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Public Bill Committees

Debated on Thursday 24 November 2022

Retained EU Law (Revocation and Reform) Bill (Fifth sitting)

The Committee consisted of the following Members:

Chairs: † Sir George Howarth, Sir Gary Streeter

† Bacon, Gareth (Orpington) (Con)

† Bhatti, Saqib (Meriden) (Con)

† Blomfield, Paul (Sheffield Central) (Lab)

† Creasy, Stella (Walthamstow) (Lab/Co-op)

† Evans, Dr Luke (Bosworth) (Con)

† Fysh, Mr Marcus (Yeovil) (Con)

† Ghani, Ms Nusrat (Minister for Industry and Investment Security) (Con)

† Glindon, Mary (North Tyneside) (Lab)

† Grant, Peter (Glenrothes) (SNP)

† Jones, Mr David (Clwyd West) (Con)

† Madders, Justin (Ellesmere Port and Neston) (Lab)

† Morrissey, Joy (Beaconsfield) (Con)

† Nici, Lia (Great Grimsby) (Con)

† O'Hara, Brendan (Argyll and Bute) (SNP)

† Randall, Tom (Gedling) (Con)

† Sobel, Alex (Leeds North West) (Lab/Co-op)

Stuart, Graham (Minister for Climate)

Huw Yardley, Sarah Thatcher, Committee Clerks

† attended the Committee

Public Bill Committee

Thursday 24 November 2022

(Morning)

[Sir George Howarth in the Chair]

Retained EU Law (Revocation and Reform) Bill

Clause 3

Sunset of retained EU rights, powers, liabilities etc

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

It is a pleasure to serve under your chairmanship once again, Sir George. The clause is a vital part of the Government’s retained EU law reform programme and will make sure that EU rights, obligations and remedies saved by section 4 of the European Union (Withdrawal) Act 2018 cease to apply in the UK after 31 December 2023.

It is a pleasure to see you in the Chair this morning, Sir George. Members will note that I am a little hoarse —please do not give me a sugar cube. I hope that means I will not be quite as lengthy as I was on Tuesday.

We can try.

I want to say a few words about the clause, which will fit in with the discussion we will have on the following clauses. All these clauses pertain to the future of our law after the removal of the legal effects of EU law. I will try not to repeat myself and to focus specifically on the terms of this clause.

I begin by stating the obvious: as we untie ourselves from the European Union, we will clearly need a new settlement of legal principles. Nevertheless, we ought to treat the clause with some scepticism and scrutinise the impact it will have on our country’s legal system. In doing so, we must consider why it was decided to take a snapshot at the end of 2020 in the first place.

When the country entered the transition period for leaving the EU, the potential for a legal vacuum to emerge rapidly became apparent, as the process of preserving EU legislation and EU-derived legislation made under section 2 of the European Communities Act 1972 began. Section 4 of the European Union (Withdrawal) Act 2018 was therefore designed to prevent such a legal vacuum once the 1972 Act was repealed, by catching everything that might have been missed and its legal effects.

I am saying that to highlight an important feature of the 2018 Act, which has been to maintain the smooth operation of our legal system while we formally left the EU. Clearly, it still has importance. Unless the Government are able to use the powers in clauses 12 to 15 to replace the effects of EU law exactly—although it is clear that they do not want to do that—we face the prospect of a legal vacuum.

I have a couple of questions for the Minister. First, does she agree that section 4 of the EU (Withdrawal) Act has provided an important function over the previous years in creating stability and certainty? Secondly, does she recognise the risk of a legal vacuum opening after 2023, and can she provide any assessment the Government have made of that risk?

As a matter of interest, I have just read on the front page of today’s Financial Times that a wide range of groups, from the TUC to the CBI, have written to the Prime Minister requesting that the Bill be withdrawn. One reason they give is that it will create a vacuum and a great amount of legal uncertainty. I suspect that the Minister has not yet had a chance to discuss the contents of that letter with the Prime Minister, but if she has, will she update us? [Interruption.] The Minister’s response suggests that she has not had that opportunity.

Such questions naturally lead us to the identification problem that we discussed on Tuesday. My understanding is that the dashboard sought to capture the examples under section 4 of the 2018 Act on retaining

“rights, powers, liabilities, obligations, restrictions, remedies and procedures”.

Due to the dashboard’s catch-all nature, however, can we be certain that all those have been picked up, given that even the Government admit that not all the regulations have been captured? How on earth can we be certain that serious vacuums will not be left by the removal of section 4 if we cannot be sure that we have identified everything affected by it? That is an important point.

Linking again to our debate on Tuesday about the timeframe in which such legal effects and legislative provisions need to be restated, replaced or revoked under clauses 12 to 15, we must not treat clause 3 in isolation. We must remember that what happens alongside the mountain of other pieces of EU legislation that need to be processed will be key to how the country moves forward. At the very least the Minister must try to offer us some reassurance—or, better yet, a plan that shows—that the Government have the matter in hand and will deal with all the legislative provisions and legal decisions before the 2023 deadline.

Overall, we agree that there has to be an end to EU supremacy in UK law, but we still have concerns about how that will operate in practice. We want to avoid a situation that the Government have known was coming for at least two years. I would be grateful if the Minister could provide some assurances to the Committee that action on the concerns that have been expressed by a wide body of representative groups is in hand.

Good morning, Sir George. I rise to support the comments made by my hon. Friend the Member for Ellesmere Port and Neston. I also think that the debate on the clause sums up some of the practical challenges with the legislation. The retained EU law dashboard has identified just 28 pieces of directly effective retained law under section 4 of the EU withdrawal Act—a mere amuse-bouche of laws that will be affected by the Bill overall. Given that the number is so small in comparison with the at least 2,500 that have been identified, and the possible 4,000, why could the Minister not show us what will happen next? After all, our debates on Tuesday were all about what would happen if we deleted every piece of legislation. There are no guarantees about what would happen next. Rather than assuming that all these pieces of legislation should go at the end of 2023, surely Ministers could commit to reviewing the 28 now and showing us the way ahead—whether some will be retained, amended or indeed abolished. Then the clause would not be required.

All of this does make a difference. For example, on Tuesday the Government gave their very first commitment on what will happen to one of the 4,000 pieces of legislation—the Bauer and Hampshire judgments about pensions. To remind Government Members, who may well have constituents coming to them about this, those are the requirements—the pieces of case law—that mean that if a company goes bust, people are entitled to at least 50% of their pension fund. The Government committed on Tuesday to abolishing those pieces of legislation, but they are affected by the clause.

The 28 pieces of legislation are not insubstantial; they could be the way forward for the Minister. Instead of requiring the clause, she could say, “We’re going to look at the 28 and tell you what we’re going to do with them,” so that people can have confidence that we have an administrative process for these pieces of legislation and the suggestion that there has been scaremongering can be put aside. She could say, “Here are 28 examples of what we’re going to do, and the fact that they are rights under section 4 of the EU withdrawal Act helps us to contain them as a piece of work.”

The Intellectual Property (Exhaustion of Rights) (EU Exit) Regulations 2019 are another of the 28. Given that the Government are getting rid of the Bauer and Hampshire judgments, thereby affecting the pension rights and protections of our constituents, could the Minister set out what might happen on that one? She was very kind on Tuesday to set out an example of what will happen to one of the 28. It would be incredibly helpful for us as a Committee to understand the impact of the legislation and to perhaps start, if not to allay our concerns—I think Opposition Members are concerned when people’s pension protections are being not just watered down but, frankly, abolished—then to understand what the Government’s intentions are in using these powers.

I simply ask the Minister to use the clause stand part debate to explain why the 28 pieces of legislation could not have been dealt with in advance of the Bill, given that they stand on the EU withdrawal Act, and to tell us a bit about what will happen to them, to give us an indication of what horrors are to come or perhaps to reassure us. Government Members want to use the term “scaremongering”. I use the term “accountability”. I am looking forward to what the Minister has to say.

It is curious that Opposition Members say they do not want to prevent Brexit or accept the supremacy of EU law, but then they come up with every which way to stop these things actually being delivered.

The matters saved by section 4 of the EU withdrawal Act consist largely of rights, obligations and remedies developed in the case law of the Court of Justice of the European Union. Many of those overlap with rights already well established by domestic law, and those overlaps can cause confusion. The Bill allows the Government to codify any specific rights that may otherwise cease to apply if they consider it a requirement.

A question was raised about whether we are ending section 4 rights; that is not the case. Section 4 of the EU withdrawal Act incorporated the effect and interpretation of certain rights that previously had effect in the UK legal system through section 2(1) of the European Communities Act 1972. Section 4 rights largely overlap with rights that are already available in UK domestic law, and it is domestic legislation where they should be clearly expressed. This Bill seeks to rectify that constitutional anomaly by repealing section 4 of the 2018 Act. That does not mean the blanket removal of individual rights; rather, combined with other measures in the Bill, it will result in the codification of rights in specific policy.

Ministers in each Department, which will be responsible for their own elements of the Bill, will work with the appropriate bodies to ensure that they share what they will be assimilating, repealing and updating. All of that will provide additional clarity, making rights clearly accessible in UK law. That is why I recommend that the clause stand part of the Bill.

Question put and agreed to.

Clause 3 accordingly ordered to stand part of the Bill.

Clause 4

Abolition of supremacy of EU law

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

With this it will be convenient to discuss the following:

Clauses 5 and 6 stand part.

New clause 8—Conditions for bringing sections 3, 4 and 5 into force

“(1) None of sections 3, 4 or 5 may be brought into force unless all the following conditions have been satisfied.

(2) The first condition is that a Minister of the Crown has, after consulting organisations and persons representative of interests substantially affected by, or with expertise in the likely legal effect of, that section on a draft of that report, laid a report before each House of Parliament setting out, with reasons, the Minister’s view as to the likely advantages and disadvantages of bringing that section into force, setting out in particular the effect of that section on—

(a) the rights of and protections for consumers, workers, and businesses, and protections of the environment and animal welfare;

(b) legal certainty, and the clarity and predictability of the law;

(c) the operation of the Trade and Cooperation agreement between the United Kingdom and the EU, and UK exports of goods and services to the European Economic Area; and

(d) the operation of the Protocol on Ireland/Northern Ireland in the EU withdrawal agreement.

(3) In relation to section 4, that report must take into account any regulation made or likely to be made by a relevant national authority under section 8(1).

(4) The second condition is that a period of sixty days has passed since that report was laid before Parliament, with no account to be taken of any time during which Parliament is dissolved or prorogued or during which either House is adjourned for more than four days.

(5) The third condition is that, after the end of that period, both Houses of Parliament have approved a resolution that that section come into force.

(6) If both Houses of Parliament have approved a resolution that that section should not come into force unless it is amended in a way set out in that resolution, then the Minister may by regulation amend that section accordingly, and that section may not be brought into force until that amendment has been made.”

This new clause requires Ministers to analyse, and to explain their analysis of, the effect of the removal of retained EU law rights, the principle of supremacy of EU law, and of the general principles. It also includes opportunity for Parliamentary approval and timeframes for laying reports before both Houses.

I rise to speak to new clause 8, but before that I will address clauses 4, 5 and 6.

Clause 4 is a Ronseal clause: with regard to abolishing the supremacy of the EU, it does exactly what it says on the tin. However, unlike putting a coat of varnish on a fence, it will not be a case of simply walking away once it is done. It is inevitable that courts will need to consider case law that we have previously regarded as settled, because that law was settled when EU law was supreme, and it no longer will be. The reality is that none of us know where this clause is going to take us.

Most lawyers practising today know no other legal environment. The world has moved on in the last 50 years in ways that we could not have foreseen, and the law has moved with it, so any reinterpretation of the law needs to be done carefully. It must strike a balance between making changes where appropriate, based on our new position outside the EU, and maintaining some consistency and predictability for businesses and individuals who are trying to conduct their working and private lives within the ambit of the law. That is why some of our other amendments have attempted to create stability in terms of what the Government can control with these regulations, because we recognise that not even this Government can control the courts and which issues are litigated.

Section 5(2) of the European Union (Withdrawal) Act 2018 stated that the principle of the supremacy of EU law will continue to apply

“so far as relevant to the interpretation, disapplication or quashing of any enactment...passed or made before exit day.”

That means that retained EU regulations would take precedence over pre-existing domestic legislation that is inconsistent with them. It also makes it clear that this does not apply to anything passed after 31 December 2020, so to some extent, supremacy of EU law has already entered history. What analysis has been done on the legal consequences of retrospectively altering the relationship between retained EU law and domestic legislation passed before 31 December 2020? Have the Government have done any analysis of this, and can they anticipate which areas will be prone to more legal challenge on the issue of supremacy?

I suspect that it will be impossible for any of us to say whether the consequences of removing the principle of supremacy would reduce the clarity of the law or change its effect in any particular case. However, the overall effect is that there will be a reduction in certainty and a risk of unpredicted—and perhaps entirely undesirable and unjust—consequences. What assessment has been made of the impact of the new level of uncertainty on business investment?

It is to the Government’s credit that they have recognised that there is a risk of unjust or unintended consequences and have retained the power in clause 8 to, in essence, retain the supremacy of EU law over domestic legislation for any EU legislation up to 23 June 2026, but that prompts the question of what happens to any undesirable case law that emerges after that date—indeed, whether there will be any case law at all before that date is an open question, given the current state of court backlogs. There are also important questions about how the powers in clause 8 will be exercised, but we will save those for that clause. Suffice it to say that we do not think things will be quite as straightforward as the clause implies.

Clause 5 raises serious questions about how the abolition of the general principles of EU law will impact on any retained EU law, as it will now inevitably throw into doubt the meaning of all retained European Union law. This will also affect primary legislation that was intended to implement EU obligations and that would have been interpreted in the light of the general principles of EU law and the rights and duties flowing from the EU. Let us remind ourselves what the terrible, unconstitutional principles of EU law are: legal certainty, equal treatment, proportionality and respect for fundamental rights.

I would be interested to hear from the Minister why the Government feel that they can no longer support any of those principles in UK law. Can she also tell us how many pieces of primary legislation will be affected by the clause? What elements of that legislation will be affected, and which Departments are likely to have to reconsider and possibly redraft primary legislation as a result of judicial interpretation? Have any steps been taken at all to assess the effect of the provisions? Again, will we see increased uncertainty and reduced investment, but richer lawyers, as a result of the clause?

I will not ask the Minister how many cases over the last 50 years have been decided in line with the principles of EU law, as I do not think that anyone could reasonably be expected to put a number on that, but she ought to be able to explain how the Bill will affect our constituents. We are talking about half a century of case law being replaced by a vacuum that, because of the way the Bill is drafted, can only be filled by litigation. The lawyers really will be the ones who benefit from the Bill.

Decisions that have been interwoven into our legislation and that affect key workplace rights and protections will now be open for question—for example, protections around discrimination, equal pay, and maternity and paternity have developed a whole line of case law over time. Separating out the decisions that have been made on such pieces of law on the basis of EU-derived principles will have consequences that I believe the Government should look to address. To give one example, the removal of the ability to make claims for equal pay for work of equal value that is done by different sexes is a well-established principle that is at risk as a result of the clause. Of course, the new figures released at the weekend show just how far we still have to go in resolving the quest for equal pay.

How will the Government address those questions? Are they content for the law to be reshaped organically by the courts instead of by Parliament? That will inevitably lead to more delays, as more and more test claims are brought in a court system already beset by backlogs. The Government will need to clarify the law, and such cases will be pursued at a cost to the individuals bringing the claims, along with very high legal fees—running to thousands of pounds—to bring appeals to the appeal courts. In practice, that will mean that the reshaping of the law will be driven by those with the deepest pockets, not those with the most just arguments. That is not the way we should look to reshape our law.

I understand the idea that, if we have the left the EU, the principles of EU law should no longer apply, but if we decide as a Parliament that those are good principles and worth keeping, and that we value factors such as legal certainty, we should be saying that as a Parliament. By tabling new clause 8, we are trying to get some sense of order into all this.

Many of the legal experts we heard from during the evidence sessions spoke about the impact of the Bill. They almost spoke in chorus about the abnormality of, and their concern about, how little opportunity there was for parliamentary scrutiny and consultation. Some of the most knowledgeable people in the country are raising concerns about the impact of providing the Executive with such unchecked powers and about the huge vacuum that the Bill will create. We should listen to those concerns. I wish to move new clause 8 to rectify the lack of scrutiny and consultation in the use of powers afforded by clauses 3, 4 and 5.

We now have nearly less than a year to deal with these crucial matters, which is testament to a weak Government that do not have the confidence to address the practical, legal and various political consequences of our disentangle-ment from the EU. The most salient question is: why would the Government want to jeopardise important legal precedents in the UK’s case law by rushing to remove them without adequate levels of scrutiny or due consideration of the impact?

The terms of the new clause are simple. After stating in subsection (1) that the new clause will place requirements on the proper use of clauses 3, 4 and 5, subsection (2) begins by detailing the conditions on which powers can be legitimately used. In particular, the subsection states that the Government must consult

“organisations and persons representative of interests substantially affected by, or with expertise in the likely legal effect of”

the Government’s use of clauses 3 to 5. It mandates that a report from the consultations be produced and laid before both Houses and include the relevant Minister’s view on

“the likely advantages and disadvantages of bringing that section into force”,

with a particular focus on basic protections for consumers, workers, businesses, and the environment and animal welfare. We have heard already in Committee that there does not seem to be a great deal of support for maintaining those protections.

The report must also focus on legal certainty in terms of clarity and predictability of law, and the operation of the trade and co-operation agreement between the UK and EU, as well as the effect on the exports of goods and services to the European economic area. It must also consider the operation of the protocol on Ireland and Northern Ireland in the EU withdrawal agreement. I hope Government Members recognise that those are all important matters that will impact on our constituents’ lives and the prosperity of the whole nation for years to come. The Government should want to know the consequences of the Bill before they enact it.

I cannot see why there would be any objection to taking such a sensible step. Perhaps there will be some grumbling or concern about administrative costs or burdens. Admittedly, there will be some costs in terms of laying reports before both Houses, but it stands to reason that any credible Government would have already carried out such assessments, or at the very least planned to do so in the very near future. Besides, the small costs associated with placing such assessments into the public domain are no doubt good value not just for the sake of transparency, but for the confidence it will instil in businesses about where the future legal landscape will lie.

Neither should there be opposition to the principle of conducting such scrutiny. It is simply due diligence. We are embarking on a process that will completely alter how the law operates in our country. The new clause simply reintroduces a level of scrutiny in the form of consultation and, in later subsections, parliamentary oversight over how the UK’s legal system will be altered.

Returning to the point of scrutiny that I began with, and that we have talked about many times, it is one of the more concerning elements of the Bill. We are expected throughout the Bill to submit to unchecked ministerial power in good faith. New clause 8(4), (5) and (6) attempt to address that. Subsection (4) deals with the necessary timeframes. To ensure that there is ample time to understand the implications of the reports laid before the House, subsection (4) states that the reports must stay in Parliament for a period of 60 days when it is sitting. That will not only give both Houses enough time to study the impact of the Government's plans, but will help prevent the Government from using the sunset as a means to rush through unsatisfactory changes—a problem not limited to the use of the powers here.

New clause 8(5) and (6) introduce the parliamentary approval that the Bill severely lacks throughout. Once the 60-day period has been completed, both Houses will have to approve a resolution to bring the relevant subsections (3), (4) or (5) into force. Crucially, under the new clause, if either House finds the subsection to be unsatisfactory, it will simply not come into force. If that is the case, both Houses will need to pass a resolution that includes a recommendation to amend the subsection so that their concerns are addressed to secure approval. The Minister would then need to act on such a recommendation. I believe that that is a reasoned approach. It has been guided by the evidence that we have heard, and would utilise the wealth of knowledge and experience contained within both Houses on the impact of such dramatic changes. We want to ensure that all eventualities have been considered and have gone through the proper channels of consent, especially on an issue as crucial as our law.

This new clause would achieve that, and the only additional cost would effectively be parliamentary scrutiny time. Rather than giving ministerial authority, it would make the decisions more transparent and more accountable. It would see that issues that are important to all of our constituents, such as consumer rights and workers’ protections, are at the forefront of our discussions and debates.

Of course, it would also ensure, as we have said many times, that Parliament actually takes back control of the process and does not give it away, not just to Ministers but to lawyers and judges, who will pursue cases in the interests of their clients. There is nothing wrong with that, but it risks a lopsided development of the law and could bring forward legal principles and developments that we cannot foresee and certainly cannot control.

I wish to make a relatively brief point, anticipating what the Minister might say on the basis of her response to comments on clause 3. It is worrying, when we are trying to have a serious consideration of the Bill, that serious questions either from our Front Bench or from my hon. Friend the Member for Walthamstow are met with the suggestion that we are, in some way, trying to deny Brexit.

I think we need to be clear on this: we campaigned to remain in the European Union; the majority of Conservative Members campaigned to remain in the European Union; but we lost and we left. There is no going back; none of us is arguing for it—no rejoining the EU, no rejoining the single market, no rejoining the customs union. But there are choices in the way that we manage our future outside of the EU. That is what we are trying to deal with, because we want to make the right choices, and are worried that the Government are not.

I have come to this session from a meeting of the UK Trade and Business Commission, which is a cross-party, cross-industry body looking at the trade opportunities and trade implications of our departure from the European Union. Both the British Chambers of Commerce, which gave evidence to us this morning, and the TUC expressed huge concern about the uncertainty created by the provisions in clauses 4 to 7 and the potential for businesses and workers to get lost in a legal quagmire from which, as my hon. Friend the Member for Ellesmere Port and Neston says, only the lawyers will benefit. Given the current backlog of such cases in our courts, that uncertainty will last for some time.

Will the Minister address the concerns that were raised by the Bar Council, whose evidence I know she will have read? It warns about,

“creating uncertainty as to the meaning and status of such REUL by removing established principles by which it is to be interpreted, altering its status vis-à-vis other law, and nudging the courts towards departing from EU case-law that interprets it.”

I hope that the Minister will respond to the questions asked by my hon. Friend the Member for Ellesmere Port and Neston, because the evidence then says:

“We detect no sign that any assessment has been done as to the legal effect of those changes on the regulations concerned (despite their importance) and can therefore detect no policy rationale for those changes whatsoever.”

I hope that, in her remarks, the Minister will address those points.

My hon. Friend the Member for Sheffield Central is absolutely right. This is not about whether Brexit has happened. We all know that Brexit has happened. We have left the European Union, and, frankly, it reflects an intellectual insecurity about the legislation if that is the only response that the Government can come up with—if they cannot actually engage in defending their proposals but try to take us on to a completely different debate.

That matters because millions of people across the country are dealing with the consequences of Brexit on a daily basis, none more so than our friends and family in Northern Ireland. I rise to ask the Minister to put aside the constant talk about, “Well, if you disagree with this, if you want to ask these questions, it’s cos you didn’t agree with Brexit,” and to do justice to the people of Northern Ireland.

On Tuesday, we talked very briefly about the Schleswig-Holstein dispute and the fact that it was a dispute between Denmark and Germany about a territory. History is littered with such instances, whereby people suffer, whereby there are refugees and whereby such disputes define political and geo-diplomatic discourse for generations to come.

In Northern Ireland, there is an incredibly difficult balance, which we know has been unbalanced since Brexit happened. We also know that one of the things that is causing real pain to people in Northern Ireland is having to maintain dual systems, because it is not clear to businesses in Northern Ireland which pieces of legislation they have to follow.

Supremacy, which this clause attacks, is one of the ways in which that situation is resolved. Government Members can dismiss everything that we have to say, but they need to look our friends and neighbours in Northern Ireland in the eye and say, “We are doing everything we can to make sure the peace holds and to uphold the Good Friday agreement.” I say that because supremacy is particularly important when it comes to the Good Friday agreement and given that this clause abolishes supremacy of EU law in Northern Ireland as well, we need to understand from the Minister—if she does not answer this question, that would be very serious—what impact the clause will have on the protocol, because the protocol at the moment is obviously under pressure and is clearly a matter that has some real consequences for the lives of people in Northern Ireland.

If the Government are hoping to tear up the protocol, that would be an extraordinary moment in the history of Northern Ireland, so the Minister owes us the justice of a serious response to a set of serious questions, not only about legal uncertainty but about supremacy and how the clause will operate in Northern Ireland. I hope that she will respond with courtesy and dignity. Whatever disagreements and debates we may have had about Brexit—as I say, Labour Members are now perfectly content that that has happened; the argument has been lost and we are moving on—doing the people of Northern Ireland the justice of answering questions about, and engaging directly with, this concept of supremacy and saying what it means for Northern Ireland is important, so that they can start to have some of the certainty about what their future will hold that they desperately require.

Before I call the Minister to respond, the hon. Lady prayed in aid the Schleswig-Holstein affair. Without interfering in the politics of the debate, I think that a more appropriate comparison might be Zollverein in Germany or Risorgimento in Italy, which were all about the assertion of the rights of nation states.

This is turning into a very interesting morning indeed, Chairman.

I rise to resist new clause 8. This new clause seeks to set conditions on the commencement of clauses 3, 4 and 5 of the Bill. I will explain to the right hon. Member for Ellesmere Port and Neston why we are making the changes in these clauses.

Each clause is vital to this Government’s programme to reform retained EU law. That there are still circumstances where retained EU law takes precedence over UK law is not consistent with our status as an independent nation. The principle of EU supremacy must be ended without delay. These amendments would add further delay by requiring the Government to write reports on items to which we have already committed. As set out already, the Government have committed to ensuring that the necessary legislation is in place to uphold the UK’s international obligations, which includes maintaining the UK’s obligations under the trade and co-operation agreement or the Northern Ireland protocol. We will come on to consider an amendment that will allow us to spend more time discussing that issue.

This Bill will not lead to legal uncertainty—to have perfect legal certainty would mean that we would forever keep the same laws. Our approach is to improve accessibility and legal clarity by codifying, where necessary, rights and principles expressly into domestic statute.

With regard to the delegated powers in the Bill, the Government are committed to ensuring robust scrutiny for the secondary legislation made under these powers while ensuring the most effective use of Parliamentary time; I believe, Chairman, that we spent many hours discussing this issue just on Tuesday. This means that legislation made using the delegated powers in the Bill will be subject to either the negative or draft affirmative procedure, depending on the legislation that is being amended and the power used. A sifting procedure will also apply to regulations to be made under the power to restate, which affords additional scrutiny of the use of power.

Clause 4 ends the principle of supremacy of retained EU law in so far as it applies to pre-2021 legislation. The clause establishes a new priority rule, which ensures domestic legislation prevails over retained direct EU legislation where there is a conflict. Thanks to the clause, an Act of Parliament will once again be the foremost law in the land. Clause 5 ensures general principles of EU law will no longer be part of the UK statute book from the end of 2023. Clause 6 establishes that after the end of 2023 all retained EU law preserved from the sunset provisions will be known as “assimilated law”.

In response to some of the questions raised, I put on the record once again that the rulebook does not seek to remove rights. In most instances, those rights already operate and are available in domestic legislation. The rulebook contains provisions to enable the UK Government and the devolved Administrations to safeguard the rights and protections of citizens of the United Kingdom. The Bill includes a restatement power so that Departments can codify rights into domestic legislation.

On Tuesday, we spoke at length about scrutiny, the sifting process and the role that Parliament will play, so I am not sure what further response I can make today. That programme has been made clear. The Government recognise Parliament’s significant role in scrutinising statutory instruments to date and are committed to ensure appropriate scrutiny of any secondary legislation made under the Bill’s delegated powers.

Changes in the law can give rise to litigation—that is normal—but we would never change the law if people wanted no change whatsoever. The risk will be mitigated in areas where Departments use the Bill’s powers to maintain the effect of our current law, if necessary, for desired policy outcomes. In other cases, proactive management of the removal of retained EU law will allow a controlled and positive introduction of a new legal regime that seeks to mitigate any risks posed by increases in litigation. For instance, the Bill contains powers allowing the Government to retain the current legislative hierarchy between specified pieces of legislation. The effects of repealing supremacy will only be considered relevant to matters arising after the enactment of policy. The change is not retrospective, and cases that have already been concluded will not reopen. Upon finding that pre-2021 domestic law is incompatible with retained EU law, courts may place conditions in the incompatibility order to mitigate the effect of that finding.

I did posit in my opening remarks the principles of EU law that will be jettisoned. In the example of legal certainty and equal treatment, does the Minister consider that those principles should no longer be part of UK law?

That assumes that we would not be treating people equally and fairly, and that is not the case when we legislate in the UK. I do not buy the idea that without EU law we are incapable of governing fairly in the UK. We are all elected to Parliament to represent our constituents, and we want to go home and tell our constituents, regardless of who they are and where they are from, that we are legislating fairly for everybody.

Why are we removing the principle of EU supremacy? That principle means that pre-2021 domestic law must give way to some pieces of retained EU law when the two conflict. That ensured legal continuity at the end of the transition period, but it is constitutionally anomalous and inappropriate, as some domestic laws, including Acts of Parliament, are subordinate to some pieces of retained law. That is the nub of the issue. We either accept the supremacy of the EU or accept the supremacy of this place. We can go round and round, but only one can prevail, and the Government believe that this Parliament should be supreme.

On the protection of fundamental rights and the equality principle, the principle of fundamental rights is generally not the exclusive preserve of the EU. We are proud of the history of the UK legal systems in which common law principles and legislation are well established to protect fundamental rights. For example, the principle of equality before the law is rooted deeply in British law. It was in 1215 that Magna Carta first acknowledged that British people had legal rights and that laws could apply to kings and queens too. The Equality Act 2010 has, to date, brought together more than 116 pieces of legislation into a single Act—a streamlined legal framework to protect the rights of individuals and to advance equality of opportunity for all. There is no equivalent to that Act in EU law, which shows how important it is that we are able to express principles such as equality before the law in a UK statute rather than relying on principles of EU law.

Does my hon. Friend not agree that a particular strength of our domestic legal system is the principle of stare decisis, whereby there is a strict rule that cases are followed in terms of precedent, which does not apply in the case of EU law?

Exactly. My right hon. Friend is incredibly knowledgeable on all those issues, and I am more than happy to defer to him; he is absolutely right. We reject new clause 8.

I will first address the intervention of the right hon. Member for Clwyd West. The point of clause 4 is that it removes the ability of the courts to refer to precedents from any decisions that have been taken in accordance with EU law, so it is worrying that the right hon. Member makes such comments.

The Minister said that we must decide whether we accept the supremacy of Parliament. We absolutely do, which is why so many of the amendments that we have tabled are about giving Parliament back control, not handing power to Ministers or, in the case of this clause, handing power to lawyers and judges to decide how our law moves forward.

I thank the Minister for promoting me to a right hon. Member—that was very kind of her. She also said that new clause 8 would delay matters. It will not. If the Government are on top of things, which I would like to think they were, they should be doing this work anyway. They should be doing this analysis in a way that enables Parliament to scrutinise the effect of the Bill.

Does my hon. Friend recognise that the Minister did not utter the words “Northern Ireland”, and did not at all address the question of how supremacy will be resolved in Northern Ireland, which follows both EU and UK legislation? I see that she is being given a note, so perhaps she can do us the courtesy of responding to that question.

The Minister might care to intervene on the hon. Member who is speaking. That does not require a point of order.

The hon. Member for Walthamstow was inaccurate. Hansard will show that I did mention Northern Ireland; I made that clear. An amendment that we will consider later today will allow us to do justice to the issue.

We will be returning to Northern Ireland, as the Minister says. She said that the Bill will not add legal uncertainty. I am afraid that that is exactly what it will do, and it is exactly what the bulk of evidence from every legal representative who has contacted the Committee shows. By abolishing principles that have been in formation for half a century, we will be in a new era and will have to develop new legal principles. That can only create uncertainty.

It is worth reflecting on the letter to which I referred earlier, which is reported in the Financial Times today. It was sent by about a dozen organisations, including the Trades Union Congress and the Chartered Institute of Personnel and Development, that have a huge interest in ensuring that the law is fair and certain. The letter warns that the Bill

“would upend ‘decades-worth of case law’ and create ‘a huge risk of poor or potentially detrimental law entering the statute book’”.

We should be listening to these people; they know what they are talking about. They have looked at the effect of the Bill and believe it will not do what some think it will. It will not be a rerun of 2019, although the Conservatives would like us to go back to 2019, because they were ahead in the polls then. We have left the EU. This legislation is about how we move forward, but I am afraid that there has been a complete failure to address the consequences of its provisions. We will be coming back to the issue for years to come, because there has been a shocking lack of forethought about the Bill’s implications. I will press new clause 8 to a vote.

Question put and agreed to.

Clause 4 accordingly ordered to stand part of the Bill.

Clauses 5 and 6 ordered to stand part of the Bill.

Clause 7

Role of courts

I beg to move amendment 79, in clause 7, page 4, line 32, at end insert—

“(d) the undesirability of disturbing settled understandings of the law, on the basis of which individuals and businesses may have made decisions of importance to them;

(e) the importance of legal certainty, clarity and predictability; and

(f) the principle that significant changes in the law should be made by Parliament (or, as the case may be, the relevant devolved legislature).”

This amendment adds further conditions for higher courts to regard when deciding to diverge from retained EU case law.

I will not speak for as long as I did on Tuesday, when I recited many different chemicals and species. I will also disappoint my hon. Friend the Member for Walthamstow by not mentioning killer shrimp. My contributions from now on will be pointed, seeking clarity from the Minister.

Through amendment 79, for which we are indebted to the Bar Council, we seek to expand clause 7 to make clear the important legal and constitutional principles that will be taken into account by the courts. The amendment directs higher courts, when deciding whether to depart from retained EU case law, to consider the well-established and, we hope, uncontroversial principles of legal certainty and regulatory stability. It would be helpful if the Minister could say whether she and the Government accept those legal principles and, if so, whether she agrees that higher courts should have regard to them when deciding whether to depart from retained EU law.

The amendment aims to safeguard the important constitutional principle that a significant change to the law, including a change to established case law, should be made by Parliament or the relevant devolved legislature. Again, does the Minister accept that fundamental constitutional principle and, if so, that it should guide the courts’ decisions under clause 7? She may not be in a position to accept the amendment, but I hope that she can make a simple and straightforward statement that she and the Government agree that the three legal constitutional principles set out in it must be maintained and respected by the courts.

I rise to resist amendment 79, which puts in place too high a bar for UK courts to depart from retained case law, including judgments made and influenced by the EU courts. Clause 7 will free our courts to develop case law on retained EU law that remains without being unnecessarily constrained by the past judgments of these new foreign courts. The clause introduces a new test for higher courts to apply when considering departure from retained EU case law. The test gives higher courts greater clarity on the factors to consider, and greater freedom to decide when it is appropriate to depart from retained EU case law. The amendment, however, would reinforce the excessive influence of the European courts and judgments on our domestic courts, and limit judges’ ability to decide to depart from retained EU case law, as should be their right and responsibility. I therefore ask the hon. Gentleman to withdraw the amendment.

We will not push the amendment to a vote, but the Minister did not give us sufficient clarification. I am sure that when we progress we will continue to hear the opinions of other bodies in relation to retained case law. That is really important as the Bill progresses through the House and into the other place.

The Government might not listen to Opposition Members, but they might listen to the Office for Environmental Protection, which, after all, they set up. It said:

“In making it easier for courts to depart from environmental retained case law, the Bill is likely to lead to uncertainty as it will be unclear whether long-established precedents will continue to be followed. This could result in unnecessary, costly legal proceedings. Consideration should also be given to whether this could also result in a reduction in environmental protection (where protections have been established through case law) and how this will be addressed.”

Does my hon. Friend agree that those critical points need to be addressed?

Absolutely. Agencies such as the Environment Agency, Natural England and the Office for Environmental Protection use these regulations and case law all the time. They have evolved over time in many areas—water, nature and so on. There is now a real danger to those provisions, so I hope the Minister will consult with her colleagues in the Department for Environment, Food and Rural Affairs and ensure we are not unable to undertake regulatory and enforcement action on the environment.

The hon. Gentleman mentions the danger of departing from precedent, but is that not substantially mitigated by clause 7(2)?

Having seen the opinions of different agencies—my hon. Friend the Member for Walthamstow mentioned the Office for Environmental Protection—and heard the evidence of the Bar Council, I am not sure that is the case.

I hesitate to intervene again, but it is specifically provided for in clause 7(2) that, although precedent may not apply in the case of European decisions, it does in the case of domestic decisions. Of course, European courts are not bound by precedent, so we have a significant safeguard in clause 7(2) against the risks that the hon. Gentleman mentions.

I know from my brief in the shadow DEFRA team that some very important enforcement actions are extrapolated from European case law, because we were under the aegis of the European Court of Justice for a very long time. It is important that we are mindful of that.

Obviously the Bill also enshrines the idea that protections can only be watered down, because it says that nothing can be brought in that increases burdens. Of course, courts are free to set new precedents, but when this Bill is enacted only precedents that reduce protection can be set. That is why the Office for Environmental Protection is concerned.

I fear we may be straying into future debates. I will not take much longer—I take your lead, Sir George. We will have further discussions about burdens and regression, so I will not labour that point. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

I beg to move amendment 38, in clause 7, page 5, line 39, after “court)” insert

“in England and Wales or Northern Ireland”.

This amendment, together with Amendments 39 to 47 and (a) to Amendment 5, would remove the Scottish courts and Scottish law officers from the case law reference procedure provided for by new sections 6A, 6B and 6C of the EU Withdrawal Act 2018.

With this it will be convenient to discuss the following:

Amendment 39, in clause 7, page 5, line 42, leave out from “Court,” to the end of line 2 on page 6.

See explanatory statement to Amendment 38.

Amendment 40, in clause 7, page 6, line 35, after “court)” insert

“in England and Wales or Northern Ireland”.

See explanatory statement to Amendment 38.

Amendment 41, in clause 7, page 7, leave out lines 4 and 5.

See explanatory statement to Amendment 38.

Amendment 42, in clause 7, page 7, line 19, leave out from “Court,” to the end of line 21.

See explanatory statement to Amendment 38.

Amendment 44, in clause 7, page 8, line 40, leave out

“, the Advocate General for Scotland”.

See explanatory statement to Amendment 38.

Amendment 45, in clause 7, page 9, line 2, after “court”, insert

“in England and Wales or Northern Ireland”.

See explanatory statement to Amendment 38.

Amendment (a) to Government amendment 5, in line 4, leave out “(b) the Lord Advocate”.

Amendment 46, in clause 7, page 9, leave out lines 10 and 11.

See explanatory statement to Amendment 38.

Amendment 47, in clause 7, page 9, line 11, after “legislation” insert

“, or to the retained functions of the Lord Advocate (within the meaning of section 52(6) of the Scotland Act 1998)”.

See explanatory statement to Amendment 38.

Anyone sufficiently interested in knowing the list of amendments I am addressing can read them in Hansard. As we have heard, clause 7 seeks to relax domestic rules on judicial precedent, which will make it easier for appellate courts across the UK to depart from retained case law. The clause also delivers a mechanism by which courts of first instance can depart from otherwise binding retained case law. I therefore very much welcomed the Labour party’s amendment 79, and supported its efforts to tidy up this section of the Bill. Labour Members are right to point out that the Government’s proposals are driven by ideology, and that they have not considered the legal uncertainty and complications that will now almost certainly prevail.

We heard from Professor Catherine Barnard in an evidence session, who warned that:

“The way in which the legal system has worked and has run successfully over the decades is on the basis of incremental change rather than this really quite remarkable slash and burn approach proposed”––[Official Report, Retained EU Law (Revocation and Reform) Public Bill Committee, 8 November 2022; c. 15, Q26.]

That is exactly what this is: slash and burn. It is another example of how the now-departed brains behind this whole operation were moving with undue haste, total disregard for the consequences of what they were doing, and the obvious fear that a more considered approach would reveal the multitude of problems that will come with this plan.

Indeed, Alison Young, professor of public law at Cambridge University, warned us of the extreme uncertainty that could come from these new legal arrangements, saying:

“Those carrying out business and trade need legal certainty, so that they have an understanding of the rules, now and going forward.”

She added that

“the issue is that those carrying out business will not necessarily be 100% sure whether things will be retained in the long term. If so, how they will be retained? Has everything that might be revoked been listed? They are not 100% sure whether it has been revoked or not.”––[Official Report, Retained EU Law (Revocation and Reform) Public Bill Committee, 8 November 2022; c. 14, Q25.]

That is a recurring theme throughout these proceedings.

It is against that backdrop that we have tabled these amendments, which, although plentiful in number, are all intended to do the same thing: remove Scots law wholly and entirely from this part of the Bill. I make no apology for repeating that this is not our Brexit. Scotland did not vote for Brexit. We did not vote for this reckless piece of legislation and, quite simply, we want nothing to do with it.

Government amendment 5 is another example of the UK Government completely failing to understand Scotland or our legal system. Although I welcome the amendments in so far as they go to repair the poorly drafted first version of the Bill, with the Lord Advocate now having his or her proper place in the functions of it, it pains me that Scotland has been dragged into this mess at all. Indeed, so great is the concern about the impact of the Bill on Scots law that I understand our amendments have been directly communicated to the Secretary of State by the Scottish Government’s Cabinet Secretary for the Constitution, External Affairs and Culture, Angus Robertson. I hope that, in that spirit, the Government will now accept them.

There is too high a bar for UK courts to depart from retained case law, including judgments made and influenced by EU courts, so I rise to resist amendments 38 to 42 and 44 to 47. Clause 7 will free our courts’ developed case law and retained EU law that remains in force, without being unnecessarily constrained by the past judgments of these foreign courts. The clause will introduce new tests for higher courts to apply when considering whether to depart from retained EU case law and retained domestic case law. Lower courts will also be given greater freedom. They will be able to refer points of law relating to retained case law to higher courts for a decision, which, if successful, could result in the lower court departing from retained case law where it would otherwise be bound by it, enabling a faster and more dynamic evolution of our domestic case law away from the influence of EU law.

The clause also provides UK Government Law Officers and Law Officers of the devolved Administrations with the power to refer points of law arising on retained case law to the higher courts where proceedings have concluded. It will give Law Officers the power to intervene in cases before the higher courts and present arguments from them to depart from retained case law. This will ensure the appropriate development of the law as we move away from the influence of EU case law and the rules of interpretation.

The amendments would remove the Scottish courts and Law Officers from the lower to higher court reference procedure and from the Law Officer reference procedure. However, consistent with EU exit legislation, these measures in the Bill will apply to the whole UK. This will give courts in all four of our great nations greater freedom to develop case law unimpeded by the excessive influence of the European courts. In addition, amendment 47 would give Law Officers of the devolved Administrations the power to intervene in reserved matters, which is not constitutionally appropriate.

Proposed new section 6C of the European Union (Withdrawal) Act 2018, established in clause 7 of the Bill, gives Law Officers the power to intervene in cases before the higher courts and present arguments for them to depart from retained case law following the new tests for departure in the Bill. These provisions are framed so that Law Officers may exercise the intervention powers on behalf of their respective Governments in cases where other Ministers or the Government as a whole have a particular view on the meaning and effect of relevant pieces of retained EU law for which they are responsible.

In the light of a new test for departure from retained case law, the powers will allow the Law Officers to bring such matters before a higher court for a decision after hearing the relevant Government’s view on the correct interpretation of relevant retained EU law. Consequently, it is right that the intervention power is not available in relation to points of law that concern the retained functions of the Lord Advocate as a prosecutor. Those functions concern legislation that is reserved to Westminster. The structure of the Law Officers’ powers is consistent with the established position of the Lord Advocate within the Scottish Government, as in other contexts the structure rightly allows the Lord Advocate to represent the Scottish Government’s views on the interpretation of devolved legislation, but not legislation that is reserved to Westminster.

It is clearly not for me to comment on the best way for a Department for domestic English affairs to rule on what English courts and English Law Officers can do and must do. Equally, it is not for anybody here, including those of us from Scotland, to change the rules on what the Law Officers and courts of Scotland can do and must do—that is exclusively for the Parliament of Scotland.

Given the importance that the Prime Minister and the Secretary of State for Scotland repeatedly attached yesterday to the need for consensus when considering any change to the relationship between our two nations, will the Minister confirm that the consensus principle works in both directions, and that no changes will be made to the powers and responsibilities of Scotland’s Law Officers or Scotland’s courts without the explicit consent of the Scottish Government?

As I just said, the structure of the Law Officers’ powers is consistent with the established position of the Lord Advocate within the Scottish Government, as in other contexts the structure rightly allows the Lord Advocate to represent the Scottish Government’s views on the interpretation of devolved legislation, but not legislation that is reserved to Westminster. For those reasons, I ask the hon. Member for Argyll and Bute to withdraw the amendments.

I do not know whether the Minister fully understood the significance of my question. We have not tabled the amendments because we think that the power is being given to the domestic Law Officers and courts of England—that is not for us to comment on. It is not even that we think that what is being proposed is wrong for the domestic Law Officers and courts of Scotland. However, what is completely wrong is for the domestic Parliament of England to legislate on the legally separate legal system of Scotland against the clear objections of the domestic Parliament of Scotland, which speaks on behalf of the sovereign people of Scotland.

If the Minister is convinced that what is proposed in the Bill is in the best interests of justice in Scotland, and if she can persuade the Scottish Parliament, the Scottish Government and the Scottish Law Officers that that is the case, there is no question but that the Scottish Government and Scottish Parliament will legislate on those terms. However, on the day after the Prime Minister and the Secretary of State for Scotland insisted that the relationship between our nations must be based on consensus, the Minister is proposing to drive a coach and horses through that consensus by insisting that this Minister and this Parliament have the right to interfere in the domestic affairs of another nation in this Union. That is a serious breach of the guarantees contained in article 19 of the Treaty of Union, and it is not acceptable.

I invite the Minister to come back, should she so wish, and advise the Committee. In preparation for the Bill, has she had any advice whatsoever on the application of article 19 of the Treaty of Union? Does she know what it says?

I absolutely associate myself with the comments made by my hon. Friend the Member for Glenrothes. It is for the Scottish Parliament and the Scottish Law Officers to decide what they can and cannot do and it is not for this place to impose that. I have always imagined that, in a partnership of equals, each partner has their voice listened to and their opinions respected. Clearly, the Union is not the partnership of equals that we have been led to believe it is. Scots law has always been independent, and it ill behoves the UK Government to try to ignore the democratically elected Scottish Parliament and the Scottish Law Officers, but I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

I beg to move amendment 35, in clause 7, page 7, line 4, leave out

“, if the point of law relates to the meaning or effect of relevant Scotland legislation”.

This amendment, together with Amendment 36, modifies the points of law on which the Lord Advocate may make a reference under the new section 6B of the European Union (Withdrawal) Act 2018 so that it is not restricted to points of law which relate to the meaning or effect of relevant Scotland legislation.

With this it will be convenient to discuss the following:

Amendment 37, in clause 7, page 7, line 5, after “legislation” insert

“, or to the retained functions of the Lord Advocate (within the meaning of section 52(6) of the Scotland Act 1998)”.

This amendment modifies the points of law on which the Lord Advocate may intervene under the new section 6B of the European Union (Withdrawal) Act 2018 so that the power to intervene may be exercised in relation to points of law which concern the retained functions of the Lord Advocate.

Amendment 36, in clause 7, page 8, leave out lines 8 to 21.

This amendment, which is consequential to Amendment 35, modifies the points of law on which the Lord Advocate may make a reference under the new section 6B of the European Union (Withdrawal) Act 2018, omitting the definition of “relevant Scotland legislation” from section 6B.

Amendment 93, in clause 7, page 9, line 10, leave out

“, if the argument relates to the meaning or effect of relevant Scotland legislation”.

This amendment, together with Amendment 48, modifies the arguments in legal proceedings on which the lord Advocate may intervene under the new section 6C of the European Union (Withdrawal) Act 2018 so that that section is not restricted to arguments which relate to the meaning or effect of relevant Scotland legislation.

Amendment 48, in clause 7, page 9, line 22, leave out “relevant Scotland legislation,”.

This amendment, which is consequential to Amendment 93, modifies the arguments in legal proceedings on which the Lord Advocate may intervene under the new section 6C of the European Union (Withdrawal) Act 2018, omitting the definition of “relevant Scotland legislation” from section 6C.

I will speak briefly about the amendments, which will remove any restraint the Bill would place on Scotland’s Lord Advocate in making reference to retained EU law.

As it stands, the Bill restricts the Lord Advocate’s power to make reference only to points of law that relate to the meaning or effect of relevant Scottish legislation. There is no corresponding restraint on the power of any other UK Law Officer regarding the law of England or Wales on matters that are reserved. Again, I understand that the message has been communicated directly to the Government by the Scottish Government. On the basis that we take the issue so seriously, I ask that the Government accept our amendments.

The comments I made in relation to the last group of amendments are equally, if not more, applicable here. I appreciate that many members of the Committee would not have thought that the submission from the Law Society of Scotland was relevant to the interests of their constituents, nor should it be. The legal systems of the two nations are entirely separate. They are required to be in perpetuity by the Treaty of Union. That is not my favourite piece of legislation, but while it is there it is incumbent on this Parliament to comply with it.

The Law Society of Scotland wanted the whole of proposed new section 6B to be deleted in its entirety. It raised a number of serious concerns in principle, many of which will apply to the application of the legislation to English courts and Law Officers as well. Proposed new section 6B changes the way in which some civil law can be challenged in the courts without changing the way in which other civil law can be challenged in the courts, so the concept of the unity of a single body of civil law starts to be weakened. The legal profession will be extremely concerned about that.

The legal profession is also concerned about the idea that after a civil case has been concluded, when the time for any appeal has passed and the case is settled, Law Officers who are not a party to the case can then intervene, effectively to act as an appellant in a case in which they have no direct interest. That process rightly applies in relation to criminal law, because almost every criminal prosecution involves the Law Officers acting in the name of the Crown on behalf of the public interest.

In fact, in Scotland nobody but the Law Officers is allowed to take a prosecution in the public interest. Bodies such as the Post Office and the Health and Safety Executive are not allowed to prosecute cases in Scotland’s criminal courts. After a case has been concluded, it is perfectly in order for the Law Officers to appeal against the leniency of a sentence, for example, because they were an interested party in prosecuting the case in the first place. That does not apply if it is a civil case, so there is a legal precedent created here that the Law Society of Scotland has raised serious concerns about, as well as very possibly the Law Society of England and Wales.

The clause again threatens compliance with the Treaty of Union—that is how serious it is, Mr Howarth. Passing the clause threatens to be in breach of article 19 of the Treaty of Union, because it makes the Law Officers of England superior to the Law Officers of Scotland. It makes the domestic courts of England superior to the domestic courts of Scotland. Why do I say that? It explicitly allows the Law Officers of England to step in and interfere in a civil case that applies only in Scotland, between two parties who are resident in Scotland and subject to the law of Scotland, where a case has been considered through due process in the domestic courts of Scotland and settled with finality as a matter of Scottish law. At that point, the Law Officers of England are allowed to wade in and interfere in a legal system that has nothing whatsoever to do with them—not on a matter of reserved legislation or one that is within the remit of domestic law in England.

The equivalent power does not apply to the Law Officers of Scotland. There are no circumstances in which Scotland’s senior Law Officers can come in and interfere in a civil case that has been heard in English courts. However, there are circumstances in which the Law Officers of England can interfere after the event in a domestic case in Scotland’s court. That is not equal treatment of the two legal systems. That is not recognition of the right of the Scottish legal system to operate independently of interference from this place. I will take advice on that and I will be interested to hear if the Minister has. That would appear to me to be a deliberate breach of one of the articles of the Treaty of Union. As many will be aware, when one article of a treaty is broken, either party has the right to consider the treaty to have been brought to an end.

I expressed my concerns in the previous sitting of the Committee that the Minister might be about to accidentally repeal hundreds of bits of legislation by mistake. I am tempted to say that we should not interrupt our opponents when they are making a mistake. If this place wants to take the risk of repealing the Treaty of Union by mistake, I will not stand in its way. However, I think I should bring it to hon. Members’ attention so that at least they cannot afterwards say they did not know what they were doing.

I will try to address all the points raised because I know how seriously they are taken by Opposition Members. The Committee should reject amendments 35, 36, 37, 48 and 93 as they would give Law Officers of the devolved Administrations the power to intervene in reserved matters, which is not constitutionally appropriate.

Amendments 35, 36 and 37 concern proposed new section 6B, established by clause 7 of the Bill, which provides UK Government Law Officers and Law Officers of the devolved Administrations with the power to refer points of law arising from retained case law to the higher courts, when proceedings have concluded, for consideration against the new test for departure set out by the same clause.

Amendments 48 and 93 concern new section 6C, which gives Law Officers the power to intervene in cases before the higher courts and present arguments for them to depart from retained case law following the new test for departure in the Bill. It is right that references and interventions by the Lord Advocate are restricted to the points of law within the devolved competence of the Scottish Government. The provisions are framed so that Law Officers may exercise the reference and intervention powers on behalf of their respective Governments in cases where other Administrations have a particular view on the meaning and effect of a relevant piece of retained EU law for which they are responsible.

The powers allow Law Officers to bring the matters before a higher court, in the light of the new test for departure from retained case law, for a decision after hearing the relevant Government’s view on the correct interpretation of a relevant retained EU law. That will allow Law Officers and the Lord Advocate to ensure an appropriate development of the law as we move away from the influence of EU case law and the rules of interpretation. It would consequently be inappropriate for the Lord Advocate, on behalf of the Scottish Government, to exercise the reference and intervention powers where the points of law relate to reserved legislation. That includes points of law that concern the retained functions of the Lord Advocate as a prosecutor, as those functions concern legislation that is reserved to Westminster.

We consider the structure of the Law Officer powers to be consistent with the established position of the Lord Advocate within the Scottish Government. As in other contexts, the structure rightly allows the Lord Advocate to represent the Scottish Government’s views on the interpretation of devolved legislation but not legislation reserved to Westminster. For those reasons, we ask the hon. Member for Argyll and Bute to withdraw his amendment.

I congratulate my hon. Friend the Member for Glenrothes for his very thoughtful contribution. Again, that goes to the heart of the Bill and the bonfire that the Government are setting if they get it wrong, time and again. There are dangers in treating this state as one country—that is what happens when one does not consider the devolution settlement properly. But on that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

I beg to move amendment 5, in clause 7, page 9, leave out lines 5 and 6 and insert—

“(2) The following are entitled to notice of the proceedings—

(a) each UK law officer;

(b) the Lord Advocate;

(c) the Counsel General for Wales;

(d) the Attorney General for Northern Ireland.”

This amendment and Amendment 6 leave out the definition of “devolved law officer” from subsection (5) of new section 6C of EUWA and instead mention each devolved law officer in subsection (2) of that section.

I will be brief. Conservative colleagues will be keen to know that we are accepting amendments 5 and 6, which will remove references to a “devolved law officer” and replace them with the specific titles of the law officers in Scotland, Wales and Northern Ireland where appropriate. This is a policy-neutral change requested by the Scottish Government and tabled by this Government in the spirit of collaboration and co-operation.

Amendment 5 agreed to.

Amendment made: 6, in clause 7, page 9, leave out lines 20 and 21.—(Ms Ghani.)

See the statement for Amendment 5

I beg to move amendment 49, in clause 7, page 9, line 33, at end insert—

“(11) Within three months of the passage of this Act, the Secretary of State must lay before both Houses of Parliament an assessment of the impact of this section on the commitment of the UK enshrined in article 2(2) of the Northern Ireland Protocol.”

This amendment has been tabled in my name and in that of my hon. Friend the Member for Glenrothes. A recurring theme with this Bill has been a lack of attention to detail to either the drafting or to fully understanding the consequences—unintended or otherwise—for great swathes of the UK’s Governments, the economy and wider society. It is breathtaking. The impact of the massive changes that will be brought about by the Bill has been at best an afterthought, and at worst completely ignored. It is reckless, and some could reasonably argue that it is a dereliction of duty on the Government’s part.

This lack of attention to detail will be most acutely felt in Northern Ireland, and in the impact that clause 7 could have on the protocol. Given that the primacy of EU law will be removed by this Bill, but it has been retained and reaffirmed in the Northern Ireland protocol, will the Minister explain how the two pieces of legislation are expected to interact with each other? The Government have committed to there being

“no diminution of rights, safeguards and equality of opportunity”

in Northern Ireland.

What mechanisms have been established to assess and monitor how that is working? The very least that the people of Northern Ireland deserve is a thorough and detailed assessment of the Bill’s exact impact on the protocol. That is why we ask the Secretary of State to, within three months of the Bill passing,

“lay before both Houses of Parliament an assessment of the impact”

that the Bill has had

“on the commitment of the UK enshrined in article 2(2) of the Northern Ireland Protocol.”

The Government have already committed to ensuring that the necessary legislation is in place to uphold the UK’s international obligations, including the Northern Ireland protocol. The UK is committed to ensuring that rights and equality protections continue to be upheld in Northern Ireland. I therefore ask the Committee to reject this amendment.

Article 2’s reference to

“no diminution of rights, safeguards and equality of opportunity”

demonstrates the UK Government’s commitment to ensuring that the protections currently in place in Northern Ireland of the rights, safeguards and equality of opportunity provisions set out in the relevant chapter of the Belfast/Good Friday agreement are not diminished as a result of the UK leaving the EU. The provisions in the Bill enable the Government to ensure that the retained EU law that gives effect to article 2 of the protocol is preserved beyond the sunset, or that an alternative provision is created to meet such requirements. The restatement power will also allow the UK and devolved Governments to codify case law and other interpretative effects where it is considered necessary to maintain article 2 commitments.

Clause 7’s provisions concerning case law do not apply in relation to obligations under the protocol. Section 6(6A) of the European Union (Withdrawal) Act continues to apply, so that our new test for departing from retained EU case law is subject to the rights and obligations in the protocol. The House already has its usual robust and effective scrutiny processes in place to hold Ministers accountable in relation to the Government’s commitments under the Northern Ireland protocol. In addition, these are bespoke arrangements in relation to the EU Withdrawal Agreement Joint Committee where the UK and EU jointly oversee each other’s implementation, application and interpretation of the withdrawal agreement, including the Northern Ireland protocol—for example, the publication of the annual report of the Joint Committee to aid Members’ scrutiny.

Adequate processes are already in place, and the introduction of a new statutory reporting requirement is not an appropriate use of Government or parliamentary time. I therefore ask the hon. Member for Argyll and Bute to withdraw the amendment.

It would be incredibly helpful if the Minister could clarify what she said about bespoke arrangements for Northern Ireland. Under article 2 of the protocol we have an obligation to uphold the institutions, including the Northern Ireland Human Rights Commission and the Equality Commission for Northern Ireland. Is she therefore saying that there are instances in which EU law will be retained because of the Northern Ireland protocol? Is she committing to upholding EU law where those institutions propose that it is part of upholding the Good Friday agreement? She said they were bespoke arrangements. Can she clarify that? It is quite an important point.

The preservation and restatement powers in the Bill or other existing domestic powers, such as section 8C of the European Union (Withdrawal) Act, will ensure that retained EU law that gives effect to article 2 rights is either maintained beyond the sunset or the alternative provision is created to meet such requirements. The delegated powers in the Bill, particularly the restatement powers, will provide the ability to recreate the effects of secondary retained EU law, including the interpretative effects of case law and general principles of supremacy where it is necessary to uphold article 2 rights. That provides a mechanism through which national authorities might implement article 2 obligations. As I said earlier, I asked the hon. Member for Argyll and Bute to withdraw the amendment.

I will not push the amendment to a vote, but we will return to it on Report. I remain completely unclear, given the timeframe, how EU law will be removed by the Bill, but be maintained and reaffirmed in the protocol. I am unclear how that actually works.

The hon. Member is making a fair point. The people of Northern Ireland deserve some clarity because, if the Bill takes away the supremacy of EU law, as we discussed earlier, but the Government are committing that there will be instances in which article 2 rights will be upheld, it would be helpful to understand what those instances are and what the process is. Who will determine what EU law can be retained? The Northern Ireland Human Rights Commission, for example, could be part of that, but it is not clear how the process works. Does the hon. Gentleman agree that we owe it to the people of Northern Ireland to set out that process now?

I absolutely agree with the hon. Lady. Such muddled thinking and the unintended consequences of pushing it through so quickly go to the heart of the Bill. There are consequences to setting a ridiculously unachievable sunset clause. The thinking time that should have gone into the Bill has not happened. Although I will not push the amendment to a vote now, I strongly urge the Government to work on it to be able to explain on Report exactly how the measure will work. It is far too important to the people of Northern Ireland to let it wither on the vine and hope it does not come back. This is hugely important, but I will not press it a vote.

Amendment, by leave, withdrawn.

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

The bar for the UK courts to depart from retained case law in the judgments of EU courts is too high, and there continues to be an overriding desire for our judicial decisions to remain in line with the opinion of the Court of Justice of the European Union. Clause 7 will free our courts to develop case law and retained EU law that remains in force without being unnecessarily constrained by the past judgments of these now foreign courts.

Question put and agreed to.

Clause 7, as amended, accordingly ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Joy Morrissey.)

Adjourned till this day at Two o’clock.

Economic Crime and Corporate Transparency Bill (Seventeenth sitting)

The Committee consisted of the following Members:

Chairs: Mr Laurence Robertson, Hannah Bardell, Julie Elliott, † Sir Christopher Chope

Anderson, Lee (Ashfield) (Con)

† Ansell, Caroline (Eastbourne) (Con)

† Byrne, Liam (Birmingham, Hodge Hill) (Lab)

† Crosbie, Virginia (Ynys Môn) (Con)

† Daly, James (Bury North) (Con)

† Hodge, Dame Margaret (Barking) (Lab)

† Hollinrake, Kevin (Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy)

† Hughes, Eddie (Walsall North) (Con)

† Hunt, Jane (Loughborough) (Con)

† Kinnock, Stephen (Aberavon) (Lab)

† Malhotra, Seema (Feltham and Heston) (Lab/Co-op)

† Mann, Scott (Lord Commissioner of His Majesty's Treasury)

† Morden, Jessica (Newport East) (Lab)

† Newlands, Gavin (Paisley and Renfrewshire North) (SNP)

† Stevenson, Jane (Wolverhampton North East) (Con)

† Thewliss, Alison (Glasgow Central) (SNP)

† Tugendhat, Tom (Minister for Security)

Kevin Maddison, Anne-Marie Griffiths, Committee Clerks

† attended the Committee

Public Bill Committee

Thursday 24 November 2022

(Morning)

[Sir Christopher Chope in the Chair]

Economic Crime and Corporate Transparency Bill

New Clause 22

Registration of qualifying Scottish partnerships

‘(1) The Secretary of State may by regulations—

(a) make provision requiring the delivery to the registrar of information in connection with a qualifying Scottish partnership;

(b) make provision for the purpose of ensuring that a partner of a qualifying Scottish partnership has at least one managing officer who is—

(i) an individual whose identity is verified (within the meaning of section 1110A of the Companies Act 2006), or

(ii) falls within any exemption from identity verification that may be provided for by the regulations;

(c) make provision in relation to qualifying Scottish partnerships that corresponds or is similar to any provision relating to companies or limited partnerships made by or under, or capable of being made under, any Act.

(2) The regulations may create summary offences, punishable with a fine, in connection with any provision made by virtue of subsection (1)(a) or (b).

(3) Do not read subsection (2) as impliedly limiting the provision that can be made by virtue of subsection (1)(c).

(4) The provision that may be made by virtue subsection (1)(c) includes provision for the purpose mentioned in subsection (1)(b).

(5) The provision which may be made by regulations under subsection (1) by virtue of section 159(1)(a) includes provision amending, repealing or revoking provision made by or under any Act, whenever passed or made.

(6) In this section—

“managing officer” has the meaning given by section 3(1) of the Limited Partnerships Act 1907;

“qualifying Scottish partnership” means a partnership, other than a limited partnership, that—

(a) is constituted under the law of Scotland, and

(b) is a qualifying partnership with the meaning given by regulation 3 of the Partnership (Accounts) Regulations 2008;

“the registrar” means registrar of companies for Scotland.’. —(Kevin Hollinrake.)

This new clause allows regulations to be made about the registration of certain Scottish partnerships and to apply law relating to companies or limited partnerships. It would allow The Scottish Partnerships (Register of People with Significant Control) Regulations 2017 to be amended or replaced in relation to those partnerships.

Brought up, read the First and Second time, and added to the Bill.

New Clause 23

Cryptoassets: terrorism

‘(1) Part 1 of Schedule (Cryptoassets: terrorism) amends the Anti-terrorism, Crime and Security Act 2001 to make provision for a civil recovery regime in relation to cryptoassets which—

(a) are intended to be used for the purposes of terrorism,

(b) consist of resources of an organisation which is a proscribed organisation, or

(c) are, or represent, property obtained through terrorism.

(2) Part 2 of Schedule (Cryptoassets: terrorism) amends the Terrorism Act 2000 to make provision about financial institutions and cryptoassets.’.—(Kevin Hollinrake.)

This new clause introduces the new Schedule inserted by NS1. Part 1 of that Schedule contains provision about a civil recovery regime for terrorist cryptoassets. Part 2 of that Schedule contains provision about financial institutions and cryptoassets.

Brought up, read the First and Second time, and added to the Bill.

New Clause 30

Duty to notify registrar of dissolution

“After section 17 of the Limited Partnerships Act 1907 (power of board of trade to make rules) insert—

‘Dissolution, revival and deregistration

17A Duty to notify registrar of dissolution

(1) If a limited partnership is dissolved at a time when the partnership has at least one general partner, the general partners at that time must notify the registrar that the limited partnership has been dissolved.

(2) If a limited partnership is dissolved at a time when the partnership does not have a general partner, the limited partners at that time must notify the registrar that the limited partnership has been dissolved.

(3) If the general partners fail to comply with subsection (1) an offence is committed by each general partner who is in default.

(4) If the limited partners fail to comply with subsection (2) an offence is committed by each limited partner who is in default.

(5) But where the general partner or limited partner is a legal entity, it does not commit an offence as a general partner or limited partner in default unless one of its managing officers is in default.

(6) Where any such offence is committed by a general partner or limited partner that is a legal entity, or any such offence is by virtue of this subsection committed by a managing officer that is a legal entity, any managing officer of the legal entity who is in default also commits the offence if—

(a) the managing officer is an individual, or

(b) the managing officer is a legal entity and one of its managing officers is in default.

(7) A person guilty of an offence under this section is liable on summary conviction—

(a) in England and Wales, to a fine;

(b) in Scotland or Northern Ireland, to a fine not exceeding level 5 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 5 on the standard scale.

(8) A general partner, limited partner or managing officer is “in default” for the purposes of this section if they authorise or permit, participate in, or fail to take all reasonable steps to prevent, the contravention.’.”—(Kevin Hollinrake.)

This new clause means that when a limited partnership is dissolved which partners are required to notify the registrar does not depend on their solvency.

Brought up, read the First and Second time, and added to the Bill.

New Clause 31

Winding up limited partnerships on grounds of public interest

“After section 25 of the Limited Partnerships Act 1907 (inserted by section 127 of this Act) insert—

‘Winding up limited partnerships: court orders

25A Winding up limited partnerships on grounds of public interest

(1) Where it appears to the Secretary of State that it is expedient in the public interest for a limited partnership to be wound up, the Secretary of State may present a petition to the court for it to be wound up.

(2) If a petition is presented under subsection (1), the court may wind up the limited partnership if the court is of the opinion that it is just and equitable for it to be wound up.

(3) The power in subsection (2) does not limit any other power the court has in the same circumstances.’.”—(Kevin Hollinrake.)

This new clause would allow the court to order the winding up of a limited partnership on a petition by the Secretary of State in the public interest.

Brought up, read the First and Second time, and added to the Bill.

New Clause 32

Winding up dissolved limited partnerships

“After section 25A of the Limited Partnerships Act 1907 (inserted by section (Winding up limited partnerships on grounds of public interest) of this Act) insert—

‘25B Winding up dissolved limited partnerships

(1) Where a limited partnership is dissolved and it appears to the court that there has been a failure to wind up the limited partnership under section 6(3A) or (3B) properly or at all, the court may make any order it considers appropriate, including an order—

(a) for the purposes of enforcing the duty in section 6(3A) or (3B),

(b) in connection with the performance of that duty, or

(c) to wind up the limited partnership.

(2) The court may make an order under subsection (1) on an application by the Secretary of State or any other person appearing to the court to have sufficient interest.

(3) The power in subsection (1) does not limit any other power the court has in the same circumstances.’.”—(Kevin Hollinrake.)

This new clause would mean that if a limited partnership has not been wound up as required by section 6(3A) or 6(3B), the court can make various orders on an application by the Secretary of State or a person with sufficient interest, including an order to wind up the limited partnership.

Brought up, read the First and Second time, and added to the Bill.

New Clause 34

Requirements to change name: removal of old name from public inspection

‘(1) The Companies Act 2006 is amended as follows.

(2) In section 64 (company ceasing to be entitled to exemption in relation to use of “limited” etc), after subsection (6) insert—

“(6A) Where a direction is given under subsection (1), the registrar may omit from the material on the register that is available for public inspection any mention of the name to which the direction relates.”

(3) In section 67 (power to direct change of name in case of similarity to existing name), after subsection (1) insert—

“(1A) Where a direction is given under subsection (1), the registrar may omit from the material on the register that is available for public inspection any mention of the name to which the direction relates (so far as it relates to the company to which the direction is given).”

(4) In section 73 (order requiring name to be changed), after subsection (6) insert—

“(7) Where an order is made under subsection (1), the registrar may omit from the material on the register that is available for public inspection any mention of the name to which the order relates.”

(5) In section 75 (provision of misleading information), after subsection (4) insert—

“(4A) Where a direction is given under subsection (1), the registrar may omit from the material on the register that is available for public inspection any mention of the name to which the direction relates.”

(6) In section 76 (misleading indication of activities), after subsection (5) insert—

“(5A) Where a direction is given under subsection (1), the registrar may omit from the material on the register that is available for public inspection any mention of the name to which the direction relates.”’.—(Kevin Hollinrake.)

The Companies Act 2006 contains various powers to direct a company to change its name. This clause allows the registrar to omit from the material that is available for public inspection references to the company’s name once it has been given a direction.

Brought up, read the First and Second time, and added to the Bill.

New Clause 47

Scottish Solicitors’ Discipline Tribunal: powers to fine in cases relating to economic crime

‘(1) Section 53 of the Solicitors (Scotland) Act 1980 (powers of tribunal) is amended as follows.

(2) In subsection (1)—

(a) in paragraph (b)—

(i) after “dishonesty” insert “(other than a conviction for an economic crime offence)”;

(ii) after “or has” insert “(other than in relation to a conviction for an economic crime offence)”;

(b) after paragraph (b) insert—

“(ba) a solicitor has (whether before or after enrolment as a solicitor) been convicted by any court of an economic crime offence, or”;

(c) in paragraph (c), after “offence” insert “(other than a conviction for an economic crime offence)”;

(d) after paragraph (c) insert—

“(ca) an incorporated practice has been convicted by any court of an economic crime offence, which conviction the Tribunal is satisfied renders it unsuitable to continue to be recognised under section 34(1A), or.”

(3) In subsection (2), after paragraph (c), insert—

“(ca) where the Tribunal is proceeding on the ground in subsection (1)(ba) or (1)(ca), or where subsection (2A) or (2B) applies, impose on the solicitor or, as the case may be, the incorporated practice, a fine of any amount.”

(4) After subsection (2), insert—

“(2A) This subsection applies where the Tribunal is proceeding on the ground referred to in subsection (1)(a) and —

(a) the solicitor has, in relation to the subject matter of the Tribunal’s inquiry, been convicted by any court of an economic crime offence, or

(b) the misconduct referred to in subsection (1)(a) consisted of an act or omission which had the effect of inhibiting the prevention or detection of an economic crime offence.

(2B) This subsection applies where the Tribunal is proceeding on the ground referred to in subsection (1)(d) and the incorporated practice has —

(a) in relation to the subject matter of the Tribunal’s inquiry, been convicted by any court of an economic crime offence, or

(b) failed to comply with a provision or rule as referred to in subsection (1)(d) and—

(i) the failure consisted of an act or omission which had the effect of inhibiting the prevention or detection of an economic crime offence, or

(ii) the provision or rule applies only for purposes relating to the prevention or detection of an economic crime offence.”

(5) In subsection (3ZA)—

(a) in paragraph (a), after “dishonesty” insert “(not being an economic crime offence)”;

(b) in paragraph (b), at the end insert “, (1)(ba) or (1)(ca)”;

(c) after paragraph (b), insert—

“(c) where subsection (2A) or (3A) applies.”

(6) In subsection (3A)—

(a) in paragraph (a), for “(1)(a) or (b)” substitute “(1)(a), (b) or (ba)”;

(b) in paragraph (b), for “(1)(c) or (d)” substitute “(1)(c), (ca) or (d)”.

(7) After subsection (9), insert—

“(9A) In this section, an economic crime offence means an economic crime within the meaning given by section 153(1) of the Economic Crime and Corporate Transparency Act 2022.”

(8) The amendments made by this section do not apply in relation to any act or omission occurring before the day on which this section comes into force.’.—(Kevin Hollinrake.)

This new clause amends the Solicitors (Scotland) Act 1980 to remove the existing statutory limit on financial penalties that can be imposed by the Scottish Solicitors’ Discipline Tribunal for disciplinary matters relating to economic crime offences; this will allow the Tribunal to impose fines of any amount in such cases.

Brought up, read the First and Second time, and added to the Bill.

New Clause 24

Disclosure of information relating to bank accounts held by subscribers to a memorandum of association

‘(1) Section 9 of the Companies Act 2006 (registration of documents) is amended as follows.

(2) After subsection (5), insert—

“(5A) The application must also contain the name of the jurisdiction of the issuing bank of each bank account—

(a) held by each subscriber to the memorandum of association,

(b) held or to be held by the company being incorporated, and

(c) held or to be held by any company linked to the company being incorporated.”.—(Alison Thewliss.)

This new clause requires relevant parties to disclose where their bank accounts are held.

Brought up, and read the First time.

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

The new clause is designed to ensure disclosure of information relating to bank accounts held by subscribers to a memorandum of association. Like many of the amendments that the Opposition have proposed, it is aimed at tightening up loopholes, making things just that wee bit more transparent, and flagging up any issues to Companies House. The issue of bank accounts and people carrying on business at a particular address in the UK has been discussed previously. Adding a bank account to that, so that one can go, “This is a bank account. This bank account is held in the UK,” and one can find that account quite easily as a result, seems to be a sensible way to close down yet another loophole in the Bill. It will continue the jurisdiction of the issuing bank of each account, which goes to some of the other points made about Companies House registration being used and abused as a means of setting up bank accounts in other jurisdictions. People were abusing the veneer of respectability afforded to them by a company registration in the UK to then set up bank accounts in other countries, which affects those other countries through the perpetration of fraud or dubious activities in those countries by those using that Companies House veneer of respectability.

The new clause would provide a bit more transparency by giving the company registrar more information, which would be useful in terms of those red flags and making it clear where companies are actually based and carrying on their business. If, for example, a company’s bank account is held in Mauritius and it claims to carry out its business in the UK, Companies House could query that and ask, “If you are really carrying on your business in the UK, why is your bank account held in Mauritius?” That would be a red flag for the registrar and would be an extra small but significant hoop that a company would have to jump through to make the situation clearer and to give Companies House a bit more reassurance that the business that is registering is indeed legitimate. It adds a helpful grip within the system, and helps Companies House to identify any red flags. I urge the Minister to consider whether this is a measure that would help Companies House in its work.

It is a pleasure to serve under your chairship, Sir Christopher. New clause 24, tabled by SNP Members, would add to the transparency of the companies register and enhance the ability of law enforcement to identify suspect registrations. It would do so by requiring the subscribers or initial shareholders of a company to provide information on the location of any bank account held either by the individual shareholders or in the name of the company itself.

The new clause reflects an acknowledgement of the realities that have been exposed by many of the recent leaks and investigative reporting by the media of the widespread criminal use of bank accounts registered in jurisdictions known for exercising minimal oversight over financial activity and for lax controls on money laundering offences. Given that the entire point of the Bill is to clamp down on the ability of criminals to exploit gaps in laws and regulatory approaches to economic crime across different countries, the Opposition sincerely hope that the Government welcome proposals that are intended to provide law enforcement with as much information as possible to facilitate the detection of economic crime. Requiring Companies House to record information on the location of relevant individuals’ bank accounts seems like an eminently reasonable measure that could make a valuable contribution to the fight against economic crime.

It is a pleasure to serve with you in the Chair, Sir Christopher. I thank the hon. Member for Glasgow Central for the new clause, which raises an interesting point. I have concerns about the privacy issues involved in putting this information in the public domain, and I wonder whether she has considered that. We are potentially talking about personal bank accounts rather than company bank accounts.

A similar proposal to require the disclosure of bank account information relating to companies was included in the 2019 corporate transparency and register reform consultation, as the hon. Member mentioned. Respondents did not on balance support the proposal and the Government subsequently agreed that the proposal did not offer sufficient benefits to justify the additional burden being imposed on companies. There is also concern that there would be practical difficulties with implementation, such as the inability to confirm information provided, or to identify where it is missing, which would reduce the effectiveness of the proposal.

There are some other measures we can use. The European Union’s fifth anti-money laundering directive required the UK to build a centralised automated mechanism, a bank account portal, designed to help law enforcement and AML supervisors to access information on the identity of holders and beneficial owners of bank accounts and safe deposit boxes. Following the UK’s exit from the EU and the agreement of the trade and co-operation agreement in January 2021, the Government reviewed the case for building the portal. At that point, law enforcement did not believe there was a strong rationale for an alternative, centralised mechanism in order to support its work and the Government concluded that we should not build a bank account portal. UK money laundering regulations have been amended to remove redundant obligations.

I would be grateful if the hon. Member withdrew her amendment, but I would like to explore the issue further, certainly as it relates to company bank accounts, so we will perhaps return to it at a later stage.

I thank the Minister for his consideration of this proposal. I would be interested to know what has changed since the previous consideration was arrived at that such provisions were not necessary. He suggests he will weigh that up and perhaps bring forward some amendments on Report, I beg to ask leave to withdraw the amendment.

Clause, by leave, withdrawn.

New Clause 26

Reporting requirement (objectives)

“(1) The Secretary of State must publish an annual report assessing whether the powers available to the Secretary of State and the registrar are sufficient to enable the registrar to achieve its objectives under section 1081A of the Companies Act 2006 (inserted by section 1 of this Act).

(2) Each report must make a recommendation as to whether further legislation should be brought forward in response to the report.

(3) Each report must provide a breakdown of the registrar’s annual expenditure.

(4) Each report must provide annual data on the number of companies that have been struck-off by the registrar, the number and amount of fines the registrar has issued, and the number of criminal convictions made as a result of the registrar’s powers as set out in this bill.

(5) Each report must provide annual data on the number of cases referred by the registrar to law enforcement bodies and anti-money laundering supervisors.

(6) Each report must provide annual data on the total number of company incorporations to the registrar, and the number of company incorporations by Authorised Company Service Providers to the registrar.

(7) The first report must be published within one year of this Act being passed.

(8) A further report must be published at least once a year.

(9) The Secretary of State must lay a copy of each report before Parliament.”—(Seema Malhotra.)

This new clause would add a requirement on the Secretary of State to report on the powers available to the Secretary of State, the Department for Business, Energy and Industrial Strategy, and Companies House in relation to the registrar’s powers to achieve their objectives set out in clause 1.

Brought up, and read the First time.

With this it will be convenient to discuss the following:

New clause 28—Reporting requirement (strike-off powers)—

“(1) Within one year of the day on which this Act is passed, and every three years thereafter, the Secretary of State must publish a report on the powers available to the Secretary of State and the registrar in relation to the registrar’s powers under this Act to strike off a company.

(2) Each report in subsection (1) must include but is not limited to—

(a) whether the appropriate mechanisms are available to the Secretary of State to prosecute directors of companies struck off the Companies House register in relation to the Act, and to recoup money on behalf of creditors, and

(b) how much money has been returned to creditors as a result of the Act’s provision for the registrar to strike a company’s name off the register if the company does not change its address from the default address, including the proportion of this money returned to the Government.

(3) Each report must make a recommendation as to whether further legislation should be brought forward in response the report.”

This new clause would add a requirement on the Secretary of State to report on the powers available to the Secretary of State, the Department for Business, Energy and Industrial Strategy, and Companies House in relation to the strike-off provisions in this Act.

New clause 63—Annual report on activity under this Act—

“(1) The registrar must publish an annual report on the implementation of, and activities under, the provisions of this Act which are relevant to the work of the registrar.

(2) The report mentioned in subsection (1) must include, but need not be limited to—

(a) information on the use of the registrar’s powers under this Act, including in relation to—

(i) financial penalties imposed, and

(ii) the number of cases of unlawful activity or suspected unlawful activity identified by the registrar;

(b) details of the steps the Registrar has taken to promote the registrar’s objectives under this Act; and

(c) the use of exemption powers for the Secretary of State introduced by this Act.

(3) The first report under subsection (1) must be published within six months of the date on which this Act receives Royal Assent.”

It is a pleasure to serve under your chairship today, Sir Christopher, and to speak to new clauses 26, 28 and 63, which stand in my name and that of my hon. Friend the Member for Aberavon. They draw together conversations we have had in Committee about the importance of transparency and feedback on the powers and measures in the Bill and would provide Parliament with a means of interrogating their effectiveness.

New clause 26 would introduce a reporting requirement in relation to the objectives in the Bill. The Secretary of State would be required to report on the effectiveness of the powers available to the registrar to achieve her objectives as set out in clause 1. To coin a phrase for which the Minister may want to take credit, what is the point of legislation without good implementation? I think we are all agreed on that point. It is therefore important to ask: how is Parliament going to know? How are we going to spot any issues? How will we know that either further measures need to be developed or new powers need to be brought in? The new clause would provide a way for us to have that transparency and feedback.

We have done our best to draft the new clause in such a way that the Minister will be able to simply accept it or come back to us with what he thinks needs amending. Importantly, it would require the Secretary of State to

“publish an annual report assessing whether the powers available to the Secretary of State and the registrar are sufficient to enable”

Companies House to achieve its objectives. Each report would make a recommendation as to whether further legislation should be introduced in response to the report and provide a breakdown of the registrar’s annual expenditure, alongside data on the number of companies that have been struck off by the registrar, the number and amount of fines the registrar has issued and the number of criminal convictions resulting from the application of the registrar’s powers as set out in the Bill. It would also provide data on the number of cases referred by the registrar to law enforcement bodies and anti-money laundering supervisors, which is extremely important.

We need to know what has emerged from the system in order to be able to interrogate how well referrals have been taken forward and how quickly and effectively that was done. Without that information, it will be much harder to interrogate what is happening on the other side and the effectiveness of law enforcement, which has been raised during our deliberations as a real weak point in our system that needs toughening up, strengthening and supporting with the resources required. New clause 26 is important to enable adequate parliamentary scrutiny and have the ongoing debate in Parliament about the effectiveness of the measures we are passing.

New clause 63 would introduce a similar reporting requirement in relation to the registrar’s general activity in the Bill. We have laid out some of the measures, including financial penalties imposed, the number of cases of unlawful activity or suspected unlawful activity identified by the registrar, and

“the use of exemption powers for the Secretary of State introduced by this Act”.

The report does not necessarily need to specify details of what has been exempted, but it is important that Parliament has an understanding of the use of those powers, the number of times they are used, and so on. We suggest that this second report is published within six months of the Bill receiving Royal Assent.

Turning to new clause 28, the registrar’s new powers include the ability to change the address of a company’s registered office where the registrar is satisfied that the company is not authorised to use the address. The Government say the registrar will have the power to change a company’s address to Companies House’s own address and then to strike the company off the register. Currently when fraudulent companies are struck off the register, there is little due diligence done, and I know the Minister has expressed concern about this matter. It does not result in significant repercussions for the directors of a company, and a huge number of companies—nearly 400,000 a year—are struck off because they have failed even to file accounts. Directors are not investigated for misconduct or held accountable, and we know these issues have been raised by R3 and others.

Martin Swain, the executive director of Companies House, said that Companies House is “aware” that

“Companies take advantage of the strike-off route to discharge themselves of debts and… for other purposes.”

He acknowledged that the new power proposed by the Bill, which would allow the registrar to strike off a company for having an invalid address, may have

“an adverse impact on the system”

and give

“companies a route to use it for criminal activity or to fold without paying their debts.”––[Official Report, Economic Crime and Corporate Transparency Public Bill Committee, 25 October 2022; c. 40-1, Q76.]

Chris Taggart told the Committee,

“Where a company has got assets… there is a downside to it being struck off”––[Official Report, Economic Crime and Corporate Transparency Public Bill Committee, 27 October 2022; c. 101, Q192.]

Graham Barrow referred in evidence to a fraudulent director being able to register new companies after others had been struck off. We therefore tabled new clause 28, which would require the Secretary of State to publish a report a year after the Act is passed and subsequently every three years on whether appropriate mechanisms exist to

“prosecute directors of companies struck off the Companies House register”

and

“recoup money on behalf of creditors”.

It would require the Secretary of State to report on

“how much money has been returned to creditors as a result of the Act’s provision for the registrar to strike a company’s name off the register”.

The principal purpose of the new clause is to ascertain whether any assets from companies struck off the register are being recouped on behalf of the creditors, so that the directors of those companies are properly penalised and held accountable for their actions, and creditors are not left wrongly out of pocket. I would be grateful for the Minister’s response on these issues. Importantly, new clause 28 requires that the report makes recommendations as to whether further legislation is needed to reform the automatic strike-off process, so that an alternative process could instead be adopted and Parliament could act swiftly in relation to recommendations.

I rise to support the new clauses in the name of the official Opposition, because Parliament will need to keep a close eye on how a lot of things in this Bill are being implemented and whether they are effective at tackling economic crime. We had a lot of debate in previous sessions about powers versus duties in the Bill and said, “If they are powers, that is one thing but if they are duties, that is quite another.” If these powers are being exercised, we need to be certain of that and keep a close eye on this Bill. These useful new clauses would allow Parliament to keep a close eye on these things, because they would require the Secretary of State to publish these annual reports to give more granular and specific detail on whether the measures brought forward in the Bill are being used and are effective.

It is a pleasure to serve under your chairship, Sir Christopher. I rise to make the simple point that the new clause is not a technical amendment; it is about an issue of principle. It is about transparency and accountability. It is not a provision that improves things at the margin; it is about making the legislation fit for purpose. Without it, the legislation will not be fit for purpose.

Throughout my history of learning about dirty money and money laundering, it has been absolutely clear to me that we have a range of tools already in legislation. As we do not have any accountability to Parliament as to how and whether those tools are employed, we do not know how effective we are in the battle against dirty money. Let me give three examples. There is now a new bit of legislation on unexplained wealth orders; it is the first time that I have known Ministers to agree to an annual report to Parliament. They agreed to it when we did the emergency legislation. I have been arguing for that for years, so I was pleased to see it, but until that moment we did not know, and we have not seen the report yet.

A better example is golden visas. We are still waiting for the report on golden visas, how they were abused, misused and used during that period, and who was let into the country on one. Another example is the amount of money that has been frozen from people who have been sanctioned by this Government. We do not have a clue how much that is. The Government put out a figure the other day for how much Russian state money had been frozen—£18 billion—but we do not have a clue how much money we have managed to get off some of the characters we know are sitting on billions.

If there is going to be effective legislation, we need clear transparency and proper accountability. That is something that the Opposition feel incredibly strongly about. We will be pressing the new clause to a Division, because it is a sensible, pragmatic and practical provision that should be in the Bill.

I thank the hon. Members for Feltham and Heston and for Aberavon for tabling their new clause. I also thank the right hon. Member for Barking and the hon. Member for Glasgow Central for their contributions. I agree with much of what they said. As they know, I fully agree that Parliament should be regularly updated on the implementation and impact of this legislation. What gets measured gets done, and it is vital that we know what is being done with this legislation.

I will speak to new clauses 26 and 28 first, because I think there may be a duplication of things that exist already. Much of the information suggested by new clause 26, such as Companies House expenditure and the numbers of companies incorporated and struck off, is already published in the Companies House annual report. Companies House already reports publicly on its activities and its regular statistical releases on gov.uk. On new clause 28, through dissolution a company is brought to a point at which it ceases to exist and ceases to appear on the register. A company can seek its own voluntary strike-off, or it can be struck of compulsorily by the registrar. In principle, that process takes place when there is reason to believe that the company is no longer in operation or carrying on business. In both cases, statutory processes ensue whereby the public generally are informed that the dissolution is in train by publications in the Gazette. There are opportunities for third parties to intervene and object to a company being dissolved.

Concerns have been expressed that unscrupulous companies choose to give the impression that they are defunct in order to precipitate their dissolution and evade creditors. That concern is ultimately misplaced, as any assets left in a company following its dissolution will not be held by the company any more, and will be passed to the Crown, bona vacantia—as ownerless property. It is also important to note the effects of the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021, which amended the Company Directors Disqualification Act 1986 by introducing a mechanism for disqualifying directors of dissolved companies.

It is also worth noting that the 1986 Act includes provision not only for disqualifying directors but for ordering disqualified directors to pay compensation. That provision is in section 15A of the Act and, as amended by the 2021 Act, covers directors of both insolvent companies and dissolved companies. If a director is disqualified and the conduct for which they were disqualified caused loss to the creditors of an insolvent or dissolved company, the director can be ordered to pay compensation either for the benefit of specified creditors or by way of a contribution to the assets of the company.

The Bill introduces a new circumstance under which the registrar might seek to strike off a company that persistently fails to provide an appropriate registered office address. I assure Members that the registrar will initiate dissolution in those particular circumstances only after having assessed the risks of doing so. The normal notification procedures, by way of the Gazette and Companies House webpages, will apply.

As noted, Companies House already makes data on company dissolutions regularly available. I question what benefit the reporting proposed by the new clause would add, as it is not clear to me that the information it covers would necessarily be available to the Secretary of State. However, I acknowledge the concern about the manner in which compulsory strike-off operates. I have asked my officials to advise me on the extent to which the Bill’s new information-sharing provisions might improve safeguards and transparency in this area. I am of course happy to engage further with Members on this topic in due course.

Most of the comments related to new clause 63. I absolutely agree that there needs to be a mechanism by which progress made on the implementation of the provisions in the Bill is reported to Parliament. There should be regular reporting on the registrar’s use of the new powers. I also accept that it is important to give Parliament an early opportunity to scrutinise how quickly Companies House implements the reforms.

I believe, however, that the new clause requires further consideration. As drafted, it has the potential to place unintended obligations on the registrar. For example, it will require the registrar to report on the imposition of financial penalties before the commencement date of the regulations. It also requires the registrar to indefinitely report on the implementation of the legislation, even if it is completed in the near future.

With the agreement of the Committee, I would like to ask my officials to consider the new clause further. I hope Members are reassured that we will give it consideration. If the new clause is withdrawn, we will have further discussions about what we might put in its place.

I thank the Minister for his comments about the new clauses. I appreciate his response on new clause 63 and very much look forward to hearing from his officials about the proposed reports, but will he tell us when we will hear from them? None of us wants the measure to be lost in the course of proceedings, and we do not want it to be left to the Lords, so I would be grateful if he can tell us when he expects us to hear a response. Assuming that it will be positive, I am happy not to press new clause 63 to a vote.

On new clause 26, the Minister did not respond with the detail that I was expecting. I understand that some data is already published. We can have an argument about whether it is there, but it is easy for there to be a summary. If Parliament is looking at one document, it will want that data. It will want to review the later data in the context of the more procedural data that Companies House already publishes. I cannot see that it is onerous to publish a summary of data that already exists.

In the Minister’s response to my hon. Friend, he said that there was duplication of subsections (1) and (3). All the other things that were listed in subsections (4), (5), (6), (7), (8) and (9) are issues on which we want an annual report to Parliament because that shows us whether the legislation is working. If there is duplication, it is not the end of the world. There is a lot of duplication in our legislation—I am sure, Sir Christopher, that you are an expert on that—but that is not a sufficient argument to put the whole new clause out of the Committee’s consideration.

My right hon. Friend is absolutely right; indeed, that is precisely where my concerns lay. The Minister simply talked about the relatively small part of the reporting requirement. If there were an argument as to whether to include it or not, my argument would continue to be that that is relevant to have in the context of the full reporting requirement that we are arguing for. There is not anywhere else in the legislation—unless the Minister can direct me to it—that will provide Parliament with such a report.

Just to abbreviate the debate, much of the information in new clause 26 is already reported by Companies House in its annual report. I think it is being said that the key measures are the additional ones in new clause 63, which relate to what the Bill’s provisions will give effect to. I am happy to return to the Committee before Report to say where we feel the new clause needs to be addressed. If we do not do it at that point, the hon. Lady is welcome to table an amendment on Report.

I thank the Minister. To clarify, he referred to coming back on new clause 63; my question is in relation to new clause 26 and whether and how the later subsections are all going to be covered by the Companies House annual report. It would be helpful if he responded to that, because currently I am not clear that they are all covered.

In new clause 26, we are asking for an assessment of whether

“the powers available to the Secretary of State and the registrar are sufficient to enable the registrar to achieve its objectives”

and about

“making recommendations as to whether further legislation should be brought forward in response to the report.”

Yes, there may be details elsewhere, but they could be summarised for the ease of use of the report. The new clause requires

“a breakdown of the registrar’s annual expenditure”

and

“data on the number of companies struck off”.

That information may well also be elsewhere. Will the Minister confirm whether

“the number of cases referred by the registrar to law enforcement bodies and anti-money laundering supervisors”

and so on is all going to published elsewhere?

May I also draw the Minister’s attention to new clause 26(6), which is important? It asks for an annual report of the total number of companies incorporated to the registrar and

“the number of company incorporations by Authorised Company Service Providers”.

The purpose of that particular bit of information relates to our concern about the integrity and honesty of company service providers. I do not believe that is covered in the Companies House report. I accept that there may be some duplication—we got that wrong—but there are issues of huge importance in terms of accountability and the integrity of the data that we would lose if new clause 26 were simply ignored.

I thank my right hon. Friend for explicitly emphasising the importance of subsection (6). She is absolutely right. The Minister will be mindful of the importance of transparency in respect of the issues relating to incorporations by authorised company service providers. Will he confirm that all the subsections in new clause 26 will be explicitly covered elsewhere? If not, we will want to pursue the matter of how that information is going to be published by Companies House and the Secretary of State.

Nobody is ignoring the comments that have been made. Nobody is keener than I am to make sure that there is proper scrutiny of what Companies House does with the powers. We should absolutely ensure that.

On the requirement for the Secretary of State to report on the use of the powers, any Secretary of State appointed by any Government, be they Labour or Conservative, will of course always review the powers needed and whether there is a need to legislate further. It is not right to dictate in legislation that the Secretary of State should do this, that or the other and I would not expect any Opposition to require that.

Companies House already reports on the number of companies incorporated and struck off—that is already in the annual report. It is an interesting point about corporate service providers; the right hon. Member for Barking has concerns in that regard, and I do too. I suggest that I should look at the matter further with officials and come back to the hon. Member for Feltham and Heston well in advance of Report—outside the tabling time—and if we are not going to do anything, she can table a similar new clause. If we are going to do something, that might address her concerns or she might need to go further. Those options are open to her and I hope she will give us time to try to address these matters to the House’s satisfaction.

I thank the Minister for his comments. He has said he will review the issues addressed in new clauses 26 and 63 with his officials. There may well be areas in which, on further reflection, he agrees with us that more could be done.

On the Minister’s comment about the Secretary of State being able to introduce legislation at any time, the point that was missed was that we know the speed with which we have to respond to economic crime. If we think back to 2016, we can see that we did not act fast enough—we have not acted fast enough in the past six years—so there is strong merit in having a mechanism that speeds up any requirements for future legislation through a report that can be reviewed and followed up on.

If the Minister is committing to review the matter and come back to us, we accept that. We would like to be involved in the discussions, perhaps after he has had an initial discussion with his officials. If there is a way to move forward with consensus, perhaps prior to Report, that could be a positive way forward. I therefore beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 29

Report into the merits of a fund for tackling economic crime

“(1) The Secretary of State must produce a report into the merits of a fund for tackling economic crime.

(2) The report must consider the case for penalties paid to the registrar to be ringfenced and used solely for the purposes of tackling economic crime.

(3) The report must be laid before Parliament within six months of this Act being passed.”—(Dame Margaret Hodge.)

This new clause requires a report into the merits of a fund for tackling economic crime to be laid before Parliament.

Brought up, and read the First time.

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

New Clause 35

Person convicted under National Minimum Wage Act not to be appointed as director

“(1) The Company Directors Disqualification Act 1986 is amended as follows.

(2) After Clause 5A (Disqualification for certain convictions abroad) insert—

‘5B Person convicted under National Minimum Wage Act not to be appointed as director

(1) A person may not be appointed a director of a company if the person is convicted of a criminal offence under section 31 of the National Minimum Wage Act 1998 on or after the day on which section 32(2) of the Economic Crime and Corporate Transparency Act 2022 comes fully into force.

(2) It is an offence for such a person to act as director of a company or directly or indirectly to take part in or be concerned in the promotion, formation or management of a company, without the leave of the High Court.

(3) An appointment made in contravention of this section is void.’”—(Stephen Kinnock.)

This new clause would disqualify any individual convicted of an offence for a serious breach of the National Minimum Wage Act 1998, such as a deliberate refusal to pay National Minimum Wage, from serving as a company director.

Brought up, and read the First time.

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

On a point of order, Sir Christopher, is it procedurally correct for my right hon. Friends the Members for Birmingham, Hodge Hill and for Barking to speak before I make my comments?

People can speak in whichever order they wish. If the right hon. Lady and the right hon. Gentleman rise before you do, I will call them first. Let’s suck it and see.

New Clause 44

HMRC anti-money laundering function

“(1) The Commissioners of Revenue and Customs Act 2005 is amended as follows.

(2) After section 5 (Commissioners’ initial functions), insert—

‘5A Commissioners’ Anti-Money Laundering Functions

(1) The Commissioners shall be responsible for anti-money laundering supervision.

(2) The Commissioners shall treat the function in subsection (1) as a priority equal to the functions in section 5.’”—(Dame Margaret Hodge.)

This new clause would require HMRC to prioritise its AML supervisory function.

Brought up, and read the First time.

With this it will be convenient to discuss 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.”

I will speak to new clause 72 first and come back to new clause 44. The Minister and the Government will know that time and again we have said we are concerned about the way in which professionals are checked, supervised and regulated in the financial services sector and that the current system is not fit for purpose. I think we all recognise that it is the professionals who play a key role in enabling the fraudsters and money launderers to successfully commit economic crimes. It is they who either facilitate, collude in or enable the wrongdoing.

I accept, as everybody in the room does, that most professionals are straightforward, honest people who want to do a good job, but the focus of our work is to ensure we have in place a smart regulatory framework that captures the wrongdoers. This is not a small issue. The £290 billion lost in fraud and money laundering is a massive sum, comprising 14.5% of GDP. It needs to be taken really seriously. We have experienced during the course of consideration of this Bill a rejection of what I consider to be pretty sensible, pragmatic amendments. This is yet another. I hope the Minister does not think that just because it has been moved by the Opposition it is not worthy of proper consideration.

I would also like to speak from the point of view of the professionals. I spend a lot of my time talking to accountants and lawyers who are active in this area. Everybody wants the bad apples knocked out. It is in the interests of the professionals themselves to ensure there is proper trust and confidence in the integrity of those who work in the industry. The Office for Professional Body Anti-Money Laundering Supervision—OPBAS—is responsible for supervising the professional body supervisors. This is complete gobbledygook, but I hope Members understand what I mean. It is the top organisation, which has the responsibility for ensuring that all the supervisory bodies do the job properly and that they properly implement the anti-money laundering regulations.

The regulations require all the professionals working in this area to have systems and practices in place to identify suspected corrupt wealth, to know their customers properly and have good record keeping and so on. They are very obvious systems that anybody who wants to work honestly would have in place. OPBAS supervises 25 organisations. Of them, 22 are in the legal and accounting profession and one is His Majesty’s Revenue and Customs, which relates to new clause 44.

HMRC supervises trusts and company service providers about which we have had a long debate. They include estate agents, letting agencies, high-value dealers, on-market dealers, accountancy professionals who do not belong to any professional body, and finally the Gambling Commission. The Financial Conduct Authority supervises the rest. HMRC in particular does not do a proper job. It does not see it as part of its function to do the supervision.

Can I just say something from my own business experience? We had two very thorough inquiries from HMRC, which spent days in our office looking at our money laundering procedures. I am pleased to say that we passed the test, but HMRC really does take its job seriously.

I do not know whether I have the quote here from the previous HMRC permanent secretary—I will dig it up and send it to the Minister—but he actually said, in evidence to the Treasury Committee I think, that he did not quite understand why it was part of his job to do the supervision. I am not quoting him accurately, but the purport of what he said was that they see it as marginal and a sort of add-on—I think he used the word “add-on”—to their main function, which is to get the money in.

The position and reputation that professionals enjoy through membership of professional bodies is really important. Therefore, the professional bodies themselves should be taking steps to minimise and attack suspicious activity where it takes place, and they should be calling it out. It is in everybody’s interest to get the bad apples.

Let me give some evidence of the current failings as we see them. The 2021 review of OPBAS—the body responsible for all the professional bodies—found that 81%, or eight out of 10, were not supervising their members effectively. This review was done only on the legal and accountancy professions. Half the supervisors did not ensure that their members were taking timely action to improve their money laundering procedures where they were found wanting. A third of the supervisors did not have effective separation between the advocacy role and the supervision role, which I think is an important aspect. For a proper review, one would separate bodies undertaking supervision and bodies undertaking advocacy to ensure there is no conflict of interest.

Some 60% of the firms visited by the Solicitors Regulation Authority in 2021 were failing to comply fully with their duties to have adequate AML controls in place. OPBAS found that nine supervisory bodies of MLR are engaging in what it calls “low levels of enforcement”. The way in which those bodies respond when they find something going on is to have a quiet chat rather than issue fines and publicly censure lawyers for breaching the MLR rules. The highest ever AML fine for a law firm by the SRA was £232,500, and it was for Mishcon. If that fine had been levied by the FCA under similar powers, it would have been £5.4 million.

The Council for Licensed Conveyancers, another group of professionals who are active in this area, imposed zero fines, despite finding that two out of three of the firms it is responsible for supervising were non-compliant with AML regulations in 2019-20. To use another example, the Law Society of Northern Ireland imposed just one fine—of £1,750—in the year 2019-2020, despite it finding 228 cases of non-compliance. That is a considerable body of evidence, if I may say so, that shows that the current system is broken and not fit for purpose.

The Chartered Institute of Taxation, a group I work with a lot, found that a third of the firms visited were non-compliant, but only four firms were disciplined for failure to provide renewal forms by the required deadline and fined for failure to submit appropriate criminality check certificates or to deal with the action points that had been raised with them in the review by CIOT of their AML procedures. In three of the four disciplinary cases by CIOT, a financial penalty was imposed, and only in the fourth was the member suspended.

I know that the Government are looking at the supervisory framework but, as is the way with Governments, that could take forever. We want to implement these reforms swiftly, so we must have some assurance and confidence, particularly because of the outsourcing of the checks on individual companies, that the professionals will seek out the miscreants in their profession. We cannot wait for the review, to put it bluntly. With these measures, we have taken the least of all the options the Government have put forward and proposed it for legislation. If the Government, on reflection, want to come back with a tougher regime, that is fine, but at least we would have the minimum in place as we enact the legislation and the reform of Companies House. Our new clause says, “Action now. Toughen up the powers and duties of OPBAS—introduce greater transparency into the system, and comeback if that is needed.” We are suggesting new powers and duties for OPBAS. The power is

“to impose…financial penalties on Professional Body Supervisors that fail to…adopt an effective risk-based approach to anti-money laundering supervision…impose proportionate and dissuasive sanctions for non-compliance…and…separate their advocacy and regulatory functions.”

This is minimal, sensible and desperately needed now if we are to go ahead, with the speed that we all want, with the implementation of the legislation.

I do not propose to spend much time speaking in support of the new clauses. The arguments made by my right hon. Friend the Member for Barking have broadly said it all. She highlighted the high levels of non-compliance, the very low levels of fines and disciplinary measures, and the frustration of the sectors in terms of tools to really root out the rogue players who need action taken against them. The new clauses would be very effective and are much needed, for the reasons outlined—in trying to get action now, toughening up powers and providing greater transparency. For the reasons that I have outlined, I totally agree that the Bill is the right place for these measures. We should not have to wait and wait and wait for what is likely to come and will almost certainly draw the same conclusions.

New clause 44 would have the effect of amending the Commissioners for Revenue and Customs Act 2005 such that the commissioners would be responsible for anti-money laundering supervision, and it states:

“The Commissioners shall treat the function in subsection (1) as a priority”.

New clause 72 would introduce provisions requiring the Secretary of State, by regulations, to set out a further power and duty for the Office for Professional Body Anti-Money Laundering Supervision. This is defined as

“the power to impose unlimited financial penalties on Professional Body Supervisors that fail”—

that fail—

“to…adopt an effective risk-based approach to anti-money laundering supervision…impose proportionate and dissuasive sanctions for non-compliance with anti-money laundering requirements …and …separate their advocacy and regulatory functions.”

We want stronger action taken against economic crime, not least because we know the scale at which it comes through the cracks, with the damage that it does to our economy. It seems to me that tightening up the roles and the performance of professional body supervisors and HMRC in some way is an opportunity that we should not miss.

The proposed clause would also insert a duty

“to publish the details of any sanctions imposed on Professional Body Supervisors, and…reviews of Professional Body Supervisors with data disaggregated by body rather than by sector.”

The sum of the two new clauses is to ensure the urgent improvement of the UK’s anti-money laundering sector. Throughout our witness sessions and Committee debates, we have heard about the lack of effectiveness of our AML system. I think that is a view also supported by the Minister. The changes are a much-needed strengthening and safeguarding against potentially rogue corporate service providers, the third parties who act on behalf of companies and can carry out the identity verification of directors.

New clause 44 has the urgent and needed effect of ensuring that the HMRC commissioner prioritises the operation of AML supervision. New clause 72 expands the powers of OPBAS and introduces provisions for much harder sanctions against professional body supervisors.

In the Treasury’s June review of the UK’s AML supervisory regime, the Government recognised that that regime needed much improvement. Consultation after consultation is not going to cut it. We have an opportunity now to do something specific, proportionate and important to improve the Bill’s outcomes.

I support the new clauses. The anti-money laundering supervisory duties are incredibly important, as they are part of firmly closing the door on economic crime. It is important that we use this opportunity to strengthen the powers in the Bill. Frankly, if we do not do it now, when will we get round to it again?

New clause 44 asks HMRC to prioritise its AML supervisory function. That seems sensible. I would note that some additional resources will be needed; the Treasury Committee’s economic crime report points to the fact that some 30,000 businesses fall into this bracket.

I note the ongoing review of OPBAS. I do not want the Minister to get ahead of the review, but it might be useful to get a perspective on the direction of travel. At the most extreme end of that review—the Committee heard evidence on this point recently—the Government could propose that OPBAS loses its AML supervisory function. It would be interesting to hear the Minister’s perspective on where he thinks the review will end up. It is quite awkward that the review does not tie in with the Bill’s timetable: the review is ongoing, we are legislating here and we do not quite know where it will end up.

I wonder whether the Minister could clarify a point that the FCA’s chief executive, Nikhil Rathi, could not clarify when he came to the Committee. The most recent report about the performance of OPBAS is dated September 2021. It feels to me that we are overdue a report on the effectiveness of OPBAS. Is the delay a result of the ongoing review or is there some other reason for it? The September 2021 report stated that:

“The vast majority (just over 80%) of PBSs had not implemented an effective risk-based approach. Only a third of PBSs were effective in developing and recording in writing adequate risk profiles for their sector”.

The report also raised various other points about the effectiveness of OPBAS. It has been operating for several years now, but we still do not feel that it is doing what it should to supervise and ensure that the anti-money laundering responsibilities of those it supervises are carried out. If the Minister does not have information on the status of that report today, I would be perfectly content for him to write to me.

Maybe OPBAS has upped its game incredibly since the last report came out—we just do not know. That also hinders our approach to the Bill, because we do not know whether these functions are being adequately carried out. While the FCA chief executive was able to say that there has been improvement, he was not able to say what that improvement looks like. Have 100% of PBSs now implemented an “effective risk-based approach” or is it 50%, or somewhere in between? We just do not know.

It is important that we use all the opportunities we have in the Bill to up the resources for the FCA, OPBAS and HMRC to carry out their functions. As I say, anti-money laundering supervision is the key to ensuring we close the door on money laundering. Those bodies are meant to stop it, and if we do not tighten the legislation and provide the resource there is very little point having the Bill.

I thank the right hon. Member for Birmingham, Hodge Hill and for Barking for their amendments, and I welcome the effort and energy they put into the oversight mechanisms that are so important in ensuring that the Bill is effective. That is the nice bit. They know what is coming next.

I do agree enormously on the importance of supervision, which has been emphasised, but I am afraid I cannot support new clause 44. Despite what the right hon. Member for Barking says, HMRC already has an anti-money laundering supervisory function and it does take its responsibilities extremely seriously. It supervises nine sectors and is the default supervisor for trust and company service providers where they are not already subject to supervision by the FCA or one of the 22 professional bodies.

I wish I had brought some of my previous notes with me. What evidence does the Minister have of that, apart from HMRC telling us that?

I am amazed that it did. Is there evidence of the number of visits or assessments carried out? I can remember a quote from the previous permanent secretary, who said, “It is not our core business.”

The core business of HMRC is raising money and ensuring that that money is clean. That is absolutely essential. Until HMRC works out whether or not the money is clean, it is hard to raise money. I would be hard pressed to describe my hon. Friend the Under-Secretary as a dodgy individual, but if he is going through these AML checks I think it is a good indication that HMRC is taking such matters very seriously. As I say, the checks are already being done and the responsibilities are held by branches of the Government, including HMRC and other professional bodies.

The amendments are therefore a duplication. The reality is that HMRC carried out 3,500 formal compliance inspections with businesses last year and issued over £2.5 million of penalties in 2021-22. That demonstrates that the business checks are not symbolic. They are not minor. They are extremely serious. HMRC takes them very seriously. I think the Government is entirely in agreement with the right hon. Lady that these checks need to happen, but the scale and type of reform to improve effectiveness and solve these problems is not yet clear. The Treasury will no doubt have many views when its formal consultation on the possible options opens. The consultation will ensure that the risks and implications of each option are fully understood before the Government commit to any particular model. The right hon. Lady knows very well that we need to get this right, not just to be quick.

On new clause 72, I welcome the desire to strengthen the UK’s anti-money laundering regime. I also share the support for the work OPBAS does. However, it is not yet the right time for the proposed changes, and I cannot support the suggested amendment. In June of this year, the Treasury published a review of the UK’s anti-money laundering regime, which considered the performance of the supervisory regime, including the work of OPBAS. It concluded that although there have been significant improvements in recent years, further reform is necessary to ensure effective supervision across the regulated sector. The review set out four options for reform, ranging from strengthening OPBAS to structural reform to establish a new statutory supervisor. Further policy work to develop these options is already under way, and the Treasury has committed to publishing a consultation before a decision on the direction for reform is made. It would be wrong to preclude the ongoing policy analysis and public consultation by making the changes proposed by the amendment.

I heard the Minister’s words with gloom. Initially, the Government put out a consultation with four options, and to speed it up, we decided to go with the weakest of the options—the one to which there would be the least objections. What I think I just heard him say, which is so gloomy, is that the Government will now publish a further consultation. All this stuff in the Bill will come into being and we will have absolutely no assurance that proper checking, regulation and supervision will be carried out on company service providers.

As I say, this is really a matter for the Treasury, and it has committed to publishing a consultation before the decision is made. It would be wrong of me to preclude the ongoing policy analysis and public consultation by making—

May I clarify whether the Minister has had any discussions with Treasury colleagues about the matter and raised his concerns? Have they acknowledged the need to act much faster?

I have had many conversations with Treasury colleagues in recent weeks and months on various aspects of the challenges that economic crime poses to the UK. Many of us are committed—in fact, the Treasury is very committed—to ensuring that economic crime is reduced in this country. The support that the Treasury has given in various different ways has resulted in many things, including a very successful operation conducted this morning by the Metropolitan police that resulted in the arrest of many people connected to economic crime. That may sound tangential on the grounds that it is about fraud, but the reality is that all of it is connected. We see a very strong overlap between money laundering, fraud and various other different forms of economic crime. The Treasury, unsurprisingly, is extremely committed to making sure that economic crime in this country reduces. The Home Office and the Department for Business, Energy and Industrial Strategy are absolutely committed to making sure that we considerably reduce the level of fraud in this country.

What is important now is to ensure that we make OPBAS as effective as possible, and that we look for some of the reforms that we have started to highlight, because that means that the changes required by the amendment will be unnecessary. I hope that we can focus on that aim.

I have just been given a statistic that records that in October 2022, HMRC named 68 estate agents that had breached anti-money laundering regulations, and fined them a collective total of £519,000. We can see that the supervision of estate agents is not just conducted by my hon. Friend the Under-Secretary but by many others around the country and is taken extremely seriously.

I hear what the Minister says, but I think we will just be setting up another duff register unless we get the regulation of those company service providers toughened up at the same time as we introduce the Bill. I want to press new clause 72 to a vote.

You will not be able to do that now, and in the meantime, you must seek the leave of the Committee to withdraw new clause 44.

Thank you very much, Sir Christopher. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 50

Requirement for UK-resident director

‘(1) The Companies Act is amended as follows.

(2) In section 156B of the Companies Act 2006, inserted by section 87 of the Small Business, Enterprise and Employment Act 2015, after subsection (4) insert—

“(4A) The regulations must also include provision to require all companies to have at least one director who is ordinarily resident in the UK.”’—(Stephen Kinnock.)

This new clause would amend the Small Business, Enterprise and Employment Act 2015 to require all companies to have at least one person who ordinarily resides in the UK as a director.

Brought up, and read the First time.

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

New clause 49 sought to ensure that the provisions of the Small Business, Enterprise and Employment Act 2015, which require company directors to be natural persons, would be brought into force. The Opposition welcomed the Minister’s commitment to introducing the necessary regulations to enact that measure in the near future, and we are very pleased to have that on the record. At the same time, however, the Opposition remain convinced that there is much more that the Government could and should be doing to reduce the risks of money laundering and economic crime within the company registration requirements. The new clauses we are about to discuss provide a number of different means by which the law could be further strengthened against the risk of such abuses.

New clause 50 would make it a requirement that every company registering in the UK has at least one director who is ordinarily resident here. I have already spoken in Committee about the risks that often come with a system that allows companies to register in places to which they have a tenuous connection in terms of actually doing business there. Although there may be certain limited circumstances in which it might be legitimate for a company with no UK-based directors to register with Companies House, I am struggling to see what they might be. On the other hand, I can think of plenty of reasons why the fact that a company has no UK-based directors might be considered a red flag for money laundering risks, calling for additional scrutiny from the registrar.

In due course, the Committee will consider a separate new clause, tabled by my right hon. Friend the Member for Barking, that would create new criminal offences involving a failure to prevent fraud, false accounting and money laundering. Without getting into too much detail on the specifics of the proposals, the relevant point for the purposes of new clause 50 is that similar offences already exist in UK law. The Bribery Act 2010 was the groundbreaking law in that respect. The precedent that it set for holding company directors liable for a failure to prevent certain criminal offences within their organisations was built on by the Criminal Finances Act 2017, which established a similar offence related to tax evasion.

Important as those developments in the law undoubtedly were, it is not hard to see the difficulties involved in enforcing those laws against individuals who spend little if any time in the UK. Successful prosecutions may depend on the co-operation of other Governments, whose laws on corporate criminal liability may not be as robust as our own. They may also be subject to lengthy and expensive extradition proceedings. New clause 50 would provide a simple safeguard in those cases. Ensuring that at least one company director ordinarily resides in the UK and is therefore subject to UK law could make it much easier for offences involving corporate criminal liability to be enforced. At the very least, it should serve as an effective deterrent, for instance by making third parties who act as company directors for a fee think very carefully about what kind of clients they are prepared to act on behalf of.

I thank the hon. Member for his amendment. As he set out, new clause 50 would require all companies to have at least one person who ordinarily resides in the UK among their directors. The proposal has been considered and rejected before. I am aware that some other jurisdictions have similar provisions, but the UK has chosen not to enact that type of measure for two reasons. First, it goes against the long-standing principle that any legitimate global citizen can do business freely in the UK. If we mandate a UK resident director, we are effectively asking an overseas investor looking to set up a business here to have a UK business partner. That sounds to me very much like something that the Chinese state might do. We do not consider that it is right for our open economy.

Secondly, we are not persuaded that there are enforcement or accountability benefits that will lower levels of corporate abuse or economic crime. The reforms in the Bill, such as identity verification, intelligence sharing and greater information querying, will help to deliver much-increased transparency and accountability. That will help us to discover rogues faster, share their details more quickly, hold them to account and, where necessary, close down their businesses, or indeed ask questions of them before we even allow them to incorporate here.

It is my expectation, as the hon. Member for Aberavon has set out, that Companies House will work with the NCA and others to put in place the systems to raise red flags so that when we see applications to incorporate companies from individuals from certain jurisdictions, more questions will be asked. If the registrar is not persuaded by the responses, she may simply say no. The addition of a UK resident director will not provide additional value and I very much hope that the hon. Gentleman will withdraw his new clause.

I thank the Minister for his remarks. We are talking about how to make it as easy as possible for those red flags to be clear. If we were to do exception reporting, there may, of course, be a clear explanation in certain circumstances for why there is not a single UK-based company director and perfectly legitimate reasons for that. We think that it would be better to do the exception reporting on that basis, so that we are casting the net and identifying red flag areas because of the nature of the company directors and where the risk would appear to be.

I take it from the Minister’s remarks that there is not a great deal of room for negotiation on that point. However, we are trying to put forward a sensible and pragmatic solution. Can the Minister say any more about how to look through the telescope in terms of exception reporting? We argue that exception reporting could be conducted on the basis of explaining why there is not a single UK-based company director while maintaining the blanket provision that there should always be such an individual in order to minimise risk.

That is exactly how we expect the process to operate. If there are red flags of concern—an exception report, as the hon. Gentleman calls it—the registrar can ask further questions and may deny that company the right to establish itself in the UK. I think those checks and balances are in place, and of course, as hon. Members have said, it is very important that those opportunities are used by the registrar. I am very keen to ensure that we have the opportunity to scrutinise the use of those powers.

I thank the Minister for those points. I see that we will agree to disagree on this. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 51

Registration requirements: UK-based assets held by overseas entity

‘(1) The Economic Crime (Transparency and Enforcement) Act 2022 is amended as follows.

(2) In Schedule 2—

(a) in sub-paragraph (a) of paragraph 2, for “and” substitute “or”;

(b) after sub-paragraph (a) of paragraph 2 insert—

(aa) is a beneficial owner of any UK-based assets held by overseas entity, and”.’—(Stephen Kinnock.)

The intention of this new clause is to broaden the scope of registration requirements for overseas entities, as set out in the Economic Crime (Transparency and Enforcement) Act 2022, to include the beneficial owners of any UK-based assets owned by an overseas company, as well as the beneficial owners of the company itself.

Brought up, and read the First time.

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

The purpose of the new clause is to close what appears to be a loophole in the current requirements on the registration of overseas entities that own property in the UK. The case for the new clause is simple. Under the current rules, as set out primarily in the Economic Crime (Transparency and Enforcement) Act 2022, a foreign company that owns property or land in the UK is required to declare the beneficial ownership of the company itself. It is, however, unclear whether it would also be required to disclose the ultimate beneficial owner of any property owned by that company.

In recent years, we have seen ample evidence of how easy it can be—

I am trying to understand the new clause. How could someone be the beneficial owner of a company and someone else own the assets? If the beneficial owners own the company, how can a different beneficial owner own the assets?

According to our interpretation, schedule 2 of the 2022 Act is unclear about whether a company would be required to disclose the ultimate beneficial owner of any property owned by that company. Our worry is that there is a loophole in the law that talks about the beneficial owner but does not give us the tools to obtain disclosure of who is the ultimate beneficial owner of the property.

In recent years, we have seen ample evidence of how easy it can be for money launderers and the enablers of economic crime to exploit any grey area, perceived or actual, in the laws that apply to them. Therefore it is essential that the law is absolutely crystal clear on that point. It is about tightening up the law as it stands.

We already know that the beneficial ownership of property and other assets is often shrouded in layer on layer of corporate secrecy. In its official guidance and examples of best practice on beneficial ownership, the Financial Action Task Force draws a distinction between the ownership of a company on the one hand and the ultimate beneficial ownership of any assets held by that company on the other. The guidance makes it clear that they are not necessarily the same thing. One of the most salient differences is that although a company can be the legal owner of a property, the ultimate beneficial owner of that property will always be a natural person, or, in layman’s terms, a human being. It is not clear whether the current legal framework for the register of overseas entities is sufficiently clear on that point.

To make a significant difference in terms of transparency, the register must require all companies to disclose the ultimate beneficial owner of any UK property under their control. It must publish that information. I would be grateful to hear the Minister’s thoughts on whether the legislation currently provides an adequate degree of clarity. If he agrees that the requirements could be made clearer, I hope that we can trust that the necessary changes will be incorporated in the Bill, or set out in regulation.

Again, I thank the hon. Gentleman for tabling the new clause. I understand what he is seeking to do, and I support him in that endeavour. I believe that the intent behind the new clause is the concern that assets other than land can be used for illicit purposes, but I am not sure that the new clause, as drafted, serves to address that.

As the hon. Gentleman knows, overseas entities are required to register beneficial owners with Companies House. Those registered as the beneficial owners of the overseas entity are the same persons as the beneficial owners that the new clause seeks to make registerable. Any assets held by the overseas entity are ultimately owned by those already required to register with Companies House.

Say an overseas entity owns a case of whisky, so we know who is the beneficial owner of that case. Who then owns the bottles of whisky in the case? It is the same owner as the one who owns the case. There is no separate owner—they either own the case of whisky, or they do not. I honestly do not think that the new clause would achieve what the hon. Gentleman wants it to achieve. If we think about yachts and other property, if we know the beneficial owner of the company, we also know the owner of the assets inside it. I hope that the hon. Gentleman will withdraw the motion.

I thank the Minister for that clarification. What rang alarm bells with us were the comments of the Financial Action Task Force, which drew the distinction between the ownership of a company and the ultimate beneficial ownership of any assets held by that company. The Minister has made his position clear, and, again, we just agree to disagree. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

Ordered, That further consideration be now adjourned. —(Scott Mann.)

Adjourned till this day at Two o’clock.

Retained EU Law (Revocation and Reform) Bill (Sixth sitting)

The Committee consisted of the following Members:

Chairs: † Sir George Howarth, Sir Gary Streeter

† Bacon, Gareth (Orpington) (Con)

† Bhatti, Saqib (Meriden) (Con)

† Blomfield, Paul (Sheffield Central) (Lab)

† Creasy, Stella (Walthamstow) (Lab/Co-op)

† Evans, Dr Luke (Bosworth) (Con)

† Fysh, Mr Marcus (Yeovil) (Con)

† Ghani, Ms Nusrat (Minister for Industry and Investment Security)

† Glindon, Mary (North Tyneside) (Lab)

† Grant, Peter (Glenrothes) (SNP)

† Jones, Mr David (Clwyd West) (Con)

† Madders, Justin (Ellesmere Port and Neston) (Lab)

† Morrissey, Joy (Beaconsfield) (Con)

† Nici, Lia (Great Grimsby) (Con)

† O’Hara, Brendan (Argyll and Bute) (SNP)

† Randall, Tom (Gedling) (Con)

† Sobel, Alex (Leeds North West) (Lab/Co-op)

Stuart, Graham (Minister for Climate)

Huw Yardley, Sarah Thatcher, Committee Clerks

† attended the Committee

Public Bill Committee

Thursday 24 November 2022

(Afternoon)

[Sir George Howarth in the Chair]

Retained EU Law (Revocation and Reform) Bill

Clause 8

Compatibility

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

It is a privilege to spend the afternoon with you in the Chair again, Sir George.

In certain areas of legislation, for example on data protection, it is likely necessary to specify that certain effects of the existing legislative hierarchy are maintained, to ensure the continuation of the legal regime. The clause therefore establishes a new power to maintain intended policy outcomes by specifying the legislative hierarchy between specific provisions of domestic legislation and provisions of retained direct EU legislation or assimilated direct legislation to maintain the current policy effect.

I have only a couple of questions. As I said, the Opposition consider the clause to be sensible, but will the Minister outline whether any assessment has been done as to what circumstances it is likely to be used in? What steps will the Government take to preserve the intent of the measure after 23 June 2026, when regulations made under the Bill will expire?

The hon. Gentleman asked about assessment. The REUL reform programme has been under way for more than a year. Departments have been engaged as to the effect of removing EU law principles—such as that the EU is the only one that can create principles and legislation—which is what we are working on. The work will continue to take place.

On the evidence about changing interpretation rules under clause 4, in specific cases—data protection regulation and competition law—removing the principles of interpretation as set out in the EU (Withdrawal) Act 2018 will cause unintended policy consequences as a result of the way that the legislation has been written. The compatibility power will ensure that the relationships between individual pieces of domestic legislation going forward are maintained. We intend that to ensure that our domestic law operates as the UK Government want it to. Each Department will of course be responsible for REUL elements within their portfolio.

Question put and agreed to.

Clause 8 accordingly ordered to stand part of the Bill.

Clause 9

Incompatibility orders

I beg to move amendment 80, in clause 9, page 10, line 36, at end insert—

“(4A) Within 28 days of the making of an incompatibility order, a Minister of the Crown must, by written statement, set out the Government’s view on the incompatibility. The statement must include consideration of the impact the incompatibility order has on rights of and protections for consumers, workers, and businesses, and protections of the environment and animal welfare, and whether the Government intends to produce regulations to revoke, amend or clarify the law in light of the order.”

This amendment requires ministers to set out, through a ministerial statement, their position on an incompatibility order that includes a consideration of the impact it will have on the rights of people.

The amendment would require Ministers to report to Parliament with a written statement in the event that a court made an order to declare that EU law and domestic law are incompatible. As we explained in relation to previous amendments, the Bill could impact on many fundamental rights of citizens in multiple areas of daily life. It could also interfere with important existing environmental protections, which I have explained at length in previous amendments.

The clause might have the effect of a court setting aside laws that guarantee such rights and protections, without giving Parliament any opportunity to ensure they can continue in place. In the interests of transparency and proper scrutiny, the amendment is designed to ensure that Parliament is alerted if that happens, enabling us to scrutinise the court decision and to consider whether we should exercise our rights to legislate to ensure that there is no confusion about Parliament’s intentions. It is not my intention to press this amendment to a vote, but I would like the Minister to explain how we can ensure proper scrutiny when such clashes inevitably occur.

The clause gives the judiciary powers in connection with the ending of the supremacy of EU law. It requires a court or tribunal to issue an incompatibility order where retained direct EU legislation cannot be read consistently with other pieces of domestic legislation. It gives the judiciary broad discretion to adapt the order to the case before it. That includes granting remedies to the effect of the incompatibility.

Courts generally have wide discretion to grant remedies that they may grant in a given case, and the clause is consistent with that principle. Where the court considers it relevant, the order could set out the effect of the incompatible provision in that particular case, delay the coming into force of the order, or remove or limit the effect of the operation of the relevant provision in other ways before the incompatibility order comes into force.

The clause is a matter of judicial process. It grants powers to the courts but does not change any rights or protections in and of themselves, which is a matter for Parliament in the scrutiny of this Bill. We do not need to create a new scrutiny process for incompatibility orders. A process of “declaration of incompatibility”, similar to that set out in clause 9, exists under the Human Rights Act 1998, and no new scrutiny procedure, such as the one proposed by this amendment, has been deemed necessary. Similar court orders could also be made under the European Communities Act 1972, where conflicts arose—again, with no such scrutiny procedure.

Once again, the hon. Member for Leeds North West raised environmental regulations. To repeat myself, we will not weaken environmental protections. The UK is a world leader in environmental protection and, in reviewing our retained EU law, we want to ensure that environmental law is fit for purpose and able to drive improved environmental outcomes. We are committed to delivering our legally binding target of halting nature’s decline by 2030. I therefore ask the hon. Gentleman to withdraw the amendment.

I take on board what the Minister says, although that last comment on the environment is slightly galling considering that on 31 October the Government were meant to bring forward, under their own domestic post-Brexit legislation—the Environment Act 2021—targets on a whole range of areas, including air quality and water quality. It is now 24 November and we still have no targets. If I am a little concerned about the Government’s performance here, she should not be surprised, but I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 9 ordered to stand part of the Bill.

Clause 10

Scope of powers

I beg to move amendment 50, in clause 10, page 11, line 12, leave out paragraph (b) and insert—

“(b) for sub-paragraph (2), substitute—

(2) Power may only be exercised by virtue of sub-paragraph (1) if—

(a) a written statement explaining the modification has been published by the Secretary of State,

(b) the Secretary of State has made an oral statement on the modification to both Houses of Parliament, and

(c) the Secretary of State has published an assessment of the impact of the modification.”

The intention of the amendment is to do what Brexit was supposed to do: restore some parliamentary oversight to the way in which the Government make and change legislation in this place. The amendment is pretty self-explanatory. It is not ideal that Ministers are giving extensive powers to chop and change laws as they see fit. If, in exceptional circumstances, it is necessary for them to have those powers, the very least Parliament should expect is that Ministers will be held to account and will explain to Parliament—ideally beforehand, but certainly afterwards—why they have done what they have done and what the impact has been.

If the Minister genuinely believes in improving accountability in this place, she will accept the amendment. In saying that, it is clear that all Ministers—nothing against this Minister—in all Public Bill Committees are under instruction not to accept anything from the Opposition. If we moved an amendment that said, “Today’s Thursday”, the Government would keep talking until it was Friday and then vote it down.

I recognise that none of that was directed at me personally, but rather collectively at all Ministers. I beg hon. Members to reject the amendment. The Government recognise the significant role that Parliament has played in scrutinising instruments to date and we are committed to ensuring the appropriate scrutiny of any secondary legislation made under existing delegated powers. We must end the restriction that some existing powers may only be used to amend retained direct principal EU legislation or rights under section 4 of the European Union (Withdrawal) Act 2018 if they are also capable of amending domestic primary legislation.

The hon. Member for Glenrothes suggests that a written ministerial statement made by a Secretary of State is accompanied by an oral statement when an existing power is exercised. I remind him that all statutory instruments that are subject to parliamentary procedure must be accompanied by an explanatory memorandum. These memorandums provide Parliament with the information and explanations required. When powers are exercised by virtue of paragraph 3(1) to schedule 8, explanatory memorandums would be laid as appropriate. Any statutory instrument that reforms retained direct EU legislation made under existing delegated powers will be subject to the proper processes for impact assessments. However, a blanket requirement for impact assessments is not appropriate as some reforms could fall below the de minimis threshold set out in the “Better regulation framework” guidance.

Now that we have left the EU, it is only appropriate for retained direct EU legislation that was not scrutinised or approved by Parliament to be treated in the same way as domestic secondary legislation, which is amendable by existing delegated powers that this Parliament has approved. For those reasons, I ask the hon. Member to withdraw his amendment.

The difference, of course, is that any secondary legislation—even if it is done by the affirmative procedure—goes through a Delegated Legislation Committee in which, at best, three or four of the parties in this House are represented. For the last seven and a half years, the Scottish National party has been represented in those Committees because of the exceptional level of support that it enjoys in our country, but there are Members of Parliament, who collectively represent the interests of a lot of constituents, who never get on to Delegated Legislation Committees. The only chance they get to question the Minister about secondary legislation is if the Minister makes an oral statement before the House. Publishing something is all very well, but Members of Parliament who are not in one of the big three or four parties do not get the automatic right to question Ministers on a written statement—they do get the automatic right to questions Ministers on an oral statement. It is quite clear which way this is going, so I will not detain the Committee by pushing the amendment to a vote. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

I beg to move amendment 51, in clause 10, page 11, line 18, leave out from “paragraph 3” to the end of line 23 and insert

“may not be so made, confirmed or approved unless a draft of the legislation has been laid before, and approved by resolution of, (as the case may be) both Houses of Parliament, the Scottish Parliament, Senedd Cymru or the Northern Ireland Assembly.”

The amendment is in my name and that of my hon. Friend the Member for Glenrothes. As we have argued since the date of publication, the Bill not only undermines the devolution settlement, but puts at risk workers’ rights, product safety, food labelling, the future of the agricultural sector, and the natural environment. Clause 10 allows for all that to happen with the bare minimum of parliamentary scrutiny, allowing everything to be dealt with via secondary legislation, and thereby conveniently avoiding the intense parliamentary scrutiny that these measures most certainly require. Clause 10 would make it easier for the Government to remove our rights and protections by using delegated powers, and therefore circumvent parliamentary scrutiny, avoid transparency and evade accountability to all Members of Parliament. This is the Executive power grab people have been talking about since the day the Bill was published.

When the Bill was published, the Government told everyone who would listen that this was all about the United Kingdom taking back control and asserting the sovereignty of this Parliament, as opposed to—in their words—shady deals being agreed in small committees in Brussels, but it does not feel like that. Who exactly is it that is taking back control here? It is not this Parliament, and it is not Members of this House, because the Government have already gleefully announced that when it comes to retained EU law,

“the amount of parliamentary time that is required has been dramatically reduced.”

It seems that for the Government taking back control means putting a group of hand-picked party loyalists on to a Delegated Legislation Committee—a Committee that, as we know, has a built-in Government majority—which will bulldoze through change after change after change, as instructed. The history of DL Committees is not particularly encouraging; in the past 65 years, only 17 statutory instruments have been voted down by a DL Committee—and that has not happened since 1979.

Although there is certainly a role for DL Committees, I do not believe that that extends to them making wholesale, fundamental changes to vast swathes of the law—on matters covering everything from the environment, nature and consumer protection through to workers’ rights, product safety and agriculture—just to help the Government avoid proper parliamentary scrutiny. The reason they are avoiding parliamentary scrutiny is that, in their fervour to get rid of any lingering European influence, the wide-eyed zealots at the heart of this dysfunctional Government have arbitrarily imposed a sunset clause for December next year. This is not just the view of the Opposition; it is a widely-held view. Professor Catherine Barnard warned against the lack of parliamentary scrutiny afforded, saying:

“Although there is a process for parliamentary oversight, it will be difficult in the timeframe to ensure that that oversight can be exercised in a manner that enables Parliament properly to scrutinise the measures as they come through.”––[Official Report, Retained EU Law (Revocation and Reform) Public Bill Committee, 8 November 2022; c. 16, Q27.]

In his evidence, George Peretz KC warned,

“One of the problems with the effectiveness of parliamentary scrutiny is that although one hears that Parliament has powers… the background against which it is being asked to approve legislation means that if it votes against that legislation, the sunset clause will apply and regulations disappear completely, rather weakening Parliament’s ability to do anything.”––[Official Report, Retained EU Law Public Bill Committee, 8 November 2022; c. 32, Q61.]

Amendments 50 and 51 seek to avoid that situation by obliging the Secretary of State to deliver both a written and an oral statement, as well as an impact assessment, before exercising any powers to repeal any legislation. How many times over the course of the first two sittings of this Committee did hon. Members raise concerns that, even now, just 13 months out from the date of revocation, the Government are still finding pieces of EU-related legislation? Indeed, 1,400 have been found in the last couple of weeks alone.

There is an almost terrifying inevitability that, in their desire to pile on the bonfire anything and everything that is remotely related to the European Union, mistakes will be made, things will be missed, consequences not thought through and impacts not understood. With the utterly reckless haste of the Government, that is going to happen. Amendment 50 would put a brake on that ideological runaway train, and force the Secretary of State to deliver both a written and an oral statement, as well as an impact assessment.

Amendment 51 should not be problematic to the Government given how much we have been told in the last 24 hours how valued and important Scotland is to this Union. If that is the case, make us an equal partner and let us decide when we want to use legislation to remove laws—and extend the courtesy of affirmative procedure to those other valued and equal partners in the Parliaments in Belfast and Cardiff too—before anything can be scrapped.

I ask hon. Members to reject the amendment. Clause 10 ensures that appropriate parliamentary scrutiny is applied to the use of existing delegated powers when they are used to amend retained direct EU legislation or section 4 of the European Union (Withdrawal) Act 2018 rights. It is this Government’s view that the appropriate procedure applied when amending retained direct EU legislation should be the same as the procedure applied to domestic secondary legislation. Any additional procedure, such as that proposed by the hon. Member, would be disproportionate given the type of legislation retained direct EU legislation is composed of.

It would be wholly inappropriate if, for example, updating individual provisions adding cheese and honey to the simplified active substance list required the approval of both Houses of Parliament, the Scottish Parliament and the Welsh Parliament. Making it easier to use pre-existing powers to amend assimilated retained direct EU legislation, while ensuring it receives the most suitable level of parliamentary scrutiny, will ensure our regulations can be kept up to date, supporting growth across the whole UK.

The Minister referred to domestic secondary legislation. Does she not understand that if a piece of secondary legislation relates exclusively to, for example, a devolved power of Senedd Cymru, as far as this place is concerned that is not domestic law—it is somebody else’s domestic law—and this Parliament should keep out of it?

I think we have covered the point of domestic law, law in Westminster and the role of Attorneys General. At the moment, we are forced to treat some retained direct EU legislation as equivalent to an Act of Parliament when amending it. It is no longer appropriate for retained direct EU legislation to keep the status of primary legislation when most of it has not had anywhere close to the same level of UK parliamentary scrutiny. I therefore ask the hon. Member for Argyll and Bute to withdraw the amendment.

I will withdraw the amendment, but it is something that we will return to on Report. This is an Executive power grab; it is a weakening of the role and influence of Members of Parliament in favour of the Executive. It is intolerable, and I hope that, when we do get to discuss it on Report, we will have the combined support of the Opposition. This is a dangerous road that we do not want to go down, and something we should avoid at all costs. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

With this it will be convenient to debate that schedule 1 be the First schedule to the Bill.

Hon. Members are already aware that clause 10 modifies powers contained in other statutes that can be exercised to make secondary legislation amending former directly effective EU law. Schedule 1 makes related amendments with similar effect to alter the procedural requirements in relation to other powers to amend retained direct principal EU legislation in line with the changes made in clause 10 to schedule 8 of the European Union (Withdrawal) Act 2018. Schedule 1 also contains amendments that are consequential on the changes to the EU withdrawal Act in clause 10. I commend the clause to the Committee.

Question put and agreed to.

Clause 10 accordingly ordered to stand part of the Bill.

Schedule 1 agreed to.

Clause 11

Procedural requirements

I beg to move amendment 81, in clause 11, page 13, line 26, leave out subsections (1) and (2).

This amendment removes the subsections that omit and replace paragraphs 13, 14, and 15 from the European Withdrawal Act 2018, and thereby leaves intact the existing scrutiny procedure for instruments which amend or revoke subordinate legislation made under s2(2) of the ECA 1972.

Good afternoon, Sir George. In essence, the amendment would remove the subsections that omit and replace paragraphs 13, 14 and 15 of schedule 8 to the EU withdrawal Act and leave intact the scrutiny procedure inserted for instruments that amend or revoke subordinate legislation made under the European Communities Act 1972.

If Ministers wish to revoke retained EU law, they are currently subject to what I would consider to be an appropriate level of parliamentary scrutiny, with mandatory explanatory statements, mandatory periods of prior parliamentary scrutiny and the mandatory use of draft affirmative procedures. Those enhanced provisions were inserted during the passage of the EU withdrawal Act in 2018 because Parliament considered such enhanced scrutiny necessary and proportionate, given the vast and varied nature of retained EU law and the potential impact of changes that we have debated at length over the past few days. We are talking about important environmental rights, workers’ rights and consumer rights. As we can see from the submissions made to the Committee, it appears that social media platforms are also at risk of being inadvertently switched off as a result of the Bill. We therefore think that this enhanced scrutiny is required.

I gather that the Government’s response as to why the requirements from the EU withdrawal Act can be watered down is that they believe those procedures have brought no tangible benefit. However, it is difficult to see what the rationale is for reducing the level of scrutiny when Parliament as a whole obviously thought that they were important enough to place in the Act just a few years ago. Could the Minister set out why she considers that a lower level is now appropriate?

I hear what the Hansard Society said about these procedures not having been used extensively thus far, but we are, of course, talking about something of an entirely different order to what we have seen to date. The procedures have mainly been used to maintain the status quo, but we are on a different and possibly uncertain trajectory now. It is clear from the Government’s refusal to accept any of our amendments to protect any pieces of regulation that there are going to be dramatic changes as a result of the Bill. Removing the requirement for the affirmative procedure will, once again, see a significant erosion of Parliament’s ability to scrutinise and hold Ministers to account when they amend the law. Why should parliamentarians not have greater involvement in the process set out in the Bill?

I have said this a number of times, but we really should aim to do better in the Bill. We should ensure that we are confident that, when changes are made, both Houses are able to scrutinise Ministers’ decisions. We will probably be presented, yet again, with arguments as to why we do not need such levels of scrutiny because these laws were foisted on us against our will in the first place, but that is essentially a way of saying that two wrongs make a right. I do not accept that. As I explained extensively on Tuesday, there has been a great deal of involvement on the part of UK politicians and representatives in the development of EU laws. I just do not accept the characterisation of these laws as having been foisted on us as correct.

I am not going to rehash all the arguments at the length I did the other day. I merely reaffirm that scrutiny is important, and when we, as parliamentarians, are faced with such a ministerial power grab, we should be concerned about trying to restrain it in some way. That is what this amendment seeks to do.

Apologies, Sir George, I was waiting for an affirmative action—in the same way I am waiting for an affirmative version of scrutiny from this legislation.

I rise to support amendment 81 because it is the nub of the issue, isn’t it? This is exactly what taking back control was supposed to be all about. It was about giving this place the powers that it was claimed had been cruelly taken from us by being part of the European Union. It is a while now, if we are honest, since we had the Brexit debates, but I do not recall a single leaflet that said, “Taking back control to Downing Street. Taking back control to a civil service office that would advise a Minister to pass an SI.” Yet, that is exactly what this piece of legislation will do on thousands and thousands of laws that our constituents care about because they have depended on them existing for generations.

I totally understand the challenge for Government MPs. Whether they were elected in 2019 or before, their experience of this Government has been of stability—of confidence in every decision and every piece of legislation that has been introduced. So they have never felt the need to question things or to have a mechanism whereby they could have a voice. What I often hear them loudly saying is, “In Downing Street we trust”—

Whoever is in it at any point—this week, next week, come what may.

The point is that parliamentary scrutiny is not a bad thing. Those of us who are democrats think it is quite a good and healthy thing.

My hon. Friend is making a powerful point. Does she recognise the way this procedure contrasts with the way these laws were originally made? Obviously, under the co-decision making in the European Union, laws are not made only by the Commission, which is characterised as the bureaucrats. They can be passed only with the active engagement and approval of the Council of Ministers, consisting of elected representatives from each member state, and the European Parliament, consisting of directly elected Members. Does it not appear that, when Government Members talk about taking back control, the democratic deficit that they once spoke of, pointing their fingers at Brussels, will now be pointed out here?

My hon. Friend has alighted on the fundamental challenge here. Obviously, it is a case of Council of Ministers—bad; individual Minister—no problem whatever. That seems to be what this Bill is doing and the process that MPs are setting up. As somebody who is hopeful that—not too long from now—Labour Members will be sitting on the Government side of this room, I still think it is a good idea for Back-Bench MPs to be able to raise questions, to table amendments and to have a voice. I thought taking back control was very much about saying that we did not trust Ministers when they joined a Council, but we did trust them when they had to face parliamentary scrutiny and to be in front of MPs who could ask them questions—difficult or otherwise, approved by the Whips or not. I know that my Whip, my hon. Friend the Member for North Tyneside, will catch my eye at this point. Amendment 81 would restore the scrutiny powers that we all agreed to in the EU withdrawal Act in the end and that were part of a process of giving people in this place more opportunity to influence what would happen next.

There is a practical challenge here. If we have all accepted that we do not even know which laws will be covered, because the dashboard will not be updated until next year, will all of us on this Committee be completely confident when a constituent comes to us and says, “You did X, but your Parliament did Y. Tell me the reason for that. Did you vote for that? Where were you when laws were passed that led to Facebook stopping working in the UK? Where were you when laws were passed that led to pension protections being deleted? What did you say? Did you vote for it? How did you represent me in that process?”—and answer there comes none, because the powers were entirely with Ministers, and the power of scrutiny, which MPs in this place could have saved and given to colleagues, was abandoned?

It is very concerning to see the Government try to delete paragraph 15, which simply requires them to explain why they thought it was necessary to revoke a piece of legislation. I return to the discussion we had on Tuesday about the Bauer and Hampshire judgments. Some might argue that, because one of those judgments went against the Government, judgments about pension protections were no longer required, but making the Government explain why they have chosen not to retain a piece of legislation that has been part of our pension protections for a number of years does not seem unreasonable. This is the sort of issue that our constituents might well raise if they are directly affected by it. If we multiply that by 4,000, we have 4,000 questions about why we chose to revoke laws.

Paragraph 15 simply asks the Government to set out why. Are we in a place now where Ministers are so worried about being held to account that they cannot even tell us why they are not doing things, let alone why they are doing things? It is one thing to come up with alternative legislation, but given that the Bill will give Ministers powers to change laws by not bringing forward legislation, it is entirely reasonable, in a parliamentary democracy, to ask them to account for why they are not doing things, as well as for why they are.

Government Members may have complete faith and confidence in the ability of current Ministers to make good decisions, and if those Ministers no longer wish to have a piece of legislation, Government Members will not need to question that. If they are confident about that 4,000 times and rising and confident about laws that they do not even know will be affected, so be it. But if they are not—if there is one scintilla of doubt about the fact that their constituents might want them to at least ask a question or seek clarification—the amendment is the mechanism that would allow that to happen. Members—on both sides of the House—give up these controls and parliamentary mechanisms at our peril. Just as courts keep Governments honest, parliamentary scrutiny keeps MPs on their toes, and that can only be a good thing.

I stand to speak in favour of the amendment, although, at best, all it seeks to do is take an entirely unacceptable clause and make it slightly less unacceptable. Clause 11 is about a Henry VIII power; it is about removing protections for this House that were, ironically, forced on the Government by Members of the other House. I am not a great fan of unelected legislatures anywhere—I certainly do not want my country even partly ruled by one—but I have to say to Conservative Members that when the House of Lords is keener on protecting the rights of this House than Government Back-Bench and Front-Bench Members are, the Government really do need to look at themselves in the mirror and ask themselves: are we a democratic Government or are we not?

I support the limited improvements to the clause, but if the amendment falls, I will seek to divide the Committee to exclude clause 11 in its entirety.

I ask hon. Members to reject the amendment. Unless I was in a different Committee Room, or on a different planet, I think Opposition Members have had every opportunity to raise their voices, because we have heard much from them today and on Tuesday, and we have had much scrutiny as well. Our constituents know exactly what we are doing because it is all noted in Hansard.

The amendment would render clause 11 without purpose. Subsections (1) and (2) ensure the removal of additional parliamentary scrutiny requirements, established in the EU withdrawal Act, in relation to the amendment or revocation of secondary legislation made under section 2(2) of the European Communities Act 1972. Subsections (1) and (2) will ensure that when secondary legislation made under section 2(2) ECA is being amended or revoked using other delegated powers, the only parliamentary scrutiny requirements that will apply are those attached to the power being used. These delegated powers have their own parliamentary scrutiny procedure attached, which has been approved by Parliament, ensuring suitable scrutiny will continue to occur.

It is imperative that additional scrutiny requirements are removed, because it is clearly inappropriate that legislation created solely to implement our obligations as a member of the EU enjoys this privileged status. What is more, no tangible benefit has been identified as a result of these scrutiny requirements; as was mentioned, that was referenced in the evidence session by Dr Ruth Fox of the Hansard Society. In practice, they add a layer of complexity that makes it difficult to make amendments to legislation containing section 2(2) ECA provisions.

Removing these requirements reflects the main purpose of this Bill, which is to take a new approach to retained EU law, removing the precedence given in UK law to law derived from the EU that is no longer considered fit for purpose.

The Minister said that we get our voices heard, including in this Committee, and that may well be true for the Government, the official Opposition and SNP members. However, we have heard a lot today about Northern Ireland. When is the voice of the Democratic Unionist party and the Social Democratic and Labour party going to be heard? We have heard a lot about the environment, but where is the voice of the Greens? Where is the voice of Plaid Cymru? Where is the voice of the Liberal Democrats? They will not be heard in a Delegated Legislation Committee. We are not talking about the voice of Parliament, but the voice of a DL Committee, which is very restricted.

The hon. Member is not being wholly honest. The level of scrutiny of any piece of legislation, not only in Committee but on the Floor of this House and the Floor of the other place, takes place for all items of legislation.

The hon. Member will be well aware of the evidence session we had just a few weeks ago, when we had a number of people from environmental agencies who previously had Green credentials or who were previously Green or Lib Dem candidates. So it is not as if those voices are not heard.

I think the irony is noted: the Minister says that everyone has their opportunity to speak and then does not give way to interventions.

On a point of order, Sir George. I think it is fair to say that the Minister has given way numerous times. It is a little churlish to suggest that she has not, and I would like Hansard to observe that.

As the hon. Gentleman well knows, it is not up to me to decide whether a Minister, or anyone else, should give way during a speech. So, strictly speaking, it is not a point of order, but the hon. Gentleman has made his point.

The convention is of course that Ministers give way when asked to in Bill Committee, because that is the point of a Bill Committee—that we have the opportunity to scrutinise legislation and question the Minister on its intent. I think the record will show that that has not been possible on every occasion.

That is why this amendment is so important, because the Government are obsessed with keeping power for themselves. The idea that the decision to leave the EU was about taking back control was not about the people of this country; it was about Ministers in Parliament making decisions that they do not have to address the elected representatives of this country on and that they do not have to justify. They are hiding away from proper accountability. That is not what taking back control is about.

My hon. Friend the Member for Walthamstow said it is clear that Government Members have no scintilla of doubt about the intentions of the Government and are confident that nothing untoward will happen. Well, if the last scintilla of doubt has ridden out of town for them, it is certainly very much in the high street for us, because we are concerned about the Government’s intentions. We have plenty of reasons to be concerned that they will not maintain laws that we want maintained and that our constituents expect to see maintained. So we want to push this amendment to a vote.

Does my hon. Friend agree that it is quite worrying that the Minister is conflating scrutiny of the Bill, and Opposition Members raising concerns about the process set out in it, with scrutiny of the subsequent statutory instruments that will be laid by Ministers under the Bill to address the 4,000 pieces of legislation that will be deleted by it? The Committee is scrutinising the Bill itself, not its impact. That the two are being conflated—the idea being that no further scrutiny should be required—is troubling. We do not know what impact the Bill will have, only the powers that it asks for. Does my hon. Friend agree that separating out those two things is important in taking back control?

I agree, and I hope that by the time the Bill reaches its conclusion we have clearer answers on how Parliament will be able to properly scrutinise many of the powers that the Government are awarding themselves in the Bill. I will press the amendment to a vote.

Question put, That the amendment be made.

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

I oppose the inclusion of clause 11, as I indicated earlier. I will give the Minister credit and assume that she just got confused. She has attempted to justify removing the requirement for full parliamentary consideration of a Bill to revoke European legislation and turning it all into secondary legislation. Not content with insisting on a sunset clause that means that if that secondary legislation does not get approved, nothing gets approved, she then attempted to justify removing the requirement to use the affirmative process for the vast majority of that legislation and instead use the negative process, which we all know is an even weaker form of parliamentary scrutiny. She completely missed the point. In fact, I think she confused the status of a Public Bill Committee such as this with that of a Delegated Legislation Committee, which she thinks is an adequate way for some of these important regulations to be considered.

The reason this Public Bill Committee exists is that the legislation was approved—not unanimously, by any means—by the House of Commons. The only requirement that anybody had to speak and vote on Second Reading was that the people of their constituency chose them to represent them in Parliament. Every member of the Committee is here because our party Whips chose to put us here. We were not elected to it by our people. We had to be elected to be in the Chamber of the House of Commons, but it is the Whips who decided who got to serve on this Committee. As my hon. Friend the Member for Argyll and Bute has said, Northern Ireland Members never get the opportunity to have their voice heard on a Delegated Legislation Committee, though they do have a voice on Second and Third Reading. There is also no automatic right for Wales to be represented. Wales is represented in this place by four political parties, but there is only one voice from Wales on this Committee. That did not have to happen; the Whips could easily have put someone else on it instead.

Only one of the many parties in this House from Scotland is represented on the Committee. As the other parties keep reminding us, the SNP speaks for a significant number of people in Scotland but not for the whole country. There are Lib Dem and Conservative MPs and one Labour MP from Scotland who for speak for their people, as well.

The process that the Minister and her party claim is adequate is a very weak process. At one point she suggested—unintentionally, I think—that legislation does get properly scrutinised and that is what this Public Bill Committee is about. But that is the core point, is it not? If these changes were being made through secondary legislation, there would be no Public Bill Committee and no opportunity to amend the provisions. That is another crucial difference, especially when looking at tonnes of complex legislation.

In a Delegated Legislation Committee, the choice is to take it or leave it. There is no process by which any Member of Parliament can amend delegated legislation once it is brought to Committee. Even if 649 out of 650 Members of Parliament decided on the day that they wanted to amend it, they would not be allowed to that. All we can do is vote down such legislation and pray to God that the Government have the time and inclination to bring a better version back.

And then we have December 2023 hanging over us like the sword of Damocles. It would be a very high-risk strategy indeed for any DL Committee to vote down any of the legislation that the Government intend to bring forward under this Bill, because there would then be a very high risk that inadequate, insufficient protective legislation would be replaced by nothing whatsoever. That is what is at stake here. It is not just a matter of semantics as to which kind of Committee decides these things in a Committee Room of the House of Commons.

If we are talking about bringing back control to Parliament, Parliament does not have full control over consideration of statutory instruments. That is, first of all, the reserve of the Government. Such scrutiny as takes place is inevitably restricted to a very small number of Members of Parliament, representing a relatively small number of the political parties represented in this place. As I say, an entire nation of the United Kingdom will never get to be represented on a DL Committee, even if the legislation almost exclusively relates to that nation of the UK. It is not an acceptable way for major legislation to be introduced and considered, and it is certainly not an acceptable way for major legislation to be approved.

If Scotland were to be independent and part of the EU, the European Council uses majority voting so members have to like or lump whatever they are given at the end of the vote. At the end of the day, someone has to make a decision and Government have to decide. How would that fit if Scotland were independent?

I cannot speak about what decisions the Scottish Parliament will take after we are independent, but I look forward to seeing that day before any of us are very much older. I am confident that it is a modern, democratic Parliament with much improved scrutiny procedures. For example, in the Scottish Parliament it would have been impossible for us to have two changes of Prime Minister without the explicit approval of the Parliament. Nobody can become a Minister of the Scottish Government without being approved by the Scottish Parliament. There is much greater parliamentary accountability for the Executive than there is ever going to be here.

My confident expectation is that when an independent Scotland goes back into the European Union, the Scottish Parliament will have a much greater role in scrutinising the actions of our Ministers, acting on our behalf, at the European Council than this Parliament has ever had. As I have said to the Committee before, the problem with lack of accountability and scrutiny of European legislation is not because the European Union’s processes are flawed, but because parliamentary accountability in this place is fundamentally flawed.

If I intended to be part of this establishment for much longer, I would be attempting to improve its processes in order to bring it into line with proper democratic Parliaments, such as the one in Scotland. Given that neither I nor any of my colleagues from Scotland are likely to be here for very much longer, I will have to leave it to those who remain to sort out the mess of a Parliament that they have created.

Our objective is not to remove power from Parliament. Our objective is to ensure that amendments or revocations made to subordinate legislation made under other existing powers receive the most appropriate level of parliamentary scrutiny. Fundamentally, people need to accept the Brexit vote and appreciate that we have to have sovereignty here. I do not think we are going to win that argument—we are too far apart.

When the European Union (Withdrawal Agreement) Act 2020 was agreed, additional parliamentary scrutiny requirements were agreed in relation to the amendment or revocation of secondary legislation made under section 2(2) of the European Communities Act 1972. It is clearly inappropriate that legislation created solely to implement our obligations as a member of the EU enjoys that privileged status. We therefore seek to remove those requirements. This reflects the main purpose of the Bill—removing the precedence given in UK law to EU-derived law—which is no longer fit for purpose now that the UK has left the EU. I recommend that the clause stand part of the Bill.

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

Clause 11 ordered to stand part of the Bill.

Clause 12

Power to restate retained EU law

With this it will be convenient to discuss the following:

Government amendments 8 and 9.

Amendment 54, in clause 12, page 15, line 13, leave out subsection (7).

Clause stand part.

Government amendments 10 to 13.

Clause 13 stand part.

I will speak to amendments 53 and 54 on behalf of myself and my hon. Friend the Member for Glenrothes. Members will be aware that clause 12 is about the mechanism that will allow UK Government Ministers, or Ministers in the devolved Administrations, to restate or protect current retained EU law so that it does not fall away automatically at the end of 2023.

Thanks to the insidious Internal Market Act 2020, there is, as with so much of this Bill, huge confusion about which areas are devolved and which areas remained reserved. That problem was recognised by Charles Whitmore from the school of law and politics at Cardiff University when he gave evidence. He highlighted the issues surrounding restatement powers, particularly for the devolved Governments, taking into account the role of the Internal Market Act. He told the Committee:

“If you start thinking about the different uses that might be made of the restatement powers, and which parts of the UK might take different approaches to supremacy and the general principles, the level of uncertainty really does start to get quite extreme.”––[Official Report, Retained EU Law (Revocation and Reform) Public Bill Committee, 8 November 2022; c. 85, Q141.]

Of course, Mr Whitmore was absolutely right to make that assessment, but it is just one of multiple problems with the clause, because it allows Ministers the freedom to decide exactly how much EU law they want to restate or protect. It lets the Government view the existing statute book as something of a smörgåsbord, whereby they can pick and choose which parts of the law they wish to keep and which parts, simply by their inaction, they will allow to disappear in December next year. For example, they could brazenly announce that they have decided to protect workers’ rights by restating them, when in reality they will have saved only the bare minimum of regulations—the ones that suit them, rather than the whole suite of laws that combine together to provide what we currently understand to be workers’ rights.

Another huge problem with the clause—indeed, it is a problem that runs throughout the Bill like the writing through a stick of rock—is that it has yet another one of those self-imposed, utterly unachievable and ideologically driven sunset clauses. It is no surprise that the clause has been criticised by the Law Society of Scotland’s Michael Clancy, who warned in his evidence to the Committee that there was a real danger that the restatement provisions contained in the clause could create further uncertainty. He said:

“There is also a lack of clarity about what comes afterwards.  It will be difficult for citizens and businesses to deal with even the provisions about replacement, restatement and the creation of the new category of assimilated law in a short—apparently very compressed—period of time, and without the adequate consultation that one would expect when this sort of law is changed.”––[Official Report, Retained EU Law (Revocation and Reform) Public Bill Committee, 8 November 2022; c. 84, Q141.]

Clause 12(3) declares that should a piece of legislation be restated and an extension be granted beyond December 2023, the legislation cannot be regarded as retained EU law. That appears particularly petty, if not vindicative, and it reflects the almost irrational hatred and loathing of anything connected to the European Union, however loosely. Our amendment 53 would remove subsection (3), meaning that the retained EU laws that the UK, Scottish, Welsh or Northern Irish Governments wish to restate will still be what they are: retained EU law.

Amendment 54 would remove the arbitrary deadline of 31 December 2023 proposed in subsection (7). As we have heard numerous times, that impossibly tight deadline is only there for narrow ideological reasons and is a disaster waiting to happen. Amendment 54 would remove the dangerous cliff edge by deleting subsection (7) entirely.

As we have said throughout, we will help to improve the Bill, which is a truly awful piece of legislation, wherever we can, and that is what amendments 53 and 54 are designed to do. We want to make the Bill a little less damaging to the statute book and, more importantly, to those whose lives and livelihoods depend on there being robust law and regulation in place.

The overarching aim of the Bill is to define retained EU law as a legal category, and the power to restate such law must be viewed with that in mind. The hon. Member for Argyll and Bute said that he wants to help the process, even though he is fundamentally trying to block it. The power to restate has been designed to allow the Government to restate domestic law where it is considered appropriate for the UK in a post-Brexit setting. However, the resulting legislation will no longer be retained EU law, as subsection (3) makes clear. The restated legislation will be ordinary domestic UK legislation that is subject to traditional domestic rules of interpretation. In particular, the supremacy of EU law will no longer apply, and section 4 rights and the general principles of EU law will cease to be read into the legislation.