Delegated Legislation Committee
Draft Police, Crime, Sentencing and Courts Act 2022 (Extraction of Information from Electronic Devices) (Amendment of Schedule 3) Regulations 2023
The Committee consisted of the following Members:
Chair: Martin Vickers
† Bailey, Shaun (West Bromwich West) (Con)
Blomfield, Paul (Sheffield Central) (Lab)
Bonnar, Steven (Coatbridge, Chryston and Bellshill) (SNP)
† Bruce, Fiona (Congleton) (Con)
Carden, Dan (Liverpool, Walton) (Lab)
† Duffield, Rosie (Canterbury) (Lab)
† Fuller, Richard (North East Bedfordshire) (Con)
† Green, Chris (Bolton West) (Con)
† Greenwood, Lilian (Nottingham South) (Lab)
† Hughes, Eddie (Walsall North) (Con)
† Jones, Sarah (Croydon Central) (Lab)
† Mak, Alan (Havant) (Con)
† Mann, Scott (Lord Commissioner of His Majesty's Treasury)
† Moore, Damien (Southport) (Con)
† Pawsey, Mark (Rugby) (Con)
† Philp, Chris (Minister for Crime, Policing and Fire)
† Whittome, Nadia (Nottingham East) (Lab)
George James, Committee Clerk
† attended the Committee
Second Delegated Legislation Committee
Tuesday 9 May 2023
[Martin Vickers in the Chair]
Draft, Police, Crime, Sentencing and Courts Act 2022 (Extraction of information from electronic devices) (Amendment of Schedule 3) Regulations 2023
I beg to move,
That the Committee has considered the Draft, Police, Crime, Sentencing and Courts Act 2022 (Extraction of information from electronic devices) (Amendment of Schedule 3) Regulations 2023.
It is a pleasure, as always, to serve under your chairmanship, Mr Vickers. In recent years, the extraction of information from electronic devices has become a pivotal part of preventing, detecting, investigating and prosecuting crime. With around 90% of all crime having a digital element, digital forensics has become crucial in criminal investigations.
For that reason, the Home Office led on the introduction of the extraction of information powers in the Police, Crime, Sentencing and Courts Act 2022, which came into force in November last year. Those powers established a statutory basis for extracting information from electronic devices, ensuring that information is extracted only for specific purposes, when necessary and proportionate, and where relevant to a reasonable line of inquiry.
In relation to victims and witnesses, there were various specific safeguards to ensure that information is extracted only once an individual has volunteered their device and agreed to the extraction of information from it. Additional measures were included to ensure that victims and witnesses are notified in writing of what information is being sought and how it will be used. They are also provided with various rights to refuse permission, if appropriate.
Those powers can be exercised by the authorised persons named in schedule 3 to the Act. The schedule is divided into three parts, which set out the different purposes for which authorised persons may exercise the powers. It is crucial that only authorised persons can extract information for the purposes set out in the schedule.
Those listed under part 1 of the schedule can exercise these powers for the purposes set out in section 37 of the Act, which concerns the investigation of crime, and for the purposes set out in section 41, which concerns an investigation or inquest into a person’s death. Those listed under part 2 may extract information only for the purposes of section 37. Part 3 lists the authorised persons who can extract the information only for the specific purpose under section 37(1), which is preventing, detecting, investigating or prosecuting a crime.
The draft regulations set out the requirement to move the Royal Navy Police, the Royal Military Police and the Royal Air Force Police from part 2 of schedule 3 to part 1 of schedule 3. That means that those forces can extract information not just for the purposes of section 37, but also for the purposes of section 41—supporting an investigation or inquest into a person’s death. I am sure the Committee would agree that, where a person has died in unexplained circumstances, it is crucial that the various military police forces are able to investigate the death as thoroughly as their civilian equivalents. That is what these simple regulations aim to provide for.
The Minister has given a very clear exposition, but it does prompt a question as to why those police forces were not given the powers in the original legislation passed in 2022 and why there is a need for the change now.
In answer to my hon. Friend, I am afraid that I do not recall the details of the debates at the time. I am not convinced that I was a Minister at the time this went through the Bill Committee, although I may have been—in fact, I may have been a Ministry of Justice Minister, and a Home Office Minister may have taken this through the Committee.
It is a pleasure to serve under your chairmanship, Mr Vickers. As the Minister stated, this relatively straightforward statutory instrument adds a new group of authorised persons—members of the Royal Navy Police, Royal Military Police and Royal Air Force Police—to part 1 of schedule 3 to the Police, Crime, Sentencing and Courts Act. The Opposition will not vote against it today.
The regulations give those authorised persons the power to extract information from a device, when the user has died, for the purpose of an investigation or inquest into the person’s death, as well as for the purpose of investigating crime and safeguarding others. When we debated the Police, Crime, Sentencing and Courts Bill—the Minister is correct that he was the Justice Minister and therefore debated some aspects of the Bill and not others—we had extensive debates about the changes it introduced, and Labour tabled several amendments that would have placed new checks on the police powers to extract data from electronic devices. We agreed with the direction of travel of the Bill, but we were concerned about vulnerable people and about those who do not want to hand over phones and the like because of the intrusive nature of such searches.
We spent months urging the Government to protect victims, particularly victims of rape and sexual abuse, from painful and often unnecessary intrusion into their lives by the mining of their phone data. In the end, the Government accepted some vital changes that mean that the police officer or other authorised person must “reasonably believe” that information stored on the device is relevant to a “reasonable line of enquiry”. It took the Government time to accept those amendments, but they did so in the end.
In this case, of course, the situation is slightly different as the owner of the device is deceased, but that person must still be treated with respect and we have to ensure that we are not too intrusive in how we mine people’s devices. I would like an assurance from the Minister that information will be used sensitively, because people deserve that even after they have passed away.
Serious problems remain about the lack of resources available to the police when it comes to carrying out data extraction from electronic devices—in this case, when a user has died. We know that there is a real problem with a lack of digital resources in forces. Just last year, a report by His Majesty’s inspectorate of constabulary and fire and rescue services found a raft of errors in this area. The inspectorate found
“delays...so egregious that victims were being failed”,
and a system of digital forensic examination that was “slow” and “ineffective”, and where
“the needs of victims were rarely taken into consideration”.
It noted that
“there are no set standards or oversight services”,
with victims let down by a postcode lottery.
At a time when most, if not quite all, crimes have some form of digital footprint—the Minister gave us the stats—the delays, oversights and lack of professionalism exposed by the inspectorate are unacceptable.
If I can drag the hon. Lady back to the regulations we are discussing today, they are about expanding the number of people who can extract information from devices. She has listed a litany of concerns, but can she answer the question that I put to the Minister, as I think she was involved in the scrutiny of the Bill? Why did Labour agree to this separation and why has she changed her mind today?
I thank the hon. Gentleman for his intervention. I suspect that it was an oversight in the legislative drafting that is being rectified, and I would rather it was rectified than not. The emphasis in our discussions on the Bill was on living people, particularly rape victims, who were loth to give up their electronic devices but who needed to. We needed to ensure that the legislative framework was right for them so that they could give up their devices in a way that they were prepared to and that protected them. We did not have a debate about inquests or about cases where people had passed away, but clearly that is increasingly a consideration as digital devices are used more and more.
Specifically on the Royal Military Police, the inspectorate recommended in a separate investigation that a formal digital investigation strategy should be introduced, because:
“RMP investigators don’t give enough consideration to how digital investigation would help the specific cases they are working on”.
That statement does not give me much confidence. I would like some reassurance from the Minister that he has faith that extending these powers to these forces will have tangible positive impacts on inquests and on the investigation of crime. Does he have evidence to suggest that the situation in the military forces, covering the Army, Navy and RAF, is any better than in the 43 territorial forces?
On recommendation 5 of the HMICFRS report, what progress has been made on reviewing digital forensics budgets and funding? I note that a formal consultation has not taken place, but the views of three military forces were captured on why this amendment is necessary; I do not know whether the Minister can share any of those findings with us. I would be grateful if he indicated when the code of practice for the extraction of information from electronic devices is likely to be updated, and if he explained how the forces that this statutory instrument relates to—the RAF Police, Royal Military Police and Royal Navy Police—will be trained to exercise their new powers, but we will not be objecting to this legislation today.
There was quite a lot there that probably went a little beyond the strict scope of the regulations, but I will try to answer some of the hon. Lady’s questions. The Government accept the point that digital evidence needs to be extracted from witnesses and victims sensitively, only where necessary and in a carefully managed way. There is evidence that it has been a been a barrier to rape and serious sexual violence prosecutions and investigations, in particular. We have tried to move things forward since the debates that took place more than a year ago. For example, with the commitment to get witnesses’ and victims’ phones back within 24 hours—particularly in the case of rape victims—we have tried to remove that barrier.
The Government are working on the digital evidence programme, which is designed to make sure that police forces have the relevant capabilities. We have created a RASSO—rape and serious sexual offences—technology partnership board to make sure that the technology and extraction capability and approaches are as good as they possibly can be.
In relation to investment, which the hon. Lady asked about, we want to make sure that digital forensics have the investment and the capabilities in place. We have invested in the creation of a forensics capability network, sponsored by the Home Office, and in the digital forensics programme, which is located in the Police Digital Service, to support police forces through automation, to better safeguard victims’ privacy and to make sure that new technology is explored and taken up as quickly as it can be. As the Royal Navy Police, Royal Military Police and Royal Air Force Police take up these new powers, they will do so in the same way as they already do with the section 37 powers, so the various requirements around sensitivity and necessity apply. Since we are clearly talking in this case about people who are deceased, it is a slightly different set of considerations. None the less, proper sensitivity needs to be displayed.
On the question about the code, we intend to update it in due course. That will not be done immediately, but work is under way to make sure that the code is updated so it is as effective as it possibly can be. I should also add that in relation to rape and serious sexual assault, which is one of the main areas of concern here, there is a rape review taskforce chaired by the Justice Secretary and attended by the Home Office, the Crown Prosecution Service and the Attorney General’s Office. That rape review steering group meets regularly to try to increase the number of rape prosecutions, and a key element of it is considering questions around digital forensics and things such as the 24-hour commitment on getting a rape victim’s phone back to them. I assure the Committee and the shadow Minister that these issues are very much at the front of our minds on an ongoing basis, particularly in the RASSO context.
I hope that addresses most, if not all, the questions that have been asked, and I repeat my previous commendation of these regulations to the Committee.
Question put and agreed to.
Draft Insider Dealing (Securities and Regulated Markets) Order 2023
The Committee consisted of the following Members:
Chair: Mrs Pauline Latham
† Aldous, Peter (Waveney) (Con)
† Bacon, Gareth (Orpington) (Con)
Baillie, Siobhan (Stroud) (Con)
† Bardell, Hannah (Livingston) (SNP)
† Blake, Olivia (Sheffield, Hallam) (Lab)
Byrne, Ian (Liverpool, West Derby) (Lab)
† Clarkson, Chris (Heywood and Middleton) (Con)
† Foy, Mary Kelly (City of Durham) (Lab)
† Griffith, Andrew (Economic Secretary to the Treasury)
Kawczynski, Daniel (Shrewsbury and Atcham) (Con)
† Metcalfe, Stephen (South Basildon and East Thurrock) (Con)
† Mills, Nigel (Amber Valley) (Con)
† Osborne, Kate (Jarrow) (Lab)
† Siddiq, Tulip (Hampstead and Kilburn) (Lab)
† Stephenson, Andrew (Lord Commissioner of His Majesty's Treasury)
Tomlinson, Justin (North Swindon) (Con)
† Twist, Liz (Blaydon) (Lab)
Paul Owen, Committee Clerk
† attended the Committee
First Delegated Legislation Committee
Tuesday 9 May 2023
[Mrs Pauline Latham in the Chair]
Draft Insider Dealing (Securities and Regulated Markets) Order 2023
I beg to move,
That the Committee has considered the draft Insider Dealing (Securities and Regulated Markets) Order 2023.
It is a pleasure to serve under your chairmanship, Mrs Latham. I thank hon. and right hon. Members for attending this debate. The UK is one of the world’s leading financial centres, and the Government recognise that financial services are one of the core engines for boosting economic growth across all four nations of the UK.
I am sure that hon. Members are well aware of the extensive programme of financial services reform that the Government are pursuing, as set out by the Chancellor in the Edinburgh reforms package. However, it is important not to overlook the robust baseline regulation that ensures the integrity of our financial markets. The regulations amended by this draft statutory instrument are paramount to achieving that. They ensure that everyone can have confidence in the integrity of our financial markets.
The draft SI updates the UK’s criminal insider dealing regime to ensure that all market participants are held to high standards and that there are meaningful consequences for those who break the law. Insider dealing is a form of market abuse. In broad terms, it is where an individual trades in a financial instrument based on material, non-public information about a company. The Financial Conduct Authority is responsible for identifying and taking enforcement action against cases of insider dealing. It can impose a variety of criminal and regulatory sanctions under the criminal and civil market abuse regimes.
The intention of today’s amendments is to enable the FCA to take action against market abuse in a way that is commensurate with the seriousness and market impact of the abusive behaviour. The legislation that defines the current criminal offence for insider dealing was first introduced in 1993. The Criminal Justice Act 1993 lists the securities and regulated markets to which the insider dealing offence applies. However, financial markets have evolved since the lists of instruments and regulated markets were last updated. As a result, those lists are narrower than the more recently updated civil market abuse regime.
The Government believe that the gap between the civil and criminal insider dealing offences needs addressing. The draft SI does just that by aligning the list of securities in scope of the criminal insider dealing offence with the list in the civil insider dealing regime. The SI also replaces the named regulated markets in scope of the criminal insider dealing offence. The use of general definitions will future-proof the list going forward, avoiding relevant markets inadvertently falling out of scope.
Overall, the SI will reinforce the UK’s reputation as a fair and transparent place to invest, with robust regulatory standards and serious consequences for those who do not comply with our laws. I commend the draft order to the Committee.
It is a pleasure to serve with you in the Chair, Mrs Latham. Labour fully supports the draft statutory instrument; we will always welcome any tightening of the rules on insider dealing. However, I have a few questions for the Minister, as he would expect.
First, I understand that the order is the outcome of the 2015 fair and effective markets review. Will the Minister explain why it has taken eight years to deliver the order and modernise our rules on insider dealing? As he knows, the EU has been years ahead of us in criminalising most forms of serious market abuse. Why did we have the delay? What assessment has the Treasury made of how much that serious eight-year delay has cost the public?
Will the Minister tell me about the scale of insider trading that preceded the order? How many instances of abuse were treated simply as civil offences? How many instances would have been treated as criminal offences if the draft order had been made earlier, as should have happened eight years ago? The Opposition support the draft order, but I hope that the Minister will be able to answer some of the questions about the long delay.
It is always a pleasure to follow the hon. Member for Hampstead and Kilburn; I thank her and her colleagues for their support. She makes a fair point about the period between publication of the FEMR in 2015 and the Committee’s consideration of the draft order today. I do not have the figures on—indeed, I do not even know—whether there has been a lack of prosecutions as a result. As the hon. Lady knows, there is both a civil and a criminal regime. It is only the criminal regime that we are updating today; we are maintaining the civil regime.
Like our Labour party colleagues, the Scottish National party supports the draft order. However, the reality is that the National Crime Agency has faced a 4.5% decrease in its budget in recent years. Is the Minister willing to say anything about the funding of the resources to pursue the criminals? What more will be done in line with updating the legislation?
These are important matters. The funding of the police is out of scope, but I am sure I share the Committee’s desire to see any criminals in this space prosecuted and to see as many investigations as possible. The FCA has operational independence in dealing with those matters, and it is our job to provide it with the tools, which is what we are doing. I am grateful for the support of the hon. Lady and her party.
There have been a number of interludes since the original FEMR in 2015, including the unprecedented period during the pandemic and some of the other financial measures that we have had to pursue as part of Brexit. I hope we have consensus about how we move forward now. In all the important work that we are doing across the financial services sector, I have a zeal to proceed at the fastest possible pace. We do not have the ability to travel back in time, but we can put the draft order on the statute book now.
One of many changes since the FEMR is the rise of cryptoassets and cryptocurrencies. Do cryptoassets fall under the definition of transferable securities or money-market instruments included in the draft order, so that cryptocurrency insider trading will be caught by these rules?
It is not in these rules per se. There were two things that I talked about; one is the fact that we are moving away from a prescriptive list and towards definitions of what constitutes a financial instrument. That allows a degree of future-proofing for precisely the purpose that my hon. Friend talks about.
My hon. Friend will also be aware that we are consulting right now on the broader regulation of cryptoassets. I humbly suggest that it is not in scope for this Committee, but I am happy to engage with him and other colleagues on it. The purpose of the consultation is precisely to involve the broadest possible range of hon. Members and stakeholders so that we get this important regulation right. It is a whole new part of the economy, and our desire is to get it right.
Question put and agreed to.