I beg to move,

That the Committee has considered the draft West Midlands Combined Authority (Transfer of Police and Crime Commissioner Functions) Order 2024.

As always, it is a huge pleasure to serve under your august and benign chairmanship, Sir Graham—I trust it will be benign, although perhaps I should not speak too soon. The draft order was laid before the House on 7 February. If approved, it will transfer the police and crime commissioner functions from the current west midlands PCC to the Mayor of the West Midlands. That would happen following the next mayoral election in the west midlands, which is scheduled for Thursday 2 May 2024, and maintain direct democratic accountability for policing and crime in the west midlands.

On a point of order, Sir Graham. Could you give the Committee your guidance on the validity and timing of this measure? My understanding is that the west midlands police and crime commissioner has applied for a judicial review, which will not be determined until 7 March. Is it therefore appropriate that we consider this matter in advance of that judicial review?

I cannot comment from the Chair on the judicial review but, as far as I am concerned, it is entirely in order for the Government to bring this matter before the House and the Committee.

Thank you, Sir Graham. The incumbent PCC for the west midlands will continue to exercise his functions until his elected term of office ends, serving his term of office in full. The Mayor, from the point of taking office on 7 May, following the mayoral election, will act as the single, directly elected individual responsible for holding the chief constable and the police force to account, and will be directly accountable to the people of the west midlands.

The Mayor of the West Midlands will be responsible for holding the chief constable to account in the way a PCC ordinarily would. Their functions will include issuing a police and crime plan; setting the police budget, including the PCC council tax precept requirements; appointing and, if necessary, suspending or dismissing the chief constable; addressing complaints about policing services; providing and commissioning services for victims and vulnerable people; and working in partnership across the whole system, just as a number of Mayors of combined authorities do, including the Mayor of Greater Manchester, which you will be very familiar with, Sir Graham.

Thank you, Sir Graham, for allowing a Member of Parliament from the west midlands to speak. Further to the point of order made by my hon. Friend the Member for Easington, could I ask the Minister what legal advice has been taken on whether the Government are acting ultra vires, if the court decides that the consultation process the Government have belatedly undertaken has not been followed correctly?

The question of ultra vires relates to whether the Government have a statutory power to act in a particular situation. The Government quite clearly do have a statutory power to act by bringing forward this order. The judicial review concerns the nature of the consultation, which is a separate question. I can tell the right hon. Lady that the Government believe that the consultation was properly conducted, and we will vigorously and robustly defend the judicial review.

The issue of whether the Government are acting lawfully is a very serious one. My question was whether the Government had taken legal advice on that point, given that judicial review proceedings are pending and the court will hear the whole case on 7 March. The Minister talks about consultation, but could he say whether the people of the west midlands actually wanted this process and what the results of the consultation were?

I have already answered the right hon. Lady’s first question: the Government are very clear that there is a lawful basis on which to bring forward this order in statute. We will also robustly—and, I trust, successfully—defend the judicial review relating to the consultation, which is a separate question. On the outcome of the consultation, about 7,000 replies were received, which is of course a tiny fraction of the population of the west midlands. The responses were fairly evenly split: I think it was 50% against, 46% in favour and 4% undecided, so it was pretty even. However, as the right hon. Lady will know from her long experience in the House, the Government will take the consultation responses into account when they make their decisions. This is not a vote or a referendum, and it is not that the largest number of responses wins; the quality of the responses and the arguments advanced in them will be carefully considered before the Government—in this case, the Home Secretary—take their carefully considered decision.

On the quality of the responses, the Minister will know, as I do as a west midlands MP, that one quite concerning thing was the number of copy-and-paste responses that seem to have come out of the consultation—as if someone was trying to tee it one way. Will my right hon. Friend reiterate the point he made about the quality of the responses to the consultation and ensuring that they are dealt with in an accurate way?

Yes, absolutely. We take into account the quality and weight of the arguments, rather than just the number. A number of copy-and-paste responses appear to have been organised, and that is something we were aware of in considering the responses.

On that point, will my right hon. Friend give way?

I will.

On a point of order, Sir Graham. I understand that the hon. Member for Lichfield has a connection to the Mayor, and I wish that he could state what that is. Should he or should he not be taking part in the proceedings?

Further to that point of order, Sir Graham. I am really grateful to the right hon. Lady for pointing that out. Legally, I am under no obligation, as I understand it—perhaps you can clarify this, Sir Graham —to declare an interest, because there is no pecuniary interest whatever. I am more than happy to say that Andy Street is a friend of mine, and I am sure he is a friend of many others. Indeed, I like to think I am a special friend of Andy Street’s, and I simply state that for the record.

The point of order and the point raised further to it are not a matter for the Chair. It is for every Member of Parliament to reach a decision on what should and should not be declared in debates or elsewhere under the code of conduct. Any Member is, of course, at liberty to consult the Registrar of Members’ Financial Interests if they have any questions about that, but the points raised are not a matter for the Chair on this occasion.

And now will my right hon. Friend the Minister give way?

Yes, of course.

On the number of cut-and-paste responses, it might be helpful to point out that, of the responses from the few people who actually took part in the consultation, over 900 were duplicates, and all of them said they did not want Andy Street. It was interesting that there seemed to be an assumption—I cannot think why—that Andy Street would be the Mayor after the election.

Indeed. The copy-and-paste responses were on the negative side. Of course, if one discounted those, the balance of replies would have been different, wouldn’t it? It is important to stress that we do not know who the Mayor will be after the election. The election will take place, and the people of the west midlands will decide who will be the Mayor, exercising mayoral functions and, if the order is successful, PCC functions as well.

That is important, because the West Midlands police force is one of only a small handful of police forces across England and Wales in so-called special measures—it is called “formally engage”, but in substance it is special measures. I would also add that West Midlands police force is, I think, the second worst-performing police force in the country when it comes to detecting and clearing up crime. It strikes me that there is a great opportunity to improve the performance of West Midlands police force under new management, whoever the Mayor may be following the election on 2 May.

Let me make some more progress.

Will the Minister give way on the consultation, because it is important?

Goodness me, I am being generous today —I will give way.

The Minister really is, but this is important, and it is our job to question him—I thought that was what we were here for. The consultation took place over Christmas. Those are never good consultations, because people have other things to do. The Minister says there were just 7,000 responses, but I think that is quite a lot. Could he clarify what he means by “cut and paste”? If the question is, “Do you want this to happen?”, the answer is going to be only either yes or no. By “cut and paste” does he mean just a yes or a no? Lastly, there was a referendum on this very proposition in 2021 and the people of the west midlands decided against it.

rose—

I give way to my hon. Friend.

I understand that the last time the consultation was done, they were strongly supportive of the Mayor. They thought it was a waste of money, actually.

Are you the Minister? Are you answering the questions?

No, I am intervening. The right hon. Lady keeps intervening, so I am sure she is not saying that I should not intervene, with the Minister’s permission. Am I not correct that, in fact, people were overwhelmingly supportive? Labour Mayor Sadiq Khan, Labour Mayor Andy Burnham and Labour Mayor Tracy Brabin all have control over the police, too. It saves money. It is not meant to be a job-creation scheme.

My hon. Friend is quite right. Let me turn to some of those questions. The consultation period ran from 20 December to 31 January. It will not escape eagle-eyed Committee members that that encompasses the entire month of January, which by no stretch of the imagination can be described as “over Christmas”.

The right hon. Member for Walsall South referred to a referendum. I do not know if she was referring, perhaps, to the previous police and crime commissioner election—

In 2021.

I am glad that the right hon. Lady, from a sedentary position, has clarified that. So when she referred to a referendum in her intervention a moment or two ago, she was in fact referring to the previous police and crime commissioner election. That was, of course, appointing an individual to the position of police and crime commissioner. He may have had a number of things in his manifesto, but I do not think we can in any way construe that as a referendum. There was certainly no question on the ballot paper about transferring, or not transferring, PCC powers. I do not think describing a PCC election as a referendum on this matter is an accurate representation of what occurred.

Let me return to the substance of the issue. Part 1 of the Government’s review of the role of PCCs cemented the Government’s view that bringing public safety functions together under the leadership of a combined authority Mayor has the potential to offer wider levers and a more joined-up approach to preventing crime. Our levelling-up White Paper reinforced that.

My hon. Friend the Member for Lichfield pointed to a number of other large cities around the country where police and crime commissioner functions are already exercised by the Mayor—with varying degrees of competence, I would add—and there are good reasons for that. There are efficiencies. The Mayor tends to be a higher-profile figure than the police and crime commissioner. The Mayor can exercise systems-wide leadership over a variety of things that are relevant to fighting crime. Typically, they can offer more effective leadership than a PCC can in the urban area concerned. I am an MP in London. While Sadiq Khan does not do a very good job as Mayor of London in general, he does have a wide range of powers, and the position has the potential to provide wider leadership on issues of crime and public safety than someone acting as a police and crime commissioner alone. We believe that that applies here as much as it does in those other cities.

Will the Minister give way?

I will. Perhaps the hon. Member is going to suggest that we transfer the PCC powers exercised by the Mayor of Greater Manchester and the Mayor of London back to a PCC. Perhaps that is what he thinks.

I am grateful to the Minister for giving way, but I will think of my own questions, if that is okay. I would like to ask about consistency. He is making quite a robust argument about efficiency and lack of duplication. Was it not the Conservatives who introduced police and crime commissioners in the first place? Why is it that in my part of the country there is no attempt to consolidate the elected Mayors and the police and crime commissioners? They are quite separate positions, and I am not aware of any move locally or by the Government to merge them.

Yes, the Government did introduce police and crime commissioners in about 2014, I think, to replace the previous police authorities, and we have introduced a number of directly elected Mayors as well. However, over time, we have consistently tried, where possible, to merge those directly elected functions, and the fact that a directly elected Mayor of Greater Manchester exercises police and crime commissioner powers is an example of that. In this cycle, we are about to have a directly elected executive Mayor of York and North Yorkshire, who will exercise police and crime commissioner powers as well, and we have the Mayor of London doing that too. There is a very clear direction of policy travel to have a directly elected Mayor also exercise PCC powers. I do not hear a single Member in this House suggesting we take the PCC powers off the Mayor of London and have a PCC for London. I do not hear a single Member saying we should take the PCC powers off Andy Burnham in Greater Manchester and have a separate PCC in Greater Manchester—quite the reverse. The direction of travel is the same: to try to consolidate these powers into a single elected individual.

Indeed, we are doing that beyond Mayors. Where we can and where the geography allows, we are trying to merge police and crime commissioner powers with the old fire authorities. To give the hon. Gentleman a recent example, when there was a change to the arrangements in Cumbria County Council, which was previously the fire and rescue authority, we took the opportunity to transfer the fire and rescue authority powers to the police and crime commissioner of Cumbria to make that individual the police, fire and crime commissioner. We have done that in other areas as well, including in Essex, Staffordshire, Northamptonshire and North Yorkshire—so the directly elected Mayor will be the combined authority Mayor and the police and crime commissioner and will also exercise fire authority powers.

The Committee and anyone looking at these proceedings, potentially including the court in a few days’ time, will see that a clear and consistent policy approach is being taken across the whole of England and Wales in consolidating these powers in directly elected Mayors and, analogously, if that is a word, in police, fire and crime commissioners. That is extremely consistent, and I trust that all Members will see that and support it.

In conclusion, although I may of course reply to any points that are raised, the Government are of the very clear, considered view, as part of a long-standing direction of travel—I have mentioned all the other examples—that the exercise of PCC functions by the Mayor of the West Midlands is a significant step forward towards realising our ambition for more combined authority Mayors to take on PCC functions. We think it is more organisationally and operationally efficient. We think it is better value for the taxpayer. We think the Mayor is a higher-profile public figure, whom the public can hold to account better than a PCC—they have a much higher profile. And we think the Mayor can provide much more effective cross-systems leadership on issues concerning police and crime, delivering better outcomes for the public in fighting crime.

The proposed arrangement is more efficient. The Mayor will have a higher public profile, be more readily held accountable and deliver better outcomes. That is why it is our policy not just in the west midlands but across the whole of England and Wales to pursue this approach. That is why I commend the order to the Committee.

It is a pleasure to serve under your chairmanship, Sir Graham. I start by confirming that we do not intend to divide the Committee on this statutory instrument, but that is because we agree with the principle and not the way the Government in which have carried out the process, and I will go into some detail on that. Today’s debate has not covered the Government in glory, and there remain some significant questions for them to answer.

The Minister was very robust in his response, but I do not think that that energy was particularly matched with substance when he was answering Members’ questions, and he might reflect on that when he responds, because there are legitimate concerns. I have been to many of these Committees, and perhaps those on the Home Office Front Bench are a bit more energetic than those on the Department for Levelling Up, Housing and Communities Front Bench, but this has been one of the most engaged Committees I have been to, because of the process and the way it has been handled, and I will go into some details on that.

Labour is consistent in its support for directly elected Mayors for our combined authorities, and it has long supported aligning the powers where they are coterminous with those of the police and crime commissioner. We supported it for the Mayors of Greater Manchester and West Yorkshire, and although the model is different in London, we see similar powers there. We have supported the same for York and North Yorkshire, and we supported the proposal for South Yorkshire too. So there has been consistent support for bringing those powers together over a number of SIs.

I am glad that the hon. Gentleman has found the debate energising and engaging—we aim to keep him entertained. He mentioned South Yorkshire, and I should have said that it is the Government’s intention to bring forward a statutory instrument rather like this one in the very near future to do the same for South Yorkshire as we are doing for the west midlands. It is only right to put that on the record, because we are taking a consistent approach.

On the basis of today’s exchanges, I hope that lessons are learned from the consultation and public engagement in the west midlands and that those are applied to the South Yorkshire consultation before that SI comes forward. It is important that we bring the public with us. Let us not fool ourselves: not every member of the public talks about these issues over their cornflakes, but those who are interested will want to know that, where they have expressed concerns, those have been taken on board. I heard the exchange earlier about “copy-and-paste responses”. We should not discount those. If people have taken the time to submit a view, it cannot be discounted. I heard the Minister—perhaps I misheard him—saying, “Well, if you discount all the negative views, what was left was quite positive.” Well, of course, that would be the case in every consultation, but I am not sure that it is quite in the spirit of—

Will the hon. Gentleman give way?

I can do, but we might be here for some time.

For the record, I did not quite say that. I did not talk about disregarding all the negative responses; I referred specifically to the copy-and-paste ones. However, I would like to make it clear for the record—

What is the difference?

There were more negative responses than just the copy-and-paste ones. I would like to make it clear for the record that the Government carefully considered all the responses, regardless of whether they were copy-and-paste ones or not. It is very important that anyone reading the report of our proceedings understands that.

I appreciate that clarification, but I think we all got the gist of where the mood was on that. I do think that this is a problem with how Governments, not just in Westminster but more generally, do politics in the UK. We start off with a predetermined view, or even a predetermined outcome, we go out to consultation, which is a paper exercise, and we do not adequately change our position when new evidence comes to the light. Politics needs to learn that listening and acting are not always the same as an embarrassing U-turn. I say that as a point of principle rather than about anything in particular, but I thought it was worth raising.

It is pretty clear that the Government have not brought on board widespread support on this issue in the way we have on other areas, and there are a number of questions that fall from that. Devolution is not just about doing things to people or imposing the will of central Government, based on what they already believed to be the outcome; it is about the Government working with local people to co-produce the outcome that is right for their area. So my questions for the Minister are as follows. What plans do the Government have to consult local authorities further, or do they conclude that the matter is now done and dusted? Before pressing ahead, will the Minister commit to a further formal consultation that commands the confidence of the west midlands region?

As the police and crime commissioner for the west midlands has pointed out, the Government have made a complete mess of the whole process, and I understand that an application for a judicial review has been submitted that will be considered next week. I know that that is a separate process, and I do not intend to go into the legalities, but the situation as it stands is remarkable, and not one I have faced in previous SIs on devolution matters.

Despite failing to secure the mandates needed in ’19 and ’21, the Conservatives decided to legislate to remove the requirement for democratic approval in 2023. On 6 December 2023, the Home Secretary approved the transfer without the lawfully required public consultation. The Home Secretary subsequently and retrospectively decided to launch a public consultation, which went against the outcome that the Government wanted, yet they decided to press ahead anyway. We are nine weeks before the mayoral and PCC elections and the administrators, the candidates and the parties still have no idea what is going to take place. They just feel very much as though it has been rushed to try to meet the deadline of the election for political purposes, rather than it genuinely being about due process and public engagement in a meaningful way. What legal advice have the Minister or his colleagues in the Home Office sought regarding the approach taken by the Government? Will they publish the legal advice in full? This whole discussion feels quite symbolic of the Government’s limited approach in general, tinkering with the structures and shifting significant powers between existing bodies, rather than away from Westminster or Whitehall down to communities at a closer level. It stands as a matter of fact that devolution under this Government is fragmented, piecemeal and has not gone far or fast enough. The powers and resources do not touch the sides of what is required for communities to have control over their own areas and futures.

Labour would push power out of Westminster with a take back control Act that gives communities a direct say in their future. It would start by giving all Mayors the powers and flexibility to turbocharge growth in their areas, including over planning and housing, transport, net zero and adult education and skills.

I am sorry to interrupt my hon. Friend’s flow, but will he give an opinion? There is a plethora of different arrangements; apart from my own region, I was just looking at Liverpool. There is Greater Manchester and Merseyside, which has a separate police and crime commissioner, as well as Steve Rotheram, the elected Mayor. There are issues with the consultation, and the members of the combined authority who were asked did not support merging the two. In the circumstances, would it not be sensible for the Committee to defer making a decision until after the judicial review has been considered on or after 7 January? Does my hon. Friend support that request for a deferral?

There are two separate points there. The first is on whether there ought to be uniformity or it should be accepted that there are different powers in different places. The Labour Front-Bench position is that where boundaries are coterminous in a place with a police and crime commissioner and a directly elected Mayor of a combined authority, both powers should be brought together with local support and consent. Where they are not coterminous, it would not be right for a Mayor in one area to take on political powers that transcend the boundaries of the combined authority in that respect. That is certainly the issue in Merseyside.

The other, separate issue, which I touched on, is a fair one: given the judicial review, should the Government press ahead or not? Certainly, the advice that we have taken is that they are two linked but separate processes. Parliament and the Government will carry on with their process, and the courts will make a judgment on the JR and its merits. It will or will not have an implication, but that is no reason not to progress at this point given the advice we have had.

I certainly take the power of the objection and the concern about the way in which things have been done, because it is a unique situation in which there are such legitimate concerns. There is a danger that the concerns raised are dismissed because the Government have the votes to get the change through regardless, which would be a mistake. If we do not bring people with us and convince them that it is the right thing for their area and can make a positive difference, and it is done despite, not with, the will of local people, that is not the road to empower people to make a change for their area.

I am listening to the argument presented by the hon. Gentleman. He says there is a will against it locally and so on and so forth; how can he say that? We have the objection of some politicos who do not like the idea that perhaps they may lose their job. We have 7,000 people out of 3 million—I will repeat that: 7,000 people out of 3 million—who responded. That is hardly a majority at all saying that they do not agree with it. The majority of people just want us to get on with the job.

With respect, as I touched on previously, although these are not the types of issues that dominate household conversations and inspire people—they have other things to get on with—I suggest that the hon. Gentleman looks at the responses to the consultation on the creation of the West Midlands Mayor in the first place, to which I say there would have been a comparable number. That is not a reason to do it or not to do it; my point is that when people make a representation, it should be taken in good faith. Whether they are for or against, if people make substantively fair points, they should be taken on board. The point about due process, local engagement and bringing people with us on that journey has been made, and it is a fair one. Without pre-empting or getting ahead of the judicial review, there is a reason why it was brought about: because there are concerns about that process.

Labour would offer all places the right power in the right places to negotiate with Government for powers that have been devolved elsewhere. We of course recognise that local government—the building blocks on which devolution is built—is in a fragile state, and its funding settlement has given rise to a number of concerns on that front, but we believe that devolution is the way forward and that it really does answer the question of how people can feel far more power and agency in the places where they live and that they care about.

I rise to support the legislation because I firmly believe that it is consistent with the Government’s policy. The merger will improve standards and efficiency, and I believe it will also help to cut crime in the west midlands. Crucially, it will enable the Mayor—whoever that is after the May elections—to set the West Midlands police budget, to appoint chief constables and to issue a policing plan.

In constituencies like mine, Aldridge-Brownhills, things like this really do matter to our residents. The elected Mayor currently has devolved powers in areas such as transport, regeneration, housing and skills, which are all very much about people, place and communities, so it absolutely makes sense to combine the role with that of the PCC. At the end of the day, if it is good enough for London, Greater Manchester and West Yorkshire, why is it not good enough for the west midlands? Particularly given the size of the west midlands region, it just no longer works to have a separate PCC.

We often talk in this place about the really complex issues that need to be tackled, such as knife crime and violent crime, which need a much more joined-up approach. That is a further reason why combining the two roles would enable much more joined-up thinking at a regional level. I have to say that we currently have a PCC who is acting with very little regard to communities, certainly in areas such as mine, on the periphery of the west midlands—I sometimes wonder whether he actually knows where Aldridge-Brownhills is, but never mind—as demonstrated by his determination to push ahead with the closure of the Aldridge police station, putting politics before people and communities. I believe that combining the role of the Mayor and the PCC will result in a much more holistic, community-focused approach.

As a matter of principle, the police and crime commissioner is not here to defend himself against or rebut the argument that is being put forward against him. We can of course make the point on policy, and have a difference where differences exist, but let us not make it too personal by criticising an individual—from any party—who is not here to defend themselves.

With all due respect, I think that others in the room have made things personal, perhaps without mentioning a name. I am standing here to defend my constituency and to make sure that I get the best for Aldridge-Brownhills.

Fundamentally, I come back to my point that combining both roles under the leadership of one person—we do not know who that will be after the May elections, and I am not being presumptuous at all—will enable a greater, more joined-up approach that will benefit communities and our constituents, with a much greater focus on them. We need this to happen and to get on with it. Let us get this done. We have the opportunity to see that happen and to deliver for our constituents.

I am grateful for the opportunity to speak in this debate. I start by commending some of the comments and the tone of the hon. Member for Oldham West and Royton. He took a measured approach to this issue. I appreciate that we are not discussing his geographic area, but he can see how this merger can work. Greater Manchester has gone on a journey, and we have seen consistency there. I appreciate the fact that Greater Manchester has had its issues—we know that and it has been excepted—but I think the hon. Gentleman would agree that, as he touched on to a degree, if we are to see the real genesis of some of these areas, devolution requires more responsibility to come down. We can go back and forth over what that looks like, but granting powers such as those in the legislation before us is a really important part of that.

I must say that the opposition to this change from colleagues in the west midlands just sounds like people trying to save a comrade. That is the brutal part of it. I ask colleagues from the west midlands whether they voted for Comrade Foster in the mayoral candidacy selection last year—the contest in which he came third. That in itself is an indictment of where we are. I have seen exactly what the opposition to the change comes down to: it feels to me, and to many of us across the west midlands, that it is to try and save a mate, and nothing more.

We talk about consistency and the evolution of our areas. As my right hon. Friend the Member for Aldridge-Brownhills and my hon. Friend the Member for Lichfield touched on, the west midlands is a region of 3 million people. It is the second largest urban conurbation in England and Wales—probably in the United Kingdom—and rightfully wants to evolve to the next level of what devolution looks like, so the opposition seems completely out of sorts. The contrast is also quite stark because, as I say, the shadow Minister gave a perfectly reasonable speech and made some really salient points. From his experience in local government, he knows the importance of managing these processes. Some of the opposition I have seen locally just seems like trying to keep the establishment going.

To touch on the points my right hon. Friend the Member for Aldridge-Brownhills made, I too have been a victim of this police station closure programme. We stopped one closure—we prevented Tipton police station from closing—but had this structure been in place, with a high-profile Mayor who was actually able to have the community cut-through my right hon. Friend the Minister alluded to, we could perhaps have sorted this situation out sooner. However, what I would say, particularly to Labour politicians locally in Sandwell, is this: shame on you for trying to take any sort of credit for saving that police station. It was not politicians who saved that; it was the community campaign that saved that. Shame on you, because you were not there when your comrade in the PCC’s office was absolutely adamant that that station had to go.

This is what we are on about: lining up responsibilities to enable us to have a more streamlined approach, to stop ridiculous situations such as the one I described and to take a more circumspect view, taking into account not just operational policing matters, which are of course important, but the broader community links that matter within our region. I think that that is what this comes down to.

I and, I think, many in the west midlands want to see our region move on. In the past 10 years, we have seen the way in which our region has evolved and developed, and it continues to do so. Why should we miss out, as my hon. Friend the Member for Lichfield said, on the opportunities that London and Greater Manchester have had? Do not get me wrong; with Greater Manchester as an example, it is not this land of milk and honey, and things do not always go right along the way. But having that accountability—the ability to hold that person to account—but in a broader, community, contextualised way, is absolutely the key pillar behind this change.

We can go back and forth on the responses around this measure; my hon. Friend the Member for Lichfield made a valuable point about the engagement on this. The hon. Member for Oldham West and Royton also touched on that when he said that this is not what people talk about over their cornflakes in the morning. However, on the democratic engagement point, I think it is incumbent on all of us in this room to ensure that there is democratic engagement on these issues.

To close, I might put one challenge to the Minister. We know that funds are stretched at the moment, and I will not go too much into the judicial review, but I would be keen to understand what advice he has taken about recovering the costs personally from the PCC. The PCC has used public money for this judicial review, when it could have been given to police officers on the beat or used to keep police stations such as that in Wednesbury in the constituency of my right hon. Friend the Member for Aldridge-Brownhills open. I would be very grateful for that information. I appreciate that some of the advice may be privileged but, from within the realms of what the Minister can share, what advice has he taken on recovering some of those costs? It is an outrage to my constituents that they have had to foot the bill for, as far as I am concerned, saving a mate.

I welcome this measure, as I am sure Members on both sides of the House do. It has opened a broad debate, and I am particularly interested in what the shadow Minister said, because I think this opens up a lot of rabbit holes that we could go down today, although we are not going to. Ultimately, I support this measure. It is the right move for the west midlands—a west midlands that is moving forward in the right direction—and it is putting us on a par with everyone else.

Before I call the Minister, I would just say that it is always my intention to allow a reasonably wide-ranging debate, with points made in illustration of arguments as long as that is done briefly. However, I would advise the Minister to perhaps respond to the final point about the cost of the judicial review on another occasion, rather than this afternoon.

Sir Graham, I will of course follow your advice, or perhaps your instruction, and reply to that another time. We have had a wide-ranging debate, and I thank the shadow Minister, the hon. Member for Oldham West and Royton, for the considered manner in which he made his remarks and for his commitment not to divide the Committee.

There was just one question I wanted to answer, which related to whether there is to be further consultation. There are no plans to consult any further. We have conducted the public consultation. The Government’s position on this question was categorically not predetermined. The Government did not have a fixed view of the matter during the consultation and took their decision quickly but only after carefully considering all the consultation responses.

Will the Minister give way?

I do not want to test colleagues’ patience.

It is important.

We have discussed it extensively already.

We very carefully considered all the responses, and only after considering them very carefully was a decision reached. In terms of local democratic consent, this transfer was possible only following a request by the Mayor of the West Midlands, who has by far the largest democratic mandate of any politician in the west midlands. On that basis, Sir Graham, I commend this order to the Committee.

Question put and agreed to.

Resolved,

That the Committee has considered the draft West Midlands Combined Authority (Transfer of Police and Crime Commissioner Functions) Order 2024.

I beg to move, That the Committee has considered the draft Limited Liability Partnerships (Application of Company Law) Regulations 2024.

With this it will be convenient to consider the draft Service Address (Rectification of Register) Regulations 2024, the draft Principal Office Address (Rectification of Register) Regulations 2024 and the draft Registered Office Address (Rectification of Register) Regulations 2024.

The regulations were laid before the House on 18 December 2023.

Given my long-standing interest in the Government’s efforts to expose and combat economic crime, it was a privilege that, when I was first made a Minister, one of my first tasks was to guide the passage through this House of the Economic Crime and Corporate Transparency Bill. I was delighted in particular to champion legislation that enjoyed such widespread support from across the House, and to find that, through a collegiate and co-operative approach with Members here and in the other place, it emerged all the stronger in its final form.

The Economic Crime and Corporate Transparency Act 2023—the ECCTA for short—truly is a landmark piece of legislation, which will reform the way in which the registrar of companies and Companies House operate, and will radically enhance the faith we can all have that companies and other corporate entities established here are working in the interests of the UK economy, rather than against it.

The ECCTA’s entry into the statute book was, of course, a first step in the process of realising reform. It is backed up by an enormous amount of work to design, construct and operationalise new processes and procedures at Companies House, many of which are codified through a substantial programme of secondary legislation that we are working hard to develop. We anticipate that in total we will bring forward some 50 statutory instruments over this year and next to implement ECCTA reforms. The group of regulations that I commend to the Committee today represents the first substantive tranche.

I will begin, if I may, by presenting the draft Registered Office Address (Rectification of Register) Regulations 2024. I know that a number of colleagues have been contacted by constituents who are alarmed and surprised to find that a company with which they have no involvement has misappropriated their address, claiming that it is that of the registered office they are required by law to file with the registrar of companies. Not only is this distressing and inconvenient for householders, but it can be indicative of criminal intent on the part of the company in question.

Although a process to rectify the situation for victims of address hijacking already exists, it unavoidably takes time and requires a degree of effort on the part of those who have been wronged. Through the 2023 Act, the registrar’s existing powers to prevent and combat this practice are to be strengthened by tightening the requirements around what constitutes an appropriate registered office address, streamlining and expanding upon the existing avenues of redress for victims, introducing criminal sanctions for companies that fail to take corrective action, and ultimately providing an ability to strike from the register those companies that persist in offending.

The instrument provides a flexible framework within which the registrar can act to combat abuse. It establishes a process to underpin cases in which the registrar believes it is necessary and appropriate to act immediately to change a company address, alongside the procedures to be followed when a company should be afforded the opportunity to object to a proposed change.

I pay tribute to the work that the Minister has done on a number of cases that I have discussed with him both before and during his tenure as a Minister. I hear what he is saying about the penalties for repeated failure to comply with the requirements in the regulations and, indeed, with the requirements elsewhere in Companies Act legislation.

Do the Government have any proposals to introduce some kind of cumulative impact for cases in which the same one or two directors are in default on 20 or 30 different companies, such that no one company’s set of defaults triggers the level for prosecution, but action will be taken when it is clear that the directors are at it, as in the case of the directors of the defunct Blackmore Bond group of companies, who had dozens and dozens of strike-off notices against different companies? No one company got so bad that the registrar felt compelled to take action against the directors of that company, but between them those two individuals had dozens and dozens of default notices against them. Do the Government have any plan to bring in a totting-up system so that the registrar can track the defaults of directors as well as of individual companies?

I pay tribute to the hon. Gentleman’s work in this policy area and on the particular case he referred to. Some of the sanctions available under the 2023 Act include custodial sentences, of course, which I think he would welcome. There is no official totting-up system as he describes it, but the Insolvency Service, for example, can take a number of different offences into account in judging whether somebody is fit to be a director in the UK. Nevertheless, the hon. Gentleman raises an important issue and I am happy to have a conversation with him offline to see what else might be done. We have certainly impressed on the Insolvency Service in meetings the need to act swiftly and decisively when we see inappropriate behaviour by company directors.

The regulations establish the framework for applying criminal penalties to companies and their officers who fail to take steps to provide an appropriate address when the registrar has replaced an erroneous one with a default address. They set out the process that the registrar can follow to strike a company off the register if corrective action is not taken, thereby ultimately dissolving the company and terminating its existence.

Both the draft Service Address (Rectification of Register) Regulations 2024 and the draft Principal Office Address (Rectification of Register) Regulations 2024 build on the regulations on registered office addresses by establishing a more comprehensive framework for rectifying erroneous addresses across the register. Although the registrar currently has the ability to correct a bogus registered office address by defaulting it to and therefore replacing it with the address of Companies House itself, she has no such ability in respect of service addresses or principal office addresses.

For context, service addresses are required for all company directors, company secretaries and any individual registered as a person with significant control. Principal office addresses are required for corporate director and corporate secretary companies that opt not to provide their registered office addresses. They are also an option for what are termed companies’ relevant legal entities. An RLE is a company or organisation that has a significant degree of influence or control over another. RLEs are effectively the same as people with significant control, but are corporate entities rather than individual people.

Like the registered office address regulations, these two sets of regulations establish flexible processes around the rectification of false or erroneous addresses. However, there is one significant difference: service and principal office addresses are a requirement for those with some kind of role in relation to a company, rather than for the company itself, so it would not be appropriate to include the ultimate sanction of striking the company at issue off the register because of the persistent non-compliance of individual parties other than itself.

The combined effect of the three instruments I have introduced so far will be to provide a more robust and comprehensive safeguard against abuse, allowing the scope to deal with, for example, circumstances in which an address has been misappropriated for multiple abuses within one company. In all cases, they support the registrar’s enhanced discretionary ability to take corrective action immediately and, where appropriate, without the need for an application on the part of the victim or an obligation to notify the offending company in advance.

Finally, the draft Limited Liability Partnerships (Application of Company Law) Regulations 2024 represent the first step towards ensuring consistency in the application of ECCTA reforms as between companies and limited liability partnerships. Although on the face of it the ECCTA focused on the reform of company and limited partnership law, it has long been the policy to apply changes in company law to the context of LLPs. It is an inherent and often-used feature of the Limited Liability Partnerships Act 2000 that it provides a regulation-making power to transpose Companies Act 2006 changes to LLPs, modifying their application as appropriate. We will seek to exercise that power through further instruments, as necessary, to ensure that ECCTA provisions apply coherently as between companies and LLPs. That will include key areas of reform such as the introduction of identity-verification requirements.

For the moment, the instrument on LLPs serves to transpose the provisions of the ECCTA that commenced on Royal Assent in October 2023 or in January 2024 and, most significantly, those that are planned to commence on 4 March, by means of regulations that will be laid before Parliament this very week. That date represents a particular landmark in the delivery of reform, as it will be the point from which many of the registrar’s new powers will commence, and from which significant new requirements will apply to companies and, by virtue of this instrument, to LLPs.

As well as all the provisions related to addresses that I have described, the provisions include: the establishment of additional controls around the name that an entity chooses to register, and that under which it conducts business; an obligation annually to confirm that the entity acts with a lawful purpose; matters around dissolution and restoration to the register; and, perhaps most importantly, the registrar’s new objectives under the 2023 Act to strive, within the parameters of her functions, to ensure the integrity and accuracy of register information and to prevent companies and others from carrying out illegal activities.

The four sets of regulations work both to ensure consistency in our application of reforms as between companies and LLPs and, more specifically, to strengthen the safeguards and remedies around the hijacking of addresses, in whatever form that presents itself. I conclude by emphasising that the measures in the regulations are crucial to the ECCTA’s effective implementation. I hope that Members will support them and their objectives, and I commend them to the Committee.

It is a pleasure to see you in the Chair this evening, Mrs Murray. I thank the Minister for his opening remarks and, indeed, for his work in this policy area over many years. I would hesitate to describe him as an expert in economic crime, but he is clearly someone one who has a long record of tackling economic crime, and today we see the fruits of his labour. I also thank hon. Members for attending this evening.

As the Minister said, the regulations all derive from the Economic Crime and Corporate Transparency Act 2023, which received Royal Assent in October. Each set of regulations under consideration today, as we have heard, enacts a provision contained in that primary legislation which, as we have heard from the Minister, is designed to improve the quality of the information held by Companies House.

These are important changes. Despite the rather lengthy titles, they do actually make a real and pertinent change to people’s lives and to how companies are regulated, and of course, as we have heard, people can be innocently caught up in these webs of deceit, so before I consider each set of regulations in turn I will make it clear that we will not oppose the regulations.

The draft Limited Liability Partnerships (Application of Company Law) Regulations 2024 remove the arbitrary— at least for these purposes—distinction between companies and limited liability partnerships, to ensure that the law applies coherently across the board. That will ensure that any entity that registers with Companies House will fall within the scope of the corporate transparency reforms that are part of the 2023 Act. In practice, all members of LLPs, as well as those with significant control, will be required to verify their identities.

The reforms are welcome—they homogenise the law —and as a general principle I will talk about some of the details, as they apply across the board, as we go on, but I have a specific question about the LLP regulations. The definition in regulation 3(3) says that “appropriate email address” means

“an email address to which, in the ordinary course of events, emails sent by the registrar would be expected to come to the attention of a person acting on behalf of the limited liability partnership.”

That seems a little circular in its definition. I hope there is a rather clearer explanation; maybe the Minister will be able to furnish some examples of what that means in practice, because it would be useful for us to understand what the yardstick is there.

The remaining regulations are all concerned, as we have heard, with requirements for companies to maintain accurate addresses and represent a clear expansion of the powers of the registrar to enforce those standards. I turn first to the draft Service Address (Rectification of Register) Regulations 2024, which empower the registrar to change the registered service address to a default address if it fails to meet legal requirements. Currently, the registrar may not undertake that change on their own initiative and must rely on the reporting of inaccurate addresses by third parties. That can allow a service address listed in the register for a company director, secretary or person with significant control to become inaccurate, ultimately meaning that they fail to meet the statutory requirements for a service address. That can have all sorts of legal implications.

The changes in the instrument will mean that the registrar can initiate such a change or do so upon application, with the discretion to act without notice or after a specified objection period. That will assist registrars in maintaining the accuracy of the register and act to incentivise those with control over a business to ensure that their service address is accurate and kept up to date. It will also potentially lead to consequences for those company directors who are allowing erroneous records to exist in an attempt to evade legal responsibilities by providing non-compliant addresses.

Those are clearly welcome changes that will in the main leave all compliant and law-abiding businesses completely unaffected and will hopefully begin to tackle the scourge of rogue directors who seek to operate unlawfully. Clearly the odd erroneous entry might be caught up in the changes, so it is worth considering the legitimate business owners who may unfortunately be in that situation and who may have concerns about the exercise of regulation 10 powers and whether they will have a swift and clear opportunity to put matters right. It would be appreciated if the Minister could devote some time to providing further guidance on that point. It is also worth noting that if the registrar contacts those people at the wrong address because it has been erroneously entered, there is a risk that they will never respond because they will never receive the contact in the first place.

Regulation 10 gives a registrar the power to change a business’s address to a default address with no notice. Two conditions have been applied to the use of the powers, namely that the registrar

“(a) is not satisfied that a relevant person’s registered service address meets the service address requirements, and

(b) does not consider it necessary to provide a period for objections to be made to the relevant person’s registered service address being changed to a default address.”

For reassurance, will the Minister provide some detail about what will likely constitute a registrar not being “satisfied” that the registered service address does not meet requirements? Equally, will he outline what conditions would make it unnecessary for a registrar to provide a right to make an objection to such a change? I do not want to stray too much into operational matters, but it would be useful if the Minister could set out what he can on those points.

The draft Principal Office Address (Rectification of Register) Regulations 2024 are similar and will establish the process by which the registrar may change an address that is registered as the principal office of a relevant person to a default address nominated by the registrar, either on the registrar’s own motion or following an application from a third party. The power to change the address would equally be available where the registrar was satisfied that the address was not in fact that person’s principal office.

I do not think much more needs to be said about those regulations, so I will spend my remaining time talking about the final set of regulations before us: the draft Registered Office Address (Rectification of Register) Regulations, which perhaps have the highest salience out of the four we are considering. In the existing system, we know that criminals can fraudulently register an individual’s residential address as a company’s registered office with Companies House. That is often done using data obtained from various sources, including the dark web, without the person in question knowing that they are being used for that purpose.

Since 2011, it has been possible to incorporate a company within 24 hours, and for the small fee of £12, without checks being undertaken by Companies House on the accuracy of the details. The perpetrators can then use this fraudulent registration to apply for credit and business loans. That causes significant problems for the unsuspecting individuals who may discover that a fraud is being perpetrated only when they attempt to apply for credit themselves, by which point their credit rating may be rather poor. There have been stories in the media about this. A street in Leigh-on-Sea had 80 or so new businesses registered in just a matter of months. Something very fishy was clearly going on.

The registered office address regulations deal with cases in which addresses have been, to use the Minister’s word, hijacked, which is quite an apt term. They grant the registrar the authority to change the address to a default one and to remove the company from the register if a genuine address is not provided. As the Minister also said, the regulations establish criminal offences for the non-compliance of companies and officers. The Minister responded to the intervention from the SNP spokesperson, the hon. Member for Glenrothes, on the issue of criminal matters. It is important that we are clear that there are criminal consequences for the failure to adhere to the requirements of the regulations. Will the Minister advise the Committee on whether individual directors might be referred to disqualification proceedings as a result of persistent breaches of the regulations? I hope some consideration is being given to making it clear to those who seek to transgress the regulations that robust sanctions are in place to deal with persistent offenders.

We appreciate the efficiency and the granting of expanded powers to the registrar, such as the ability to act unilaterally based on information already in its possession, but there are concerns about how the Government plan to protect and support the victims of these fraudulent practices. There is also a real question about the capacity of Companies House fully to undertake its new responsibilities. This starts with the question of just how big the problem is. Does the Minister have any sense of how many companies are operating in this way? What are the resourcing implications for Companies House as a result of the statutory instrument? For example, are any more staff to be assigned to the registration processes to deal with the issue? Is Companies House expected to have a fairly busy period when the regulations first come into force, followed by a drop-off in activity? Or is there an expectation that there will be a consistent and significant call on resources for a long period of time?

On that latter question, I have a concern that I would like the Minister to reflect on. The examples of multiple businesses popping up on the same street or at the same address will be low-hanging fruit for the registrar, but we know that the law often has to evolve to keep pace with changes in criminal practice. It will hopefully become obvious, as a result of the regulations, that such situations will no longer be tolerated, and they will diminish, but I suspect that more sophisticated schemes may take their place. Has the Minister begun to map out where this might lead in practice? Will he keep an eye out for developments and maintain a dialogue with Companies House on such practices?

Even when matters are rectified and the address is changed, there remains the serious question of the continuing impact on the individual. There may be an impact on their credit rating or even more serious consequences, and they will still be there. They may well be unfairly penalised for some considerable time. Do the Government have any plans to address such possible consequences?

My final point is about the interrelation between the powers that are being provided in the instrument and the actions that other Government Departments and agencies might be able to take. For example, the companies in question are often engaged in VAT fraud, which is why they keep popping up in this way. Will there be a data-sharing arrangement with His Majesty’s Revenue and Customs or any other Government agencies that might be interested in having the information we are talking about? I would be grateful if the Minister could address that point.

Overall, we do not think that the instruments are controversial. They are welcome on both sides of the House and we hope they will be successful. We need to stamp out this awful practice. The havoc it wrecks on individual lives is there for all to see, as is the fact that it allows criminals to act outside the law, and that absolutely must be stamped out.

I, too, support all four sets of regulations, although Members will not be surprised to hear that I am not sure that some of the measures go far enough. Some of them, though, will help to prevent the kind of abuse we have seen in the past.

I am not sure how quickly we will be able to deal with the bogus companies that are already sitting on the register; there are probably tens of thousands of them that need to be dealt with. One way in which we could start that might be to change the practice by which Companies House registers companies. The predecessor Department to the Minister’s saw it as a badge of honour to publish in its annual report a massive increase in the number of company registrations. Now, if that represented a massive increase in business activity, it was a good thing, but I think we all know that it represented a massive increase in bogus company registrations, which is not something to boast about and is probably something we should be quite concerned about.

It is my understanding that it has always been an offence, or certainly has been for a very long time under the original Companies Act, to fail to provide an appropriate registered address. The criteria as to what is appropriate quite clearly do not apply to picking an address at random out of the phone book and subjecting the poor, innocent occupant of that address to getting letters from HMRC and various others for the next several years. It has always been an offence knowingly to provide false information in order to register a company. We can see that that is happening hundreds—sometimes thousands—of times per day yet, as far as I can see, nobody is getting picked up on it.

I share the shadow Minister’s concern, first, about the financial and people resource available in Companies House to start to deal with this issue, and secondly, about other aspects of resource, such as logistical support. Where do we start to tackle the mountain of bogus companies, none of which is there for a valid purpose?

I commend to Committee members the work of the transparency campaigner Graham Barrow, who tweets almost every day about swathes of new companies that have been registered, all either at the exact same address or at nearby addresses, all with directors who have the same nationality, usually in batches of 50 or 60 at a time, in exactly the same line of business, all operating in the same street, sometimes with the same director, usually all directors having the same date of birth, and usually all with the same occupation. It is blatantly fake, yet Companies House does not have the kind of fraud-prevention software that most financial institutions would have at their disposal to run through all that and immediately raise a flag that says, “I don’t think this is right. A human being needs to look at this before we let them on to the register.”

In that regard, although regulation 4 in the registered office address regulations tightens the requirements for addresses to be changed, no proof is asked for that the address that it has been changed to, or the address the company has, has any connection whatsoever to the company. Why are we not introducing that as a requirement? Yes, it would mean a bit more bureaucracy, a bit more paperwork and a bit more time being spent before the company gets set up, but it would save an awful lot of the time spent trying to track them down afterwards, and sometimes, if that company was subsequently used to commit fraud against the innocent public, it would save an awful lot of pain.

I will make my second point about the notice referred to in regulation 6 of the registered office address regulations, but the point applies more generally to a lot of the new requirements in the regulations, and to a lot of the existing Companies House requirements. I do not understand how Companies House decides what documents in relation to a company are worth posting on the website pages for that company, and which are not. For example, the registrar will put online a copy of a notice of intent to strike a company off the register for failing to comply with Companies Act requirements. It does not tell us what requirements it has failed to comply with. Several months later, we see a further notice, which usually says that the registrar has decided not to strike the company off after all. We do not get to see the submission that the company made to persuade the registrar not to strike it off.

I am convinced that if members of the public, and certainly people like Graham Barrow, were allowed to see the information that companies are submitting in order to be allowed to stay in existence, they would realise that a lot of them—although some are perfectly genuine—are giving bogus information in order to stay on the Companies House register.

Order. I remind the hon. Gentleman to stay within the scope of the legislation we are discussing.

Thank you, Mrs Murray.

A number of companies are voluntarily wound up shortly before they would be compulsorily wound up for failing to file their first set of accounts, and in such a case nobody ever gets to know what happened in that company during the period when they did not have accounts. The regulations will help, but they do not go far enough.

Like the shadow Minister, I would be interested to know whether the Minister might give us any examples of circumstances in which, under regulation 10, the registrar would think it not necessarily appropriate to give a period of notice—a period for objections—before taking action to change the address. The registrar might well have information that could not be made public for other reasons, but an indication as to when the registrar is expected to use that power, and when they are expected to go through the longer process, would be useful.

One concern that I have about regulation 16, on the suspension period, is that there is a long list of requirements that a company need not meet during the time when it is in the process of changing address. I can quite understand that—for example, it is reasonable for a company to say, “If we are in the process of moving to a different address, it is not realistic for us to keep a physical register of members available for inspection”—but what precautions are built in to prevent someone from using an appeal process to string out the suspension period for as long as they want, to ensure that the public lose the right to examine the company’s affairs?

Regulation 18, which is very short, relates to the collection and destruction of documents—usually those found lying around in a company office that has never really been a company office. If the company has been struck off, the registrar is allowed to destroy documents that have been delivered to the company. In applying the permission in that regulation, we would expect a registrar to be sensible. The fact that certain information has been delivered to the company, even though the company has not received it, may well be important in subsequent legal actions, and given that we know it can take years, especially after a company has gone bust, for company director misconduct to be resolved, there needs to be a sensible application of that regulation so that the registrar does not get in the way of their own work by destroying what might have been important evidence at a later stage.

The question of why information is not made public is even more relevant to regulation 22. In my experience, a company has to try quite hard to get compulsorily struck off, rather than just wound up at the request of its members. If an objection to striking off is received and accepted, it is reasonable for the public to be told why the company has not been struck off in the circumstances.

If we are talking about sanctions against rogue directors, and often bogus directors, disqualifying the director is a much more effective sanction than striking off the company. In the Blackmore Bond example that I mentioned earlier, taking away one of the directors’ companies left 35 others in the cupboard. It is guaranteed that the one taken away is the one that carries all the debt, while the ones left in existence are the ones that have all the money. If we move on the directors and start to take disqualification action on them at an earlier stage, first, we will get a much higher level of compliance, and secondly, it is likely that as soon as one or two sets of directors find themselves getting disqualified, a lot of the others will quietly disappear because they do not want to go through such a process.

Most of my comments about the regulations on changing addresses relate to the registered office address regulations. The provisions are very similar in the service address regulations and the principal office address regulations so, rather than going through the other two sets of regulations, I ask the Minister to take my comments as alluding to them all.

On the limited liability partnerships regulations, my first significant question to the Minister is: how close are we, once the regulations are approved, to completely closing the loophole that applies specifically to Scottish limited partnerships? There is a long-standing legal principle in Scotland about a partnership having a legal identity of its own. That was there for very valid purposes when the Partnership Act was created in the 1890s, or whenever it was, but it is now a loophole that has been mercilessly used by organised crime gangs from all over the world. They register limited liability partnerships in Scotland because they can do things with partnerships registered in Scotland that they cannot do with businesses registered almost anywhere else in the world. I know the Minister is very aware of that issue, and I commend in particular my good and hon. Friend the Member for Glasgow Central (Alison Thewliss) for her tireless work on it. I hope the Minister can indicate what else we need to do to close that loophole once and for all once the regulations have been approved.

Finally, although I certainly agree with the intention in the limited liability partnerships regulations for designated members to be civilly and, if need be, criminally liable for any default—similar provisions apply to the directors of companies—some of the companies we are talking about have company directors and designated partners who are less than five years old. My hon. Friend the Member for Glasgow Central found a case in which a company director had not been born yet. It is all very well to say that we will take action, and criminal action if need be, against the people running these bogus businesses, but we need to recognise that in some cases the person actually running the business is not the person whose name is on the incorporation documents. It is not the person whose name, address and date of birth are registered at Companies House: it is an entirely different person.

For that reason, in addition to the approval of the regulations—I look forward to further regulations coming forward to plug some of the other loopholes—I appeal to the Minister to find a way to make the resources available for a really good root-and-branch review of everything sitting on the Companies House register, so that we can get rid of these nonsensical positions where babies in arms, and foetuses who have not been born yet, are registered as company directors. If we have to move on such companies, we cannot prosecute anybody, because the only registered directors are far too young to prosecute, and the people actually committing the criminal offences can walk away scot-free.

I am pleased to see the regulations and I will support them. I will continue to give the Minister my full support —I know this is something he takes very seriously—in the attempt to clean up after the shocking length of time for which the companies regulations in these islands have been allowed to fall way behind what the fraudsters are doing. I hope that, during the brief time I have left in this Parliament, I will be able to say that Britain is no longer the best place in the world to do fraud—but at the moment, it probably still is.

It is a pleasure to respond to Members’ comments.

Points were made on appropriate addresses and email addresses, and I think the same response covers both issues. Our definition for that is that when acknowledgment is requested in correspondence, that request is responded to. That applies whether it is an email address or an actual address—for example, it is not a post box or a virtual post box; it has to be somebody who represents the company. The key thing is that it meets the registrar’s obligations to notify the parties involved. There is a responsibility on the entity itself to make sure that it gives an address or email address that will be responded to when requested.

On the disqualification of directors, that can be done for repeated offences against company law, for example. I agree with the SNP spokesman, the hon. Member for Glenrothes, that sanctioning an individual could be a better route to ensuring compliance than striking off a company.

On the number of companies we are referring to, about 26,000 companies are currently registered with Companies House as their default address, so that would be a place to start.

On resources, the hon. Member for Ellesmere Port and Neston may have noticed that we recently laid an instrument to increase the fees at Companies House for both incorporation and things like confirmation statements. The increases were significant, although the fees are still affordable—between £30 and £50 for various different things. That was done to increase resources, as he set out, both in terms of the numbers of people looking to ensure that the information is accurate and undertake investigations and in terms of enforcement. That includes extra staff at Companies House and in the Insolvency Service.

The hon. Gentleman referred to low-hanging fruit, and yes, there will be some. We expect the registrar, who has an obligation to maintain the integrity of the register, to look to identify different opportunities to clean up the register. That will be done very much on a red-flag basis and by cross-referencing information. We will of course continue to have conversations with Companies House about its progress. I meet it regularly on such issues.

The hon. Gentleman rightly talked about the impact on individuals. We have all had experience and examples from our constituents of where addresses have been used inappropriately. The No. 1 thing about the provisions of the legislation is the deterrent effect on bad actors and their inappropriate manipulation of addresses, for example. I hope that the impact on individuals will diminish.

The hon. Gentleman asked about information sharing and whether work with other agencies will be possible to identify some of the abuse; that is absolutely the case. The ECCTA provision is very much about the ability to share information between agencies, including HMRC and the National Crime Agency.

The SNP spokesman, the hon. Member for Glenrothes, asked a number of important questions. He is right to say that an address already has to be provided, but the requirements in the regulations are to move from just an address to an appropriate address. There will be obligations to provide an appropriate address, as discussed.

The hon. Gentleman talked about proving an address. As the Economic Crime and Corporate Transparency Bill went through the House, we looked at that issue in Committee and in the remaining stages, and we thought it would be too bureaucratic and unfair to legitimate businesses. Most of the 5 million companies registered with Companies House are legitimate businesses, and they would all have to prove that address, which we think would be the wrong approach.

I take the Minister’s point, but does he see that some people might think different rules are being applied? It is difficult to ask 5 million companies to prove their address, but we are happy to ask 50 million voters to prove who they are to allow them to vote. I know that voting is not the responsibility of the Minister’s Department, but does he understand that that is an inconsistency?

Order. That is not within the scope of the regulations. I gently remind the hon. Gentleman to stay within the confines of the legislation we are discussing.

Thank you, Mrs Murray. I would love to respond to that point, but clearly I would be told I was out of order by the Chair if I did so.

To be clear on limited partnerships, I think the hon. Member for Glenrothes mentioned Scottish LLPs, but I think I am right in saying that he meant Scottish limited partnerships. There is a distinction between English, Welsh, Northern Irish and Scottish limited partnerships. The main difference between them is that SLPs have their own legal personality, separate from the partners in them, while English LPs do not. Unlike English and Welsh LPs, SLPs are covered by the “persons with significant control” framework and must submit beneficial ownership information to Companies House, including— as we get to that stage—identity verification requirements. That goes back to the hon. Gentleman’s point about using people who may not have been born yet; that would be a requirement on companies. It will be pretty tricky to do in that particular scenario once we fully implement the requirements of this legislation.

As for when the registrar may act expeditiously, such action may be taken, for example, to change an address immediately if evidence suggests that the address has been targeted multiple times. I think I have covered all the points that Members made.

We are committed to implementing the ECCTA as quickly and as effectively as possible. My Department and Companies House have been working since Royal Assent last October to be in a position to commence a significant proportion of the Act on 4 March. From that point, the registrar will be empowered and equipped to be much more proactive in defence of the register’s integrity, and in a position to begin the process of examining and proving its accuracy. That will mark a step change in the registrar’s status as a heavyweight player, alongside law enforcement and other agencies, in the concerted fight against corporate abuses and economic crime. I commend the regulations to the Committee.

Question put and agreed to .

Resolved ,

That the Committee has considered the draft Limited Liability Partnerships (Application of Company Law) Regulations 2024.

Draft Service Address (Rectification of Register) Regulations 2024

Resolved ,

That the Committee has considered the draft Service Address (Rectification of Register) Regulations 2024.—(Kevin Hollinrake.)

Draft Principal Office Address (Rectification of Register) Regulations 2024

Resolved ,

That the Committee has considered the draft Principal Office Address (Rectification of Register) Regulations 2024.—(Kevin Hollinrake.)

Draft Registered Office Address (Rectification of Register) Regulations 2024

Resolved ,

That the Committee has considered the draft Registered Office Address (Rectification of Register) Regulations 2024.—(Kevin Hollinrake.)