activity is within the competence of the Scottish Parliament, the draft order is needed. It has been drafted using the UK Government’s powers under section 104 of the Scotland Act 1998 to make legislative changes that are

“necessary or expedient in consequence of…any Act of the Scottish Parliament”.

The draft order makes provisions about arrests effected both within and outside Scotland in connection with crimes committed in Scotland, the investigation of Scots law crimes and extradition matters in Scotland. Schedule 1 will ensure that cross-border enforcement and assistance continue to work effectively; for example, when a Scottish warrant is executed in England, Wales or Northern Ireland, provisions in the 2016 Act on arrest procedure and rights of suspects will apply. Schedule 2 covers the effects of the Act on reserved forces—the Ministry of Defence police, the British Transport police and the Civil Nuclear Constabulary. Schedule 3 relates to the impact of the Act on immigration, officers of Her Majesty’s Revenue and Customs, designated customs officers and the National Crime Agency. Schedule 4 covers the application of the Act to persons subject to service law, and schedule 5 makes provision in regard to a person arrested in connection with extradition proceedings.

Reserved forces exercising the powers and privileges of a police constable in Scotland will be bound by a stop and search code of practice issued under section 73 of the 2016 Act. The draft order will amend the Act to ensure that UK Government and reserved bodies subject to the terms of the code are fully consulted when any amendments to the code are considered. It also makes reference to a code of practice that will apply to investigative bodies reporting criminal offences in Scotland to the Crown Office and the Procurator Fiscal Service.

The draft order is a wide-ranging and complex instrument that has required close working between Ministers and officials of the UK and Scottish Governments. It is a good example of the two Governments working together to make the devolution settlement work. I commend it to the Committee.

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It is a pleasure to serve under your chairmanship, Mrs Main.

The Criminal Justice (Scotland) Act 2016 introduced reforms that will help to modernise, improve and enhance the efficiency of the Scottish criminal justice system. It does so by aiming to promote best practice and places an emphasis on streamlining the system. The draft order is a necessary step to make provisions as a result of the 2016 Act and makes a few alterations that I would like to touch upon today.

The draft order will enable the Lord Advocate, when acting under section 57 of the 2016 Act, to specify bodies and deal with matters that would otherwise be outwith the legislative competence of the Scottish Parliament, in terms of section 29(2)(b) or (c) of the Scotland Act 1998. It will also require constables, officials and officers to have regard to the code of practice when searching a person who is not in police custody. Modifications are being made as a result of the 2016 Act; in particular, article 24(3) expands the procedural requirements made in relation to the 2016 Act to reflect the application to constables in non-territorial police forces.

Essentially, the main aims of the draft order are to lay down provisions to facilitate the streamlining of the statute book, and I am sure we can all see the benefit of that. It is a necessary piece of legislation to ensure that the UK statute book is not duplicated or contradicted in any way. For that reason, the Labour party supports the order.

Question put and agreed to.

Committee rose.

Draft Proceeds of Crime Act 2002 (Investigations: Code of Practice) Order 2018 Draft Proceeds of Crime Act 2002 (Investigative Powers of Prosecutors: Code of Practice) Order 2018 Draft Terrorism Act 2000 (Code of Practice for Authorised Officers) Order 2018

The Committee consisted of the following Members:

Chair: Mr Adrian Bailey

Ali, Rushanara (Bethnal Green and Bow) (Lab)

† Dakin, Nic (Scunthorpe) (Lab)

† Day, Martyn (Linlithgow and East Falkirk) (SNP)

† Flint, Caroline (Don Valley) (Lab)

† Freer, Mike (Finchley and Golders Green) (Con)

† Haigh, Louise (Sheffield, Heeley) (Lab)

† Hoare, Simon (North Dorset) (Con)

† Howell, John (Henley) (Con)

† Jones, Susan Elan (Clwyd South) (Lab)

† Keegan, Gillian (Chichester) (Con)

† Malthouse, Kit (North West Hampshire) (Con)

† Moore, Damien (Southport) (Con)

† Smith, Eleanor (Wolverhampton South West) (Lab)

† Smith, Royston (Southampton, Itchen) (Con)

† Tredinnick, David (Bosworth) (Con)

† Twigg, Derek (Halton) (Lab)

† Wallace, Mr Ben (Minister for Security)

Kenneth Fox, Committee Clerk

† attended the Committee

Third Delegated Legislation Committee

Tuesday 5 December 2017

[Mr Adrian Bailey in the Chair]

Draft Proceeds of Crime Act 2002 (Investigations: Code of Practice) Order 2018

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I beg to move,

That the Committee has considered the draft Proceeds of Crime Act 2002 (Investigations: Code of Practice) Order 2018.

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With this it will be convenient to consider the draft Proceeds of Crime Act 2002 (Investigative Powers of Prosecutors: Code of Practice) Order 2018 and the draft Terrorism Act 2000 (Code of Practice for Authorised Officers) Order 2018.

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It is a delight to serve under your chairmanship this early morning, Mr Bailey.

The three orders give effect to revised codes of practice, providing guidance and acting as an important safeguard on the use of investigatory powers in the Proceeds of Crime Act 2002 and on the use of powers in relation to terrorist property under the Anti-terrorism, Crime and Security Act 2001. Those two pieces of legislation provide strong powers in the fight against crime and terrorism. In particular, the powers relate to investigation and the recovery of assets that are the proceeds of crime or are terrorist property. Obviously, exercising the powers can involve interference with people’s privacy and property, so the purpose of the codes of practice is to provide guidance to law enforcement officers on the lawful and proportionate exercise of the powers. They safeguard the proportionate, effective and consistent use of the powers.

The codes may be revised, or new ones created, in the light of legislative changes. The three revised codes before the Committee are consequential on changes made in POCA and ATCSA by the Criminal Finances Act 2017. Two of the codes relate to POCA: one relates to law enforcement officers and is issued by the Secretary of State, and the other contains guidance for prosecutors and is therefore issued by the Attorney General. The POCA and ATCSA powers have been strengthened and expanded by the 2017 Act. Once commenced, the powers will give officers important new tools to assist with investigations and to recover assets, supporting the Government’s commitment to fight terrorism and make the UK a hostile environment for those seeking to move, use and hide the proceeds of crime and corruption.

The powers to which the codes relate will not initially be commenced in Northern Ireland, because in the absence of an Assembly we have been unable to obtain the necessary legislative consent to commence the powers relating to devolved matters in the 2017 Act. I assure the Committee that we are working with the authorities in Northern Ireland to address and remedy the issue as soon as possible. For the time being, the codes, in so far as they apply to Northern Ireland, will cover only existing POCA powers. The ATCSA provisions apply across the whole United Kingdom and thus include Scotland. The POCA provisions to which these codes relate are for England and Wales only and do not extend to Scotland.

The three codes build on previous codes issued under POCA and ATCSA. The codes provide an important safeguard and reassurance that the powers are being used properly and proportionately. We plan to commence the majority of the new and amended POCA and ATCSA powers on 31 January 2018. Once approved, the codes will come into operation at the same time as the powers. The new powers to which the amended codes relate have already been debated, and the 2017 Act received Royal Assent in April, with cross-party support. We are therefore not debating the powers themselves, but considering the codes that give guidance on their use. The amended codes of practice are required as a result of the introduction of new investigatory powers and some amendments to existing ones, as well as new seizure, detention and forfeiture powers under ATCSA.

In line with the requirements in both POCA and ATCSA, the Secretary of State must prepare and publish a draft of any new or revised code, consider any representations made and modify the draft as appropriate. A public consultation has been undertaken on all the codes before the Committee today. More detail on the consultation can be found in the accompanying explanatory memorandum.

One order relates to a code that deals with the use of investigatory powers by law enforcement officers under chapter 2 of part 8 of POCA. The revised code caters for new and amended powers introduced by the 2017 Act—notably, unexplained wealth orders. Unexplained wealth orders will provide an enforcement authority with the ability to require an individual or company to explain how specified property was obtained, and may state that specific documents or information are to be provided in order to establish whether property has been legitimately obtained. There is a further section relating to disclosure orders, which has been considerably revised. Notably, disclosure orders will now be available to law enforcement agencies in money laundering investigations.

In addition, the code provides guidance on the use of the two new categories of investigation introduced by the 2017 Act: detained property investigations and frozen funds investigations. Those new investigations support the powers to forfeit certain listed items of property, such as precious stones and works of art, and to forfeit funds in bank or building society accounts. The kind of investigators who may apply for these orders are clearly set out in the revised code, as are the procedure and statutory requirements for applying. The code sets out the issues that agencies and officers should consider before making an application.

The code has been revised in consequence of the extension of powers to the officers of the Serious Fraud Office and the Financial Conduct Authority, and in the light of the fact that Her Majesty’s Revenue and Customs is now being given civil recovery powers, including those of investigation. There is a similar code providing guidance for prosecutors using the investigatory powers. As that code relates to prosecutors, it is issued by the Attorney General, although it is substantially the same as the one issued by the Secretary of State. The order bringing that code into effect is also before the Committee today. As the two codes are essentially the same in substance and in their procedures and provisions, I am discussing them together and, in this instance, on behalf of the Attorney General.

The third order gives effect to a revised code of practice made under the Terrorism Act 2000 for officers exercising asset recovery powers conferred on them through the terrorist property provisions of schedule 1 to ATCSA. The code has been updated to reflect the amendments made to the Terrorism Act and ATCSA by part 2 of the 2017 Act, including a new power administratively to forfeit “terrorist cash” and new civil recovery powers to seize, detain and forfeit listed terrorist assets and terrorist money held in bank and building society accounts. I repeat the essential point that these revised codes ensure the targeted, proportionate and effective use of the powers.

On the nature of the guidance, the codes ensure that officers consider the rights of the person—in particular, their right to free enjoyment of their property—and the impact on their community. It provides the process that officers should follow when arriving at a decision to use the relevant powers and in their execution. The codes also ensure that there will be a full paper record in relation to the use of the powers. The training provided by the National Crime Agency to all financial investigators includes familiarity with the codes. It is also important to note that codes have been in place for the use of these POCA powers since their commencement in 2003 and that they have acted as a safeguard in ensuring the powers are used in a measured and relevant manner. The revised codes will ensure that that will continue. I therefore ask the Committee to approve the orders, and thereby give effect to the codes of practice.

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First, let me put on record that the Opposition fully support the statutory instruments, which is why it is baffling to see so many Members here so early in the morning.

As I say, we fully support these powers. They are absolutely necessary but nowhere near sufficient. Our biggest impediment to tackling the current terrorist threat is bodies on the ground, but police officer numbers are being cut up and down the country. I was in Norwich over the weekend; every single police community support officer post in Norfolk is being abolished. That is an incredible threat to our ability to tackle not just crime and antisocial behaviour, but the unprecedented terrorist threat we face. Our PCSOs and neighbourhood policing teams are the eyes and ears of our counter-terrorism units, and they need not just powers but resources and bodies on the ground.

The Minister referred to the right to respect for private and family life and to peaceful enjoyment of property under the European convention on human rights. Will he say a little more on the training that our law enforcement officers and financial investigators will receive, to ensure that those rights are fully respected and understood? We must ensure that the codes provide sufficient guidance on that.

I will not detain the Committee any longer. We are more than happy to support the instruments.

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It is a pleasure to serve under your chairmanship, Mr Bailey. I am grateful to the Minister for outlining the orders. Let me say on behalf of the Scottish National party that we are totally committed to tackling organised crime and terrorism. We see nothing contentious in the orders and are happy to support them.

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I thank both Opposition spokespersons for their constructive criticism. POCA was introduced by a Labour Government, and successive Governments have built on that good piece of work to ensure that we take away the property that terrorists acquire through organised crime and money laundering. I think that spirit carried through to the Criminal Finances Act 2017, which was also supported by all parties. The Government made concessions to both the SNP and the Labour party on matters such as the use of betting slips and Scottish limited partnerships; we too have concerns about their misuse.

The codes of practice are needed because unpicking the complex web that criminals weave to hide their money requires skills and training, but also guidance on navigating through the plethora of relevant law. They manage to hide their money through exploiting that complicated legal structure, and we must equip ourselves to counter what they do.

In answer to the point made by the hon. Member for Sheffield, Heeley, first, we already have Crown Prosecution Service specialists. Some activities, such as terrorist financing, are not as prevalent as people might think, but they are important and potentially dangerous, so we have those specialists. In regional organised crime units there are specialised proceeds of crime units, specifically set up to recover assets and implement confiscation orders. That specialist group is funded not only through home forces and the Home Office, but from some of the receipts from asset recovery; the asset recovery incentivisation scheme funding is ploughed back in. We decided, in line with our manifesto, that above the 2015-16 baseline of recovery, all assets—100%—will be returned to law enforcement agencies and the people involved in the prosecution, to put funding back in.

On police cuts, I hear what the hon. Lady says about numbers, and I understand the threat that we are up against. I do not dispute that we have had to make some tough decisions on policing, as we have elsewhere, but it is not just a numbers game; powers are important. Also, fighting terrorism and crime in the 21st century is different from when I was fighting terrorism in the early 1990s. How terrorists and criminals do business is different and we have to change the way we deal with it. Although, as the hon. Lady points out, there may have been reductions affecting some aspects of policing, there have been increases for the intelligence services and technical capabilities, which have taken our counter-terrorism funding from £11.7 billion to £15.2 billion—a 30% increase. I do not think that there has been such an increase in funding anywhere else in the public sector over the spending period.

We recognise the threat, and that we must deal with it. We will deal with it not just through the police but through the broader counter-terrorism family, including intelligence services, and—in the Prevent duty area—local government and schools, as well as, upstream, places such as GCHQ, so that we keep one step ahead of organised criminals and terrorists. I urge the Committee to support the orders. We will be happy to get on with the job, and I should be happy to go with the hon. Member for Sheffield, Heeley to meet some of the terrorist financing specialists, to see how they go about what they do.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Proceeds of Crime Act 2002 (Investigations: Code of Practice) Order 2018.

DRAFT PROCEEDS OF CRIME ACT 2002 (INVESTIGATIVE POWERS OF PROSECUTORS: CODE OF PRACTICE) ORDER 2018

Resolved,

That the Committee has considered the draft Proceeds of Crime Act 2002 (Investigative Powers of Prosecutors: Code of Practice) Order 2018.—(Mr Wallace.)

DRAFT TERRORISM ACT 2000 (CODE OF PRACTICE FOR AUTHORISED OFFICERS) ORDER 2018

Resolved,

That the Committee has considered the draft Terrorism Act 2000 (Code of Practice for Authorised Officers) Order 2018.—(Mr Wallace.)

Committee rose.