I beg to move amendment 70, in clause 16, page 18, line 25, at end insert—

“(1A) Before the power in subsection (1) may be exercised, the relevant national authority must publish a written statement on any societal and economic changes relevant to the intended modifications.”

With this it will be convenient to discuss clause stand part.

It is a pleasure to see you in the Chair, Sir Gary, for our final day of scrutiny of the Bill. The amendment was tabled in my name and that of my hon. Friend the Member for Glenrothes. It will be a relief to the Committee that I will be as brief as I can, as I know we have an awful lot to get through.

Clause 16 allows a relevant national authority to make modifications to secondary legislation that it considers appropriate, taking into account

“changes in technology, or…scientific understanding.”

We do not disagree with that. Our amendment simply seeks to widen the scope of the clause by allowing relevant national authorities not just to consider changes in technology and developments in scientific understanding, but to take into account societal and economic changes that may be pertinent when making modifications to retained EU law.

It is the narrowness of the clause that concerns us the most. It has been highlighted as a potential problem by the Law Society of Scotland, which in its excellent briefing paper suggested widening the scope to reflect other factors and include economic or societal changes. It seems eminently sensible to include factors that go beyond science and technology. Whether we like it or not, things happen in society that we cannot reasonably predict. It would therefore be unwise for the legislation to be so completely straitjacketed that we could not react appropriately to unpredicted societal events.

Similarly, giving relevant national authorities the ability to pivot when changes to the economic circumstances dictate also seems logical. Imagine we had been examining the Bill before the summer, and I had tabled an amendment that would have allowed relevant national authorities the flexibility to consider changes in economic circumstances when considering retained EU law. Had I based my argument around a Conservative Prime Minister resigning and forcing a lengthy leadership election, and the arrival of a new Prime Minister who promptly tanked the economy and then resigned six weeks later, everyone on the Government Benches would have howled with derision, but that is precisely what happened.

As much as we like to think we know what is around the corner in terms of society and the economy, the truth is that we simply do not. That is why, again in the spirit of trying to be helpful and improve what is a thoroughly dreadful piece of legislation, I commend amendment 70 to the Government.

It is a pleasure to see you in the Chair, Sir Gary. I was sorry to read that you may not be seeking re-election. I know that social media is not always truthful on such things, but what I read appeared to be legitimate, and I will be sorry to see you go. I welcome the Minister in the Jack Grealish role, coming in late in the day to retrieve a seemingly lost position for the Government.

I understand that we are dealing with clause 16 stand part as well as amendment 70. I thank the hon. Member for Argyll and Bute for moving the amendment, which is very similar to some of ours. It will be no surprise that we are sympathetic to and supportive of it, but to avoid repeating what we have said previously I will try to keep my statements brief. Government Members will be tired of hearing this, but those who are tired of scrutiny are tired of democracy itself, so I will yet again refer to the lack of scrutiny and consultation that are the hallmarks of the Bill.

Amendment 70 offers a means to address that problem in the specific and possibly limited circumstances in which clause 16 will apply. We know how often the Government like to use the phrase “specific and limited circumstances”. The amendment contains the guiding principle of our new clause 9, which was previously debated: the Government and relevant national authorities need to address the impact of changes made by the use of the Bill’s powers. Having Ministers of the Crown produce written statements about intended modifications will ensure not only that the societal and economic impacts of changes are considered, but that they are justified, which, as we have discussed, ought to provide a greater level of accountability. Despite the fact that the amendment could benefit from extra conditions—for example, mandating a programme of consultation with relevant stakeholders—it serves the purpose of demanding greater scrutiny. Given that the Government rejected our new clause, which previously requested that, I suspect we will not find favour with this one.

It is a pleasure to serve under your chairmanship, Sir Gary.

I thank the hon. Member for Argyll and Bute for tabling the amendment, but I urge the Committee to reject it. The power under clause 16 is intended as an updating power to make modifications to retained EU law that take account of a change in technology or developments in scientific understanding. The scope of that power has been deliberately restricted so that it can only be exercised to bring about such modifications.

It is critical that that power operates in that manner to ensure that legislation that sits on the UK’s statute book is able to keep pace with scientific and technological developments, so that we continue to uphold our high standards as well as ensure laws remain tailored to best suit the UK’s needs. Without that power, it would take a significant amount of parliamentary time for the Government to bring forward bespoke proposals and consider each amendment on a sector by sector basis.

I consider the requirement for Ministers to produce a written ministerial statement on the societal and economic changes relevant to the proposed changes under the clause to be neither relevant nor appropriate. The UK Government are committed to the appraisal of any regulatory changes relating to retained EU law, and the nature of that appraisal will depend on the types of changes that Departments make and the expected significance of their impact. We assess that current scrutiny procedure for legislation made under the clause is sufficient. Further scrutiny would be inappropriate for that type of power and would place additional pressure on parliamentary time. The power is circumscribed and, in answer to an earlier question, it is for Ministers to make those decisions. Further scrutiny could hinder the UK’s ability to keep pace with new scientific and technological developments, and I am sure that no member of the Committee would want that.

Will there be a standard threshold across Departments to trigger when Ministers may use the power? If so, can the Minister share it with us?

In so far as I understood the hon. Gentleman’s question, the powers are circumscribed. They are designed to deliver the technical changes necessary and are certainly not meant to lead to substantive changes in policy. That would absolutely not be within the scope of the clause.

On that basis, I ask the hon. Member for Argyll and Bute to withdraw his amendment.

I thank the Minister for his response. I also thank the hon. Member for Ellesmere Port and Neston for his support. I still do not quite understand why the Government have been so deliberately restrictive in the scope of clause 16. In common with much of the Bill, the Government’s complete refusal to accept any reasonable amendments is worrying. The amendment is not party political, but arose directly from a suggestion from the Law Society of Scotland. I will not pursue it to a vote, however, and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 16 ordered to stand part of the Bill.

Clause 17

Power to remove or reduce burdens

Question proposed, That the clause stand part of the Bill.

The clause relates to legislative reform orders under the Legislative and Regulatory Reform Act 2006. There are certainly positives associated with the mechanisms within which those orders operate.

The procedure for enacting draft Bills, in common with the terms of new clauses we have tabled, would include requirements for consultation, with further time for parliamentary consideration. When we are talking about between 2,400 and 3,800 laws, we think that is a reasonable proposal. That requirement would apply to instruments introduced under both the negative and the affirmative procedure, with the super-affirmative procedure further requiring 60 days for consideration, and a requirement on Ministers to have regard to recommendations to amend the draft order. Even if Ministers choose to press ahead with the unamended order, they must still lay a report before the House detailing the representations made and the proposed revisions. Although these measures do not go quite as far as our proposed new clauses, if they were used across the board for non-deregulatory purposes, they would be far more preferable to the use of the standard procedures currently in the Bill.

As Jack Williams pointed out in evidence a couple of weeks ago, the main concern is that using any of the mechanisms contained in the 2006 Act will put in place completely unrealistic time constraints, if they were used on all regulations and pieces of legislation on the EU dashboard. We have discussed at length why we think the 2023 sunset is unrealistic. Given that the time restrictions we face are well known, why does the clause remain in the Bill? Are there plans to use this power? Will the Minister provide us with some examples of where he thinks it might be appropriate to use this procedure or where it is already intended to be used? How will the problem of the clear six to eight months we will have once the Bill is passed to deal with all the regulations be dealt with?

The Government have promised to abide by all the stages of consultation and reporting in the Bill. It seems to me that it would therefore be a challenge to deal with this in the timeframe we have. Will the Minister tell us what criteria will be used when deciding to use this procedure? I presume some consideration was given as to when it might be appropriate to use it before it was inserted into the Bill. If Ministers choose not to use this power, there is nothing that we as parliamentarians can do about it. That is the nub of it.

Looking at 2016 Government guidance on legislative reform orders, it was noted that it can take some 10 to 14 months from the start of a consultation before a legislative reform order becomes law and reaches the statute book. I think we are all conscious of the fact that, even in the unlikely event that there is a smooth passage of this Bill through the Lords, it will be in force at the lower end of that timescale, if not far below it. I wonder if the Minister can tell us whether there is any intention to use the powers under the clause and, if so, in which circumstance they might be operative.

Clause 17 amends the LRRA 2006 explicitly to include any retained direct EU legislation in its definition of legislation. This amendment confirms that the delegated powers existing in the framework for legislative reform orders extend to retained direct EU legislation, and enable it to be amended within the current procedures and scope of the LRO process. There is no reason to exempt this category of legislation from the LRO process. It is a pretty innocuous technical change, and I commend the clause to the Committee.

Question put and agreed to.

Clause 17 accordingly ordered to stand part of the Bill.

Clause 18

Abolition of business impact target

Question proposed, That the clause stand part of the Bill.

I will be brief, as we have many clauses to get through. Clause 18 abolishes the business impact target in the annual report that the Conservative Government themselves introduced in 2015. Perhaps the Minister could explain the rationale behind the change. Have the Government finally caught up with the pointlessness of this exercise, which has piled unnecessary work and bureaucracy on civil servants over the past seven years? It would be helpful to hear the Minister’s explanation for the change.

My apologies for being late for the start of the sitting, Sir Gary.

About eight years ago, I bought myself a car. For a long time, the car did pretty much what I wanted it to do, but now it is showing its age and is not really behaving the way I would like, and I am wondering whether it is worth keeping. It would be foolhardy for me to get rid of my car when I have no idea what kind of car I want to replace it with, because I would leave myself open to the possibility either that I am without a car for a lot longer than I expected to be or that a replacement car is much more difficult and expensive to acquire. That is the position the Government want to put us in with this clause.

Having left the EU, the UK has the regulatory freedom to ensure that all regulations are designed with UK interests front and centre. To seize the opportunities that come with this freedom, it is important that the Government’s framework for scrutinising regulation—the better regulation framework—is reformed. As set out in “The benefits of Brexit”, we are reforming the system to ensure that we regulate only where necessary. When regulation is needed, it should be designed and implemented in a way that minimises burdens on businesses and households, thereby driving competition, innovation and, ultimately, growth.

The abolition of the business impact target will support the delivery of the reforms by reducing what is currently a disproportionate focus on direct costs to business and allowing—I hope the whole Committee will agree—a more holistic appraisal of the impacts. By increasing the early scrutiny of the flow of new regulation and improving the existing stock of regulation undertaken through the use of powers elsewhere in the Bill, the new system will support the Government’s growth ambitions.

The Minister has great faith in the new system, but none of us can have any faith in it because we have not seen it. When can we expect to see the intended replacement for the relevant sections of the 2015 Act?

As I said, we expect the reforms to the better regulation framework to set a higher bar for the introduction of regulation and to help to reduce the flow. On the precise timing of when that will be, I will come back to the hon. Gentleman, unless I am suitably refreshed right now. As I say, this is a more proportionate approach, which I think the whole Committee will support. I therefore recommend that the clause stand part of the Bill.

On the basis of the Minister’s answer, I assure him that we will come back to him in due course and tell him when we are prepared to support clause 18, but we are not prepared to support it yet.

Question proposed, That the clause stand part of the Bill.

We have already debated how the Bill grants Ministers sweeping powers; we now come to clause 19, which looks like it literally and explicitly allows Ministers to do anything they want. The Minister needs to explain what the Government think the powers are going to be used for, specifically in relation to EU regulations.

On the face of it, clause 19 would allow Ministers to make the case for anything at all, provided only that they consider it appropriate and in consequence of the Act. It is entirely left up to Ministers themselves to define “appropriate” and “in consequence”. I would like the Minister to give the Committee further clarification of what “appropriate” and “in consequence” really mean—or perhaps he does not yet know.

It is noteworthy that the powers include modifications to any Act of Parliament—including this legislation. The powers are so sweeping that it is difficult to understand why the Government cannot better define the powers they are giving themselves in the clause.

First, I have a concern similar to the hon. Gentleman’s. It is the same concern that the SNP has expressed repeatedly throughout the progress of this Bill and many others. If the Bill does not just give any Minister the power to do whatever they like, will the Minister explain what clause 19 does not allow them to do? I always think it is interesting that when they give powers to Ministers, the Government put it into legislation that the Minister can do only what they consider appropriate. It is almost as if they do not trust their own Ministers not to do things that are considered completely inappropriate—although, having seen the actions of some Ministers over the past few years, I completely understand why they put that restriction in.

Secondly, is there a legal definition of what is actually meant by the words

“in consequence of this Act”?

If there is not, we could see regulations made under clause 19 being challenged in court, with the case hanging on whether the Minister’s decision was in consequence of this Act. A phrase as woolly as that is going to be a field day for lawyers. It is going to end up with the Government, and potentially businesses, being tied up in exactly the kind of legal uncertainty that the Government claim they are trying to get rid of by the passing the Bill. Will the Minister clarify those two points, with particular regard to the legal interpretation?

Clause 19 establishes a power to make consequential provision. It is necessary to enable the UK Government to make appropriate provision in consequence of the Bill. That includes the ability to modify any enactment, including provisions in the Bill. The power in the clause is exercisable by a Minister of the Crown and can be used to make regulations by statutory instrument.

You might not know it from listening to the debate, Sir Gary, but the inclusion of such a power is standard practice for Bills in respect of which minor additional changes to legislation may be necessary as a consequence of the changes brought forward by the Bill. Consequential amendments to legislation may be necessary to ensure that the UK statute book continues to function effectively. It is therefore appropriate that the power be included in the Bill to enable UK Government to deal with consequential amendments—and strictly consequential amendments.

The consequential power is subject to the negative procedure. If the power is used to amend primary legislation, it will be subject to the draft affirmative procedure to ensure the sufficient level of scrutiny. It is in fact entirely appropriate and proportionate.

Question put and agreed to.

Clause 19 accordingly ordered to stand part of the Bill.

Clause 20

Regulations: general

I beg to move amendment 64, to clause 20, page 20, line 13, at end insert—

“(1A) A Minister of the Crown may not include in regulations under this Act any provision which is within the devolved competence of any devolved authority as defined in paragraph 2 of Schedule 2.”

With this it will be convenient to discuss the following:

Clause stand part.

That schedule 2 be the Second schedule to the Bill.

The amendment was tabled in my name and that of my hon. Friend the Member for Glenrothes and takes us back to a recurring theme of this Bill Committee—namely, the incursion by the UK Government into areas that are, and have been since the establishment of the Scottish Parliament more than 20 years ago, wholly devolved.

I assure Members that before today is out they will have heard a great deal more about the power grab that is happening and how the Bill and its partner, the United Kingdom Internal Market Act 2020, are systematically undermining the devolution settlement and stripping powers from our Parliament. The amendment would simply protect the integrity of the devolution settlement by preventing a UK Minister from revoking any piece of retained EU law that currently sits within the competency of the Scottish Government, as defined in paragraph 2 of schedule 2.

The Union is hanging by a thread. The polls increasingly show a pro-independence majority, and among young voters in particular that majority is substantial and growing. We have heard lots of talk about the partnership of equals and how Scotland has an integral place in this so-called precious Union; those may be nice words and easy for politicians to say, but the problem is that fewer and fewer Scots believe it any longer. Not only have we been dragged out of the European Union in the face of an overwhelming desire to remain a member, but in the past weeks we have discovered that this is not a voluntary Union after all. We cannot decide our constitutional future without the permission of this place. Now, with this Bill, coupled with the insidious United Kingdom Internal Market Act, we have to sit and watch the powers of our Parliament being eroded and our democracy being dismantled.

I challenge the Government to prove me wrong and show the people of Scotland that this place is no threat to our Parliament and our democracy by accepting amendment 64 and allowing our Government to act according to the mandate given to them in 2007, 2011, 2016 and, again, in 2021. That mandate is to keep our regulations in lockstep with the European Union if that is what we choose to do.

I shall speak briefly to schedule 2. The need for the Government to act with devolved authorities when provisions are outside the devolution settlement makes a lot of sense. We are currently in a situation in Northern Ireland in which there is no Executive, the Assembly is not functioning and the Northern Ireland protocol, which is hugely affected by the Bill, is effectively broken. The schedule 2 powers will, in the end, as things stand—they do not look like they are going to change in the near future—be enacted by a UK Minister of the Crown rather than by the devolved authority, whether with or without a Minister. I note that that is made explicit. So we have a situation in which, although the Bill cannot have any impact on what happens regarding the Executive, there is a mismatch between what is happening de facto in Northern Ireland and de jure in the Bill. That creates a dichotomy, so will the Minister tell us how he thinks that will resolve itself, considering that a new Executive is nowhere in sight?

Following the comments of my hon. Friend the Member for Argyll and Bute, the existence of schedule 2 specifically tells us everything we need to know about the nature of what is sometimes claimed to be democracy in this place. There is an explicit assumption in the schedule that Ministers in this place have the right to directly hold to account the democratically elected national Parliaments of the United Kingdom. That is not devolution; that is colonialism. It is not democracy; it is elected dictatorship. I appreciate that what is stated in schedule 2 is simply a restatement of the assumption that has run through this place for the past 300-plus years, yet it is a false assumption. It is an assumption that ultimate sovereignty by gift of God resides with an unelected individual who then passes down that sovereignty to a semi-elected Prime Minister.

If the SNP decides to join the EU, is that not exactly what would be being joined?

I think the hon. Gentleman knows perfectly well that that is not the case. The European Union is about sharing and pooling sovereignty; there is no shared or pooled sovereignty within this Union. There is absolute sovereignty exerted, in effect, by one individual. One individual was able to end the careers of 40 Conservative MPs in 2019, just because they disagreed with him. That is how powerful one individual in this place can be. No individual in the European Union would have that authority against the will of national Parliaments and national Governments. My final response to the hon. Member is that he might think it is in Scotland’s interests to leave the European Union but, with the greatest respect, it has nothing to do with him. It is—it should be—a choice for the people of Scotland—

Actually, it is not much to do with this amendment, either. Please continue.

It is also for the people of Scotland to decide what restrictions are put on the actions of their national Parliament and national Government, as it is for the people of Wales and of Northern Ireland. The inclusion of the schedule is another example of the rights of those three devolved nations being usurped by a state that claims to have the absolute right of sovereignty over them—but it does not have that absolute right, and, quite soon, it is going to discover, to its cost, that it never had that right.

I urge the Committee to reject the amendment tabled by the hon. Member for Argyll and Bute. It would prevent UK Ministers from making provisions within the competence of any devolved authority in respect of any of the powers in the Bill. As Members will be aware, the UK Government are committed to respecting the devolution settlements and the Sewel convention. The territorial extent of the Bill is UK-wide, and it should take effect UK-wide so that the benefits of Brexit can be seized across all four nations of the UK.

Conferring the powers concurrently ensures that the UK Government are able to legislate on behalf of a devolved Government who do not intend to take a different policy position. That will ensure that the most efficient and appropriate approach to the reform of retained EU law can be taken in every situation. Because of the nature of retained EU law, the edges of where UK Government competence ends and devolved competence begins are not always absolutely clear, so it is important that UK Ministers are able to make provision in areas of devolved competence to ensure that nothing important falls between the areas of reserved and devolved competence.

When using the powers in the Bill, we will use the appropriate mechanisms, such as common frameworks, to engage with devolved Governments, enable us to take account of the wider context and allow for joined-up decision making across the UK. The idea that we are riding roughshod over the devolution settlement is incorrect.

The hon. Member for Leeds North West mentioned Northern Ireland. The powers in the Bill are concurrent partly so that we can work with the Northern Ireland Executive—when there is one—to ensure that the Northern Ireland REUL required to operate the withdrawal agreement and the NIP is preserved.

I think I have answered most of the points that were made—I hope so, anyway—so I ask the hon. Member for Argyll and Bute to consider withdrawing his amendment.

Over the course of today, I will give the Government numerous opportunities to show that they respect the devolution settlement and that they are not intent on usurping powers from our Parliament. Given their past record, I had no expectation that they would accept amendment 64, but I never wanted it to be said, in future, that they did not understand what they were doing, or that it was somehow accidental. The Minister said that it is not clear what is devolved and what is reserved. It is absolutely clear: it is in the Scotland Act 1998, which says clearly that if it is not reserved, it is devolved. We will vote against schedule 2, but I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 20 ordered to stand part of the Bill.

Question put, That the schedule be the Second schedule to the Bill.

I beg to move amendment 1, in schedule 3, page 30, line 5, leave out paragraph 2 and insert—

“2 (1) Sub-paragraph (2) applies to a statutory instrument containing regulations under this Act which is subject to a procedure before Parliament for the approval of the instrument in draft before it is made.

(2) The statutory instrument may also include regulations under this Act or another enactment which are made by statutory instrument which is not subject to the procedure mentioned in sub-paragraph (1) (whether or not it is subject to any other procedure before Parliament).

(3) Where regulations are included as mentioned in sub-paragraph (2), the statutory instrument is subject to the procedure mentioned in sub-paragraph (1) (and is not subject to any other procedure before Parliament).

(4) Sub-paragraphs (1) to (3) apply in relation to a statutory instrument containing regulations under this Act which is subject to a procedure before Senedd Cymru as they apply in relation to a statutory instrument containing regulations under this Act which is subject to a procedure before Parliament, but as if references to Parliament were references to the Senedd.

(5) Sub-paragraphs (1) to (3) apply in relation to a statutory rule as they apply in relation to a statutory instrument but as if references to Parliament were references to the Northern Ireland Assembly.

(6) Sub-paragraphs (1) to (3) apply in relation to a statutory instrument containing regulations under this Act which is subject to a procedure before a devolved legislature as well as a procedure before Parliament as they apply in relation to a statutory instrument containing regulations under this Act which is subject to a procedure before Parliament, but as if references to Parliament were references to Parliament and the devolved legislature.

(7) In sub-paragraph (6) ‘devolved legislature’ means the Scottish Parliament, Senedd Cymru or the Northern Ireland Assembly.

(8) Nothing in this paragraph prevents the inclusion of other regulations in a statutory instrument or statutory rule which contains regulations under this Act.”

This amendment enables regulations under this Act subject to the draft affirmative procedure to be combined with regulations that are not subject to that procedure.

This is a technical amendment necessary to ensure that the mechanism for combining statutory instruments in the Bill functions correctly. The intent behind the Bill is to enable regulations made under different powers in the Bill to be combined into a single statutory instrument where it would be more appropriate to do so. This technical amendment will allow provisions made under any powers in the Bill and other enactments to be combined with regulations under the Bill that require a draft affirmative instrument.

Where such provisions are combined, the default procedure will be the higher procedure, which is the draft affirmative. That will enable statutory instruments to be combined more effectively, which will save resource and reduce the future burden on parliamentary business. The amendment also makes equivalent provision for the devolved legislatures. I commend the amendment to the Committee.

I am grateful to the Minister for providing an explanation of the technical nature of the amendment. It actually quite an important amendment for the Government if they are to have any chance of meeting their self-imposed deadline in a year’s time. Being able to link together different instruments that require different procedures will, as the Minister said, be a helpful tool to limit the amount of parliamentary time taken up, although that may come at the cost of scrutiny. I am, however, encouraged by the Minister’s confirmation that the affirmative procedure will be used in those circumstances. It is almost as if there will be levelling up of regulations so that the higher standard of scrutiny will apply.

Will the Minister tell us whether there has been any assessment of on how many occasions it is anticipated that the amendment will be used? It is worth saying, once again, that if the Government had not created this artificial cliff edge and put themselves up against the clock so steadfastly, the amendment would not be necessary.

I will not oppose the amendment, but I need to put on record that the fact that such a detailed technical amendment is needed is clear evidence that the people who draft legislation do not always get it right first time. Is it not lucky that we have a Bill Committee, so that errors, omissions and oversights in the drafting of the Bill can be put right before it comes into force? The 4,000 or so—at the latest estimate—bits of legislation that the Bill will tear up and throw in the fire will be replaced by things that we will not get a second chance to put right in Bill Committee.

When, as will almost certainly be the case, the Government end up repealing bits of legislation that nobody knew existed, we will not have a Bill Committee to put things on hold in order to correct any mistakes. The fact that the Government have already had to table this and so many other amendments and we have no idea what else they will have to introduce on Report or in the House of Lords does not represent a criticism of those who drafted the legislation. It is simply an illustration of an uncomfortable fact: no matter how good we are at drafting legislation, we do not get it right first time. If this Bill passes in the form in which the Government are determined to pass it, there are potential catastrophic impacts from Parliament repealing legislation that it did not even know existed.

I am glad that there is, I think, acceptance that this amendment is a practical and sensible measure. By bringing procedures together in one and having the affirmative procedure, we can ensure that Parliament can scrutinise in a more holistic manner, to address some of the concerns that have been raised by the Scottish nationalist spokesman. As to precisely how often, I do not have an estimate on that, but I expect it to be on numerous occasions, because, as has been said, there is a substantial amount of retained EU law. If that can be brought together and scrutinised in an effective manner that allows full and proper scrutiny but does so in a way that does not waste parliamentary time, I hope we will have something that works for all parts of the House and is seen as practical and proportionate.

Amendment 1 agreed to.

I beg to move amendment 88, in schedule 3, page 31, line 6, leave out from “15” to the end of line 8 and insert—

“(d) regulations under section 16.”

This amendment, together with Amendment 89, would make all regulations under Clause 15 (regulations that are intended to achieve the same or similar objectives as the REUL being replaced) and under section 16 (technological developments) subject to affirmative procedure.

With this it will be convenient to discuss amendment 89, in schedule 3, page 31, line 17, leave out paragraph (c).

See explanatory statement to Amendment 88.

We have already spoken at length about the lack of effective parliamentary scrutiny provided for in the Bill. Our amendments 88 and 89 would ensure that any instruments made by Ministers to replace retained EU law under clause 15 or to update it under clause 16 were subject to the affirmative procedure and had to be approved by both Houses. At present, schedule 3 does not provide for the affirmative procedure for clause 16 instruments at all; for clause 15, it provides for the affirmative procedure to apply only in the case of revocation or for much more limited cases where the clause 15 powers are used for sub-delegation or to create a new criminal offence.

It seems to us, as well as to many of those who have submitted written evidence, that the powers in both clauses are potentially extremely significant even if they are not being used for wholesale revocation. Updating and replacing retained EU law might well involve alterations to existing and long-established rights and protections—alterations that we feel Parliament should be asked to positively agree to before they pass into law. The Minister himself just said that this Bill covers a substantial number of regulations, so it is only right and proper that we have the correct level of scrutiny and process in this place.

Can the Minister explain the circumstances in which he envisages the powers to replace and update being used? Can he also provide examples of the replacement or updated legislation that Departments are planning to take through, using these powers? I ask because we have heard very little, but we know that civil servants are busy preparing regulations for this procedure.

Good morning, Sir Gary. It is a pleasure to serve under your chairmanship this morning on this Bill. You have missed some real treats, I venture to suggest, about the future of decision making in this place.

Members who have been on this Committee for the whole marathon rather than the last couple of miles will know that Opposition Members have been raising consistent concerns about how we do what we were all promised we would be able to do—take back control. The amendments before us this morning are about exactly that, because one of the central concerns that we have about this legislation is that it does not take back control to the British people; it simply takes back control to the back rooms of Downing Street and Departments. These provisions, these amendments, show why that concern is merited.

All of us have sat through statutory instrument Committees in our time in Parliament. It is a joy to receive the message, at the last minute, that you have been selected, Sir Gary, for what pleasures—what delights—await you and what information you will learn on one of those Committees. But they are a vital part of our parliamentary scrutiny process. After all, they offer the opportunity for Ministers to set out clearly the purpose behind any amendments; the recognition that not everything needs to be debated on the Floor of the House; and clarity about the Government’s thinking. Many of us who have sat through court cases will recognise how important that is when it comes to the application of the law.

As we have discussed previously in Committee, this legislation will delete overnight potentially 4,000 laws. It could be more, or it could be slightly less—who knows? We probably should know before we pass the Bill. We have had that debate and the Government still do not think it is important, but they have always told us that they wanted to take away unaccountable European bureaucrats and give us the opportunity to have British bureaucrats making legislation. The amendment challenges that process. It would give back to us, as parliamentarians, the responsibility for holding the Government to account.

No, no, no, no.

Perhaps, then, the Minister will publish and confirm for all of us who have been on the Committee—he is new to these debates, but I am afraid he is going to hear this concern repeated at length—what comes next. Without clarity over what comes next, it is difficult to be confident that the legislation will not be a destructive disaster. I see he is already enjoying the fact that he is on duty today.

Having this power only for revocation undermines other powers the Bill gives to Ministers, because it is a power both to ignore and to amend legislation. Taking back control and returning it to the back rooms to allow Ministers to write legislation and then simply put it before us in a “like it or lump it” proposal is not really taking back control.

I also venture to say that it is worth ensuring that we have this procedure for all forms of legislation that are affected by the Bill—not for some grand political design so we can have these wonderful debates, but because, as we have already seen with this Bill, not everything is going to be perfect. Departments make mistakes. Drafting can contain errors. I am reminded of the tale, which is completely true, of the Belgian legislature that managed to put a recipe for asparagus into Belgian law because it was cut and pasted into legislation by accident. That genuinely happened—I am sure the Minister will google it—in 2021.

Statutory instruments give us an opportunity to pick up drafting errors, as well as to hold Ministers to account, and to challenge and query legislation—for example, one of those so-called technical amendments, although we know the Bill represents not technical amendments, but, potentially, serious changes to rights, rules and regulations that people have relied on and recognised for generations. Having such a procedure would give us the chance to identify actions, and possibly to identify the asparagus.

If the Minister will not accept the amendment, he is saying two things: first, that taking back control is not about Parliament, but simply about the back rooms, and, secondly, that we never get things wrong. We have all met in life individuals, and perhaps even organisations, who say, “I never get things wrong,” and we know that that is the most worrying thing that anybody can say. Drafting errors are part and parcel of trying to get right even one or two pieces of legislation, but the Government, potentially, are setting us up to try to get 4,000 right to replace the laws they are deleting overnight.

Statutory instruments and the use of processes and amendments are an important part of the process of trying to ensure that that is done with the greatest possible skill. Removing those powers, or not clarifying that they are part of those processes, and giving Ministers the opportunity to decide whether they want to put themselves up for parliamentary scrutiny is like letting contestants in “The X Factor” avoid the judges’ houses stage. This all forms an important part of the process.

I have a horrible feeling that the Minister is not going accept the amendment, so in responding to the queries and questions we have raised, and in reflecting on why the amendment has been tabled, will he consider why—when we are discussing potentially significant and meaningful changes, and when we know he can only water down regulation because the Bill says that regulation can only be something that does not create a burden—he believes our constituents should be denied that representation and that voice in the process? That is what not including such a provision, or not having any form of it, means.

We saw that in the pandemic, when statutory instruments were not receiving appropriate scrutiny. In December 2020, a new set of covid restrictions that would have criminalised a child going to school in tier 4, despite schools remaining open, were implemented without any parliamentary scrutiny. In that case, due to the extraordinary public scrutiny these regulations faced, the issue was finally identified before the schools returned from the Christmas break for one day. Despite what they might think, however, it is not normal for commentators on Twitter to go through legislation at this level. Such errors are not minor—they are not just asparagus—but could have real life implications. They happen and they happen in this place, and not having proper scrutiny of SIs is the foundation of such errors.

I hope the Minister will do more than laugh at the asparagus. I hope he will act on these concerns and finally agree, if not to this amendment, to the tabling of the Government’s own amendment in the other place to ensure we finally take back some control. I say to my colleagues on the Government Back Benches that at some point, somebody will turn up in their constituency surgeries asking about the outcome and implication of this legislation, and they will have to say, “Well, I didn’t vote through any changes. I did not recognise the problems with the sunset. I was pretty confident about not knowing what laws this would affect and I did not even vote through any powers to be able to scrutinise what happens next. I just thought it would all be fine because this Government never make mistakes.” It simply will not wash.

I urge the Committee to reject amendments 88 and 89. Alongside the other powers in the Bill, the power to revoke or replace in clause 15 is an important, cross-cutting enabler of reform in the Bill. The power to update in clause 16 is an essential, ongoing power that will facilitate technical updates to retained EU law to take account of changes in technology or developments in scientific understanding. We recognise Parliament’s important role in scrutinising legislation, and the Bill ensures the appropriate scrutiny of all amendments and revocations of retained EU law using the powers in the Bill, including the powers provided for in clauses 15 and 16.

When discussing matters of scrutiny, I feel it is important to note the negligible scrutiny that most of the legislation we are discussing today—with such high-falutin’ language from the Opposition—received when it was created. When our democratically elected Government of the people of the United Kingdom take decisions, for which they are accountable at the ballot box, that is what I mean by taking back control. The people who are elected are responsible for what happens. That is what we have, and we are accountable at the ballot box. When they go to the ballot box now, British people will know who to hold responsible: us. It is not some pooled whatever system in Brussels; it is here in the United Kingdom. Power sits within this legislature, which is elected by the people of this country; it is not about precisely where the powers sit within our legislature. That is why it seems ironic that the Opposition parties had so little concern when powers were exercised on the other side of the channel, but apparently it is outrageous when those powers are exercised here by a democratically elected Government.

Will the Minister give way?

I am not going to give way. If I was, I would certainly let them know, Sir Gary. [Hon. Members: “Lack of scrutiny!”] More important than issues around lack of scrutiny is the Minister’s failure to keep everyone calm. I recognise that is a significant misstep on my part.

Let me first turn to clause 15. Any regulations made under subsection 15(2) that recreate a power to make subordinate legislation or a criminal offence present in the retained EU law that is being replaced are already subject to the affirmative procedure, as are those regulations making alternative provision to the REUL being replaced under subsection 15(3). The power to update has been crafted so that we can do this in the right way. I must underscore this by saying that the power is intended to enable UK legislation to be updated to reflect future advances in science and technology, rather than to provide for any fundamental policy changes.

Given the scope of the power and the amendments that we expect to be made to regulations under this power, we judge the negative procedure to be the proportionate level of scrutiny. We therefore do not assess that it is necessary or appropriate for all regulations made under clauses 15 or 16 to be subject to the draft affirmative procedure. To do so would place additional pressure on parliamentary time and detract from the legislative agenda, and indeed from the scrutiny of substantive measures that should be subject to that positive scrutiny that we are talking about. I therefore ask the hon. Gentleman to withdraw the amendments.

Before I call Alex Sobel, I call Peter Grant.

Thank you, Sir Gary, for calling me to speak. You will be aware that I attempted to intervene on the Minister to correct his mistake, because we are not in the same position with this Bill as we were with European legislation. The reason that Parliament did not do more to scrutinise the action of British Government Ministers in making legislation on our behalf while we were in the European Union is that, for most of the time, Parliament under any Government was completely supine. This Parliament is set up in such a way that it does what the Government tell it to do. It is headline news around the world if Parliament does not do what the Government tell it to do. Parliament had the power to rein in Ministers, but shamefully it repeatedly failed to do so. If this Bill goes through, Parliament will not have that power; Ministers will be able to do pretty much what they like.

The Minister talks very grandly about the fact that people have the chance to hold the Government to account. It is not a debate for just now perhaps, although some of us think that it is a debate for every day of the week, but the people of Scotland have been holding this Conservative party to account since 1955 and they just cannot get rid of them. He will perhaps understand why we can have no confidence in a legislative process that puts powers into the hands of a group of Ministers who people in Scotland have rejected at every opportunity they have been given since before I was born.

I want to just pick up on the idea that before 2016, or before early 2020 anyway, the regulations that we are talking about were somehow just created out of thin air—that an EU Commissioner decided one day that that was the regulation and that was it, and suddenly it was law in this country. That is a long way from the truth. The regulations had to go through the Council of Ministers, on which a UK Minister sat; they had to go through the European Parliament, where UK MEPs sat and provided scrutiny; and then they had to go through this House and the whole process here in the UK Parliament. When they related to devolved bodies, they also had to go through the devolved Administrations. I do not understand the argument that somehow there was a lack of scrutiny and process before, and now there is proper scrutiny and proper process. What our amendments would do is introduce the affirmative procedure.

Does my hon. Friend agree that there is a heavy irony in a Minister who refuses to take interventions and to be held accountable for what he says suggesting that nobody should be worried about the details of parliamentary scrutiny, who then cloaks himself in an argument that somehow the scrutiny mechanisms within the European Union were not acceptable?

That is a theme running through the whole Bill. First, Ministers want to take powers for themselves—for the Executive—and away from Parliament. I understand that the Executive in this country is elected, at least in part—that is, down at this end of the building. Secondly, even in the microcosm of this Bill Committee, this is the third part of the Bill on which Ministers have refused to take interventions from the Opposition. They are not prepared to allow relevant scrutiny, which creates an even stronger argument as to why we need protections.

Does my hon. Friend agree that although we hear an awful lot about how terrible the processes were and about these laws being imposed on us, as we discussed at length, we never hear which specific laws the Government object to?

As we do not know, there might be more than 4,000 of these regulations. We would all like lists of the various different types of regulations; I would certainly like to see which of the regulations did not receive adequate democratic process and scrutiny.

In conclusion, all of the arguments that we have heard make it even more important that the Committee accepts these two amendments.

I beg to move amendment 69, in schedule 3, page 33, line 10, at end insert—

“Consent of Scottish Ministers

8A Before making regulations to which this Part of this Schedule applies, a Minister of the Crown must obtain the consent of the Scottish Ministers.”

This amendment modifies the powers which are conferred on Ministers of the Crown in devolved areas so that they may only be exercised with the consent of the Scottish Ministers.

Amendment 69, tabled in my name and that of my hon. Friend the Member for Glenrothes, simply adds a line to the end of schedule 3 that, in layman’s terms, would prevent the UK Government from acting in areas of devolved competence without the consent of the relevant Scottish Government Minister or Ministers. In previous sessions, we have discussed how the UK Government plan to avoid parliamentary scrutiny by packing Delegated Legislation Committees of this House, and using secondary legislation to dispose of thousands of pieces of retained EU law.

The Minister has heard that we on these Benches are deeply concerned about the lack of parliamentary scrutiny. Although we who work in this Parliament might be concerned, it is completely unacceptable that the Governments and parliamentarians across these islands will be excluded from those Committees and will have to sit and watch us. My hon. Friend the Member for Glenrothes pointed out that they will have to watch as members of a party that has not won an election in Scotland since 1955 push through change after change to legislation in areas that have been—and are—wholly devolved, and which the people of Scotland and its democratically elected Government do not want changed.

It is yet another example of things being done to us, against our wishes, by a Government who we did not elect. I say to the UK Government that amendment 69 is another opportunity to show the people of Scotland that you value their opinion, you respect their Parliament and Government, and you wish to respect the devolution settlement. I urge you to accept this amendment. If you do, then maybe you will go some way to letting the people of Scotland know that you are not coming for our Parliament or our powers.

Just a reminder that “you” is me. Does the hon. Gentleman mean the Minister, because I love the people of Scotland?

Absolutely, Sir Gary. I have no idea what you wish to do after you leave this place, but I am certain it is not that. If the Minster accepts the amendment, that would maybe go some way to showing that his Government are not coming after our powers or our Parliament.

I urge the members of the Committee to reject the amendment. As they are aware, the Bill contains a sunset date of 31 December 2023, by which all retained EU law will be removed or reformed. That date was chosen to create the impetus for REUL reform and enact change at the earliest opportunity. The Bill has been drafted to ensure that the sunset date is workable, but it is pivotal that there are no impediments or delays in that process. A delay of a month or more to seek consent would make it more difficult for the necessary regulations to be laid before that date. That risks the inadvertent sunsetting of laws that Departments have identified they wish to keep.

The Minister appears to be admitting that the ideological, arbitrary and unnecessary deadline of the end of next year is more important than the basic processes of democracy and of courtesy towards the devolution settlement. Is that correct? Is that what he is saying?

I congratulate the hon. Gentleman and his colleague, the hon. Member for Argyll and Bute, on the mental and political gymnastics through which they put themselves in order to make out that perfectly reasonable, fair, proportionate and devolution-friendly legislation is somehow an affront to the Scottish people and devolution. It takes a particular turn of mind and will to twist everything into a grievance, even when that is not borne out as a reasonable outcome.

The UK Government take into account a variety of factors when seeking delegated powers in devolved areas. Each Bill is drafted according to its specific policy intent and the most appropriate way to effect those policy changes. The powers for the UK Government to make statutory instruments in devolved areas are not new, and have been used across a wide range of policy areas since the advent of devolution. That is because it is often appropriate for the UK Government to amend existing, or introduce new UK-wide regulations, including in devolved areas. That approach is more efficient and ensures greater coherence across the UK, as well as making it easier for our stakeholders.

Furthermore, the amendment would impose on UK Ministers a consent requirement from Scottish Ministers for provisions in areas of devolved competence. As I said, the boundaries are not always clearcut and could give rise to litigation, which might result in regulations being struck down by the courts.

The Bill is not intended to take powers from the devolved Governments and nothing in our proposed legislation affects the devolution settlements. In fact, the powers under the Bill will give the devolved Governments greater flexibility to decide how they will regulate those areas governed by retained EU law in the future. That will enable the Scottish Government to make active decisions about retained EU law within their devolved competence for the benefit of citizens and businesses in Scotland. What a shame that we did not hear any of that reflected in the contribution of the SNP spokesman, the hon. Member for Argyll and Bute.

The Government remain committed to continuing discussions with the devolved Governments throughout the passage of the Bill to ensure that the most efficient and appropriate approach to REUL reform can be taken in every situation in a way that works and provides certainty for all parts of the UK. As I said and do not apologise for repeating, the Scottish Government will be able to make active decisions about retained EU law within their competence. They need to get on with that and not have their representatives in this Parliament making out inaccurately that the Bill makes impositions on Scotland that it does not.

It is nice to see the Minister revert to type. Having been regaled for the past two or three days by someone with a slightly more considered approach, it is nice to see that the Government’s gloves have finally come off. We are getting down to the nitty-gritty of the Bill.

Let us be absolutely clear: this Bill is a full-on attack on the devolution settlement. Coupled with the United Kingdom Internal Market Act 2020, this is an attack on our Parliament and our power. The idea that the Bill is “devolution-friendly” is literally laughable, as he heard from the reaction to it of me and my hon. Friend the Member for Glenrothes.

To be clear, that date of 31 December was chosen without consent. No one asked the Scottish Government or the Scottish Parliament if they agreed to that date. The date is ideological, arbitrary and a cliff edge 13 months from now, and it is almost certain to fail. It is an impossible target to achieve, and it will not be achieved. I say to the Minister again: we are giving him and his Government the opportunity to show that they respect the devolved settlement and Administrations. The amendment gives them the opportunity to say once and for all: “We respect you, listen to you and value your contribution.”

Despite all the Minister has said, I urge him yet again to accept the amendment. If he does not, however, I will not press it to a vote.

It is not only in their debate style that we have seen a complete contrast between the Minister and his colleague the Minister for Industry and Investment Security, who was in Committee last week. We should remember what the Minister’s colleague said last week about the need for the 31 December deadline and how achievable it was. When we raised concerns that bits of legislation will be repealed by mistake, that was scaremongering. When we raised concerns that if the Government force through 90,000 job cuts in the civil service, civil servants who are already overworked will be put under impossible pressure, that was scaremongering as well. When we warned that the pressure would lead to more mistakes being made than would be acceptable or sustainable, that was scaremongering because the civil servants would get it right first time in just over a year. Now we are being told that a delay of a month in a small minority of some of these 4,000 bits of legislation would be so catastrophic that it cannot even be allowed in the name of simple democracy or simple courtesy.

If the Minister is concerned that a month’s delay is too long and if the Government are really on top of the problem, as they keep telling us they are, they could send a message to the devolved Governments today to say: “These are the parts of retained EU law that we think have got a direct impact on your devolved powers. We only need to give you a month to decide whether or not to give consent. But because the Government are in control and we know what we are doing, we can give you six months. If you come back in six months and tell us whether you consent, we still have three months to negotiate any differences and then a full three months to put the legislation in place.” That is how the Government would manage the situation if, first, they really were in control and knew what they were doing, of which we have seen very little evidence so far, and secondly, if they really believed in and respected the spirit of devolution.

The spirit of devolution is that there will be different answers in the four different nations of the United Kingdom because there are different needs, different priorities and, as we see, more and more different expressions of political will. On that point, the Minister keeps referring to the suggestion that Government Members understand and respect the will of the people of Scotland. We are prepared to put that to the test at any date of the Government’s choosing. The Government are running away from the will of the people of Scotland.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Just a gentle reminder that we are sometimes in danger of making Second Reading speeches on some of the amendments. We all know the rules, so let us keep our focus on the amendment in hand.

Question proposed, That the schedule be the Third schedule to the Bill.

It is worth spending a little time on schedule 3 because it is the engine underneath the dashboard of the vehicle that will drive us off the cliff edge at the end of next year. It gives the Government the ability to use regulations to carry out the heavy lifting required by the Bill. As we have discussed many times already, we know the potential ramifications of that for the huge range of protections that our constituents currently enjoy and for the lack of parliamentary oversight that there will be in that process.

We have said all this before, but the broad changes that will be carried out under the regulations will mainly fall under the negative procedure. Offering only the affirmative procedure to a small proportion of the changes envisaged by the Bill falls far below the standard of scrutiny that we would expect. When one considers the sheer number of regulations required to make the changes, which we have talked about, and of course the risk that laws will fall by default because the relevant Department has not identified them, the concerns over lack of scrutiny multiply.

Does my hon. Friend agree that what is so critical is that we depend on Ministers knowing what is affected and what is not? I am struck by the fact that the Minister tried to tell us on Second Reading that airline safety rules would not be included and therefore we did not need to worry about the regulations. In fact, subsequent written parliamentary questions have confirmed that the SIs around airline safety were part of the Bill and therefore not contained in the Civil Aviation Act. Does my hon. Friend agree with me that making sure the engine underneath is roadworthy is perhaps one of the most critical things we can do in Committee, given that Ministers themselves perhaps should not be at the wheel?

I think I have got rather lost in the number of analogies there; I might want to pull over and take a breather. The point is that we just do not know the full extent of the Bill. If we do not know, and if the Ministers and civil servants do not know, we cannot be confident that there will be no unintended consequences, which is why the level of scrutiny that the Bill affords is inadequate.

The wider problem is the way the Bill is framed. It seeks to provide the wrong answer to, essentially, the right question—“What do we do about all the retained EU law?”—but I am afraid that the answer we have come up with is wholly inappropriate. It does not uphold principles of scrutiny or parliamentary supremacy; actually, it makes Parliament a bystander in large parts of the process.

Schedule 3 specifies how the powers in the Bill will be exercised through regulations made by statutory instrument or the relevant equivalent in the devolved Administrations. The schedule sets out the parliamentary procedure applicable to specific powers in the Bill, including in cases where instruments contain combined provisions using a number of powers. It provides for equivalent procedures to apply in the devolved legislatures and for joint procedures to be available when Ministers of the Crown are making regulations jointly with devolved authorities.

The hon. Gentleman asked about the sifting procedure. The sifting procedure will apply to legislation made under clause 12, the power to restate retained EU law; clause 13, the power to restate assimilated law or sunsetted EU rights, powers, liabilities and so on; and clause 15, powers to revoke or replace, where Ministers decide to use the negative procedure. The sifting procedure largely corresponds with the sifting procedure under the European Union (Withdrawal) Act 2018 and under the European Union (Future Relationship) Act 2020. In both cases, sifting was effectively used to ensure proportionate parliamentary scrutiny on legislation regarding EU exit.

Under the procedure, recommendations on the appropriate procedure from both Committees, in the House of Lords and House of Commons, must be received before the instrument can be made. If either Committee recommends that the instrument should be subject to the draft affirmative procedure, the Minister must either follow that recommendation or publish a written statement explaining why they disagree with the Committee’s recommendations. If no recommendations have been received from the Committees after 10 days, the legislation can be made under the proposed procedure.

The sifting procedure will provide additional scrutiny of the powers while retaining the flexibility of using the negative procedure when and only when there are good reasons for doing so. The Government recognises the significant role Parliament has played in scrutinising instruments subject to these sifting procedures and are committed to ensuring the appropriate scrutiny of any secondary legislation made under the delegated powers in the Bill.

Question put and agreed to.

Schedule 3, as amended, accordingly agreed to.

Clause 21 ordered to stand part of the Bill.

Clause 22

Commencement, Transitional and savings

I beg to move amendment 66, in clause 22, page 21, line 39, at end insert—

“(aa) section [Impact assessments];”.

With this it will be convenient to discuss new clause 3—Impact assessments—

“The Secretary of State must publish an assessment of the impact of the

(a) revocation of any—

(i) EU-derived subordinate legislation, or

(ii) retained direct EU legislation, or

(b) removal under section 3 of any rights, powers, liabilities, obligations, restrictions, remedies or procedures saved by virtue of section 4 of the European Union (Withdrawal) Act 2018 at least three months before the revocation or (as the case may be) removal takes effect.”

I will be mercifully brief. The amendment stands in my name and that of my hon. Friend the Member for Glenrothes. The amendment and new clause 3 would oblige the UK Government to provide an impact assessment on what they believe the likely consequences would be of any withdrawal of a piece of legislation before any revocation of the EU law takes place. That impact assessment should be published three months ahead of any scheduled revocation date.

The Government may see that requirement as a tad onerous, but it simply reflects the gravity of what the Government are planning with retained EU law. It would ensure that, rather than having the planned bonfire of legislation, the Government and their Departments of State are forced to consider very carefully and in great detail exactly the consequences of what they are about to do. Is that not what our constituents would expect of this Parliament and its parliamentarians—to consider very carefully the consequences of each piece of action that it takes and what impact it may have on those constituents, their businesses and livelihoods? I urge the Government to accept the amendment and new clause.

I ask that the Committee reject the amendment and new clause. When retained EU law is a regulatory provision and is being amended significantly, we would expect Departments to put their measures through the Government systems for regulatory scrutiny, such as the better regulation framework.

Where measures are being revoked, Departments will be expected to undertake proportionate analytical appraisal, and we are exploring appropriate steps that we can take to appraise the resulting impacts. However, given that Departments will undertake proper and proportionate cost-benefit analysis in relation to amendments to retained EU law, we do not consider there to be a need to include a reference to impact assessments in clause 22, relating to commencement, as such procedures and approaches are baked into the way Departments behave. I therefore ask the hon. Gentleman to consider withdrawing the amendment.

I am disappointed but not in the least surprised by the Minister’s response. In the future, when we pick over the detritus of the Bill and people say, “Why did they do it the way they did it?” the Government will never be able to say that they did not know what would happen and that it was not brought to their attention. They have decided to plough on regardless with this self-imposed cliff-edge deadline. I will not push the amendment to a vote. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

I beg to move amendment 71, in clause 22, page 21, line 39, at end insert—

“(aa) section [Assessment of the impact of repeal of retained EU law];”.

With this it will be convenient to discuss new clause 7—Assessment of the impact of repeal of retained EU law—

“Within three months of the passage of this Act, the Secretary of State must publish an assessment of the impact of the repeal of any retained EU law done under the provisions of this Act.”

I will again be brief. The amendment and new clause would oblige the UK Government to publish an impact assessment of the consequences of repealing retained EU law. If they are not prepared to publish an analysis before, it is incumbent on them to publish an impact assessment of the consequences of every piece of retained EU law that is being revoked, and for that impact assessment to be published no later than three months after the date that any revocation has taken place.

This proposal is similar to what we proposed with amendment 66. We understand that it will take a great deal of work for Ministers and officials, but given the seriousness of the consequences of getting this wrong, if this revocation of retained EU law has to happen, it should happen with as little negative impact on businesses and people’s lives. That may mean a little extra work for Ministers, their staff and Whitehall Departments, but we think it is well worth doing.

I hope the Minister will view this amendment—indeed, all our amendments—as being in the spirit of trying to make what we have described as a truly awful piece of legislation just a little better. As we said at the outset, given the rate at which the Government are planning to proceed, mistakes are absolutely inevitable, and people—our constituents and their businesses—will be hurt by those mistakes. If the Government are not prepared to do an impact assessment before they revoke EU law, it is incumbent on them to carry one out after the EU law has been revoked so we can understand the consequences of what has happened and hopefully avoid a future catastrophe.

I thank the hon. Gentleman for the constructive spirit in which he tabled the amendment and new clause. None the less, I ask the Committee to reject them. They are similar to the previous group. Given that Departments will undertake proper and proportionate analysis in relation to amendments to retained EU law, and that effort is under way to understand the potential impacts of sunsetting, we do not consider that there is a need to include them in the Bill. I therefore ask the hon. Gentleman to withdraw them.

I thank the Minister for his reply. It is nice to see that the temperature has come down somewhat. If only to reassure the public that what they are doing is working, it is incumbent on the Government to provide these impact assessments. The Bill is happening hurriedly and, dare I say it, with a lack of planning, and when it hits the buffers on 31 December next year, people have a right to know what that means for them. However, I will not press the amendment to a vote. I am certain that we shall return to this issue on Report, but I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

I beg to move amendment 61, in clause 22, page 21, line 42, at end insert—

“(da) section [Impact on the UK’s obligations under the Trade and Cooperation Agreement];”.

With this it will be convenient to discuss new clause 1—Impact on the UK’s obligations under the Trade and Cooperation Agreement—

“Within three months of the passage of this Act, the Secretary of State must lay before Parliament an assessment of the impact of this Act on the UK’s obligations under the Trade and Cooperation Agreement between the UK and the European Union done at Brussels and London on 30 December 2020.”

When England and Wales voted to leave the European Union, and took Scotland and Northern Ireland out of the EU along with them, the United Kingdom Government signed a withdrawal agreement with Brussels. In return for certain rights and privileges in terms of trade with the EU, the United Kingdom promised not to diverge from the agreed level playing field set out in the trade and co-operation agreement.

I and many others have serious concerns that, if the Bill passes into law as it stands, the United Kingdom is in grave danger of breaching the international agreement it signed—I presume in good faith. On the presumption that the trade and co-operation agreement was signed in good faith, and that the UK Government would not knowingly and deliberately break such an important international treaty, I strongly urge the Government accept amendment 61. It would oblige the Government to publish, within three months of the Bill becoming law, an impact assessment of how the revocation of retained EU law, particularly on workers’ rights and environmental protections, has affected the trade and co-operation agreement.

The Government cannot be deaf to people’s concerns about the Bill, or to the genuinely held fear that, if it is pushed through unamended, and is implemented in the way that the Government have suggested, it will have a detrimental impact on the level playing field agreement with the European Union. If that happens, and if we stumble, accidentally or otherwise, into a situation in which we have broken the level playing field agreement, I fear that the United Kingdom could expect economic sanctions to follow. The last thing that the economy needs right now is another completely avoidable self-inflicted knock.

I urge the Government to accept the amendment. It makes sense. It sends a signal to our friends in the European Union that the United Kingdom is not about to unilaterally diverge from or break its international agreements, that we respect the level playing field, and that we will stick to what we said.

I will be brief. This is an issue about which we are also concerned. No one wants to enter into a trade war because a Minister makes a mistake, and amends or forgets to restore regulations. That is what the Bill risks. I remind the Committee what the hon. Member for Watford (Dean Russell) said on Second Reading:

“I am very happy to make a commitment today that the Government will, as a priority, take the necessary action to safeguard the substance of any retained EU law and legal effects required to operate international obligations within domestic law. We will set out where retained EU law is required to maintain international obligations through the dashboard”—[Official Report, 25 October 2022; Vol. 721, c. 189.]

We are back to the dashboard. That is not quite as good as having something in the Bill, which is what the amendment seeks. However, it prompts a question for the Minister: when can we expect the commitments regarding the lovely dashboard to be honoured? We are all regularly hitting “refresh” to see whether the dashboard will be updated with the additional 100-plus or 1,400-plus Bills that have been identified. It is important that our international obligations are maintained. If there is a way of ensuring that Parliament is content, we are happy to support the amendment.

I ask the Committee to reject the amendment. None the less, the Government agree about the importance of the UK continuing to meet the obligations set out in the UK-EU trade and co-operation agreement. As a sovereign nation, we have the right to regulate as we see fit and in the best interests of the UK. This right is preserved in the UK-EU trade and co-operation agreement, and the Bill is part of us exercising that right. The level playing field provisions commit the UK and EU not to weaken or reduce overall levels of protection on labour and social standards, climate and the environment in a manner affecting trade or investment between the parties.

The Government’s intention is to ensure the necessary legislation is in place to uphold the UK’s international obligations. That is why we pledged on Second Reading to safeguard in domestic law the substance and legal effect of any retained EU law necessary to meet those international obligations. We have an exciting opportunity to embark on ambitious regulatory reform and remove outdated legislation that does not suit the UK. We can build on the high standards we have committed to within the trade and co-operation agreement, and at the same time boost competitiveness and productivity—something I hope the whole Committee will support. I therefore urge the hon. Member for Argyll and Bute to withdraw the amendment.

I thank the Minister for that response. Whether on workers’ rights or environmental protection, we have heard so much evidence and correspondence from people outside this Parliament who have genuine fears that this is the starting pistol of a deregulatory race to the bottom. If that were to be the case, I fear that the United Kingdom would be in breach of the level playing field agreement. I do not think the Government have fully considered the implications of this legislation. All my amendment sought to do was force the Government to consider those implications. I would push it to a vote, but I think it is another issue we will return to at a later stage, because it is vital that we are not seen to be tearing up international agreements or flying in the face of them in the way I fear the Bill will do. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

I beg to move amendment 65, in clause 22, page 21, line 42, at end insert—

“(da) section [Disapplication of the UK Internal Market Act 2020];”

With this it will be convenient to discuss new clause 2—Disapplication of the UK Internal Market Act 2020—

“Where Scottish Ministers have used any power granted to them under this Act—

(a) to provide that any EU-derived subordinate legislation or retained direct EU legislation is not subject to revocation at the end of 2023, or

(b) to restate any provision of retained EU law (or, as the case may be, assimilated law), that legislation or provision shall apply notwithstanding any provision of the UK Internal Market Act 2020.”

Having been mercifully brief previously, I may take slightly longer now, because I think these measures are fundamental to our concerns about the Bill. Amendment 65 and new clause 2 would ensure that UK Ministers could not use the United Kingdom Internal Market Act 2020 to undermine or deny Scottish Ministers protecting retained EU law. These measures go to the heart of the issue—working between the internal market Act and this Bill.

We have said throughout Committee that even if this were a standalone piece of legislation, it would be sufficiently bad for us to oppose it at every step of the way. But for Scotland—and, I suspect, other devolved Governments—we have taken it in conjunction with the internal market Act. Not only does it present an existential threat to Parliament and the devolution settlement; this Bill is a disaster for crucial parts of the Scottish economy. I do not think it was coincidental or accidental. This is part of a deliberate policy to undermine and weaken devolution and the devolved Parliaments. It is designed to force the constituent parts of the United Kingdom to align their policies with those of the UK Government and to do what this Government tell them to do. The United Kingdom Internal Market Act 2020 knowingly created confusion and deliberately blurred the hitherto clear lines of demarcation that existed.

The Bill, when in effect, will impose this place’s will on areas that have been wholly devolved since the Scottish Parliament was reconstituted more than two decades ago. In the areas of the environment, health, food standards and animal welfare, the democratically elected Scottish Parliament is the body that sets policy and direction. Since the internal market Act came into effect, we have seen significant encroachment by the UK Government into these wholly devolved areas. Amendment 65 and new clause 2 would ensure that if the Scottish Government and Scottish Parliament decided that they wished to remain aligned to EU law, they could do so without the imposition of the internal market Act forcing them to change their position.

The infringement into the powers of our Parliament has, I fear, become a full-scale attack, with blanket, UK-wide—from Truro to Thurso—policies being imposed in areas over which this Government have no legislative consent. It is a crusade to weaken food standards, animal welfare, product labelling, environmental health and so much else by a Government who have no mandate to operate in those fields in Scotland. As I said earlier, this is the starting pistol on the deregulatory race to the bottom. That is why the United Kingdom Internal Market Act and the Bill have been brought in in this way. It goes completely against the spirit of devolution and is in direct contravention of the Sewel convention.

Before Second Reading, I met with the regional board of the National Farmers Union of Scotland in Argyll and Bute on a farm near Oban. The message was stark: farmers feel forgotten and undervalued. They have been battered by Brexit and they now face this Bill, which, they have said, is a potential death sentence for the agriculture sector in Scotland, which requires subsidies to manage the land, keep the lights on in the hills, provide employment and stem rural depopulation, as well as producing high-quality, high-value beef, lamb and dairy.

We know that the Bill will allow the lowering of food standards. We know that it will allow the relaxation of rules around labelling and animal welfare. We know that it will allow mass importation of inferior-quality products. All that will be an unmitigated disaster for Scottish agriculture. Our farmers are also painfully aware that, as it stands, there is very little that their democratically elected Parliament can do about it.

Last Wednesday, between our sittings on Tuesday and Thursday, I met Martin Kennedy, president of the National Farmers Union of Scotland, and his officials. They repeated almost word for word what I was told by my Argyll and Bute farmers. Martin Kennedy’s message to the Committee and this Government is that he and his members have severe reservations and concerns about the potential impacts of this Bill. As we do, he and his farmers accept that the Bill cannot be taken in isolation, but has to be put alongside the United Kingdom Internal Market Act.

Scottish farmers are not best noted for their political radicalism—probably because they are so busy battling the elements day and night to produce some of our best dairy and meat products—but this Government should understand that the Scottish agriculture sector is up in arms, maybe as never before, about the Bill and the United Kingdom Internal Market Act, and their disastrous consequences. If the Government will not listen to us here today and choose to ignore the Scottish Government, I implore them: listen to Martin Kennedy and his members about what this Bill will do to them, and their businesses and livelihoods. They are the ones who will bear the brunt of being forced into a UK-wide, one-size-fits-all regulatory framework that forces us to diverge from EU regulations.

When supermarket shelves become full of cheap, inferior cuts of meat, when lorryloads of chlorine-washed chicken cross the border and saturate the market, when animal welfare is a thing of the past, and when labelling rules are so relaxed that consumers do not know what they are consuming, that is a death knell for Scottish agriculture. The people of Scotland should be in no doubt that this Bill, coupled with the United Kingdom Internal Market Act, means one thing and one thing only: this place is coming for our Parliament and our democracy.

Unfortunately, the new clause appears to apply only to Ministers in Scotland, not in the other devolved nations, but it does raise some important issues. If we start from the proposition that it is right that in areas of devolved competence, the devolved Administrations should have the ability to re-regulate their own priorities, which, I think, is where the Bill takes us, it does not take much to see where that might cause some difficulties, particularly when the Bill creates no wider duty in relation to the operation of the market access principles underpinning the UK internal market. The Bill creates the risk of new barriers to trade in the UK internal market. I accept that there is a conundrum there.

We want to allow the devolved nations to develop policy as per their own competencies, but there is no process in the Bill for resolution of any regulatory differences between the UK and the devolved Governments and, critically, no process for businesses or consumers to be consulted on the potential for new barriers between England, Scotland and Wales for certain categories of good. We need to understand how the Government intend to address that. Are the processes in the UK Government and devolved Administrations common frameworks post Brexit intended to apply to the Bill? If so, it is not clear from the Bill. Perhaps the Minister can reassure us on that.

I take the initial point of the hon. Member for Ellesmere Port and Neston that we should perhaps have included the other devolved nations. It is an indication of the weakness of the Bill Committee system that sometimes some of the devolved nations have no representation whatever on a Committee. Of course, the way to address that is for the Government to signal their clear intent by accepting the amendment and undertaking to introduce an equivalent amendment protecting Northern Ireland and Wales at a later stage.

My hon. Friend the Member for Argyll and Bute raised a concern that the Bill will be used to lower standards. The Government always howl in protest and say that it will not be, but last week they insisted on including a clause that would prohibit making regulations under the Bill that placed additional burdens on businesses. They have not introduced a clause that prohibits the use of the Bill to make regulations to lower standards on workers’ rights, animal welfare or anything else. I wonder why that might be.

My hon. Friend also pointed out yet again that the presumptuous way in which the UK Government forced through the United Kingdom Internal Market Act 2020 was based on the assumption that, notwithstanding the devolution settlements, Ministers in the British Government have the right to overrule the elected national Parliaments and Governments of Scotland, Wales and Northern Ireland. Although there will be cases where it is better to have similar or sometimes identical standards across these islands, the Government assume that what is decided by those who are elected by and for the people of England should automatically be what is imposed on the people of the other nations of the United Kingdom. That is not how devolution works. That is not how consensus works, which is what the Secretary of State for Scotland kept going on about last Wednesday in reply to our urgent question.

If the Government seriously want to work by consensus across the four nations, they would introduce legislation that required it to be in place before anything was done to change legislation. The Government have been reminded umpteen times over the past few weeks of the devolved competencies of our national Parliament in Scotland, Senedd Cymru and the Assembly in Northern Ireland. I appreciate that there is a different situation in Northern Ireland just now, and that there may be times when it is essential, and in the interests of the people of Northern Ireland, for the UK Parliament to act when the Northern Ireland Assembly is not functioning, but the Bill is not about stepping in in emergency circumstances. The Bill, and the clause that we are looking at, is about the Government having the right to step in wherever it suits them.

I urge the Government to accept the amendment. I know they will not, because they seem to be under orders not to listen to or accept any amendment, regardless of how sound or sensible it is, if it comes from the wrong side of the Committee. If that is an indication of the way they intend to use the powers that the Bill will give them, we should all be very concerned indeed.

I urge the Committee to reject the amendment. The UKIM Act was introduced to protect businesses, jobs and livelihoods following our exit from the EU. The amendment seeks to disapply the provisions of the UKIM Act in cases where Scottish Government Ministers use the powers contained in the Bill to preserve or restate retained EU law. The operation of the UKIM Act is essential in maintaining our integrated market to ensure the free flow of goods, services, and people through the recognition of professional qualifications throughout the UK. The UKIM Act provides certainty for businesses and consumers where divergent approaches to regulation are taken in different parts of the UK, and the provisions of the Bill do not change that.

We recognise and value four nation co-operation—that is one reason that all four Administrations jointly started the common frameworks programme—and we remain committed to working with the devolved Governments in areas of shared policy interest, including REUL. I can see why the hon. Member for Argyll and Bute, from an oppositional point of view, would make out that we will lower our standards, but that is absolutely not our intent. Food standards are a devolved matter—I think that will be reassuring for Martin and his members—and key measures in the Bill apply to the devolved Administration. Accordingly, the devolved Governments will be able to exercise the powers in the Bill to amend retained EU law in their existing devolved competencies. We will work with all the devolved Governments, including the Scottish Government, on retained EU law reforms in line with commitments and common framework agreements that cover food standards.

If food standards will be absolutely protected and enshrined, as the Minister said, will he give me a cast-iron guarantee that, if the Scottish Government decide they do not want chlorine-washed chicken, they can prevent lorryloads of chlorine-washed chicken from crossing the border? Can he give me a cast-iron guarantee that if the Scottish Government say that they do not want inferior, cheap, hormone-injected beef on Scottish supermarket shelves, they can prevent that from happening? Can he give me a guarantee that, should the Scottish Government decide they will stick to the legislation on animal welfare and passporting, that too will be absolutely protected in this legislation?

Of course, chlorine, chlorine dioxide and other chemical washes have not been approved for washing chicken meat, and therefore are not allowed to be used. The hon. Gentleman can paint up any number of other unfounded scare stories and ask for categorical assurance from the Government that they are not planning to kill every firstborn, but I assure the Committee that that is not our intention.

Let me rephrase the question. Should the UK Government decide that chlorine-washed chicken is acceptable and the Scottish Government decide it is not, could the Minister give me a cast-iron guarantee that the primacy of the Scottish Government’s decision to continue to ban chlorine-washed chicken would be respected under the terms of the Bill?

Of course, it may be a question as to whether the Scottish Government decide to approve chlorine-washed chicken. Imagine if the scientific evidence provided in Scotland did that; perhaps the Scottish Government are secretly planning to bring in chlorine-washed chicken, in which case we would have to consider how that would be dealt with. In that instance or any other, the Government will continue to work closely with the devolved Governments to manage intra-UK divergence, including through existing mechanisms such as the common frameworks programme and the UK Internal Market Act.

I will not insult the Committee by suggesting that the Scottish Government will do things that I honestly do not think that they will do; I just wish that the hon. Gentleman would do us the courtesy of doing the same. I urge him to withdraw his amendment.

I will not withdraw the amendment, and I will seek to divide the Committee. The Minister said that the UK Internal Market Act is there to protect the interests of business; perhaps it is there to protect the interests of business as long as the business is not a Scottish farmer. This will be the death knell for the Scottish agricultural sector. Those in the sector are not the most radical group on the planet, but this Government and legislation have fired them up as I have never seen before. This is not four nation co-operation; this is as far as we can get from four nation co-operation. This is one nation imposition. On that basis, I will seek to divide the Committee.

Order. It is 11.25 am. We will start this afternoon at 2 o’clock with a Division. I know that Members are keen to get to the Chamber, so off you go.

I beg to move, That the clause be read a Second time.

It is a pleasure to serve under your chairmanship, Mr Robertson, and it is fantastic to rise to do something more worthy in Committee than pour water for my hon. Friend the Member for Glasgow Central.

I accept completely that, as has been said many times, the Bill is excellent and we just need to tighten it up, and that it contains provisions, including on unique identifiers, that will help to block some of the more obvious means of carrying out the practice of phoenixing, which has been discussed both when we took oral evidence and throughout line-by-line scrutiny. However, it is my view, and that of many others, that we are missing a golden opportunity to fully address phoenixing with the Bill and to tighten up all parts of the regulations relating to Companies House.

The genesis behind new clauses 69 and 70 is a specific directorate and company the businesses of which have unfortunately harmed my constituents and many others across Scotland and throughout the UK. New clause 69 would stop those who burn through multiple limited companies leaving a train of destruction in their wake, with little or no recourse for the authorities. It would not prevent those who have no nefarious or ill intent but find that their company is unsuccessful, even on more than one occasion. It would not apply automatically to any individual who hits the three winding-ups limit; it would only allow the registrar to act if there were grounds to do so.

Around 10 years, a company called HELMS—Home Energy and Lifestyle Management Systems—controlled and operated by a man named Robert Skillen, went door to door in my constituency offering solar panels and home insulation as part of the now-scrapped UK Government green deal scheme. You will be pleased to know, Mr Robertson, that I do not intend to go over the whole story; suffice it to say that hundreds of my constituents and thousands of people across Scotland are still paying the price to the tune of thousands of pounds each.

Skillen was able to wind up HELMS, move on to his latest venture with millions in his back pocket and face no consequences for his personal actions. He is an individual—there will be thousands like him—with a long track record of extracting maximum value from his scams via limited companies and then setting up shop for a new crack at it, having defrauded thousands of people. He even had the cheek to set up a company to assist those who had been defrauded by his previous company to receive compensation from which he would receive a cut. That type of individual is currently beyond the reach of the law; hopefully, provisions such as the new clause would assist with that.

Mr Skillen was fined £200,000 by the Information Commissioner’s Office and £10,500 by the Department of Energy and Climate Change, as it was at the time, but the fact is that of that £200,000 he paid only £10,000 before winding the company up. That led the ICO to lobby the Government to enable it to fine individuals such as Robert Skillen up to £500,000.

In respect of cases such as those of Mr Skillen and many others who make sharp practice look easy and do so without any care or remorse, the new clause would act as a deterrent to the manipulation of company registration for personal gain and enrichment and prevent those who have used multiple company identities for malfeasance or sinister purposes from continuing that pattern of behaviour ad nauseum. I stress that the point of the new clause is not to prevent those who have had genuinely unsuccessful businesses from starting afresh. The registrar should be able to separate those cases from those of people with evil intent.

Companies House already has the power to disqualify directors and the new clause would simply allow it to consider slightly wider grounds on which such a disqualification could rest. It would help to put an end to the cases that every Committee member will have encountered in their constituencies of companies taking payment for goods and services, shutting up shop with the cash pocketed and then popping up again under a different name but carrying out exactly the same work. The purpose of the new clause is to tease out from the Minister the Government’s approach to phoenixing. With that, I rest.

It is a pleasure to serve under your chairship, Mr Robertson, and to follow the hon. Member for Paisley and Renfrewshire North, who made a very important speech. New clause 69 would introduce new provisions to prevent the continued trading of companies repeatedly declared insolvent and the practice of phoenixing, which the hon. Member outlined. It states:

“A company may not be registered under the Companies Act 2006 if, in the opinion of the registrar of companies, it is substantially similar to a company which has been subject to winding up procedures under the Insolvency Act 1986 on more than three occasions in the preceding ten years.”

A company may be “substantially similar” to previous companies in terms of its name, registered office, proposed officers and so on. This would mean that there is more scrutiny, and questions are raised about whether a company should be able to continue trading.

It is very important, for the reasons we have outlined in Committee, to seek to protect the public and other businesses from unscrupulous operators effectively carrying on their business activity and going through the same cycle of building up debts, which leads to consumer issues, and simply disappearing and starting again. We must deal with that behaviour, which is a route through which economic crime takes place, and that is why we support the new clause. We will listen closely to the Minister’s response on how the Government propose to tackle the issue of phoenixing.

I note the similarity between the intentions of this new clause and new clauses 28 and 46, tabled by my hon. Friend the Member for Aberavon and I, which we have discussed. In different ways, all those new clauses would tighten up glaring loopholes around strike-off, insolvency and phoenixing that enable those who are participating in economic crime to avoid scrutiny. We welcome the new clause, and we look forward to the Minister’s response.

It is a pleasure to serve with you in the Chair, Mr Robertson. I appreciate the spirit of the amendment, and I also appreciate the hon. Member for Paisley and Renfrewshire North describing this as an excellent Bill—a very constructive point—but one that needs tightening up; I understand his points and applaud the efforts made by him and other Opposition Members to do so.

I am fully aware of the devastating consequences that such issues have on businesses, suppliers, supply chains and our constituents. I have a case of a gentleman called Scott Robinson who repeatedly closed his investment business down. It was called TBO Investments at one point and then became Mount Sterling Wealth. He effectively took his clients with him, and people lost huge amounts of money. They had provided money for him to invest based on supposedly low-risk investments, but he was actually gambling that money in very high-risk investments, and he did that time and again. I really sympathise with the spirit of the amendment, and I am keen to look at not just phoenixing but other types of situation where people deliberately take risks like that that have devastating consequences for consumers and businesses in our constituencies.

The Minister says he will look at this and is sympathetic to the issue. For clarity, does that mean a later stage beyond the Bill or at a later stage of the Bill?

In my view, it needs further work rather than just plonking the new clause in the Bill. There is a wider issue here and I am pleased to see that he seems to acknowledge that. Certainly, a piece of work is needed to look at this in detail. There are some measures in place already—just the pre-pack arrangements subject to Committee scrutiny. I will come on to that in a second.

There are existing provisions in the Bill that provide safeguards against the fraudulent phoenixing behaviour that the new clause targets. Section 216 of the Insolvency Act 1986 makes provision for restriction and prohibition on the re-use of a company name when new companies are formed, which is an intrinsic feature of phoenixing and one that the hon. Gentleman addresses in his new clause. That provision will be complemented by the new powers contained in the Bill. For instance, the registrar may choose to exercise the power to compel the production of information to help her determine whether an application to incorporate a company complies with the proper delivery requirements. They will include that those named as prospective directors can lawfully act as such, which would not be the case if they were barred under the 1986 Act from acting as a director of a company using a prohibited name, and the registrar would be empowered to reject the incorporation application. Furthermore, the registrar will have greater power to direct companies to change their names if they deliberately mislead in their purpose. Such powers provide the registrar with a powerful tool when considering new company registrations.

The registrar will be able to examine and interrogate information already held and share data with law enforcement partners and other authorities. That will allow other key characteristics such as verified identities, the registered office, proposed officers and business activities to be critically assessed with intelligence received to spot patterns of phoenixing.

If adopted, the new clause would be largely duplicative of provisions already in place or those introduced by the Bill. It would also erode the registrar’s discretion in the application of their powers as envisaged. There will be some instances when companies are captured by the new clause and are not culpable, but are merely victims of a legitimate business failure trying to start their enterprise. For instance, the new clause mentions companies that have

“been subject to winding up procedures”.

In that situation, they may be companies that have not necessarily gone into liquidation. There might be other legitimate reasons that those procedures have taken place, which may not be reflective of something that might be considered phoenixing. So, the registrar must be allowed to apply their powers according to the facts and information available. As I have said, I am keen to look at that, including the pre-pack rules, to see where we can tighten up on the matter to make sure those instances are minimised. For all those reasons, I hope the hon. Member will withdraw his new clause.

I thank the Minister for his response. The new clause was very much a probing amendment and the Minister points out one weakness. It is a small new clause for dealing with quite a big problem and I may look to table a much more rounded amendment on Report. With that, I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 70

Bar on directors in breach of duties receiving public funds

“(1) A company with a director or directors which are in breach of the general duties outlined in Chapter 2 of the Companies Act 2006, or who have been found to have committed statutory breaches of employment law, may not receive Government provided funds or financial support, unless subsection (2) applies.

(2) A company whose director or directors meet the criteria outlined in subsection (1) may receive Government provided funds or financial support if such funds or support are provided solely and specifically for the direct benefit of the company’s employees.”—(Gavin Newlands.)

This new clause seeks to prevent directors who fail to comply with their duties as a company director or with employment law provisions from being able to access funds in instances where these funds are for the benefit of the company and not the company’s employees.

Brought up, and read the First time.

I beg to move, That the clause be read a Second time.

It is like London buses—I am back. I do not propose to take as long to speak to new clause 70, which proposes to turn off the tap of public funding to those who have failed to discharge their duties under the Companies Act or who have failed to discharge their duties to their company’s staff. I mentioned Mr Skillen previously, and his local constituency got in touch with me to tell me that he is back in business and that his company had been in receipt of public funds. The aforementioned Mr Skillen is currently a director of four limited companies, each one coming after the winding up of HELMS. Those companies are interlinked via control and ownership structures. Through that, Government loan funding was applied for and granted just before Mr Skillen became a director and owner of a large chunk of the new enterprise.

My new clause is very simple and would prevent those who fail to discharge their duties from receiving public money or support for any company for which they are listed as a director. Mr Skillen’s modus operandi was to misuse and mis-sell under the Government’s green deal scheme, but he popped up a few years later at a company benefiting from taxpayer funding and is involved in the energy business as well. It is simply not good enough that policy interventions intended to promote a wider economic strategy, be it local or national, are manipulated and used by spivs who are able to hide behind company registration and face no barriers to their actions from the registrar, short of the nuclear option of being barred from acting as a director.

We have seen a number of cases over recent years of multinational companies, such as P&O Ferries and, not quite to the same extent, British Airways, breaching their duties as employers and breaching employment law. Indeed, the chief executive of the former happily admitted breaking the law while appearing before the Transport Committee’s joint session with the Business, Energy and Industrial Strategy Committee. Such blatant and open law breaking cannot be rewarded with taxpayer support, and the new clause would ensure that those breaching laws that are meant to protect workers cannot then dip into the same workers’ pockets for financial support. It would not impact on workers, because any funding, such as for a furlough scheme, would not be affected by the new clause.

This is a useful new clause, in the spirit of some of the new clauses that we have tabled on what should and should not be available to directors who are in breach of their duties, disqualified and so on. The new clause, tabled by our colleagues from the SNP, would introduce new provisions that bar directors who are in breach of their duties from receiving public funds. Under the new clause, a company with a director or directors who are in breach of the general duties outlined in the Companies Act 2006, or who have been found to have committed statutory breaches of employment law, should not receive Government-provided funds or financial support unless it is solely and specifically for the purpose of directly benefiting the company’s employees.

This is an important debate, and I would be interested in the Minister’s response. When taxpayers find out that their money goes towards effectively supporting or enriching directors who are in breach of the Companies Act, there will be a real question about what the Government can do to further disincentivise and not reward those who are in breach of employment law or other areas of legislation. We support the sentiments behind the new clause and the arguments being made, and I look forward to the Minister’s response.

I thank the hon. Member for Paisley and Renfrewshire North for his new clause; again, I support the motivation behind it. Clearly, there are restrictions already. Where a director has failed to observe a specific duty under the Companies Act 2006, they will potentially find themselves liable to criminal sanction and disqualification. I accept the fact that we have not focused too much on that area in the past, but that is exactly why we are legislating in the Bill to make the registrar far more proactive in her work. Where an employer has committed a breach of employment law, the relevant statute will generally provide appropriate remedies either by way of a right of action for the worker—normally in an employment tribunal or the courts—or by way of state enforcement, or sometimes both.

The new clause seeks to isolate only two triggers for denying access to financial support. Although they may have merit as triggers, who is to say that there are no other matters of conduct on the part of either a company or its directors that might lead one to question the wisdom of awarding it taxpayers’ money? Obviously, that should be determined within the scheme rules. The hon. Gentleman pointed to a case in which a director was interlinked with four other companies. There are already restrictions on Government loans—covid loans, for example—which must be taken into account where there are interlinked schemes, and he is probably aware of that.

I appreciate the Minister’s response. To pick up on a couple of his points, he said that there are already remedies available, but as we have seen there are far too few for employees who suffer at the hands of a nasty business owner. We have all seen such cases on the news or from our own case loads.

The Minister mentioned the regulations governing covid loans. Clearly, that is a very specific example, and he makes a fair point, but that is not the case for all public moneys. However, this is a probing provision and would require further work before I sought to test the Committee or the Chamber with a vote. I therefore beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 71

Suspicious Activity Reporting: risk rating

“(1) The Proceeds of Crime Act 2002 is amended as follows.

(2) After subsection 339(1) insert—

‘(1ZA) An order under subsection (1) must prescribe that a risk rating be included as part of a disclosure.’”—(Dame Margaret Hodge.)

Brought up, and read the First time.

I beg to move, That the clause be read a Second time.

I will be on my feet for a bit, so I will try to be succinct—I know that Members have other things to do this afternoon. [Laughter.] It may be impossible for me. I want to say quite a lot about this new clause.

New clause 71 is about reforming of the suspicious activity reports regime. Ministers will accept that the SARs regime is a central tool in our defence against money laundering, but I hope they also accept that the current system is broken—it is not working. The new clause would introduce a new risk rating system, which would transform the efficacy and efficiency of the current regime.

SARs are very valuable and a vital source of intelligence. They are made mainly by financial institutions, but also by solicitors, accountants or estate agents, and they report suspicious activity. They have been absolutely instrumental in a range of successful actions against criminal activities, locating sex offenders, tracing murder suspects and identifying those involved in online child abuse, and they have shown how young women are trafficked into the UK. They have also been instrumental in closing down fraud and money laundering.

To give one example of a successful case involving fraud, a vulnerable elderly man in his 80s was the victim of a fraudster who had gained his personal details through a cloned website, when the elderly man believed that he was making a genuine investment. The reporter who saw the transaction going through was suspicious when the fraudster tried to impersonate the victim and access his main funds. He reported the transaction, and the UK Financial Intelligence Unit, which operates the SARs regime, received that report. The unit immediately passed it on to the enforcement agency—I wish this happened every time—which visited the victim in his house. The agency was then able to quickly contact the institution where the transaction was supposed to take place. It reported that the suspicious activity was wrong and confirmed the real identity and bank details of the elderly man, which all prevented him from losing in excess of £80,000.

This scheme is therefore important, and it is successful when it works well. However, at present, the sheer volume of SARs and the limited resources available mean that the information is not analysed and often simply not used. In evidence to the Treasury Committee, Mark Steward, the director of enforcement at the Financial Conduct Authority, said:

“More needs to be done in order to get more out of the valuable data that is in there. Otherwise, it just sits there.”

Graeme Biggar, also giving evidence to the Treasury Committee, as director general of the National Economic Crime Centre, said:

“Twenty years ago, we got 20,000 suspicious activity reports in, largely from banks. This year, we would not be surprised if we got three quarters of a million, and the number of defence against money laundering SARs, where we are told in advance and given the option to refuse permission to proceed, is going to double, we think, this year. The sheer volume coming through is really significant and very hard to deal with.”

According to research from Spotlight on Corruption, only 118 people handle the SARs. That is one employee to 4,250 SARs. The Australians, who have a similar enforcement regime, and who have also experienced an explosion in SARs, have a staff complement of one to 1,400—three times better than our own. The Committee has often talked about the relative budgets for enforcement of the UK and the USA. The USA has increased funding of the Financial Crimes Enforcement Network by 30%, and its staffing by 50%. The Minister should recognise that the Federal Bureau of Investigation’s budget is now 15 times larger than the National Crime Agency, although our population is only five times smaller than America’s.

The Financial Action Task Force review in 2018 said SARs should be reformed, and SARs were criticised by the FATF. The Treasury Committee report in 2019 talked about SARs reform. In 2017, the Government had announced a reform programme for SARs, led by the Home Office together with the NCA. That reform programme constituted action 30 in the economic crime plan. The intent was to have an IT transformation, better analytical resources and capabilities, and an improvement in SARs processes. That SARs programme was reviewed by the Government’s Infrastructure and Projects Authority, and was given an amber rating in 2021. So reform started in 2017, the programme was given an amber rating in 2021, and today, in 2022, it is not complete and there is no timetable from the Home Office—maybe the Minister can help with that—or a target date for completion, which was a criticism the Treasury Committee made of the programme. Delivery was originally promised by December 2020, but we are two years on from that and we are a long way from seeing SARs completed.

In that context, new clause 71 introduces a risk-rating regime. I do not think anybody thinks that is a crazy idea, and I hope the Minister will—just for once—adopt one of the suggestions that the Opposition have made in Committee. I hope he will not say that we do not need the legislation. We are nearly six years on from when the reform programme was announced, and reform has not happened. The Government cannot, despite the best efforts of right hon. Member for Uxbridge and South Ruislip (Boris Johnson), ignore legislation, although they seem to be ignoring the desire to reform the SARs programme.

If Ministers want action, which they have consistently said they seek with the Bill, they should accept new clause 71. If they simply see this measure as party political, they should not. We do not deal with the funding issue in the new clause, but we will ensure that the focus is on the most significant SARs. That will lead to more enforcement. I urge the Minister to adopt our new clause.

It is a pleasure to speak briefly in support of the new clause tabled by my right hon. Friend the Member for Barking. It would amend the Proceeds of Crime Act 2002 such that any disclosure made as part of the suspicious activity reporting regime must include a risk rating. My right hon. Friend outlined very effectively the reasons why the new clause is important. Much of the evidence in our meetings at the outset of the Bill, which set out the context and stakeholder views, it was clear that the SARs regime was failing. The databases of referrals were going unreviewed and unlooked at, because the resources were not there. There was no effective means that we could see of prioritising SARs fed into the NCA.

SARs is an essential tool in our defence against money laundering, but if the system is not working, something needs to happen. Having an extra step in the process to help with prioritisation, look at risks and deal with those identified as higher risk would help, as my right hon. Friend outlined, to bring in quality, at a time when we know that quantity is the new battle. She said that the current estimate is three quarters of a million referrals, which is extraordinary. Given the scale and types of economic crime, the number of referrals is likely to get worse, not better. That is a good thing if we are starting to highlight and refer more cases as we start to clean up our systems. However, we then need to deliver on that; otherwise, the downside is that we will reduce confidence among those doing the referrals that anything will actually happen.

Nigel Kirby of Lloyds Bank said in his evidence to the Committee:

“I think the SARs regime and the Proceeds of Crime Act 2002 itself actually need—well, not necessarily to be turned upside down, but to be looked at as a whole.”––[Official Report, Economic Crime and Corporate Transparency Public Bill Committee, 25 October 2022; c. 19, Q26.]

I think we have some agreement that the system itself is important, essential and necessary but that it needs wholesale reform to make it more efficient and effective and to ensure that it does what we ask of it.

I thank the right hon. Member for Barking for the new clause. I will slightly gloss over one element and focus on something she mentioned several times—I always listen carefully to what she says—about the comparison between the FBI and the NCA. I take the comparison, but the NCA is not a direct comparator for the FBI. After all, the FBI includes the equivalent to MI5. It also includes counter-terrorism police and a lot of what we call regional organised crime units. It includes a lot of other areas of policing that simply do not come under the NCA’s budget, so the comparison of budgets is not apples and oranges; it is more like apples and cider—the bulk of one and the punch of the other are not quite the same. I hope the right hon. Lady will forgive me for saying that that is not entirely a fair comparison.

That said, the NCA does an enormous amount of good work and uses SARs in many different ways. I have the figure here: the UKFIU received and processed nearly 600,000 SARs in 2019-20. That has increased significantly every year. The action taken has resulted in about £192 million being denied to criminals in 2019-20, up 46% on the previous year. So this is something that we are already using heavily.

We all think that SARs is a helpful regime. I wonder whether the Minister has been given the information by the NCA. It got more than half a million SARs, but how much of that data did it use to get the millions that it got in? That is a heck of a lot of data, which should yield a huge amount of valuable information.

First, not every SAR leads to an actionable offence. Many of them are simply, and quite rightly, reports. They are reports because there are suspicions, but suspicion does not necessarily mean guilt. Many times these are companies that are taking on clients or that have clients who are suspicious, and they want to be sure they are doing the right thing so, responsibly, they report in. We should not confuse the absolute number of reports with a level of criminality. That would not be fair on the British population, those doing the reporting or the NCA, which is looking into these things.

I did not mean to stop the Minister in mid-flow. He says that the number does not necessarily correlate to criminality. Is he concerned to hear that trust and company service providers have provided only 31 SARs, according to Graeme Biggar when he gave evidence to the Treasury Committee? A total of 31 seems impossibly low for the number of trust and company service providers, compared with what comes in from others.

The hon. Lady makes a fair point, but as she knows well that is not the point of the new clause, which is about the supervision of SARs and the ways in which they are checked and verified. That said, I have listened carefully to her and will have a look at that, because I do appreciate the point she makes. That said, I think these codes already enable the NCA to triage effectively, although if she has better ideas I am happy to listen and look at them further. However, I am to be convinced, because I think the Bill already addresses the areas she indicates. I get the point she is trying to make, but I am not sure that her suggestions would lead to a significant improvement on what is already there.

I am trying to untangle what the Minister said. If he is open to further discussions, I do not think that there is a rating regime. All we are saying is that there should be a rating regime so that the most urgent cases come at the top. My understanding is that that does not exist. There may be some form of triaging that I am not aware of. We just want to introduce a rating regime. If he is willing to engage in discussions before Report, I am happy not to put the matter to the vote. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 72

Office for Professional Body Anti-Money Laundering Supervision: powers and duties

“(1) The Secretary of State must by regulations set out a further power and duty for the Office for Professional Body Anti-Money Laundering Supervision.

(2) The power referred to in subsection (1) is the power to impose unlimited financial penalties on Professional Body Supervisors that fail to—

(a) adopt an effective risk-based approach to anti-money laundering supervision;

(b) impose proportionate and dissuasive sanctions for non- compliance with anti-money laundering requirements; and

(c) fail to separate their advocacy and regulatory functions.

(3) The duty referred to in subsection (1) is the duty to publish the details of any sanctions imposed on Professional Body Supervisors, and its reviews of Professional Body Supervisors with data disaggregated by body rather than by sector.”—(Dame Margaret Hodge.)

Brought up, and read the First time.

Question put, That the clause be read a Second time.

I beg to move, That the clause be read a Second time.

With this it will be convenient to discuss new clause 74—Failure to prevent fraud, false accounting or money laundering: director liability—

“(1) If an offence under section [Offence of failure to prevent fraud, false accounting or money laundering] is committed by a body corporate and it is proved that the offence—

(a) has been committed with the consent or connivance of an officer of the body corporate, or

(b) is attributable to any neglect on the part of an officer of the body corporate, the officer (as well as the body corporate) commits the offence.

(2) For the purposes of this section, ‘officer’ means—

(a) a director, manager, associate, secretary or other similar officer, or

(b) a person purporting to act in any such capacity.”

I will speak for a little longer on new clause 73, but hopefully we will get through the others more quickly. It is probably one of the most important new clauses that we have tabled. It sits with new clause 79, which we will come to a little later. If we can make progress on this issue, we will be putting some better meat on the bones of what is still quite timid legislation.

We all want to do all we can to prevent economic crime from occurring in the first place. Prevention and early intervention is obviously the best, cheapest and most effective way of tackling the problem of dirty money. We want to stop it happening in the first place. We also all know that much economic crime takes place because lawyers, company service providers, accountants, bankers or estate agents either enable or collude with bad actors, helping them or turning a blind eye to the things that they do, thus enabling money to be laundered, crime to be committed, and our systems to be used to commit financial crimes.

There is currently too little in our laws and regulations that will stop the enablers—accountants and all the others—supporting and enabling economic crime. Companies and individuals are not held to account for what they do. The new clause aims to put a halt to that. We need to reform our outdated corporate liability laws so that not only companies but senior managers can be prosecuted if they fail to prevent fraud, false accounting and money laundering. It is not because we want to have endless prosecutions, or to fill prisons with these enablers, but because the threat of criminal prosecution will act as the best and most vital deterrent in preventing professionals from helping criminals to launder and manage their dirty money.

As we have said time and again in Committee, most professionals act with integrity. Those professionals with integrity have absolutely nothing to fear from the new clause. Indeed, the majority, who act responsibly, should welcome the change, because it will help us to clean up their profession, get rid of the bad apples and restore our reputation as a trusted jurisdiction. The Minister knows very well—I am trying to find the right Minister—

I know as well.

Both Ministers know that reform has been promised, and delayed, for a long time. The 2015 Conservative manifesto committed to making it illegal for companies to fail to put in place measures to prevent economic crime. The 2017 Ministry of Justice consultation on corporate liability reform sat for three and a half years. Inexplicably, it found that there was not enough evidence to pursue reform. I can only imagine that the Ministry was strongly lobbied. It said there was not enough evidence despite the fact that 76%, or three out of four respondents, said that the identification doctrine, which we will come to, inhibits the holding of companies to account for economic crime, and that two out of three respondents thought that corporate liability reform would result in improved corporate conduct. Despite all that, the Ministry chose not to pursue reform.

We then got the Law Commission’s review in 2022. It found that the current situation was “highly unsatisfactory” and that, on the status quo on corporate liability, “the identification doctrine”—for fraud and money laundering, the way in which we determine whether the people involved represent the “directing mind and will” of the company and can therefore be held responsible—

“is an obstacle to holding large companies criminally responsible for offences committed in their interests by their employees.”

The commission said that the status quo is “unfair” and that if the law remains unchanged it

“will continue to enable large companies to be acquitted for conduct which would see small businesses convicted.”

It also stated that that

“could diminish confidence in the criminal law”

and, finally, that the status quo incentivises poor corporate governance and

“rewards companies whose boards do not pay close attention.”

Given all that, I cannot think of a stronger indictment of the status quo.

There are endless examples of where our failure to modernise our criminal liability law has led to failure in the courts. The Barclays bank action is probably the most infamous, or famous, of them all. In 2008, during the financial crisis, Barclays wanted to avoid nationalisation and entered into a deal with Qatar, from which it received more than £11 billion and a loan of £3 billion. The bank, however, also set up what was called an advisory service agreement—in a sense, as I can say under parliamentary privilege, it was a bribe—and, under it, £322 million was given to those who facilitated the deal between Qatar and Barclays bank.

The Serious Fraud Office tried to prosecute the bank and its chief operating officer with charges of conspiracy to commit fraud and charges involving “disguised commissions”—in my interpretation, bribes. The court threw out all the charges, saying that the alleged criminal dishonesty of senior officers “could not be attributed” to Barclays. So the chief executive could not be held responsible for what the bank did, because the chief executive was not the bank, but reported to the bank. It was a crazy judgment. The court also dismissed cases against other individuals, as they could not be defined as the “directing mind and will” of Barclays.

There was, then, a Barclays fiasco, but there were other examples, such as the LIBOR rate-rigging scandal. No criminal prosecutions were brought, although the individuals prosecuted gave evidence that their managers knew what they were doing, so the company itself was liable. If the Minister for Security will allow this comparison, the US brought criminal enforcement action against 12 of the banks in the LIBOR scandal—British banks—and extracted $3.4 billion in criminal fines. Other examples include HBOS—to which the Under-Secretary often refers—Serco and the tagging contract, London Capital & Finance, and so on and so forth.

In 2022, four parliamentary Committees called for the reform of corporate criminal liability legislation. In February 2022, the Treasury Committee urged the Government to

“act quickly in bringing forward any legislation flowing from the Law Commission’s review. In the meantime, corporate criminals will continue to be able to escape prosecution for economic crimes.”

I probably do not have to quote this one, as the Minister might remember it, but the Foreign Affairs Committee called for

“reform of outdated and ineffective corporate criminal liability laws which mean that it is difficult to hold large companies to account for economic crimes.”

No, I remember it very well.

Anyway, I thought it was a speech in favour of the intent of this new clause.

Failure to prevent offences have proved effective elsewhere, as the Minister himself has said. We use them to tackle bribery and tax evasion, and the Minister always raises the best example when he refers to what used to go on in the construction industry. In my youth, people would regularly have terrible accidents on construction sites, some of which were fatal. It was only when a duty was introduced for those who ran construction companies to ensure the health and safety of their workers in the workplace, meaning it would be a criminal offence if they failed to do so, that miraculously, overnight, deaths on building sites came almost to a 100% halt. We have lots of examples of where a failure to prevent does not end up with people being locked up but does change behaviour. That is what we are trying to do.

I have lots of examples of areas where the Bribery Act 2010 has been successful and this is not one. This is the last legislative opportunity we will have in this Parliament to put into effect something that Members across the House think is important. There is so much evidence from so many bodies emphasising the importance of this bit of legislation. I cannot see any argument for delay. Before they reached their great, really important roles on the Front Bench, both Ministers argued passionately, frequently and loudly for this reform. I hope they will accept the new clauses, together with new clause 79, on the identification principle. With the inclusion of those three new clauses, we can hold our heads up high and say that we have done good work in Parliament.

It is a pleasure to serve under your chairship, Mr Robertson. I pay tribute to my right hon. Friend the Member for Barking. The passion and eloquence with which she spoke was exemplary in terms of reminding us about what is at the heart of the Bill and one of the top priorities that we want to achieve. I do not want to say much more; how can I follow that?

New clause 73 would introduce a new offence of failing to prevent fraud, false accounting or money laundering, and new clause 74 would extend that offence, so I shall take them together. In effect, the new clauses would extend current failure to prevent offences beyond bribery and tax evasion to other economic crimes, money laundering and fraud. The offences would be applicable both to companies themselves and to senior managers or directors.

The Labour Front Bench team welcomes the new clauses tabled by my right hon. Friend the Member for Barking as vital to help to drive cultural change and corporate governance standards for the prevention of economic crime in the UK. They would also standardise criminal rules for holding companies to account across different economic crimes.

The call for this change is supported by a number of stakeholders, including Spotlight on Corruption, which made the following argument in written evidence to the Committee:

“Most urgently, a new failure to prevent fraud offence would help address the UK’s serious fraud epidemic. Fraud accounts for 40% of all recorded crime, but fraud prosecutions have fallen from 42,000 in 2011, to 13,500 in 2021 in the last decade, a 67% decrease. According to the Crown Prosecution Service (CPS): ‘an extension of the “failure to prevent” model to fraud, false accounting and money laundering would be unlikely to require companies to do more than what they would already be expected to do under the current law (which relies on the identification doctrine) but it would enable prosecutors to hold them to account more effectively where they fail to do so’. The heads of the Serious Fraud Office (SFO) and the CPS have both recently called for new failure to prevent offences.”

I refer the Minister, in addition to the stakeholders that support the call for change, to his own words on Second Reading. I will not replay his greatest hits—that my right hon. Friend the Member for Barking has already done so—but he has stated clearly that he sees this offence as “the No. 1 measure” that we need. The Opposition fervently hope that both Ministers will agree with their former selves that this is the No. 1 measure we need in the prevention and detection of economic crime. We urge the Conservative Front-Bench team to accept the new clause as a necessary and urgent provision to tackle economic crime that would have support across the board.

I, too, rise to support the new clauses, which are incredibly important.

“Of all the measures we have talked about today, this would have the biggest effect in terms of cutting down on economic crime, because lots of our financial organisations are complicit when it suits their interests to be so.”—[Official Report, 13 October 2022; Vol. 720, c. 309.]

If the Under-Secretary recognises those words, it is because they are his own from just a few weeks ago, on 13 October 2022. What a long time it has been; here we are today at the end of November.

It is important that we use the new clauses as an opportunity. As the right hon. Member for Barking said, this is an opportunity to make this change now and get it right. It cannot be said that the Ministers present do not agree with the measures. The Under-Secretary argued for a failure to prevent economic crime offence not just on 13 October 2022 but on 7 July 2022 and 1, 22 and 28 February 2022, on 2 December 2021, on 9 November 2021, on 22 September 2021, on 18 May 2021, on 9 November 2020, on 25 February 2020, on 19 July 2019, on 23 April 2019, on 18 December 2018 and on 9 October 2018. Why have we got to the point today where he is arguing against something that he has argued for so consistently and repeatedly in this House?

Will the hon. Lady give way?

I will if the Minister can give me an explanation as to why he is not going to back the new clause.

When have I argued against it?

I suspect that if it goes to a vote, he will vote against the new clause, so he does not even need to argue against it. If it goes to a vote, he and his colleagues will vote against something that he has consistently and repeatedly supported in this House. He knows in his heart of hearts that this is the right thing to do. I am very interested to know whether, if the Government will not support the new clause—whether it goes to a vote or not—they will introduce something similar on Report. Both Ministers know that this is the right thing to do. The opportunity is here in the Bill. If the opportunity is there and the will is not, that leaves huge questions for the credibility of the entire Bill.

I am delighted to speak on the new clause. As the right hon. Member for Barking correctly identifies, it touches on many areas that my hon. Friend the Under-Secretary and I have spoken about on numerous occasions, and we are not alone in having done so. Section 172(1)(b) and (d) of the Companies Act 2006 speaks about the interests of employees and of the community being the responsibility of directors as well, so having an emphasis on directors’ responsibility in corporate legislation is not new. My hon. Friend the Under-Secretary has also spoken about it in building safety legislation, which the right hon. Lady cited.

There are many different examples of our recognition that the interests of the whole of society and of the whole United Kingdom are better protected when directors understand that they are there not simply to advance shareholder value, but to further the interests of the whole community of their employees and wider society in actions and responsibilities they undertake. Although I see all of the responsibility laid out and I take very seriously the point the right hon. Lady made, we still need to do a little bit of work on how this can be made to work. There are arguments, some of which hold water, about whether the 2017 money laundering regulations include elements that already cover some of these areas, and there are arguments about whether the Law Commission will want to look at different bits of this. I can assure the right hon. Lady that I will look at this extremely seriously, because she is absolutely right that the Bill offers an opportunity to introduce different reforms. I will look to make sure that any opportunity is fulfilled as quickly as possible.

I am grateful for that. The hon. Gentleman referred to the Companies Act 2006—I cannot remember which section. In the days when Tony Blair changed our jobs every year, I was lumbered with taking through the biggest Act in Parliament. We deliberately put that section in, in the face of massive opposition. At the time there was a front page story in the FT that said, “How dare you talk about any interest but shareholder interest?” But the provision has stood the test of time, I am pleased to say, and I am glad to hear him cite it.

I do not want to embarrass Ministers today by putting the issue to a vote. I know that they feel strongly about this, but so do we—really strongly. The Bill will not pass any litmus test of its potency if the new clause is not included. I know there will be resistance because the professions that would be subject to the new potential criminal liability are very strong in lobbying. They are probably strongly lobbying the Department for Business, Energy and Industrial Strategy, as well as the Treasury and other Government Departments. I say to Ministers that they have to resist that lobbying with every bone in their bodies, because this is not an attack on any profession. There ought to be a new offence that cleans up the profession, and we will pursue this issue right through every phase and stage of the Bill’s passage.

I want to say one final thing to the Minister. Of course we need to make the new clause work, but for goodness’ sake, we have the same offence in the Bribery Act and the tax evasion legislation, and it works perfectly well.

The right hon. Lady makes a very important point about vested interests. We have previously discussed the influence of people who may not be keen on these kinds of clauses. I would say to anybody in the financial services sector who is making these claims that there are potentially huge benefits from preventing fraud across the board, because 70% of online fraud, which costs banks a lot of money, comes from platforms, and this kind of legislation could make the platforms responsible for removing content. So the sector could see benefits as well as potential new obligations.

I am grateful to the Minister for reinforcing my argument. I would add simply that the same is true of the online harms Bill. If we had director liability there, I think we would see a lot of the online harms disappearing, but that is for next week.

On how the new clause would work, we can mirror processes that take place in other bits of legislation. To say that it is already covered is a nonsense, because we would not have had the failure of the Barclays case and all the other cases that I cited to the Minister had we already put in place legislation that was appropriate for ensuring that companies and their directors are held to account. I will not put the matter to a vote, but this is a hugely important issue. I look forward to our debating it further at other stages during the course of the Bill. I wish Ministers well in their attempts to get it past the Government, but if they do not, Parliament will do so. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 75

The Economic Crime Committee of Parliament

“(1) The Secretary of State must by regulations establish a body to be known as the Economic Crime Committee of Parliament (in this section referred to as “the ECC”).

(2) The ECC will consist of nine members who are to be drawn both from the members of the House of Commons and from the members of the House of Lords.

(3) Each member of the ECC is to be appointed by the House of Parliament from which the member is to be drawn.

(4) The ECC will have the power to meet confidentially.

(5) The ECC may examine or otherwise oversee any regulatory, enforcement or supervision agencies involved in work related, but not limited to—

(a) tax avoidance and evasion by corporations;

(b) illicit finance;

(c) anti-money laundering supervision;

(d) tackling fraud;

(e) kleptocracy and corruption; and

(f) whistleblower protection.”—(Dame Margaret Hodge.)

Brought up, and read the First time.

I beg to move, That the clause be read a Second time.

I have been promoting accountability for years now. In the work that I did with the Minister as we thought about how we could tackle economic crime and turn round the tanker, we always said there were four ways in which we had to respond. One was through having not more regulation, but smart regulation. The second was through tough enforcement. The third was through broad transparency—the ruling of the European Court of Justice last week is an absolute nightmare that could create real difficulties for us in the economic crime space. The fourth was accountability, and with the new clause we are suggesting a way for us to have that accountability.

There is interest in this subject across the House. The hon. Member for Hitchin and Harpenden (Bim Afolami) has written a paper on these issues. Can we find a mechanism for holding the regulatory bodies properly accountable to Parliament for what they do?

A lot of these questions arose when I chaired the Public Accounts Committee and we first started looking at tax avoidance. The rule is that everybody should be equal before the law in tax, but there was always a suspicion that sweetheart deals were being struck with certain big corporations and high net worth individuals. In fact, early on we came across one involving Goldman Sachs; on the back of a story in Private Eye, we uncovered a sweetheart deal. To this day, though, I do not understand whether Google is paying the correct tax or whether there is a deal there, and I could say the same about a lot of the big multinational companies. Because of the confidentiality of taxpayers’ interests, Parliament has no way to get the information that it needs to assure itself that the tax authorities are treating all taxpayers equally.

I have worked with all the agencies in this area—the NCA, the Serious Fraud Office, the Metropolitan police and so on—so whistleblowers, or just people who come across something that is wrong, often come to me, and I give the case to one of the agencies—and that is the last I ever hear of it. I always pursue the cases, but all too often I get the response, “Oh, there are security reasons for you not being given the information.” There was the Savaro case, which I referred to BEIS at the time. It went through BEIS and I still do not know whether anybody was pursued. Certainly, there were people behind that explosion in Lebanon, which led to so many deaths and loss of property.

I think that Parliament needs a better hold on what is happening and better accountability around how those agencies are operating. In the new clause, we suggest that we mirror the Intelligence and Security Committee, which meets under Privy Council terms. The proposed economic crime committee could be a Committee of both Houses, meeting under Privy Council terms and overseeing all the regulatory bodies in this space—in financial services and economic crime. It could call for papers relating to individual cases, which would remain confidential because the ECC would meet in private. The ECC could then produce reports on systemic changes that are necessary, arising from consideration of those individual cases.

I think that that would massively improve accountability, as well as the performance and effectiveness of the agencies. With that information, members of the ECC would have a better understanding of what, if anything, they needed to do as legislators to improve the situation. I believe that this committee will happen one day, but I am proposing it today as a new clause in this Bill. I know that the hon. Member for Hitchin and Harpenden and those who support him in this mission would be happy to support me today, and I hope that Ministers give it a good hearing.

I am happy to support new clause 75, tabled by my right hon. Friend the Member for Barking, which would require the Secretary of State by regulation to establish a body to be known as the economic crime committee of Parliament.

The new clause is driven by and based on the fundamental principles of transparency and accountability. Our call for those two principles to be adhered to is important because it recognises that the structures for reviewing progress, and scrutinising and reviewing economic crime, are simply not good enough. There is too much siloed thinking. This aspect of scrutiny does not sit neatly within BEIS, the Treasury, the Home Office, or the Ministries of Defence and of Justice; it really spans the waterfront, yet those Departments are all vital parts of what should be a systemic approach to tackling economic crime.

The proposed committee would consist of nine Members drawn from the House of Commons and the House of Lords, with each member of the ECC appointed by their respective House of Parliament. The ECC would have the power to meet confidentially; it could examine or otherwise oversee any regulatory enforcement or supervision agencies involved in work related to, but not limited to, tax avoidance and evasion by corporations, illicit finance, money laundering, fraud, kleptocracy, corruption, and whistleblower protection.

We welcome the new clause as it would introduce a vital mechanism for transparency and accountability within the Bill. If the Minister does not agree with it, we hope that he will acknowledge that the existing mechanisms are unfit for the kind of joined-up, systemic, expert-driven scrutiny that is needed to keep pace with and keep ahead of economic crime. Throughout this Committee’s proceedings, my colleagues and I have tabled amendments and new clauses designed to increase the scrutiny and transparency of the measures that the Bill will introduce, so as to ensure that when they are implemented, they are as effective as possible. If the Minister is not able to support the new clause, Parliament and the country more broadly would need him to come up with something better.

I wholeheartedly agree with the new clause. When the Treasury Committee looked at this issue, what struck me was that economic crime was nobody’s priority. Our report said:

“Economic crime seems not to be a priority for law enforcement. The number of agencies responsible for fighting economic crime and fraud is bewildering.”

If it is bewildering in that sense, it is bewildering to Parliament, too. This is a BEIS and Home Office Bill, yet it has huge Treasury implications and huge security implications, and that gets to the heart of why this new clause is so important. There needs to be a body in Parliament that holds all these agencies to account in one place. If BEIS does a little bit, and the Home Office does a little bit, and security does a little bit, and the Treasury does a little bit, there will not be the cohesive scrutiny of all those agencies that is needed. Committees could well be palmed off with different responses by different agencies, with nobody consistently holding them to account.

The work of the Treasury Committee is very wide ranging. We have two meetings a week, and that is not enough to cover all the issues we need to cover. Setting up a bespoke Committee that could build up expertise on this issue would allow for that accountability. It could meet in private if it needed to, although it would ideally meet in public. The point is that it would keep an eye on all the things that we have agreed to in the Bill, and we would be holding all these agencies and Ministers to account in a consistent way. The reports of the ECC would also, we hope, be taken seriously, and its recommendations implemented.

It is not really enough that the Treasury Committee or another Committee looks at economic crime every once in a while and sees how things are going. The Treasury Committee has done that previously, looking back at previous reports and asking, “How are things going now?” but there is not that week in, week out consistent scrutiny of what is happening. Without scrutiny and consistency, it is difficult to see how the Government will get this right. We are legislating here, but legislation cannot be put on a shelf and left; it has to be living legislation that is scrutinised on a regular basis. A committee of sort proposed in the new clause really would give Parliament a lot of power to ensure that these measures are implemented correctly and that the agencies responsible for economic crime, which affects all of our constituents, continue to be held to account.

The right hon. Member for Barking will not be surprised to hear that I am a huge fan of parliamentary scrutiny, not just of Government but of various issues that others have sometimes felt are not in the immediate remit of the scrutinising Committee. As she will be aware, I received some criticism when the Foreign Affairs Committee, which I was fortunate to chair, focused so clearly on economic crime in 2017-18—in fact, it was some of the first work that we did—because of the national security threat that it poses to the United Kingdom. Its importance in foreign policy is very clear.

The Treasury Committee has done an awful lot of extremely good work on this issue; over the years, it has done some excellent reports on economic crime. The Public Accounts Committee, the Justice Committee and others have also focused on economic crime at various points. However, while I completely understand the right hon. Lady’s argument, I cannot support the new clause, because it is simply not up to a Secretary of State to set up a Committee of the House. As she knows very well, that is a decision for the House; it would therefore not be appropriate to have that provision in the Bill.

I would add that there are various other elements that already scrutinise quite a lot of the agencies referred to. There is the Economic Crime Strategic Board, co-chaired by the Chancellor and the Home Secretary—I know it is within Government, but it is still a challenging body because it supervises the agencies of Government. Various other levels of scrutiny appear at different points, which help to oversee the function of the agencies and different elements that the Government are trying to deliver—that the ministerial element of the Government is trying to get the bureaucratic element of the Government to deliver. It is really important that we keep those intentions.

I am sure that, in that spirit, the Minister also accepts that scrutiny by the Executive is different to scrutiny by the legislature.

Of course.

What we are seeking is scrutiny by the legislature. I take what he said, and will reflect on it. There is cross-party support for this concept; whether we have got it quite right is open to debate, and we will have to find another means of getting it debated in the House. On that basis, I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 76

Whistleblowing: economic crime

“(1) Whistleblowing is defined for the purposes of this section as any disclosure of information suggesting that, in the reasonable opinion of the whistleblower, an economic crime—

(a) has occurred,

(b) is occurring, or

(c) is likely to occur.

(2) The Secretary of State must, within twelve months of the date of Royal Assent to this Act, set up an office to receive reports of whistleblowing as defined in subsection (1) to be known as the Office for Whistleblowers.

(3) The Office for Whistleblowers must—

(a) protect whistleblowers from detriment resulting from their whistleblowing,

(b) ensure that disclosures by whistleblowers are investigated, and

(c) escalate information and evidence of wrongdoing outside of its remit to another appropriate authority.

(4) The objectives of the Office for Whistleblowers are—

(a) to encourage and support whistleblowers to make whistleblowing reports,

(b) to provide an independent, confidential and safe environment for making and receiving whistleblowing information,

(c) to provide information and advice on whistleblowing, and

(d) to act on evidence of detriment to the whistleblower in line with guidance set out by the Secretary of State in regulations.

(5) The Office for Whistleblowers must report annually to Parliament on the exercise of its duties, objectives and functions.” —(Dame Margaret Hodge.)

Brought up, and read the First time.

I beg to move, That the clause be read a Second time.

This new clause relates to another issue on which there is cross-party support: reform of whistleblowing. It has been put together for me, although it is in my name, by the hon. Member for Cheadle (Mary Robinson), who leads the all-party parliamentary group for whistleblowing. I must put it on the record that she has been a fantastic campaigner in this area and an outspoken champion for the countless courageous individuals who have dared to speak out. As she rightly says, for most of those individuals whistleblowing has shattered their lives, with many losing their health and livelihood. What we are talking about here is really important.

Our new clause would introduce an office for whistleblowers, which would protect the whistleblowers and ensure that their disclosures are investigated and information provided is passed to the relevant authorities. In clause 4, we set out ways in which whistleblowers would provide that service. I think that the hon. Member for Thirsk and Malton is the Minister replying to this debate; I know that he is passionate about this topic, because he has said so on lots of occasions—most recently on Second Reading on 13 October, when he said:

“We do not protect or compensate whistleblowers, and that is wrong. Those people do the right thing and come forward but—not to put too fine a point on it —we hang them out to dry.”—[Official Report, 13 October 2022; Vol. 720, c. 309.]

He went on to say:

“It is pointless having lots of law enforcement people charging around not knowing where to look. Whistleblowers tell us where to look. Some 43% of all financial crimes are identified through whistleblowers, yet it is something we do not talk about. We do not just need more regulators; we need somebody to point us in the right direction. Regulators will always be watchdogs, never bloodhounds. We need the bloodhounds in the organisations who are willing to speak up if things are going wrong.”—[Official Report, 7 March 2022; Vol. 710, c. 121.]

Hear, hear to that, but let us have some action arising out of those passionate words.

Whistleblowing plays an absolutely key role in addressing economic crime, whether it is for money laundering or other crimes. Think of the Panama papers 2016—we would never have had them—or the Paradise papers, the Russian and Troika laundromats, the Azerbaijan laundromat, the FinCEN files and the Pandora papers. Let us look at just one of those—the Panama papers—which were 11.5 million legal documents held by the Panamanian law firm Mossack Fonseca. It basically made its money by creating offshore companies and bank accounts to launder and hide the money. The story was given to a German paper, then 370 journalists got involved in investigating the data, working in 80 countries.

Just think what came out of that. Twelve current and former world leaders were named in those papers. There was a $2 billion trail to Putin through his close friend Sergei Roldugin, known as Putin’s wallet. The money went all over the world, including into an upmarket ski resort in Leningrad owned by a company funded by this dirty money and where Putin gave his daughter a sumptuous wedding. The Icelandic Prime Minister resigned off the back of the papers. The Pakistani Prime Minister was removed from office due to allegations of corruption and fraud.

Through the leak, some £1.2 billion of tax revenue was restored to 23 national Governments. In the UK, there was an extraordinary list of the rich and powerful, from Kevin Keegan to Nick Faldo, Lewis Hamilton, Tiger Woods, Gary Lineker, Madonna, Keira Knightley, Simon Cowell, Nicole Kidman, the Barclay brothers, Stuart Gulliver of HBSC, and political figures like Arron Banks, Michael Ashcroft and the right hon. Member for North East Somerset (Mr Rees-Mogg). They were all named and exposed.

Going back to my Public Accounts Committee days, the work we did all came from whistleblowers in the area of economic crime. I referred earlier to the Goldman Sachs sweetheart deal. That emerged from a whistleblower—a lawyer working in His Majesty’s Revenue and Customs. We had a very frustrating session. We knew something was going on, and we interviewed the head of tax at HMRC, but he would tell us absolutely nothing. I then got a bundle of papers from a lawyer who was working there, and in that bundle was a sheet of paper that had on it two things. It said that a meeting was held by the head of law, and he had said that the head of tax had shaken hands on the deal, which the head of tax had denied at the Treasury Committee. He also said that the deal was unconscionable.

We called back the head of tax and head of law and interrogated them. They still said nothing. Then my hon. Friend the Member for Norwich South (Clive Lewis) said to me, “Put the guy on oath. He might tell you something.” That had never happened in a Select Committee. I turned to the clerk, who told me that I could put him on oath, and said, “Go and find a Bible.” It took them 20 minutes to find a Bible. But the point is that all that from a whistleblower led to the trail that I think has certainly ended up with me being on this Committee considering the Bill today.

What is so terrible about that story is that the then head of tax left public service, and I asked the person who became the permanent secretary in HMRC every time she appeared before the Committee, “Are you looking after that whistleblower? Is he okay?” She always gave me assurances that he was, but actually they raided his computer and telephone. His marriage broke up, and in the end life became so intolerable that he had to leave public office. It is one of the things I feel great shame about really—that I was not able even in that position to protect him, even though it was his revelations that enabled us to start discovering what was going on.

Whistleblowing helps everywhere. It is a vital way of revealing wrongdoing in all sorts of sectors. It was a child sex abuse whistleblower who helped reveal the child sexual exploitation in Rotherham. The NHS is full of workers who blew the whistle on things such as the lack of personal protective equipment. The Public Accounts Committee saw another example, relating to Serco, where a GP contract was done in Cornwall but they were lying about their performance. A whistleblower came to us, but Serco’s response was simply to rifle through everybody’s lockers to try to find out who the whistleblowers were. Serco was not interested at all in the fact that the information it provided was inaccurate, or in trying to improve the quality of the service.

Interestingly, whistleblowers in America are treated very differently, particularly on the issue of compensation. To give one example, in the JPMorgan case, there was a $45 million settlement after two whistleblower employees at a Georgia mortgage broker alleged that the bank had scammed a programme that was intended to make it easier for veterans to qualify for loans, and had submitted fraudulent claims to the Government. The whistleblowers were awarded $11 million. Facing the same charges, Wells Fargo later settled for $108 million. A whistleblower revealed massive robo-signing at the four banks that were the country’s largest mortgage providers. The companies had allegedly relied on a company called Docx to forge signatures on thousands of mortgage documents. The suit was settled for $95 million, and the whistleblowers received $18 million for helping to expose the fraud.

The Minister well knows the facts that I will give him now. In 2018, 40% of whistleblowers reported going on sick leave—that is the pressure in the workplace. Only 4% of whistleblowers who bring claims under the current legal structure succeed. Of the 1,041 whistleblower reports submitted to the FCA in 2021-22, only three have resulted in any significant action. The Minister must agree that enough is enough. We in this country cannot go on failing to treat whistleblowers with the respect, support and advice that they deserve. Our new clause starts the process of reform. It does not do everything—for example, it does not do financial compensation—but it is a start.

Finally, please do not just say, “We are looking at this.” Do not tell us you will come back. This is a once-in-a-lifetime opportunity.

The right hon. Lady makes an interesting point about how compensation works in the USA. She will be aware that Protect, the most high-profile whistleblower organisation in the UK, is against a compensation scheme similar to that in the USA. There is good reason for that: very few whistleblowers in the USA actually get compensation, which is one of the flaws in the scheme. Does she agree that we must think carefully about how we introduce whistleblower reform? It needs to be well thought through, rather than simply rushed.

I agree that we have to think carefully, but setting up an office for whistleblowing, which is what our new clause would do, could be the start. We might get some proper expertise in there, so as to think through some of the more complex issues.

Minister, grasp the opportunity and agree with our proposal. It would set up a new office—a central place for any would-be whistleblower to come for advice. It would support regulation in organisations. It would be a central place for setting standards, monitoring, evaluating and reporting. It would ensure that those who inflict or suffer detriment will be properly held to account or properly compensated. An office for whistleblowers would drive up standards across both the private and public sectors, increase transparency and restore public confidence. Whistleblower discrimination is a global problem, and the new office would set a global standard here in the UK.

I will be brief because my right hon. Friend the Member for Barking has, again, made the case so eloquently. We support new clause 76. The basic fact is that by their very nature, money laundering and economic crime are very often linked to serious organised crime gangs and hostile states. We are dealing with some pretty frightening people. Without adequate protection, the stakes for an informed insider blowing the whistle are simply too high.

New clause 76 would take those vital first steps to provide more adequate protection for whistleblowers and enable the greater detection of fraud and economic crime by establishing a body specifically set up to both protect whistleblowers and investigate their reports. We feel strongly that the Government must bring forward steps to protect and enable whistleblowers. New clause 76 provides an excellent and strong platform to make that happen.

We also support this important new clause. In a recent speech, the Minister said that 43% of all economic crime was identified by whistleblowers, which illustrates why the new clause belongs in the Bill. We all know from whistleblowers’ stories that doing the right thing comes often at a significant cost personally, professionally and financially. It is important that we do anything we can to support those whistleblowers and to make sure they feel comfortable to go ahead and do what they do to ensure that we are all protected. I look forward to hearing the Minister supporting the new clause, because he has supported it umpteen times in the past.

I think this is the last occasion I have to address the Committee, so I thank all Members for their contributions. We have had very constructive debates throughout the days that we have looked at the Bill. I thank the officials for all their work in these areas.

Not for the first time, I am very sympathetic to the new clause and to the previous one on failure to prevent. Nothing I have seen or heard since I started as a Minister only a few weeks ago has changed my mind on the things I have said in the House and other places about the need for whistleblower reform and failure to prevent reform. There is no conspiracy behind the scenes here. There is a difference between arguing against the principle of something and arguing against the provisions of something. That is where we probably differ a little.

As the hon. Member for Glasgow Central said, I have said before that 43% is the stat for the discovery of financial crime. In my experience, it is much higher than that—about 100%. Everything I have dealt with has been brought to the attention of authorities through whistleblowers, not least Ian Foxley, my constituent who was very important to the case on GPT Special Project Management Ltd that the right hon. Member for Barking referenced. He was the bloodhound in that case. We need those bloodhounds.

Since taking over as Minister with whistleblowing in my portfolio, I have asked officials to prioritise this review and to get it moving properly, and that is what we have committed to do. There are differences in where we go with it: do we do something to address the cases like Ian Foxley’s and the others the right hon. Lady references? Sally Masterton addressed those cases. Do we do something longer term and more complex? It is either low-hanging fruit or something more radical.

My hon. Friend the Member for Cheadle has done fantastic work in this area. I am keen to engage with her and my hon. Friend the Member for Weston-super-Mare (John Penrose) to make as much progress as we can as quickly as we can. Ian Foxley’s case is interesting because he was prevented from getting compensation. He was very successful in getting that case highlighted and the authorities successfully prosecuted it, but he was denied compensation because the PIDA rules on what it describes as an employee did not cover his particular category. That is a relatively easy issue to fix and something I want to look at.

The other part of the current legislation is around prescribed persons. There are 80 prescribed persons at the moment: people to whom others can make a protected disclosure. We are extending that this week when I introduce a statutory instrument on extending the number of prescribed persons to whom whistleblowers can go to seek assistance. Indeed, some of those prescribed persons are in this room. Members of Parliament are prescribed persons, as are some Ministers, but so too are our agencies. That is probably my biggest concern.

I took the case of Sally Masterton, who was key to highlighting the HBOS Reading scandal, which I have referred to many times in Parliament, to the Financial Conduct Authority. When I asked Andrew Bailey, who was then the chief executive of the FCA, whether he had followed his own whistleblowing procedures in relation to Sally Masterton, who was terribly mistreated by Lloyds Banking Group, he refused to answer the question because I was not a relevant person, under the relevant legislation. That is quite astounding, when it was Parliament that legislated to introduce the whistleblowing protections in the first place.

There are things that we need to do quickly that would address many of the problems, but we have done much. We have improved the guidance on what a prescribed person needs to do. We have a requirement on people to make public annual reports on what they have done in terms of whistleblowers, but I am keen to hold regulators’ feet to the fire in this area. I ask the right hon. Member for Barking not to pre-empt the review that I am urgently undertaking, because she knows how serious I am. I would like to bring forward effective reform very quickly, and to effect change more quickly. I fear that the new clause would delay the reform, when we can make progress by other means.

I hear what the Minister says. I simply say to him that finding legislative time will be a battle, so I hope that he has some mechanism to get the reform through.

There are things that we can do without primary legislation that could move much more quickly.

I hear that. This matter will be debated by others on Report. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 79

Identification doctrine

“(1) A body corporate commits an offence listed in Schedule 8 where the offence is committed with the consent, connivance or neglect of a senior manager or senior managers.

(2) An individual is a ‘senior manager’ of an entity if the individual—

(a) plays a significant role in—

(i) the making of decisions about how the entity’s relevant activities are to be managed or organised, or

(ii) the managing or organising of the entity’s relevant activities, or

(b) is the Chief Executive or Chief Financial Officer of the body corporate.

(3) A body corporate also commits an offence if, acting within the scope of their authority—

(a) one or more senior managers engage in conduct, whether by act or omission, such that, if it had been the conduct of only one representative, that representative would have been a party to the offence; and

(b) the senior manager who is responsible for the aspect of the organization’s activities that is relevant to the offence — or the senior managers collectively — fail to take all reasonable steps to prevent that offence being committed.”—(Dame Margaret Hodge.)

Brought up, and read the First time.

I beg to move, That the clause be read a Second time.

This goes with the failure to prevent, so I will not speak to the new clause. It literally just sorts out the legalese to ensure that we can get at companies and their directors.

Order. Does the right hon. Lady still wish to move the motion?

Yes, because I want it on the record. I am just conscious that Members want to get on, and that the argument is the same.

We fully welcome the new clause, which we think is very important to ensure that all perpetrators of economic crime are caught and dealt with.

I merely point out that, while the new clause addresses many of the points that the right hon. Member for Barking has raised before, it also raises many of the same challenges. For that reason, I will object to it.

I will not at this point press the new clause to a vote, so I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 80

Forfeiture of recoverable property obtained through economic crime

“(1) Where the conditions in paragraph(2) are fulfilled, a notice may be served in accordance with subsection(4) by the Director of Public Prosecutions, the Director of Serious Fraud Office, or the Director General of the National Crime Agency (hereafter, ‘the Director’) upon the holder of an account held at a bank in the United Kingdom.

(2) The conditions mentioned in paragraph(1) are that—

(a) the Director has reasonable grounds to believe that property held in the bank account is recoverable property obtained as a result of an economic crime offence;

(b) in relation to the bank account or any property in the bank account, a consent request has been made to an authorized officer under Section 335 of the Proceeds of Crime Act;

(c) an authorized officer refused the consent requested;

(d) a court has granted an extension of a moratorium period for 186 days under section 336A of the Proceeds of Crime Act 2002; and

(e) a court has granted approval to the Director to serve the notice.

(3) A notice under this section shall be a notice by way of representation and shall—

(a) state the name of the holder of the bank account to whom it is addressed;

(b) specify the details of the bank account and of the property or part of the property in the bank account which in the opinion of the Director is recoverable property;

(c) state a date on which, and a place and time at which, the holder of the bank account is required to attend a hearing of the Court to show cause why the property so specified is not recoverable property and should not be forfeited; and

(d) be served on—

(i) the holder of the bank account, and

(ii) the bank at which the account in question is held,

and if an address for service on the holder of the bank account is not known, service on the bank only shall be taken as sufficient for the purposes of this paragraph.

(4) In this section and section [ Forfeiture of recoverable property obtained through economic crime: summary procedure ]—

(a) ‘economic crime offence’ means an offence listed in Schedule 8 of this Act; and

(b) ‘recoverable property’ has the meaning given in section 304 of the Proceeds of Crime Act 2002.”—(Dame Margaret Hodge.)

Brought up, and read the First time.

I beg to move, That the clause be read a Second time.

With this it will be convenient to discuss new clause 81—Forfeiture of recoverable property obtained through economic crime: summary procedure—

‘(1) If the person on whom a notice under section [Forfeiture of recoverable property obtained through economic crime](3)(d)(i) served (the “respondent”) fails to attend the hearing as required by the notice, the Director may apply forthwith for a forfeiture order, and the Court may make such an order, without further notice to the respondent.

(2) If the respondent appears (whether in person or by a legal representative) at the hearing, the respondent may—

(a) at the hearing, satisfy the Court that the property is not recoverable property; or

(b) request that the question of whether or not the property is recoverable property be determined at such later date as the Court may order.

(3) If the respondent makes a request under subsection(2)(b), the respondent must provide an affidavit in answer to the notice within the period of 21days beginning with the date on which the matter is placed on the list, satisfying the Court that the property is not recoverable property.

(4) Unless the respondent satisfies the Court that the property is not recoverable property obtained as a result of an economic crime offence, the Court shall, upon the application of the Director, make a forfeiture order in relation to the property specified in the notice or any part of it.

(5) Property which is forfeited pursuant to a forfeiture order under this section shall be paid into the top slice of the Asset Recovery Incentivisation Scheme run by the Home Department.’

I will speak to this very quickly, too. This is an interesting new clause, because its purpose is to tackle the issue of suspicious wealth remaining frozen in bank accounts and serving no useful purpose. We propose a new, more straightforward, pragmatic solution to deal with suspicious wealth, enabling our enforcement agencies to confiscate the moneys in the bank and repurpose them so that much of the wealth can be used to fund and strengthen our anti-money laundering enforcement capacity and perhaps be given back, in some cases, to the nations from which it has been stolen.

When a banker sees a suspicious transaction, he or she is required to ask for consent from the police to allow the transaction to go ahead. If the police officer refuses consent, the moneys can be frozen in the bank account. Under our new clause, the money would then remain frozen for six months, and the director of the Serious Fraud Office could apply to the courts to confiscate or seize the moneys. They will be granted that application unless the respondent proves to the court that the funds do not have a criminal origin. The onus is on the respondent to prove that he or she has obtained the assets legitimately. The SFO does not have to prove that the respondent committed a criminal activity; it is up to the respondent to prove that the funds are legitimately and honestly acquired and are not linked to acts of criminality. The new clause is modelled on unexplained wealth orders.

This would add an important new weapon to our arsenal in the fight against economic crime, as it provides for the non-conviction-based confiscation of frozen assets. Although they are not my favourite people, the people of Jersey have introduced a very similar law and recently managed to secure £1.7 million that was frozen in accounts there. That was money paid to Lieutenant General Jeremiah Useni, who had held office in the Abacha regime in Nigeria, and the allegation was that it was the proceeds of corruption. Although he tried to get his money back, he could not, and a lot of the £1.7 million went back to Nigeria.

The British Bankers’ Association thinks that we have up to £50 million held in frozen accounts, untouched. We need a little touch of boldness from the Minister. He should not just accept the message of “resist” that he gets from his officials. He should give good consideration to this sensible, practical, good idea of seizing money stolen by bad people and giving it back to the citizens who have been robbed, or repurposing it to strengthen the fight against economic crime.

We welcome these new clauses, which would give effect to the Government’s stated intention to unlock the proceeds of crime held in bank accounts to fund law enforcement efforts to tackle economic crime. Their adoption would also optimise the potential of the defence against money laundering regime and streamline the process of UK law enforcement identifying tainted wealth and being able to seek its forfeiture.

I thank the right hon. Member for Barking. While I agree with the intent behind her new clauses, I argue that they narrow slightly the scope in which the state can already recover much of the proceeds of crime. While they attempt to simplify, the reality is that we are already recovering large sums. I am not saying that we could not do more—we certainly could—but I am not convinced that the new clauses would add significantly to existing legislation. Last year, for example, a record £115 million of proceeds of crime were recovered under existing powers.

That is not a brilliant argument, but I will pursue this issue on Report, as we are doing with other issues around seizing and freezing assets. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 84

Compensation for Victims of Economic Crime

‘(1) The Secretary of State must, no later than 90 days from the date on which this Act comes into force, publish and lay before Parliament a strategy for the potential establishment of a fund for the compensation of victims of economic crime.

(2) The strategy may include provisions on the management and disposal of any assets realised by the government, or any body with law enforcement responsibilities in relation to economic crime, under relevant UK legislation.’—(Stephen Kinnock.)

This new clause would require the Secretary of State to prepare and publish a strategy on the potential establishment of a fund to provide compensation to victims of economic crime.

Brought up, and read the First time.

I beg to move, That the clause be read a Second time.

As this is the last time I will be on my feet, I thank the Committee; it has been an excellent set of debates, and I look forward to further constructive engagement with the Government on these matters.

The context of new clause 84 is the devastation caused by Putin’s barbaric and illegal war for the lives and livelihoods of Ukraine’s population. This demands a concerted cross-party and international effort, of which the UK should be at the forefront, as the staggering costs of reconstruction are sure to remain a key challenge long after the war itself has reached its inevitable end.

The new clause would require the Government to prepare and publish a wide-ranging strategy for efforts to ensure that the necessary financial compensation is made available to victims of economic crime, wherever they may be. This could and should be applied to victims of international crimes, of which the war in Ukraine is without doubt an example, but it could be applied more broadly as a means of providing a measure of justice to the victims of any other kleptocratic regimes around the world. The new clause would provide a mechanism for compensating victims of economic crime in the UK, including the thousands, or perhaps even millions, of British victims of online scams and other kinds of fraud. We therefore commend the new clause to the Committee, and I look forward to the Minister’s response.

If this is indeed the last opportunity I have to speak in the Committee, I thank the Ministers. I hope they have been listening closely to what we recommend and will bring back amendments on Report. I also thank my hon. Friend the Member for Paisley and Renfrewshire North for being so patient and helpful in supporting me throughout the passage of the Bill.

The new clause gets to the heart of the matter. Victims of economic crime often receive very little compensation but suffer greatly from the impact of the crime. It can be devastating for people, both financially and personally, and they are deeply affected by it for the rest of their lives, so anything that will go towards helping to compensate those victims seems like a sensible prospect.

As this is probably the last time I will speak in the Committee, I thank you, Mr Robertson. I also thank the right hon. Member for Barking for her input into the Bill not just today, but over many years and as Chair of the Public Accounts Committee. The way in which she has championed tackling economic crime, drawn the House’s attention to it, and focused the country on the real threats that we have faced has been impressive to us all, and I am personally enormously grateful to her. She certainly helped my work enormously when I chaired the Foreign Affairs Committee, and she has now helped to focus my work as a Minister. I am very grateful that I have had the privilege of working with her.

I forgot to thank you, Mr Robertson, for chairing the Committee and for showing such an interest in what we are doing. I also thank the Ministers and Members of all parties who have spoken and participated. I look forward to working further to get even more into the Bill.

If anybody thinks that I was trying to soft-soap the right hon. Lady in order to shut her up in future sittings, they do not know her very well. It would have not worked, and I have not tried it. All I have done is to pay credit to somebody who has definitely earned it. I also thank my fellow Minister and the Whips, who have got us through at lightning speed.

On the new clause, the powers in part 4 already increase the focus on victims. The compensation principles of the Serious Fraud Office, CPS, the National Crime Agency and others have committed law enforcement bodies to ensuring that compensation for economic crime is considered in every relevant case, including where there are overseas victims, so I believe that the Bill already focuses on many of the aspects that we have discussed. That said, we are coming to Report. As always, I will be listening, but I have yet to be convinced about the new clause, because I believe that it has largely been covered.

Has the Minister any thoughts on the international forums that have been set up—for example, the Russian Elites, Proxies, and Oligarchs Taskforce and the European Commission’s Freeze and Seize Taskforce. What contribution are the UK Government planning to make to those processes?

I can speak directly to that, because I have recently had a meeting about it with other Governments and other jurisdictions. So far, many people have come up with ways to freeze assets. That is not a particular challenge; the UK does so very actively. Seizing and forfeiting in totality is a different challenge, because it depends on ownership and on many aspects of common law jurisdiction that we would not want to understate. I assure the hon. Gentleman honestly that I have not given up on this, because compensation for the victims in Ukraine is the very least that we should expect, as he correctly identified. Ukraine’s inevitable victory, which is absolutely assured, leads us to start thinking about how we reconstruct that extraordinary country. It is clear that Russian state assets held abroad—some, sadly, are held in the UK—should go some way to contributing to that.

That said, how do we construct the legal arguments to ensure that that is possible? They need to be in keeping with British common law, for obvious reasons. We do not want a jurisdiction of forfeiture; we want a jurisdiction of law. There is more work to be done, therefore. We are working very closely with other common law jurisdictions, such as Australia, Canada and, indeed, the United States. There is an ongoing discussion, but it is not quite as straightforward as I would have hoped.

I have no further comments, and I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Schedule 1

Cryptoassets: terrorism

“Part 1

Amendments to the Anti-terrorism, Crime and Security Act 2001

1 Schedule 1 to the Anti-terrorism, Crime and Security Act 2001 (forfeiture of terrorist property) is amended as follows.

2 After Part 4B insert—

‘Part 4BA

Seizure and detention of terrorist cryptoassets

Interpretation

10Z7A (1) In this Schedule—

“cryptoasset” means a cryptographically secured digital representation of value or contractual rights that uses a form of distributed ledger technology and can be transferred, stored or traded electronically;

“crypto wallet” means—

(a) software,

(b) hardware,

(c) a physical item, or

(d) any combination of the things mentioned in paragraphs (a) to (c),

which is used to store the cryptographic private key that allows cryptoassets to be accessed.

“terrorist cryptoasset” means a cryptoasset which—

(a) is within subsection (1)(a) or (b) of section 1, or

(b) is earmarked as terrorist property.

(2) The Secretary of State may by regulations made by statutory instrument amend the definitions of “cryptoasset” and “crypto wallet” in sub-paragraph (1).

(3) Regulations under sub-paragraph (2)—

(a) may make different provision for different purposes;

(b) may make consequential, supplementary, incidental, transitional, transitory or saving provision.

(4) A statutory instrument containing regulations under sub-paragraph (2) may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.

(5) In this Part—

“cryptoasset-related item” means an item of property that is, or that contains or gives access to information that is, likely to assist in the seizure under this Part of terrorist cryptoassets;

“senior officer” means—

(a) a senior police officer;

(b) an officer of Revenue and Customs of a rank designated by the Commissioners for His Majesty’s Revenue and Customs as equivalent to that of a senior police officer;

(c) an immigration officer of a rank designated by the Secretary of State as equivalent to that of a senior police officer;

“senior police officer” means a police officer of at least the rank of superintendent.

Seizure of cryptoasset-related items

10Z7AA (1) An authorised officer may seize any item of property if the authorised officer has reasonable grounds for suspecting that the item is a cryptoasset-related item.

(2) If an authorised officer is lawfully on any premises, the officer may, for the purpose of—

(a) determining whether any property is a cryptoasset-related item, or

(b) enabling or facilitating the seizure under this Part of any terrorist cryptoasset,

require any information which is stored in any electronic form and accessible from the premises to be produced in a form in which it can be taken away and in which it is visible and legible, or from which it can readily be produced in a visible and legible form.

(3) But sub-paragraph (2) does not authorise an authorised officer to require a person to produce privileged information.

(4) In this paragraph “privileged information” means information which a person would be entitled to refuse to provide—

(a) in England and Wales and Northern Ireland, on grounds of legal professional privilege in proceedings in the High Court;

(b) in Scotland, on grounds of confidentiality of communications in proceedings in the Court of Session.

(5) Where an authorised officer has seized a cryptoasset-related item under sub-paragraph (1), the officer may use any information obtained from the item for the purpose of—

(a) identifying or gaining access to a crypto wallet, and

(b) by doing so, enabling or facilitating the seizure under this Part of any cryptoassets.

Initial detention of cryptoasset-related items

10Z7AB (1) Property seized under paragraph 10Z7AA may be detained for an initial period of 48 hours.

(2) Sub-paragraph (1) authorises the detention of property only for so long as an authorised officer continues to have reasonable grounds for suspicion in relation to that property as described in paragraph 10Z7AA(1).

(3) In calculating a period of 48 hours for the purposes of this paragraph, no account is to be taken of—

(a) any Saturday or Sunday,

(b) Christmas Day,

(c) Good Friday,

(d) any day that is a bank holiday under the Banking and Financial Dealings Act 1971 in the part of the United Kingdom within which the property is seized, or

(e) any day prescribed by virtue of section 8(2) of the Criminal Procedure (Scotland) Act 1995 as a court holiday in a sheriff court in the sheriff court district within which the property is seized.

Further detention of cryptoasset-related items

10Z7AC (1) The period for which property seized under paragraph 10Z7AA may be detained may be extended by an order made—

(a) in England and Wales or Northern Ireland, by a magistrates’ court;

(b) in Scotland, by the sheriff.

(2) An order under sub-paragraph (1) may not authorise the detention of any property—

(a) beyond the end of the period of 6 months beginning with the date of the order, and

(b) in the case of any further order under this paragraph, beyond the end of the period of 2 years beginning with the date of the first order; but this is subject to sub-paragraph (4).

(3) A justice of the peace may also exercise the power of a magistrates’ court to make the first order under sub-paragraph (1).

(4) The court or sheriff may make an order for the period of 2 years in sub-paragraph (2)(b) to be extended to a period of up to 3 years beginning with the date of the first order.

(5) An application to a magistrates’ court, a justice of the peace or the sheriff to make the first order under sub-paragraph (1) extending a particular period of detention—

(a) may be made and heard without notice of the application or hearing having been given to any of the persons affected by the application or to the legal representatives of such a person, and

(b) may be heard and determined in private in the absence of persons so affected and of their legal representatives.

(6) An application for an order under sub-paragraph (1) or (4) may be made—

(a) in relation to England and Wales and Northern Ireland, by the Commissioners for His Majesty’s Revenue and Customs or an authorised officer;

(b) in relation to Scotland, by a procurator fiscal.

(7) The court, sheriff or justice may make an order under sub-paragraph (1) if satisfied, in relation to the item of property to be further detained, that—

(a) there are reasonable grounds for suspecting that it is a cryptoasset-related item, and

(b) its continuing detention is justified.

(8) The court or sheriff may make an order under sub-paragraph (4) if satisfied that a request for assistance is outstanding in relation to the item of property to be further detained.

(9) A “request for assistance” in sub-paragraph (8) means a request for assistance in obtaining evidence (including information in any form or article) in connection with the property to be further detained, made —

(a) by a judicial authority in the United Kingdom under section 7 of the Crime (International Co-operation) Act 2003, or

(b) by an authorised officer, to an authority exercising equivalent functions in a foreign country.

(10) An order under sub-paragraph (1) must provide for notice to be given to persons affected by the order.

Seizure of cryptoassets

10Z7AD (1) An authorised officer may seize cryptoassets if the authorised officer has reasonable grounds for suspecting that the cryptoassets are terrorist cryptoassets.

(2) The circumstances in which a cryptoasset is “seized” for the purposes of sub-paragraph (1) include circumstances in which it is transferred into a crypto wallet controlled by the authorised officer.

Prior authorisation for detention of cryptoassets

10Z7AE (1) Where an order is made under paragraph 10Z7AC in respect of a cryptoasset-related item, the court, sheriff or justice making the order may, at the same time, make an order to authorise the detention of any cryptoassets that may be seized as a result of information obtained from that item.

(2) An application for an order under this paragraph may be made, by a person mentioned in paragraph 10Z7AC(6), at the same time as an application for an order under paragraph 10Z7AC is made by that person.

(3) The court, sheriff or justice may make an order under this paragraph if satisfied that there are reasonable grounds for suspecting that the cryptoassets that may be seized are terrorist cryptoassets.

(4) An order under this paragraph authorises detention of the cryptoassets for the same period of time as the order under paragraph 10Z7AC authorises detention in respect of the cryptoasset-related item to which those cryptoassets relate.

Initial detention of cryptoassets

10Z7AF (1) Cryptoassets seized under paragraph 10Z7AD may be detained for an initial period of 48 hours.

(2) Sub-paragraph (1) authorises the detention of cryptoassets only for so long as an authorised officer continues to have reasonable grounds for suspicion in relation to those cryptoassets as described in paragraph 10Z7AD(1).

(3) In calculating a period of 48 hours for the purposes of this paragraph, no account is to be taken of—

(a) any Saturday or Sunday,

(b) Christmas Day,

(c) Good Friday,

(d) any day that is a bank holiday under the Banking and Financial Dealings Act 1971 in the part of the United Kingdom within which the property is seized, or

(e) any day prescribed by virtue of section 8(2) of the Criminal Procedure (Scotland) Act 1995 as a court holiday in a sheriff court in the sheriff court district within which the property is seized.

(4) This paragraph is subject to paragraph 10Z7AE.

Further detention of cryptoassets

10Z7AG (1) The period for which cryptoassets seized under paragraph 10Z7AD may be detained may be extended by an order made—

(a) in England and Wales or Northern Ireland, by a magistrates’ court;

(b) in Scotland, by the sheriff.

(2) An order under sub-paragraph (1) may not authorise the detention of any cryptoassets—

(a) beyond the end of the period of 6 months beginning with the date of the order, and

(b) in the case of any further order under this paragraph, beyond the end of the period of 2 years beginning with the date of the first order; but this is subject to sub-paragraph (4).

(3) A justice of the peace may also exercise the power of a magistrates’ court to make the first order under sub-paragraph (1).

(4) The court or sheriff may make an order for the period of 2 years in sub-paragraph (2)(b) to be extended to a period of up to 3 years beginning with the date of the first order.

(5) An application to a magistrates’ court, a justice of the peace or the sheriff to make the first order under sub-paragraph (1) extending a particular period of detention—

(a) may be made and heard without notice of the application or hearing having been given to any of the persons affected by the application or to the legal representatives of such a person, and

(b) may be heard and determined in private in the absence of persons so affected and of their legal representatives.

(6) An application for an order under sub-paragraph (1) or (4) may be made—

(a) in relation to England and Wales and Northern Ireland, by the Commissioners for His Majesty’s Revenue and Customs or an authorised officer;

(b) in relation to Scotland, by a procurator fiscal.

(7) The court, sheriff or justice may make an order under sub-paragraph (1) if satisfied, in relation to the cryptoassets to be further detained, that condition 1, condition 2 or condition 3 is met.

(8) Condition 1 is that there are reasonable grounds for suspecting that the cryptoassets are intended to be used for the purposes of terrorism and that either—

(a) their continued detention is justified while their intended use is further investigated or consideration is given to bringing (in the United Kingdom or elsewhere) proceedings against any person for an offence with which the cryptoassets are connected, or

(b) proceedings against any person for an offence with which the cryptoassets are connected have been started and have not been concluded.

(9) Condition 2 is that there are reasonable grounds for suspecting that the cryptoassets consist of resources of an organisation which is a proscribed organisation and that either—

(a) their continued detention is justified while investigation is made into whether or not they consist of such resources or consideration is given to bringing (in the United Kingdom or elsewhere) proceedings against any person for an offence with which the cryptoassets are connected, or

(b) proceedings against any person for an offence with which the cryptoassets are connected have been started and have not been concluded.

(10) Condition 3 is that there are reasonable grounds for suspecting that the cryptoassets are property earmarked as terrorist property and that either—

(a) their continued detention is justified while their derivation is further investigated or consideration is given to bringing (in the United Kingdom or elsewhere) proceedings against any person for an offence with which the cryptoassets are connected, or

(b) proceedings against any person for an offence with which the cryptoassets are connected have been started and have not been concluded.

(11) The court or sheriff may make an order under sub-paragraph (4) if satisfied that a request for assistance is outstanding in relation to the cryptoassets to be further detained.

(12) A “request for assistance” in sub-paragraph (11) means a request for assistance in obtaining evidence (including information in any form or article) in connection with the property to be further detained, made —

(a) by a judicial authority in the United Kingdom under section 7 of the Crime (International Co-operation) Act 2003, or

(b) by an authorised officer, to an authority exercising equivalent functions in a foreign country.

(13) An order under sub-paragraph (1) must provide for notice to be given to persons affected by the order.

Safekeeping of cryptoasset-related items and cryptoassets

10Z7AH (1) An authorised officer must arrange for any item of property seized under paragraph 10Z7AA to be safely stored throughout the period during which it is detained under this Part.

(2) An authorised officer must arrange for any cryptoassets seized under paragraph 10Z7AD to be safely stored throughout the period during which they are detained under this Part.

Release of cryptoasset-related items and cryptoassets

10Z7AI (1) This paragraph applies while any cryptoasset or other item of property is detained under this Part.

(2) A magistrates’ court or (in Scotland) the sheriff may, subject to sub-paragraph (9), direct the release of the whole or any part of the property if the following condition is met.

(3) The condition is that the court or sheriff is satisfied, on an application by the person from whom the property was seized, that the conditions for the detention of the property in this Part are no longer met in relation to the property to be released.

(4) A person within sub-paragraph (5) may, subject to sub-paragraph (9) and after notifying the magistrates’ court, sheriff or justice under whose order property is being detained, release the whole or any part of the property if satisfied that the detention of the property to be released is no longer justified.

(5) The following persons are within this sub-paragraph—

(a) in relation to England and Wales and Northern Ireland, an authorised officer;

(b) in relation to Scotland, a procurator fiscal.

(6) If any cryptoasset-related item which has been released is not claimed within the period of a year beginning with the date on which it was released, an authorised officer may—

(a) retain the item and deal with it as they see fit,

(b) dispose of the item, or

(c) destroy the item.

(7) The powers in sub-paragraph (6) may be exercised only—

(a) where the authorised officer has taken reasonable steps to notify—

(i) the person from whom the item was seized, and