House of Lords
Monday 14 March 2022
Prayers—read by the Lord Bishop of Durham.
Broadcasting White Paper
My Lords, the Government have committed to ensuring that listeners continue to have free-to-air access to UK radio services when listening via connected audio devices and that radio services are not discriminated against by large tech platforms which carry audio over internet protocols. The digital radio and audio review considered these issues in its report of last October. The Government’s response to that report will be published shortly and will set out our position in this area in more detail.
I thank the Minister for his positive reply. Prominence rules were put in place over 15 years ago for TV broadcasters and are set to be updated, I believe, but there are none at all for radio. The pandemic and now events in Ukraine have reinforced the importance of PSB radio, but as audiences increasingly access radio and audio services on demand, online and through new devices, this valuable service is at risk and at the mercy of the global tech companies which control distribution of content on these platforms. Reform is urgently required . I am glad that the Minister agrees—I think—that there is a pressing need to address this issue in the broadcasting White Paper and the media Bill. Can he tell us when that is likely to come?
The noble Baroness is right that there has been rapid change in the last five years. Smart speakers have become widely available and are now owned or accessed by a third of all adults, so the Government recognise the urgency of the issue. We are very conscious that connected audio devices are starting to represent a significant and growing share of radio listening. They have opened new routes for listeners and new avenues for content creators, but they also carry a risk of listener access to radio services being disrupted or limited. We fully recognise those concerns and are committed to taking the necessary steps to ensure continued free-to-air and unintermediated access to UK radio. As for future legislation, that will be set out in the normal way.
My Lords, the withdrawing of funding for Creative Skillset in 2016 has left a gap in audio-only skills training. BBC Sounds Audio Lab and Global Radio’s academy have filled some of that gap, but does the Minister agree that there is a role for the Government to help develop and deliver high-quality audio skills training for a new generation of talent?
Yes, I agree with the noble Viscount. As I say, as the review noted, these devices have opened up new avenues for content creators to reach audiences with podcasts and other audio output. There are very exciting job opportunities for people in this area and part of the work we are leading through DCMS is to make sure that people have the opportunity to work in our vastly expanding creative industries.
My Lords, tech platforms and smart speakers have now become gatekeepers to the UK radio broadcasters, with access to all their valuable audience data. Will the Government ensure that the long-delayed new statutory competition framework for the Competition and Markets Authority’s Digital Markets Unit becomes a priority, levels the playing field between broadcasters and online platforms and addresses the significant current risk to media plurality and radio broadcasters?
We recognise that good arguments have been made for taking action to protect radio’s long-term position and ensure the continuation of the huge public value which radio provides. However, that will not be straightforward; any significant intervention in this area will need to be considered in the wider context of other work we are carrying out, particularly in relation to digital markets and data protection reform.
My Lords, the Minister referred a short while ago to what I think he called our “rapidly expanding creative industries”. Is he confident that his colleagues in the Department for Education are fully aware of the opportunities those industries offer and are constructing the national curriculum in a way that makes it possible for people to access them?
Yes, I have regular meetings with colleagues in the Department for Education and across government. I have had them in the past and have more coming up imminently. We are discussing these issues across departments so that we can make sure that everybody, whatever their age—whether they are school leavers or people who are changing career—has the opportunity to move into these exciting areas.
My Lords, is it not the case that the old-fashioned shortwave transmission systems are much more difficult to interfere with than the more modern systems? Therefore, can the BBC be persuaded to concentrate on that system when broadcasting to Ukraine and thereabouts?
As well as availing themselves of the opportunities which the new media and new technology allow, we recognise that many people still rely on analogue radio services. That is why we have said that it would be wrong to switch those off before 2030, at the earliest. Both the Foreign, Commonwealth & Development Office and DCMS are working with the BBC to maintain the very important work that the World Service is currently doing in Ukraine.
My Lords, in the same way that the online safety Bill has been drafted to have a degree of flexibility as the internet develops, will the Minister look at making prominence regulations technology neutral in the same way? To avoid duplication of regulation for TV, radio and online, has an assessment been made of the potential for a one-stop shop for prominence rules?
The review which I mentioned was commissioned by the Government as part of the wider look at the broadcasting sphere. We are conducting that strategic review of public service broadcasting and will set out our response to it in due course. I cannot anticipate what it will say but I can assure the noble Baroness that we are looking at all these issues in the round. As I say, this is an area where the technology is moving rapidly, so it is right to review it carefully.
My Lords, can the Minister explain why Russia Today was allowed to broadcast for as long as it did, sending out its propaganda on a daily basis? Surely there is a need for balance, and should not the regulator have taken action far beyond what it did before? It has cancelled it now but why did it have to wait for something like this to happen? Should it not have taken action before?
My Lords, one of the things that sets us and the rest of the world apart from countries such as Russia is our commitment to free and fair broadcasting. We are very pleased that RT has been removed from Sky Freeview and Freesat in the UK, which means that Vladimir Putin cannot push out his propaganda on UK networks. My right honourable friend the Secretary of State wrote to the major platforms asking them to do everything they can to prevent access to RT online in the UK, as they have done in Europe, and we are very pleased that Meta and YouTube have taken action and removed RT from their platforms. Therefore we have acted in this area while recognising our commitment to free speech and broadcasting.
Your Lordships have become very used to listening to answers from the Dispatch Box opposite which sound as though they are lobbing the question into the long grass. The Minister said that technology is moving very rapidly in these areas. Are the Government?
This is an area in which only five years ago smart speakers were not available and now they are now widely available in people’s houses. The Government are keeping pace with that very rapid change, conducting thorough reviews with stakeholders and considering it carefully. A five-year timeframe for technology that did not previously exist shows that we are acting swiftly in this area.
My Lords, I know that the Minister has to be careful with the language that he uses. He politely referred to President Putin’s propaganda. The right word is not “propaganda”, as that might contain an element of truth; surely it should be President Putin’s “lies”.
Yes, I would be happy to say that lies are being disseminated from the Kremlin about what is going on in Ukraine. That is why we have taken action to stop the poisonous propaganda that RT has been propagating on Vladimir Putin’s behalf.
Building and Fire Safety: Leaseholders
Leaseholders living in their own properties in buildings over 11 metres will be protected from all cladding remediation costs. The Building Safety Bill will require developers to pay to fix historical building safety defects in buildings they own above 11 metres. We will legislate to make sure that other building owners who can afford to pay cannot pass historical building safety defect costs on to leaseholders. Leaseholders who are liable to pay for some non-cladding costs will have those capped in a way similar to Florrie’s law.
My Lords, I thank the noble Lord for his response and for the progress made, and I accept that good progress has been made. However, the situation remains that there are general building safety issues and some of these leaseholders are still left in appalling situations. Does the noble Lord accept the principle that if you are not responsible for the poor workmanship, you never signed it off as satisfactory and you did not insure it, you cannot be expected to pay for what is now deemed not fit for purpose? If he accepts that, he is the one person who can do something about it. He is the Minister responsible and has the ear of the Prime Minister, so what are we going to do?
My Lords, I thank the noble Lord for putting me in the hot seat. We have done an awful lot. It is fair to say that through regulation we can ensure that we protect leaseholders, who are very much the victims, from bearing anything apart from, I hope, very minimal costs. Those have been capped at £15,000 over five years in London and £10,000 outside London. That is for the narrowest shoulders, particularly shared owners, who are protected as well. We can always do more, and I appreciate that that campaign reckons that we should take this down to zero. However, we continue to ensure that we protect leaseholders wherever we possibly can.
My Lords, I welcome what my noble friend just said but I remind him of what the Secretary of State in another place said on 10 January:
“First, we will make sure that we provide leaseholders with statutory protection … and we will work with colleagues across the House to ensure that that statutory protection extends to all the work required to make buildings safe.”—[Official Report, Commons, 10/1/22; col. 291.]
I welcome the amendments that my noble friend has tabled in Committee but does he recognise that further substantial amendments will be necessary on Report if that commitment is to be honoured?
I thank my noble friend for stepping in helpfully. Of course, as we approach Report, the Government will bring forward further amendments that will do more to protect leaseholders but will also ensure that the polluters must pay—my noble friend and I share that principle.
I join other noble Lords in thanking the Minister for the considerable progress he has made and his very collaborative approach as we work through the Building Safety Bill. He will be aware that the definition of a qualifying lease in the Bill is set to exclude many small private landlords. We are not talking about the big commercial set-ups but people who have one, two or possibly three flats which they bought simply to provide themselves with a pension. Do Her Majesty’s Government intend to look at that definition of a qualifying lease again? Many of those people are deeply worried at the moment.
I thank the right reverend Prelate, who has also been a consistent campaigner. As a Government we are very much aware of the impact this has on, say, pensioners, where property is their primary pension asset and the annuity from those properties effectively pays for their pensions. As I say, I ask the right reverend Prelate please to wait until we bring forward further amendments on Report, but we are very alive to this issue.
My Lords, the Minister reminds us that the Government propose that leaseholders should pay no more than £15,000—in London. Does he accept that, if you live in London and are facing very heavy costs, including rapidly rising energy bills, for many people who will be faced with a bill of £15,000, that is not nothing or little—it is a crippling amount? Does he accept that limiting it to £15,000 does not relieve the pressure on many people who simply cannot afford £15,000?
My Lords, there is no doubt that £15,000, paid over five years, is a substantial sum, but the reality is that some poor leaseholders who are victims have paid far more than that on interim measures before a single bit of remediation has been done. Having a cap on leaseholder costs ensures that they are no longer fleeced through Section 20 notices to pay for mistakes for which they are not responsible. That is what that protection achieved and, through regulation, we can broaden the impact to protect those with the very narrowest of shoulders.
My Lords, we have a problem going forward, because cladding, if it is put in properly, can be an option to make older houses thermally efficient. Have the Government thought about reassurance measures so that cladding remains an option for, for example, all the thousands of pre-1930s buildings?
That is a very good point: cladding per se is not necessarily a bad thing. What we cannot do is wrap our buildings up in cladding where the effect on the spread of fire is a bit as if it had been coated in petrol. Cladding provides the warm homes that many people enjoy. If you carry out remediation in an insensitive way, it removes the protection for leaseholders in the insulation required to make the home liveable. Therefore, remediation needs to be done in a sensible and thoughtful manner with people who are living in their homes. Of course, we need to ensure that we promote good cladding systems and remove the bad.
Throughout the pandemic, the Government’s approach has been informed by a wide range of scientific and medical advice and the latest data, as well as by economic, social and deliverability considerations. Ministers have always had regard to the scientific advice when taking decisions to implement or remove restrictions, but have balanced them against other considerations.
Given that the level of infections is now running at 220,000 new infections per day, and given the fact that the Government are planning to remove free testing from 1 April and have already removed the legal obligation to self-isolate, having already removed the support payments for self-isolation, how do the Government intend to protect the most vulnerable in society and NHS staff, given the Government’s new policy provisions of Living with Covid-19?
I thank my noble friend for those questions and will try to answer them as best I can. We are now transitioning to a stage where we are able to live with Covid, and we have just announced our living with Covid strategy. At the same time, we are looking at the best way to help those who are particularly vulnerable medically or economically, who should still be entitled to free tests, for example, and issues such as affordability. We continue to monitor the new variants, the BA2 and the deltacron, and we will also continue to have the ONS surveys.
My Lords, given the fact referred to by the noble Baroness, Lady McIntosh, about the reversal of what was a very welcome decline in numbers, has any advice been given to the Government by the bodies to which the Minister referred about a further, fourth jab—another booster jab—for the elderly population? I suppose I should declare an interest.
I thank the noble Lord for declaring an interest. We are reviewing all scientific advice and looking at the spread and potential of new variants. Advice has been given on an additional booster, particularly for those over 75. I will not ask the noble Lord his age, but I commit to write to him.
My Lords, one thing that some of the most vulnerable have been able to do is make a risk assessment about going out. If testing is not happening and local scientific data on cases not available, that risk assessment cannot be made—isolating the vulnerable even more. Will the Government reflect on that?
The Government have reflected on that and, in line with the public sector equality duty, have considered the impact of those decisions on the wider population but also on those who were previously classified as extremely vulnerable or clinically extremely vulnerable. For example, we are looking at whether it is appropriate to continue to give them free tests, and how they can get in touch with clinicians and others to ensure that they are more protected.
My Lords, at the publicly streamed evidence session of the All-Party Coronavirus Group on 1 March, we asked some members of SAGE to outline SAGE modelling for the lifting of restrictions in the living with Covid plan. They replied to us that they had not been asked to model any such plans by Ministers. Given that cases, as the noble Baroness, Lady McIntosh, said, are now 221,000 a day, with active cases of more than 2 million and hospital admissions rising across England, exactly what modelling advice did the Prime Minister and Secretary of State for Health and Social Care take?
We constantly have meetings with the UKHSA and a number of different scientists join us for the calls when we have them, but we have always balanced things up. I shall give an example of a conversation I was having just before Christmas with some of the modellers. I asked them “What is your advice?”, and they said “Minister, before we give you the advice, you have to bear in mind that we are only considering the variant at the moment. It is for you to consider the wider medical balancing issues, and also the economic and social costs as well, and we recognise that you have to balance all those up.”
My Lords, further to the question asked by the noble Lord, Lord Reid, and declaring a similar interest, I ask my noble friend not just to write to the noble Lord, Lord Reid, but to make a general announcement, so that we know when these fourth jabs will be administered.
It is interesting that, when I was talking to some of the modellers and scientists about this, they said that whenever they look at models of changes in behaviour, they count in or consider that there will be some uptick because of people relaxing measures. Even though we are moving from a position where it was legal to where it is guidance, they reckon that number in, but they still felt that it was not significant enough not to go forward with the change in strategy.
My Lords, further to the question of my noble friend Lord Cormack, I have already received a summons for my fourth jab. My impression is that, in west London, the programme has been set up and will be working quite satisfactorily. I will be having my fourth jab tomorrow week.
My Lords, three matters have emerged in the past few days: first, there is a new variant; secondly, as the noble Baroness, Lady McIntosh, said, Covid cases have risen by 55% in the past week; and, thirdly, the UK Health Security Agency intends to stop funding the fantastically successful and important ZOE COVID Study app. I appreciate that this Government have an aversion to counting in general, but this app has been vital in tracking and understanding Covid-19, so how will the Government maintain their capacity to monitor this virus, which has not gone away?
I thank the noble Baroness for reminding noble Lords that the virus has not gone away. That is one of the reasons why we laid out the Living with Covid-19 strategy. The UKHSA, the Office for National Statistics, and a number of academics, will continue to monitor it. Noble Lords who have read all the articles during the pandemic will be aware of how many scientists are also producing data. We continue to monitor all that data and balance it up when making decisions. We are also prepared to stand up rapidly should there be any variants of concern.
My Lords, the Prime Minister has announced that at some stage there will be a major inquiry into Covid. Can the Minister assure the House that when it takes place, all scientific advice that has been received by the Government will be published? Can he also tell us whether he is aware of any scientific advice which has not yet been published?
If I was aware of any scientific advice that had not yet been published, I am not sure whether I would be unaware of it. I will try to find out. The Government have laid out the terms of the inquiry; only last week I sent the link to some people, which I am very happy to send to the noble Viscount, for the points that should be considered by the inquiry. During the pandemic, and even now, we continue to receive a wide range of scientific advice. The wonderful thing about scientists is that they continue to debate with and contest each other. Some say that we should never have had these measures, some that we lifted them too early, and some that you can never get the timing right, whatever you do.
My Lords, as we enter an economic war, are the Government not absolutely right to balance the scientific advice with the economic consequences, and that by pursuing the policies which they have since before Christmas, they have put the economy in a strong position which guarantees that we can do as much as we can to help the most vulnerable people in our country?
I thank my noble friend for making that point. It is incredibly important, not only within the medical community, where we were asked, for example, to lift some restrictions so that we could start tackling the backlog. We were asked ‘by mental health experts to ensure that people were getting access to mental health care who had been unable to because of the pandemic. We have also balanced this against economic and social considerations—sometimes these things affect each other. Being unable to work and facing uncertainty can be one of the most destabilising things and can affect people’s mental health. My noble friend is right that we have had to balance a number of issues in the round.
Electric Vehicles: Charging Points
My Lords, the Government and industry have supported the installation of over 29,500 publicly available charging devices, including over 5,400 rapid devices. The Government have also supported the installation of over 300,000 charge points in homes and businesses and have announced over £1.3 billion to further accelerate the rollout of charging infrastructure.
My Lords, I am grateful to the Minister for that information. However, do the Government accept that if the target of switching to electric cars is to be met, at least two things must happen? When an electrically powered car driver goes any long distance, he or she is nervous that they cannot charge to come back. Even more importantly, even in areas where there are plenty of charging points, they are nearly always taken up by cars that are not charging. That is a complaint from electric car drivers. The charging points are there in parts of London, but they cannot get to them because other people are using them as parking spaces. Can we do something about that?
I recognise the point raised by the noble Lord; there has been some media coverage about that recently and we are looking at what we can do. However, people are never more than 25 miles away from a rapid charger on the strategic road network, which is particularly good for long distance journeys. The Government have done an enormous amount of consultation over the past year on how we can mandate for new standards and for reliability, ensure that consumers can access support if they have trouble charging, make it easier for consumers to find the right charging point and its availability by publishing open data, and ensure that the costs are published as well, so that consumers can compare the costs of different chargers.
My Lords, as we might be working late, I decided to drive in today. The first three public EV chargers were broken. I finally found a free and available fourth. Does the Minister understand that many people who have bought EV cars are now starting to regret it, and can she step away from this market-driven approach to rolling out infrastructure which at present is random, unreliable, and desperately inadequate?
I cannot agree that it is unreliable and desperately inadequate. We cannot control from Whitehall where EV chargers are—that would be utterly mad. We must work with the local delivery partners—the local authorities—and the private sector. At the end of the day, it will be the private sector which puts these charges in place. It will not be Whitehall, so we must ensure that the local authorities have the skills to figure out where their communities need their chargers. We are particularly concerned about those who do not have access to off-street parking, and we will be asking local authorities to focus on those people.
My Lords, as a Westminster resident I enjoy access to a fast-growing network of relatively inexpensive and efficient chargers fitted into existing lamp-posts, in a partnership between the city council and ubitricity. How many towns and cities benefit from this very practical approach? What can the Government do to incentivise these partnerships between local authorities and commercial providers?
The noble Baroness is right: there are some excellent interventions. That is why we must upskill the local authorities and increase their knowledge of what is going on. The Department for Transport has funded the Energy Saving Trust. It runs a local government support programme and provides free impartial advice. There are webinars on best practice, particularly in rural areas, and we are about to publish the EV infrastructure guide, a technical guide which will cover the sorts of things which the noble Baroness talks about. It will enable local authorities to find the right solution for their area.
Sadly there are not enough. I understand that there are some available in the car park for another place. As I have said previously, it is not for the Government to install charging points in the Palace of Westminster, although I encourage the authorities to do so.
My Lords, about a third of households have no access to off-street parking or a personal garage and miss out on lower costs from charging cars using cheaper overnight electricity. While 76% of the richest households have access to off-street parking, the same is true for only just over half of the poorest fifth of households. Put another way, only 51% of private renters, 38% of housing association tenants, and 26% of local authority renters, have access to off-street parking, compared with 81% of homeowners. What do the Government intend to do, and by when, to address this charging divide which works against the less well off, and to reduce the disparity in prices across the charging network? We have heard a glowing picture from the Government just now about what is happening. They say that they have spent a lot of money. It seems to have been a lot of money that has created a charging divide, and from what the Minister has said, it is largely the fault of local authorities. I think that it is the fault of the Government.
One moment; the EV home-charge scheme, which the noble Lord will know was previously focused on single-unit owner-occupied households, is now being closed to those households and is focusing entirely on those people who are in rented or leasehold accommodation, specifically without their own designated parking. We are switching that very important source of funding to ensure that those who do not have the luxury of off-street parking and home ownership can get a charger.
My Lords, can the Minister please confirm that users of the new charging points will be paying for the electricity they consume? I was surprised to learn from one London borough that initially, the electricity was provided free when they installed charging points.
My Lords, does the Minister recognise that the reliability of the charging points, particularly on the motorway network, is a real problem? Has she had a chance to consider the idea that I put forward a couple of months back about increasing the penalties on providers, so that they are properly punished and incentivised to provide a decent service to EV motorists?
This links into the measures that we announced in December 2021, when we said we were looking at a mandate for new standards for reliability. Obviously, if there are new standards for reliability, there will have to be penalties if companies do not meet those standards.
My Lords, the increasing number of charging points for electric vehicles and the demand for heating homes through heat pumps will add quite a lot of extra demand on the national grid, which is currently ill equipped to meet it. What urgent attention is being paid to managing demand—for example, by increasing insulation in homes and perhaps by reducing speed limits?
My Lords, we recognise that there will be an increased demand on energy infrastructure, both overall and particularly during peak periods. We are confident that the existing operators will be able to meet that demand, but of course we are working with the sector to ensure that it is efficient and sustainable. One of the things we are doing, for example, is looking at V2X technology, which is when you export energy from a vehicle back into the grid when it is not being used. Indeed, we have invested £30 million of funding in V2G projects—from the vehicle to the grid—and that is one of the ways in which we will ensure that our energy networks can cope.
My Lords, the aforementioned electricity lamp post system is of course excellent when there is not another car parked there that is not charging. The reason it is excellent is that every model of car can use the lamp post. Are the Government considering legislation such that there is complete compatibility in the charging stations, so that every model of car can use every charging station, which is not the case at the moment?
My Lords, I am just old enough, as the House was reminded earlier, to remember us being told by my Government what a great idea it was to move to diesel. My question to the Minister is about electricity consumption. Given the commitment to all-electric cars by the middle of the 2030s, plus cryptocurrency, plus the exponential growth of smart technology, plus 5G—I could go on but I will not—can the Minister assure us that a very solid impact assessment has been made of the aggregate demand of these technological developments on the requirement for electricity generation in 15 years’ time? Can she tell us where it is going to come from?
Unfortunately, the noble Lord’s question goes a little bit beyond my brief today, and indeed beyond my department. However, I will be very happy to speak to my colleagues in BEIS, who have responsibility for energy demand in the future, and ask them to write to him to set out exactly how the forecasts are being made and how they will be met.
Saudi Arabia: Mass Execution
Private Notice Question
My Lords, we are deeply concerned by the execution of 81 individuals on 12 March. The United Kingdom strongly opposes the death penalty in all countries and in all circumstances as a matter of principle. The UK ambassador has already raised the UK’s strong concerns with the Saudi national security adviser and its Deputy Foreign Minister. Her Majesty’s Government regularly raise concerns with Saudi authorities regarding juvenile death penalty applications. The British Embassy in Riyadh closely monitors all juvenile death penalty cases, and routinely attempts to attend trials.
My Lords, Saturday’s massacre is the largest execution in Saudi Arabia’s history. The Ministry of Interior, in explaining, said that it
“will not hesitate to deter anyone who threatens security or disrupts public life”,
demonstrating just how low the bar is for execution in that country. Child defendants remain on death row, despite the Saudis’ promises to end the death penalty for minors. Abdullah al-Howaiti, a child defendant, is at particular risk. I understand that the public prosecutor continues to seek the death penalty for him. It is reported that the Prime Minister will meet Crown Prince Mohammed bin Salman this week. If that is the case, will the noble Earl confirm that the Prime Minister will put the United Kingdom’s commitment to human rights above any trade deal premised on acquiescence to bloodshed?
My Lords, the noble Lord, Lord Collins, raises the issue of the juvenile death penalty. As I said in my earlier Answer, the British embassy at Riyadh closely monitors all juvenile death penalty defendants and regularly attempts to attend their trials. In April 2020, the Saudi Human Rights Commission announced a moratorium on death penalty sentences for individuals who committed discretionary crimes of violence. The noble Lord also mentioned our engagement with the Saudi Arabian Government, and I can say that engagement carries on, at all levels and at every opportunity. At every opportunity in the future, we will continue to raise issues relating to the use of the death penalty in Saudi Arabia.
My Lords, the Government’s last human rights report highlighted what they considered to be real progress by Saudi Arabia on the use of the death penalty, but that has now been horrifically reversed. Indeed, the Government’s own human rights report singled out that Saudi Arabia does not allow external witnesses to its trials. Last week, the noble Lord, Lord Grimstone, and officials were offering Saudi Arabia greater market access to our aerospace industry and now we are in negotiations to offer it preferential access to the City of London. Will the Government give an indication that they are not just concerned about this but will remove preferential market access for Saudi Arabia in the UK economy for grievous and horrific human rights abuses?
My Lords, the noble Lord is quite right in how he has described these abuses, and I was personally shocked to read the news over the weekend about the execution of 81 individuals. The noble Lord also mentioned human rights: yes, we are particularly concerned over a variety of human rights issues relating to arrest and the continued detention of individuals, and my noble friend Lord Ahmad raises this on all levels. All these issues are always under review. We have a very close relationship with Saudi Arabia and this enables us to have full and frank discussions over these issues.
My Lords, there are a number of areas where there has been successful engagement with Saudi Arabia—for example, in relation to women’s rights. The UK has consistently called for women in Saudi Arabia to be able to participate fully in society. Since 2018, women’s rights and empowerment have improved significantly.
My Lords, it is important to have trade deals throughout the international community. At the moment, with the issues relating to insecure energy supplies, it is particularly important that we keep talking to our close allies across the world.
My Lords, I am unsure about the answer to that question; I will get further information to my noble friend. The engagement that we continue to have with the Saudi Government is extensive. Over the last six months, my noble friend Lord Ahmad has visited Saudi and has also had a meeting with Saudi Ministers here in London. Those continual engagements enable us to have these serious conversations.
My Lords, do not these executions—there were 67 in 2021, 27 in 2020 and now these 81—demonstrate a horrific and rather brutal pattern? Sometimes these executions are carried out using the sword, and crucifixion has even been used. The mortal remains of those who have been executed are put on public display. As we heard from the noble Lord, Lord Collins, even children have been involved. Will the noble Earl undertake to speak to his colleagues in the Foreign Office about engaging scholars at Al-Azhar Mosque in Cairo to see whether we can engage people who are academics and have a firm belief in civilised values, so that we can hear Muslim voices being raised against this barbarism?
My Lords, will the noble Earl give us a specific undertaking that the Prime Minister, if he sees Mohammad bin Salman in the coming days, will raise this topic and these concerns with him? We all recognise the importance of oil and energy in the present global crisis over Ukraine, but that cannot be a reason for failing to raise these very grave abuses with the man with the greatest authority in that country.
My Lords, the noble Lord makes an excellent point, as the whole issue of these executions is at the forefront of our minds, and we continually raise the use of the death penalty at any meetings that take place. We will certainly do so at any meetings in the near or immediate future.
My Lords, the United Kingdom has always been clear that Khashoggi’s murder was a terrible crime. We condemn his killing in the strongest possible terms, which is why we have sanctioned 20 Saudi nationals involved in the murder under the global human rights regime. The former Foreign Secretary raised the issue during his visit to Riyadh in March 2020. We have consistently set out our grave concerns, both publicly and privately.
My Lords, on human rights in general, and the rights of children in Saudi Arabia, can the noble Earl assure us that the rights of children are being explored? I do not think that I am the only one in the House who feels that this was very cynically undertaken this weekend, as there was a hope that it would be hidden away.
I thank the right reverend Prelate for that question and bringing to our attention the issue of juveniles. However, I find it difficult to believe that, even with what is happening around the world, anybody would be able to hide what has happened over the weekend.
My Lords, would it be totally inaccurate to characterise the Government’s attitude as, “These executions are unfortunate, but other considerations transcend them”? I am afraid the Minister has been very disappointing this afternoon. Surely we can be more effective; we can push the Government of Saudi a bit harder. Would we perhaps be more effective if we worked in conjunction with our European friends and had an agreed approach to Saudi? Are the Government thinking of doing that?
My Lords, I am afraid the noble Lord is inaccurate. If he had had only three-quarters of an hour to prepare for this, he might have the same difficulty with it. It is quite clear that we engage very strongly. I know that noble Lords will think, “Oh, he is repeating the same line again”, but the fact is that we do have very strong relationships with and are a strong ally of Saudi Arabia. The fact that we are in that position means that we can have these full and frank discussions.
Does the Minister accept that it is not very reassuring to be told frequently, as we have been in his replies today, that there are ongoing and close discussions with the Saudis on these issues, and that it is the relationship we have with the Saudi Government that enables us to have these endless full and frank discussions on human rights issues? Is it not a disturbing fact that these full and frank discussions seem to have had no effect at all on the behaviour of the Saudi Government?
My Lords, all I can say to the noble Lord is that the situation is indeed dire, in so far as 81 people have been executed over the weekend—as I said, I was personally shocked—and it is a matter that we are following up at the highest level.
My Lords, the noble Earl has twice failed to answer direct questions from my noble friends Lord Collins and Lord Liddle. Will the Prime Minister raise these issues in his discussions? If the noble Earl does not know the answer, will he say whether he would do so himself were he in the Prime Minister’s position?
Luckily, I am not in his position, but I think I did answer the question asked by the noble Lord, Lord Collins. I said to him that, if such meetings happen in the future—I am sure there will be some in the immediate future—these issues will be raised at the highest level.
My Lords, will the Government publish a full report on the judicial and security assistance that the UK provides to the Kingdom of Saudi Arabia, and can the Minister assure us now that none of that assistance played any role in the imposition or execution of these death penalties?
My Lords, it seems to me that the Government need to look for levers to reinforce to the Saudi Administration that this sort of activity and behaviour is simply unacceptable to this country. Maybe if in future we did not allow sports-washing to make a regime sound legitimate, helpful and interested in our culture, the Saudis would learn the lessons. What is happening at Chelsea might be brought home to them, so that they understand that there are consequences for how they behave that will be played out here so that our culture is not subverted in that way.
The noble Baroness makes some really good points as far as sport is concerned and how important it is. She might have been referring to the purchase of Newcastle United. As she is aware, the Saudi Arabian Public Investment Fund is a significant investor there; it operates across a wide sector. We welcome the PIF’s purchase of Newcastle United, but we never had a role at any point in the club’s prospective takeover. This has been a commercial matter for the Premier League, but the noble Baroness makes some good points relating to culture.
Social Security Benefits Up-Rating Order 2022
Guaranteed Minimum Pensions Increase Order 2022
Motions to Approve
Goods Vehicles (Licensing of Operators) (Amendment) Regulations 2022
Motion to Approve
Cumbria (Structural Changes) Order 2022
North Yorkshire (Structural Changes) Order 2022
Somerset (Structural Changes) Order 2022
Motions to Approve
My Lords, I beg to move the Motions standing in my name on the Order Paper en bloc.
My Lords, I do not want to detain the House long on this matter. I should declare my interest as a member of Cumbria County Council. I would like to put on record a couple of points. First, I thank the noble Lord, Lord Greenhalgh, for the care and attention he paid in the debate we had in Grand Committee on these issues last week. I think that he listened.
Secondly, I put on record my view that the decision we are implementing today, which was taken last summer by Robert Jenrick—late lamented in his role as Secretary of State—to split Cumbria into two unitary authorities is unsustainable, possibly in the short term and certainly in the medium term. In the short term, it involves splitting services that are vital yet fragile, such as social care and child protection, in the space of 12 months. I fear the consequences for the most vulnerable in our society as a result. On longer-term sustainability, the Government are imposing unnatural communities on Cumbria. I cannot believe that these new authorities will sustain public support in the longer term.
My Lords, we debated this at some length in Grand Committee. The noble Lord made those points very eloquently. Since then, I have agreed to meet with him and the current county council leader. In fact, I also disclosed and put on record that I have never been to Cumbria and I hope to put that right.
It is a great shame; I am hearing “shame” from my own Benches. I want to make sure that I remedy that fact and get up to Cumbria. It is clearly a very nice place.
It does not need to be the case that councils split the commissioning of adult social care and social services. Even though they are split into two county councils, they can commission together. As a local authority leader I did that myself, as part of the late lamented tri-borough arrangements, whereby the commissioning of adult social care and elements of children’s social care happened collaboratively with neighbouring London boroughs. I am sure that could happen in Cumbria as well. So where there is a will, there is a way and I am sure the leaders of the two new local authorities will seek to build bridges rather than erect walls.
Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2022
Motion to Approve
Small Business, Enterprise and Employment Act 2015 and Pubs Code etc. (Amendment) Regulations 2021
Motion to Approve
Supply and Appropriation (Anticipation and Adjustments) Bill
Second Reading (and remaining stages)
Bill read a second time. Committee negatived. Standing Order 44 having been dispensed with, the Bill was read a third time and passed.
Nationality and Borders Bill
My Lords, before we move on, I will make some remarks about devolution and this Bill. I begin by placing on record my thanks to the devolved Administrations for their engagement at both official and ministerial level.
The majority of the Bill’s provisions apply across the UK. Some clauses extend only to England and Wales because the relevant policy areas relate to matters that are devolved in Scotland and Northern Ireland. These are: civil legal services; arrangements for prisoners who are liable to removal from the United Kingdom; and some specific measures relating to support for potential victims of modern slavery.
I want to be clear that, in the view of the UK Government, the provisions of the Bill that have UK-wide application relate strictly to reserved matters. This means that none of the Bill’s provisions engage the legislative consent process. We have therefore not sought legislative consent from the devolved legislatures.
I advise your Lordships’ House that the Scottish Parliament has approved a Motion, lodged by the Scottish Government, to withhold legislative consent in respect of specific measures relating to age assessment and modern slavery. But it is the view of the UK Government that these measures relate strictly to reserved matters and therefore did not engage the legislative consent Motion process and do not require legislative consent.
The Senedd Cymru has also approved a Motion, lodged by the Welsh Government, to withhold legislative consent in respect of specific measures relating to age assessment and to powers to make consequential provisions. Again, in the view of the UK Government, these measures relate to reserved matters and therefore did not engage the legislative consent Motion process and do not require legislative consent.
For the sake of completeness, I will say that the Northern Ireland Executive has not lodged a Motion relating to the Bill in the Northern Ireland Assembly.
We look forward to continued engagement with the devolved Administrations as we move to operationalise the Bill and the wider new plan for immigration.
Clause 44: Illegal entry and similar offences
1: Clause 44, page 41, line 37, leave out “, (E1)”
Member’s explanatory statement
This tidying-up amendment is consequential on Amendment 55 at report stage which removed an inserted subsection that would have created an offence for ‘arriving’ in the UK without entry clearance.
I apologise—the House will have to put up with me rather than my noble friend Lord Coaker. I note what the Minister said about reserved matters and the approach and feelings of the devolved Administrations. One only hopes that these matters can be resolved in a satisfactory way acceptable to all parties.
I will speak to the amendments tabled by my noble friend Lord Coaker. All the amendments in this group are tidying-up amendments, and most are consequential on changes this House saw fit to make to the Bill on Report. We on these Benches are content with all the amendments proposed today.
Amendments 1 to 6 in the name of my noble friend Lord Coaker make minor, technical changes to what is now Clause 44 of the Bill. On Report this was Clause 39, and your Lordships’ House voted to remove a subsection that provided for a new offence of arrival into the UK. These amendments are consequential on that change.
Amendment 8, also in the name of my noble friend Lord Coaker, is consequential on the decision of this House to remove Clause 58 from the Bill on Report. Clause 58 would have provided for the credibility of trafficking victims to be damaged by late compliance with an appropriate trafficking notice. This tidying-up amendment removes a now-defunct reference to Clause 58, which is no longer part of the Bill.
Amendment 10, also in the name of my noble friend Lord Coaker, removes a subsection from Clause 70 on child victims of modern slavery. This clause was added to the Bill on Report as an amendment led by my noble friend Lord Coaker. The subsection being removed disapplied what was then Clause 64 to child victims. However, Clause 64 was then removed and replaced by a subsequent amendment. Amendment 10 removes the reference to Clause 64, which no longer exists in its original form.
I have also been asked to introduce Amendment 9 as the noble Lord, Lord McColl of Dulwich, is unable to be here; he sends his sincere apologies to the House. As a result of the number of votes on Part 5 of the Bill, the noble Lord has tabled this amendment to ensure that there is consistency across the Bill. Like other amendments, Amendment 9 is a tidying-up amendment and does not introduce new issues of principle. It simply removes the previous definition of “public order”, which is no longer used due to changes made to Clause 67 agreed by your Lordships on Report. The noble Lord, Lord McColl of Dulwich, has asked me to put on record his thanks to all those who last week supported his amendment to give support and leave to remain to confirmed victims of modern slavery. He also made the point, with which I and others strongly agree, that we regret Part 5 being included in the Bill at all, but the Bill still leaves this House with significant improvements, which we hope the other place will support.
Finally, I am grateful to the noble Baroness, Lady Stroud, for her amendments, which are consequential on amendments that these Benches supported on Report. I also welcome Amendment 11 from the Minister, which reflects the decision of this House to remove Clause 9 from the Bill. I beg to move.
My Lords, I can be fairly brief. I support the amendments put forward to your Lordships’ House by the noble Lord, Lord Rosser. In particular, I refer to Amendment 9 in the name of the noble Lord, Lord McColl. I think we would all want to extend to him a speedy return to his place and thank him for all the work he does on behalf of victims of modern-day slavery. I mention my own interest as a trustee of a charity, the Arise Foundation, that deals with modern slavery and human trafficking.
It has been a pleasure to have co-signed amendments to Part 5 of the Bill in the noble Lord’s name but, like the noble Lord, Lord Rosser, I would have preferred that Part 5 was not here at all. I hope that the Minister, when she comes to reply, will be able to give us some indication about the cart-before-the-horse point that was made frequently during discussions on Part 5—in other words, when the new legislation on modern slavery will be laid before your Lordships’ House. I realise that she cannot give us an exact date, but is there some rough estimation of when we might expect to see that? After all, all these issues will be back on the table and open to amendment at that time.
I am sure that all noble Lords will join me in commending the noble Lord’s perseverance and persistence in the cause of improving the support and outcomes for victims of modern slavery over many years. I support his tidying up of Amendment 9 and trust that noble Lords will do the same. We have had the opportunity to improve the Bill for victims of modern slavery, and I am proud of what the House has done in undertaking that. There are still areas of concern, and the Government will know that the outcomes of the Bill will be monitored closely by those who work with victims of human trafficking.
In concluding, I ask the Minister whether the Government will publish the statutory guidance cited in Part 5, in Clause 64, before ping-pong is completed. If not, will it be published during the current Session of Parliament?
My Lords, on these Benches we support the amendments, but I ask the Minister to go back to the—to me quite worrying—announcement she made at the beginning of this debate, regarding the legislative consent Motions or otherwise. The fact that the Scottish and Welsh Governments do not support the Bill—I assume that is the political and, if you like, philosophical reality behind their stance—seems to raise not just political but practical and procedural issues and matters of enforcement.
I will refer to one issue in the Bill: the arrival or entry into the UK. If asylum seekers arrive at the coasts of Scotland or Wales rather than England, what is to happen? I understand that the Minister’s tone had to be quite neutral and not alarmist, but there are very serious issues related to this. I think the House would be grateful if the Minister were able to flesh out the position a little more.
We have greatly improved Part 2 of the Bill, because it no longer flies in the face of the 1951 refugee convention as understood by our courts, all the other parties to the convention and UNHCR, the institution given the responsibility of overseeing the implementation of the convention. I really hope the Minister will ensure that her colleagues in the other place understand that many in this House feel very strongly about this and would be unlikely to change our view if we were again asked to consider the introduction, contrary to the convention, of a first safe country rule.
There is never a good time for a unilateral reinterpretation of international obligations, but there could not be a worse time than when there are 2.7 million refugees in continental Europe and the Russians are trampling on the 1949 Geneva conventions. We really need to hang on to our reputation for believing in a rules-based system and the rule of law.
My Lords, I support all the amendments because they all seem to make complete sense in terms of tidying up, including those in the Government’s name. I too was disturbed by the announcement about the devolved legislatures—it expresses the deep unease about the Bill out in the country as a whole. I ask the Minister to take away from this House a real concern that this is not the right time to press ahead and that Ukraine has raised questions about the Bill and whether some kind of pause ought to be considered.
My Lords, I thank the noble Lord, Lord Rosser, for outlining his points. I will start with the government amendments, which are two tidying-up amendments for consideration by your Lordships’ House. The first is a minor drafting amendment to Clause 47, which relates to working in United Kingdom waters. The amendment removes a definition of the term “United Kingdom waters” from the clause. This definition is superfluous as the term is not actually used in the Bill. The amendment therefore helps to clarify Clause 47, so I commend it to your Lordships’ House.
The second amendment is necessary to resolve a problem that has arisen in connection with Schedule 2 to the Bill. This schedule relates to deprivation of citizenship. Its inclusion in the Bill was agreed when noble Lords voted to accept amendments on this topic moved on Report by the noble Lord, Lord Anderson of Ipswich. The problem obviously arises because after agreeing the amendments from the noble Lord, Lord Anderson, your Lordships’ House then voted to remove the substantive deprivation of citizenship clause from the Bill. In consequence, the noble Lord’s amendments were also removed and the schedule was left as an orphan, with no clause to establish it as part of the Bill. I have therefore given notice of my intention to oppose the question that Schedule 2 be the second schedule to the Bill, to ensure that the Bill is consistent.
I also note the 11 tidying-up amendments tabled by the noble Lord, Lord Coaker, and my noble friends Lord McColl of Dulwich and Lady Stroud. The Government will not oppose these amendments, but we will doubtless return to consider both them and the substantive clauses they amend at ping-pong. May I just say something about my noble friend Lord McColl? I had noticed that he did not seem very well recently, and I am sure the whole House will join me in wishing him a speedy recovery.
On the question from the noble Lord, Lord Alton, about a modern slavery Bill, I say: as soon as parliamentary time allows. I cannot give an exact date to the noble Lord. As for guidance being available before ping-pong, I will certainly let him know the intended timetable for the guidance.
On the point about the LCM for Scotland, Wales and Northern Ireland, the provisions of the Bill that have Ukraine-wide application are strictly reserved matters but I say to noble Lords that officials will continue to engage on the specifics of operationalisation.
Amendment 1 agreed.
Amendments 2 to 6
2: Clause 44, page 41, line 42, leave out paragraph (e)
Member’s explanatory statement
This tidying-up amendment is consequential on Amendment 55 at report stage which removed an inserted subsection that would have created an offence for ‘arriving’ in the UK without entry clearance.
3: Clause 44, page 42, line 8, leave out “, (E1)”
Member’s explanatory statement
This tidying-up amendment is consequential on Amendment 55 at report stage which removed an inserted subsection that would have created an offence for ‘arriving’ in the UK without entry clearance.
4: Clause 44, page 42, line 10, leave out “, (E1)”
Member’s explanatory statement
5: Clause 44, page 42, line 18, leave out “, (E1)”
Member’s explanatory statement
6: Clause 44, page 42, line 21, leave out “, (E1)”
Member’s explanatory statement
Amendments 2 to 6 agreed.
Clause 47: Working in United Kingdom waters: arrival and entry
7: Clause 47, page 47, line 2, leave out “and “United Kingdom waters” have” and insert “has”
Member’s explanatory statement
This is a minor drafting amendment to remove a definition of a term not used in inserted section 11B of the Immigration Act 1971.
Amendment 7 agreed.
Clause 63: Provision of information relating to being a victim of slavery or human trafficking
8: Clause 63, page 62, line 40, leave out from “date” to end of line 41
Member’s explanatory statement
This tidying-up amendment is consequential on Amendment 66 at report stage which left out a Clause.
Amendment 8 agreed.
Clause 69: Conclusive grounds: support and leave to remain for victims of slavery or human trafficking
9: Clause 69, page 68, leave out lines 4 to 7
Member’s explanatory statement
This is a tidying-up amendment.
Amendment 9 agreed.
Clause 70: Slavery and human trafficking: victims aged under 18 years
10: Clause 70, page 68, line 31, leave out subsection (6)
Member’s explanatory statement
This is a tidying up amendment. This subsection disapplied a Clause of the bill (Clause 64 at Lords Report Stage) to children. However that Clause was then removed and replaced by a subsequent amendment. This amendment corrects this Clause for the updated version of the bill.
Amendment 10 agreed.
Schedule 2: Deprivation of Citizenship without notice: judicial oversight
11: Schedule 2, leave out Schedule 2
Member’s explanatory statement
Schedule 2 was inserted by amendment at Report Stage, but was introduced by what was then Clause 9, which was then removed from the Bill. The Schedule now has nothing in the Bill to introduce it, and the provisions in it are wholly dependent on the amendments to the British Nationality Act 1981 that were made by Clause 9: it does not make sense on its own.
Amendment 11 agreed.
Schedule 4: Removal of asylum seeker to safe country
Amendments 12 and 13
12: Schedule 4, page 93, line 23, leave out paragraphs 1 and 2
Member’s explanatory statement
This amendment leaves out paragraphs 1 and 2 of Schedule 4 to the Bill, which would amend section 77 of the Nationality, Immigration and Asylum Act 2002 (no removal while claim for asylum pending). It is consequential to Amendment 35 at Report Stage which was agreed on division.
13: Schedule 4, page 94, line 29, leave out paragraph 4
Member’s explanatory statement
This amendment is consequential to the amendment to leave out paragraphs 1 and 2 of Schedule 4. It is consequential to Amendment 35 at Report Stage which was agreed on division.
Amendments 12 and 13 agreed.
My Lords, if I may, I will just detain the House a little longer to mark the end of this Bill’s passage through your Lordships’ House. It has been very wide-ranging. It has had five thorough days in Committee and three days on Report. During this time, in response to the terrible situation in Ukraine, we have added important measures to the Bill which introduce new visa penalty provisions for countries posing a risk to international peace and security. I was very pleased to see support for these measures across the House.
I was not so pleased, though, by the removal of some important measures, the aim of which was to find a long-term solution to long-term problems in our asylum and illegal migration systems which successive Governments have faced over decades. Those amendments will now be considered in the other place and no doubt we will debate them soon.
Notwithstanding that, I want to take this opportunity to recognise the contributions of those who have supported me in steering the Bill through the House. In particular, I thank my noble and learned friend Lord Stewart of Dirleton, my noble friend Lord Wolfson of Tredegar and my commendable noble friend Lord Sharpe of Epsom for sharing the load from the Front Bench.
I also express my thanks to all noble Lords who stayed up very late on a number of occasions and thank Members on the Front Bench opposite for their engagement on the Bill, accepting that there have been some areas of disagreement between us. I thank in particular—because I cannot thank everyone—the noble Lords, Lord Coaker, Lord Rosser, Lord Paddick and Lord Anderson of Ipswich, and the noble Baroness, Lady Hamwee.
I also extend my thanks to officials at the Home Office and the Ministry of Justice, as well as lawyers and analysts, not only in those two departments but across government. On my behalf and my ministerial colleagues’, I extend our thanks and appreciation to all of them for their professionalism over the past months. I also thank the teams in our respective private offices.
There should be no doubt about the merits of the Bill’s ultimate objectives, namely to increase the fairness and efficacy of our system, to deter illegal entry into the UK and to remove more easily from the UK those with no right to be here. That is what the British people voted for, it is what the British people expect and it is what the Government are trying and determined to deliver. In view of the crises now confronting our world, it is surely now more important than ever that the Bill moves swiftly to become law. On that note, I beg to move that the Bill do now pass.
I will not detain the House for long but I think that I ought to say a few words; first, to thank the Minister, in particular, for the number of meetings that I know she has held—I suspect that she has lost count—and her willingness to respond in writing and in some detail on issues that have been raised, which is certainly appreciated. I also thank the noble Lords, Lord Wolfson of Tredegar and Lord Sharpe of Epsom. I will not comment too much about people who stayed late since I probably fell rather short in that regard myself. Some of us made sure we left in time to get last trains, but not everybody did.
I take this opportunity to thank my Front-Bench colleagues, in particular my noble friends Lord Coaker and Lord Ponsonby of Shulbrede. I cannot possibly mention everybody involved but I want to thank the large number of contributors from the Back Benches, not least on my own side, including my noble friends Lady Lister of Burtersett and Lord Dubs—they are by no means the only ones—as well as those from the Government Back Benches, the Lords spiritual, the Cross Benches and, of course, the Liberal Democrats. I hope that noble Lords will forgive me for not going through and naming everybody; I would be here all night if I did. With apologies, of course, I must also thank the Greens; I am on the verge of getting into real trouble.
I thank members of the Government’s Bill team as well. I know that they have to work particularly hard and I am sure they must get frustrated at times with some of the contributions that are made, not least by myself, but they always deal with us in a good-natured way; we appreciate that very much indeed. I also thank the staff in our own office here in the Lords, not least Grace Wright, who covers Home Office matters and without whose support and backing on this Bill, frankly, I would have been in real difficulty. I appreciated that very much; I am sure that that applies to my noble friends Lord Coaker and Lord Ponsonby of Shulbrede too.
As the Minister said, a number of amendments have been passed. They have come not just from the Opposition Front Bench—indeed, a minority may have been led by us—but from all parts of the House. I think that sums up the frustration—that is probably understating it—that many people feel about some of the content of the Bill. I can only say that I hope that the Government, and the other place, will give full and careful consideration to the changes and amendments that have been made to this still-controversial Bill by your Lordships’ House.
As the Minister has mentioned, we spent five days in Committee and three on Report. I appreciate that the Minister, on behalf of the Government, will not be excited by the outcomes of all the votes but, bearing in mind that those amendments did come, and in many cases had support, from all parts of this House, the least we can expect from the Government and the other place is that they give them full and careful consideration.
My Lords, following the invasion of Ukraine, it has been interesting to note how the arguments of some noble Lords have acquired a hollow ring. We were implored to listen to public opinion to restrict immigration, but this Bill is not about restricting the over 90% of immigration to the UK that is nothing to do with refugees. This Bill is targeted at asylum seekers like those fleeing Ukraine, who, in recent years, accounted for about 4% of immigration to the UK, and it is aimed at victims of modern slavery: people being trafficked and exploited by ruthless people smugglers as well as many being exploited in this country who were born in the UK.
Public opinion shows that British people welcome refugees; this Bill shuns them. It is consistent with the Government making another grave mistake in using the new-found freedom from the European Union to place barriers in the way of Ukrainian refugees instead of waiving visas as the rest of the EU has done. To paraphrase the Irish Prime Minister yesterday, we can deal with any security issues once they are here—the priority is humanity.
I thank my noble friends Lady Hamwee and Lady Ludford, without whose support I would not have made it through this ordeal, as well as the Labour Front Bench and Back Benches, our respective support staff, Elizabeth Plummer and Grace Wright, and all those organisations and individuals who have supported us in opposing this truly dreadful Bill, including the noble Baronesses, Lady Jones of Moulsecoomb and Lady Bennett of Manor Castle.
I thank the tripod of Ministers—the noble Lords, Lord Wolfson of Tredegar and Lord Sharpe of Epsom, and the noble and learned Lord, Lord Stewart of Dirleton —for supporting the noble Baroness, Lady Williams of Trafford, who has striven uncomplainingly through unreasonably long sittings due to the mismanagement of the timetabling and the deliberately unco-operative attitude of the Government. This House should not have been debating issues of this gravity at 3 o’clock in the morning or voting on them after midnight.
The elected House passed this Bill and, therefore, sadly, so must we. Hopefully, we have taken some of the sting out of it. In the light of Ukraine, simply because it graphically illustrates the barbaric nature of this Bill, we now ask the other place to think again and to leave in place the improvements that we have made. We on these Benches earnestly hope that it will.
My Lords, I place on record my thanks to the noble Baroness, Lady Williams of Trafford. She has heard a lot of complaints about the things that Members of your Lordships’ House disagree with, and I associate myself with some of those complaints, but this Bill has been something of an endurance test. At a quarter to one in the morning last week, as we debated citizenship fees, I thought that maybe this was not the way to conduct parliamentary business. However, I was particularly pleased that, during the course of our proceedings, the noble Baroness was specifically recognised and raised to the Privy Council; it was a just reward for the way in which she serves your Lordships’ House.
I notice that the noble Lord, Lord Patten of Barnes, has been listening in the Chamber this afternoon. He spoke in our debate last week about the position of young Hong Kongers. Along with the noble Lord, Lord Sharpe, the noble Baroness was incredibly helpful in incorporating into this Bill something that will really benefit young people in Hong Kong who, born after 1997, were not part of the BNO scheme that their parents had been part of. I have already seen emails from people in Hong Kong expressing their thanks to your Lordships’ House.
Finally, I extend my thanks to Members from all sides who supported my amendment on providing safe and secure routes out of genocide in various parts of the world. I hope that that will not be lost in the maelstrom as we now proceed to ping-pong but will be given serious thought, and that maybe further discussion can take place as this Bill now proceeds to another place.
My Lords, I join the noble Lord, Lord Alton of Liverpool, in his comments about my noble friend the Minister, on her effective stewardship of this Bill and the recognition that she has recently received in becoming a member of the Privy Council.
I would like to add a slightly different perspective from that of some noble Lords who have spoken in this stage of the legislation. I support this Bill. I have not contributed to a great extent during its passage, but noble Lords may have noticed that I have spent a lot of time listening to the debates during its period in your Lordships’ House. Although I support the Bill, I do not do so blindly. I am a great believer in the parliamentary process, and I have always taken the view that the process of scrutiny always improves legislation. The Bill leaves this House to return to the other place stronger than when it arrived. I commend many noble lords who have worked to achieve that, including my noble friend the Minister and her colleagues on the Front Bench.
However, I will make a couple of other observations. One of the things that I have found a bit concerning in listening to some of the debates during this Bill’s period with us is the way in which some noble Lords in bringing forward their amendments, or those who have supported their amendments, have sought to suggest that people who are kind are people who will support them—in a way, trying to define those who oppose the Bill as the only people who speak for those who are kind and generous when it comes to those who come to our country in their time of need. As the Minister said earlier, it is important for us to recognise that the need and desire for stronger immigration controls, and the generosity of spirit of the British people to refugees and to asylum seekers, are not mutually exclusive. Actually, a lot of people feel strongly that it is because of stronger controls that people feel able to be that much more generous in the way they feel they want to be to those in need.
So, whatever happens when the other place considers the amendments that have been made in your Lordships’ House and sends the Bill back to us, I hope that when we get to that stage in the passage of this legislation we will all refrain from trying to monopolise or reserve for ourselves a definition of kindness that is not embracing of those who also want to see stronger immigration controls.
My Lords, this has been an incredibly tough Bill, not only because of the stamina necessary to take us through the very long hours—and sometimes the very long speeches—but because it has sometimes been emotionally draining. It was almost worse than the policing Bill, which I really thought was the worst Bill. On the other hand, we have had some great speeches.
I thank everyone who has thanked us. We have put quite a lot of energy into this, and at the same time we are well aware that it is the whole House that has made a real difference.
Bill passed and returned to the Commons with amendments.
National Insurance Contributions Bill
2A: Because it affects a charge on the public revenue, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.
My Lords, I welcome this small but important Bill that has returned to this House—I hope for the final time. I again thank the noble Lord, Lord Tunnicliffe, and the noble Baroness, Lady Kramer, who have previously contributed to an engaging debate on these important issues.
Two amendments have returned for our consideration today. Both relate to amendments previously narrowly passed in this House. They have returned to the House after being carefully considered by the other place and having been convincingly rejected, with financial privilege cited as the reason. I will summarise both.
The first amendment that the Commons have rejected would have added an additional condition to Clause 2 of the Bill whereby the freeport NICs relief would be available only if the freeport governance body maintained a public record of beneficial ownership of businesses operating in the freeport tax site. The House of Commons has considered the issue and decided that the amendment made in your Lordships’ House is subject to the financial privilege of the House of Commons and should not be accepted. However, I will mention what the Government are doing to ensure that firm and co-ordinated action is taken to crack down on economic crime, as I know that this House has kept the issue very much at the forefront of its mind, given the unfolding events in eastern Europe, and contributed vastly to furthering this particular debate.
For the record, following the commitments announced by the Prime Minister in February, the Government have brought forward the Economic Crime (Transparency and Enforcement) Bill to crack down further on illicit money and corrupt elites in the UK, and I look forward to following the discussions on that Bill very shortly. The Bill will introduce a register of overseas entities’ beneficial ownership of UK property to tackle foreign criminals using UK property to launder money; reform our unexplained wealth orders regime to remove key barriers faced by law enforcement and to help target more corrupt elites; and strengthen the Treasury’s ability to take action against financial sanctions breaches.
We have also published details of further upcoming legislation, including fundamental reform of Companies House, enhanced information-sharing powers and new powers to seize crypto assets, which are designed to clamp down on money laundering and illicit finance. The Prime Minister also confirmed that we will set up a new dedicated kleptocracy cell in the National Crime Agency to target sanctions evasion and corrupt Russian assets hidden in the UK, which means that oligarchs in London will have nowhere to hide. These measures are good news for the UK, enhancing our already strong reputation as an honest and trusted place to do business.
The Government have also taken steps to ensure that freeports are secure from money laundering, fraud and other illicit activities. First, to ensure that goods within the freeport customs site remain under customs control and the sites are robustly secured, both the freeport operators and businesses operating in the customs site will need to be authorised by HMRC and Border Force. Compliance checks on goods within the freeport will be carried out by HMRC and Border Force.
Secondly, to ensure sufficient security of the sites and prevent illicit activities, freeports will have to adhere to the OECD code of conduct for clean free trade zones and must maintain the current obligations on freeports set out in the UK’s Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
Thirdly, the Government also require each freeport governance body to undertake reasonable efforts to verify the beneficial owner of businesses operating within the freeport tax site and to make the information available to HMRC, law enforcement agencies and other relevant public bodies. This is a condition of freeport status and is a proportionate approach; it means that the local area and law enforcement can take effective measures to ensure the security and propriety of operations within the freeport.
Moving on, the second amendment that the Commons overturned would have provided the Treasury with an additional power to amend the period in which an employer can apply a zero rate of secondary class 1 NICs to a veteran’s employment. The House of Commons has considered the issue and decided that this amendment is subject to the financial privilege of the House of Commons and should not be accepted. There are existing levers within the Bill, such as increasing the upper secondary threshold and extending the overall period of the relief. The proposed additional powers are therefore not necessary. In addition, the Government consulted widely on this measure and have received positive feedback from stakeholders, as the House will know.
In conclusion, the Commons rejected both amendments on the basis of financial privilege. I hope that this House will accept the will of the elected House for the reason of finance privilege and pass this important Bill. I beg to move.
My Lords, I will be brief because we have a heavy agenda today, and we are going to be talking about the Economic Crime Bill, which is not unrelated to the issue I want to raise, which is that of freeports. The amendment this House introduced would have made that register of beneficial ownership of businesses in freeports public. There may have been a mistaken impression sometimes—I am sure the Minister did not intend this—that that information would be available to people, either through the properties register or through the revised Companies House register. But that is not the case except in the very rare circumstances where the business in the freeport would be a headquarters for the entity and therefore its legal address, or where the entity had sought to purchase property. Those are mistakes that no criminal organisation or kleptocrat would make. They would take advantage of the lack of disclosure that otherwise frames freeports.
I found the reasons the House of Commons gave quite extraordinary. It said this amendment was rejected:
“Because it affects a charge on the public revenue.”
If there is to be a register of beneficial ownership of businesses in a freeport, uploading that to a public website rather than the internal site essentially has no cost difference. So, public revenue cannot possibly be the reason that this is an issue. So, where could public revenue come in? It is because the additional transparency that allows civil groups, activists, journalists and others to look at what is happening in the freeports would, in effect, deny to criminals, money launderers, kleptocrats and others of similar ilk the ability to claim exemptions in national insurance contributions. In other words, it would have reduced the demand on the public purse; it would have reduced the demand for public spending. Yet that seems to be the reason being given for overturning this particular arrangement. So I would just be curious to know, if the Minister speaks again—but we can deal with this in relation to other cases—why denying to criminals and money launderers various tax exemptions and reductions in national insurance payments is considered to be an issue of public revenue and therefore a reason for not including this particular measure. I am exceedingly confused.
On other matters, I supported the issues raised by the noble Lord, Lord Tunnicliffe, and I am sure he will speak to them. But I do regret that both these measures have been overturned.
My Lords, we need to move quickly to today’s main business, so I will be brief. During Prime Minister’s Questions on 9 February, the Conservative MP Stuart Anderson asked
“whether veterans will always be at the heart of this Government’s strategy and whether everything will be done to see that they always get what they need.”
The Prime Minister responded that
“we ensure that veterans receive particular support and encouragement in employment, and we encourage employers to take on veterans as well.”—[Official Report, Commons, 9/2/22; col. 940.]
The Minister knows that we welcome the new NICs relief for employers of veterans. Our amendment did not compel the Government to do anything. It merely gave Ministers the option of extending the 12-month relief, if that would have had a beneficial impact on veterans’ employment and retention. I struggle to understand why both the Prime Minister and Mr Anderson voted against that proposition, given their stated support for veterans. However, in a phrase I have heard throughout my career, we are where we are. Your Lordships’ House has fulfilled its role and, having done so, should now let this Bill pass.
My Lords, I have some very brief return remarks to thank the noble Baroness and the noble Lord for their remarks. Of course, I listened carefully to the disappointment expressed by them both in terms of the outcome. However, perhaps I can give a little chink of light: I think we can look forward to continuing to debate some of the themes raised, perhaps more appropriately, as I mentioned earlier, during the course of the economic crime Bill. But with that, I beg to move.
Motion A agreed.
4A: Because it affects a charge on the public revenue, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.
Motion B agreed.
Arrangement of Business
My Lords, the next business is Committee on the Economic Crime Bill, and it might be helpful for the House if I outline the plan for the rest of the day. As the House decided last Wednesday, the House will, we hope, complete all the remaining stages of the Bill today. To allow this to happen, at the end of Committee, if the Bill is unamended, Members will have 30 minutes to table any amendments they wish the House to consider on Report. The deadline will be displayed on the annunciator. Amendments are tabled with the Public Bill Office in the normal way. The Public Bill Office will be happy to advise on amendments before the conclusion of Committee. Depending on the progress of the Bill, I will make further announcements during the course of the day about arrangements for further stages of the Bill.
Economic Crime (Transparency and Enforcement) Bill
Relevant documents: 22nd Report from the Delegated Powers Committee, 14th Report from the Constitution Committee
Clauses 1 to 3 agreed.
Clause 4: Application for registration
1: Clause 4, page 2, line 19, at end insert “and, where applicable, the statement and information mentioned in subsection (2A)”
Member’s explanatory statement
This amendment requires an application for registration as an overseas entity to include the information and statement required by subsection (2A) (information about trusts).
My Lords, we start with a group of government amendments to collect more information about trusts and overseas trust-like arrangements. These amendments address both the concerns raised in the other place by noble Lords on Second Reading in this House. I pay particular tribute to my noble and learned friend Lord Garnier, the noble Lords, Lord Vaux of Harrowden, Lord Faulks and Lord Fox, and the noble Baroness, Lady Jones of Moulsecoomb, all of whom drew attention to this important issue in their speeches.
As highlighted by those noble Lords, there is a particular difficulty with the availability of information about some trusts, including so-called discretionary trusts. This is where the assets are held in trusts to be used at the discretion of the trustees, because the beneficiaries can change. So we need to have some further information captured on trusts in this register, over and above what Her Majesty’s Revenue & Customs already captures on the TRS—trust registration service.
Both Houses can rest assured that this issue was not overlooked by the Government. Officials had already been working on amendments to the Bill, but it was important to table amendments only when we were sure that proposals were workable in practice and that the drafting fully achieved the policy intent. I have had a number of discussions with noble Lords, so I think everybody appreciates this is a complicated technical area.
These amendments set out that where a trustee of a trust—or of an equivalent arrangement that under the law of a country or territory outside the United Kingdom is of a similar character to a trust—is a registrable beneficial owner, the overseas entity must give them an information notice. That notice requires the recipient to provide information about the settlor, beneficiaries and other persons who have rights to appoint or remove trustees or rights over the exercise of the trustees’ functions—sometimes referred to as protectors.
The trustee must also provide other information about the trust—for example, the date of creation and about other trustees. It is an offence for the trustees to fail to comply with the notice without a reasonable excuse. The entity must then disclose this information to the registrar. Although this information will be unavailable for inspection on the public register, it may be disclosed to Her Majesty’s Revenue & Customs, law enforcement agencies and other specified persons with a public function for use in the execution of their functions. HMRC will also be able to disclose information to allow the registrar and the Secretary of State to take action in connection with offences.
While the abuse of trusts to prevent disclosure of beneficial ownership for high-end money laundering and tax crime has been well documented, it is important to remember when considering these amendments that trusts can be established for legitimate and highly personal reasons, such as protecting assets for children or vulnerable adults. So let me reassure noble Lords—the noble Lord, Lord Coaker, in particular, has raised with me directly—that this is the intention behind Amendments 45 and 46. I reiterate once again that this information will be available to law enforcement and other agencies.
Amendments 6 and 10 require overseas entities to disclose to the registrar where an individual or an entity which is a registerable beneficial owner of the overseas entity is a trustee. Amendments 1 and 2 require the overseas entity to provide to the registrar, on application under Clause 4, information about trusts where a trustee is a registerable beneficial owner. Amendments 21, 22, 25, 28, 29 and 30 provide for the same when overseas entities comply with their updating duty or apply for removal from the register under Clauses 7 and 9. Amendment 4 is an insertion of clause cross-references in part consequential on changes to Clauses 4, 7 and 9, which brings the trust information that I have just described within scope.
Amendment 15 sets out the required information about trusts within Schedule 1. This includes the name or, if it does not have a name, a description, the date of the trust’s creation, further information about trustees and information about the beneficiaries, settlors and other interested persons who have rights in respect of the appointment or removal of trustees or the exercise by the trustees of their functions.
Amendment 89 extends the provisions of Part 1 of the Bill in relation to trusts so that they apply to arrangements of a similar character outside the United Kingdom. It also allows the Secretary of State to specify descriptions of arrangements outside the UK that are, or are not, to be treated as of a similar character to a trust.
Amendment 16 allows for the Secretary of State to make further provisions about the required information about trusts. Amendments 38 and 39 provide that overseas entities must take reasonable steps to obtain information about trusts, including sending trustees information notices requiring them to confirm, correct or provide the required information. This will, of course, mean that Clause 15 will make it an offence for a trustee to fail to comply with the information notice without a reasonable excuse.
Amendments 45 and 46 provide that the required information about trusts will be unavailable on the public register. Amendment 46 removes protection of date of birth and residential address information because Amendment 47 creates different provisions governing the disclosure of information about trusts. Amendment 47 generally prevents the registrar from disclosing the required information about trusts. It also includes a new power to disclose information about trusts to HMRC or other specified persons with public functions. Amendment 48 is consequential on Amendment 47, ensuring that the new power to disclose information about trusts cannot be used in a way that would contravene data protection legislation.
Amendment 85 permits HMRC to disclose information to allow the registrar and the Secretary of State to take action in connection with offences.
Amendments 16, 26, 27, 31 and 32 are consequential on other amendments to ensure that the new amendments are consistent. I hope that is helpful to noble Lords. I beg to move.
My Lords, I rise to speak to Amendment 17. I am delighted that it has also been signed by the noble Lord, Lord Agnew. This would extend the definition of a registerable beneficial owner of an overseas entity to include anyone who is the beneficial owner of land or property held by the entity.
Why does this matter? Let me give an example. Mr X wants to buy a house in London and sets up an overseas company to own the land. In this scenario, he meets the conditions for being a beneficial owner of a company; the Bill works as intended. However, assume our Mr X rather likes his anonymity, so he approaches a Panama law firm which, after a payment, buys the house for him using its general nominee company which holds legal title to many such properties all beneficially owned by different people. The nominee company issues a declaration to Mr X that it is holding the land as his nominee and that he is the beneficial owner of the property.
In this scenario, the nominee company is the overseas entity owning the property and its beneficial owner is the law firm which set it up. Depending on its ownership structure, the partners at the law firm may or may not appear on the register. However, that is not the point. They may be the beneficial owners of the nominee company but are not the beneficial owners of any of the properties owned by the company. Mr X and the other beneficial owners of the properties held by the nominee company do not tick any of the boxes for being a beneficial owner of that company. The declaration issued by the nominee company is private, so in this scenario they remain anonymous.
Is this what the Government intend? Opening the Second Reading debate last week, the Minister, the noble Baroness, Lady Williams of Trafford, said that the Bill would
“require anonymous foreign owners of UK property to reveal their real identity, ensuring that they can no longer hide behind secretive chains of shell companies.”—[Official Report, 9/3/22; col. 1484.]
That suggests that this is not what the Government intended, and this is where Amendment 17 comes in. By extending the definition of a beneficial owner of an overseas entity holding UK property to include anyone who is the beneficial owner of land or property held by the entity, we would be giving this Bill the scope the Government appear to intend for it.
Responding to last week’s debate in the other House, the Minister there said that if nominee companies were “directed by someone else”—the beneficial owner of the land—then the person doing the directing would be “caught by condition 4” in the definition of a beneficial owner: significant influence or control. But that would only be the case if a separate nominee company is set up for the particular beneficial owner. If a general nominee company is used and this acts for hundreds of different clients, then it is difficult to see that any one of them exercises significant influence or control over the nominee company. That is why Amendment 17 is needed.
My Lords, I support the theme of what the noble Lord, Lord Clement-Jones, just said, which is the general weakness of the definition of beneficial ownership in this Bill. It is very striking that in other jurisdictions within the British Isles that hold registers of beneficial ownership and have done for some years, the beneficial owner is always defined as an individual and never as a firm or a trust. An individual who ultimately owns or controls the entity must be identified. The Bill as currently constructed has significant weaknesses, which will prevent the identification of individual beneficial owners in the way that the Government apparently intend but have not as yet achieved.
My Lords, we find ourselves in an unusual position. Normally, this House is trying to knock the edges off overzealous legislation and limit the powers the Government have a tendency to give themselves. In this Bill, we are trying to achieve the exact opposite: to strengthen the powers and close the loopholes so that the powers are as effective as possible.
We are trying to move quickly because of the awful situation in Ukraine. As the Minister said at the outset, the overseas entity register is not an emergency measure—although it will be useful in this situation. In normal times, it would be subject to much more detailed scrutiny, and we would not normally debate such wide groups as we are today. At Second Reading, I asked the Minister to confirm that the follow-up economic crime Bill would be sufficiently wide in scope to allow the matters we are covering now to be considered further, if necessary, as part of that Bill. While the Minister nodded vigorously at the time, he did not give that confirmation in his response. The House clearly accepts the need to move fast, and matters which would normally be voted on will not be pushed to a vote. I hope that the Government will reciprocate that flexibility. Speaking for myself, it would be much easier to accept the flaws and gaps in this Bill, if it were clear that there will be the opportunity to give the more detailed scrutiny which these important issues deserve in due course. Will the Minister please provide that confirmation today?
We all welcome the additional clauses that the Government are proposing on trusts, one of the more common methods to obscure ultimate ownership. Of course, trusts can be—and, as the Minister said, they usually are—perfectly legitimate. However, they can be misused. As such, I commend the Government for introducing these new clauses. That said, and in addition to the points made by the noble Lord, Lord Clement-Jones, there is still one area where an important gap remains: the classic way of camouflaging the identity of the ultimate beneficial owner is by the use of discretionary trusts. These will often have a stated beneficiary, such as a charity, but, because they are discretionary, the benefit can be passed to others who are not identified. That might be under a formal agreement, but it is often something less formal or traceable. In such situations, it can be difficult to ascertain who the real beneficiary is. The identity of “the settlor or guarantor” is one clue— government Amendment 15 rightly requires those to be identified.
The Minister kindly wrote to me yesterday afternoon—I apologise for spoiling his weekend. He said that HMRC already has access to information about beneficiaries through new data-sharing gateways and existing exchange of notes mechanisms. However, this is true only for UK resident taxpayers and for situations where money actually flows. It does not cover all jurisdictions, so the gap remains. Many of the ultimate property owners are not UK residents, and value can pass in different ways—for example, the simple right to use the property rent-free would not be picked-up by HMRC.
One other way of trying to see through such discretionary trusts is to identify who has benefited in the past, including those who have had the use of the underlying property at less than market rent. It would be relatively easy to add a subsection to the Government’s Amendment 15 to cover that, and it would not be difficult information for innocent parties to provide. Is this something which the Government could consider, even if it is in later regulation?
As a general theme, we should not be allowing overseas entities to register unless they are fully transparent. To be honest, the Government’s apparent reluctance to accept clauses which would improve that transparency is somewhat concerning. On that theme, I also wholeheartedly support Amendment 17. It seems rather pointless to have information on the overseas entity, if that still fails to show us who owns the property. I urge the Minister to look at that seriously.
My Lords, I shall speak in support of the noble Lord, Lord Clement-Jones, and his Amendment 17. I recognise that the Government have made big strides in the last few days to listen to the concerns which are so widely held. However, given all this effort, and given that the Bill has sat almost ready for four or five years, I feel that we could go further today and do the job properly.
There is no point in legislating for a Bill that leaves huge gaps for more anonymity. I am really sceptical about the need for endless anonymity. The people who strive to have anonymity do not always have it for the right motives. We need to recognise that. I said to the Minister before we came to the Chamber that we spend our lives being entirely reasonable in this country while trying to deal with very unreasonable people. Of course, we must stick to the law, but we need to have the levers in the law which enable us to tackle these bad actors. This is why, in my own slightly layman attempt with Amendment 23, I have tried to bring more focus on the promoters of these organisations. This is to ensure that there is much more responsibility taken by directors who promote organisations, and that they help to provide proper due diligence when working with the sorts of people they are busily defending anonymity for.
I thank the Minister for the way in which he has engaged with his officials to try to address some of the concerns which have been raised.
I will also pick up the point made by the noble Lord, Lord Vaux, about something which concerns all noble Lords about this Bill: it is going through on an emergency process because we face an emergency, yet not all of it concerns emergency legislation. Of course, the sanctions part is, but many of the other parts of the Bill about overseas entities have been on the stocks for years—as the noble Lord, Lord Agnew, said. Yet the Government have failed to act before now and it is only in the face of this emergency that they have done so. While that is to be welcomed, in some respects, it affects many of the things on which we would want to vote and would want to discuss in great detail, and many of the amendments which your Lordships have quite rightly brought forward which would improve the Bill. On the basis of not tying up this House or preventing this legislation from passing, in the face of the current national emergency, the Bill will go forward in a way which is not as good as it could be. I think that this is a feeling which is generally held across the House. It is certainly how we feel. Of course, we will support the Government in putting this legislation through—but that is not to say that we do not have very serious concerns about aspects of it.
Many noble Lords on Labour Benches and other Benches have raised these issues. Therefore, I very much agree with the noble Lord, Lord Vaux, that the Government need to recognise that the amendments being put forward—even though most, if not all, of them will be withdrawn—seek to do so from a position of needing to strengthen this Bill; it is about time we got hold of a problem which has been identified by many different reports over a number of years. As the noble Lords, Lord Agnew and Lord Clement-Jones, pointed out, transparency is everything. As we go through parts of this legislation and we see exemptions, and parts of the Bill where full disclosure is not to be statutory or guaranteed, one wonders whether it goes as far as it could.
The amendments tabled by the noble Lords, Lord Agnew of Oulton and Lord Clement-Jones, deal with related issues around nominees. We hope that the Minister can offer a full response to the points made by both noble Lords, because they are really important. A lay person reading this would be concerned about the fact that it provides a way to circumvent the regulations.
I thank the Minister for the clarification he made around government Amendments 45 and 47. I am sorry to detain noble Lords, but I briefly remind the House that this is a public document. What if you are not an accountant or someone trained in financial matters? This is the Government’s explanatory statement on government Amendment 45. The Minister has clarified it for me, but many people would think that there is something concerning about the amendment when it says:
“This amendment means that the required information about trusts will be unavailable for inspection on the public register.”
That is the Government’s only explanation of an amendment which they are passing. The Minister has just outlined this.
Similarly, government Amendment 46 states:
“This amendment excludes information about trusts from the definition of ‘protected’ date of birth and residential address information.”
I am sure that there are proper explanations for that. However, sometimes Governments need to be careful. I know the amendment was drafted in haste, but there must have been a better way of doing it.
I accept that there will be many valid reasons for excluding certain trusts from the public register—for example, if one has been established to benefit a child later in life. However, if we had proper time to debate this, an amendment surely could have been brought forward—I would have brought one forward—saying that the exemption could be tied to a specific criterion, rather than being drawn in such a general nature, as it has been. This is another example of the sorts of ways many of us would wish to see this legislation tightened.
We will not stand in the way of these amendments but, as we go forward, I hope that the Minister can give further thought to the very real concerns which have been raised by noble Lords.
I will just underline one point that the noble Lord, Lord Coaker, made. At Second Reading we got the impression that there was quite a limited list of items that were going to go into the second economic crime Bill. Can we have an assurance at this opening stage from the Minister that he will remain open-minded as to the shopping list of items—if I may use the phrase—which will need to be included, some of which may be revisiting what we have done today but others of which will be entirely new? Can he assure us that it is not a short shopping list?
I just make a very brief point to my noble friend. Because of migraine, I was unable to take part in Second Reading; I had to go home. I was going to make the point then that, if ever a Bill needed continuous post-legislative scrutiny, it is this one. Can my noble friend give an assurance that he will try to set up a special sort of post-legislative scrutiny to look continuously at how the Bill comes into force, what effect it has and where it fails?
First, I thank noble Lords for their comments. I do not disagree with the sentiments of a lot of what has been said. I say to the noble Lord, Lord Coaker, that I absolutely appreciate the points that he has made. This is a very complicated and technical area of law, and I assure noble Lords that we have gone into it in great detail. This morning, I met my noble friend Lord Wolfson, who is a trusts expert, to go through the provisions, and I have examined them closely with Treasury and BEIS officials.
We are doing this to close potential loopholes in trusts; the Government have no other agenda here. This is a difficult area. HMRC has recently established a trusts register for UK trusts, and we want to try to make sure that the same visibility exists for overseas trusts. If an overseas trust buys UK property, its interest is clearly covered and will need to be declared, but there is a potential problem with an overseas entity holding a property, and then that being owned by a trust. It is an attempt to control and close those particular loopholes in this complicated area of law, and what I totally accept are complicated amendments have been worked on at great pace to try to do that. So there is no difficulty and no difference between any of us in what we are trying to achieve with this legislation.
I also happily concede that we may not have got every last dot and comma absolutely accurate and right. One point that my noble friend made to me this morning was that we are if not the first then possibly the second in the world to attempt to do something like this, and it will be an iterative process—it is fair to accept that. A lot of international lawyers and others will be carefully studying this legislation and trying to find ways around it. I can certainly say that, if there are loopholes and if something is presented that we think needs closing, we will absolutely do that, if necessary, in the next Bill—although the full extent of the legislation may not be visible at that stage. But we are committed to doing this, providing that information and giving law enforcement the opportunity carefully to scrutinise many of these arrangements.
In particular, I give the assurance that the noble Lord, Lord Vaux, and possibly my noble friend Lord Cormack, were looking for: the further economic crime Bill, which the Government intend to introduce in the next Session, will be broad. We will, of course, carefully examine and consider any amendments proposed in either House that serve to strengthen our framework for tackling economic crime. I know from my long experience in this House that noble Lords will not be shy in coming forward where they can see improvements that could be made to legislation and where they identify any potential loopholes. There are some fine minds in this House and I am sure that they, along with some of our excellent officials, will turn their attention to doing just that.
I agree with the sentiments; there is no difference between us and what we want to try to achieve, and I am grateful in particular to the opposition parties’ Front Benches, with whom I have had extensive discussions, for their forbearance. I will happily concede that this is not necessarily emergency legislation; we have been trying to introduce this register for a while but until now it has not managed to get the prominence in the public sphere and sufficient priority in the legislative programme to allow it to be brought before this House. As the Minister responsible for it in the House and in my department, I am grateful that we have now managed finally to bring it forward. It will be a useful tool of transparency and of benefit to, first of all, the public, and then to the law enforcement community in attempting to target the small minority of overseas entities that hold property in the UK. Something like 59,000 overseas entities hold property, and the vast majority do so for perfectly legitimate, lawful and legal reasons—but within that there is, of course, a tiny minority we all want to target, and this is our transparency contribution to an attempt to do just that.
I move on to look at the amendments in detail. I thank the noble Lords, Lord Clement-Jones and Lord Fox, and my noble friend Lord Agnew, for their Amendment 17. I am grateful for the meeting that I was able to have with my noble friend Lord Agnew earlier to talk about this issue. As I said, I can see the good intent behind this amendment, but it would be ineffective as tabled—and I shall explain why.
It does not fit within the legislative scheme of the Bill. For example, the Bill provides five conditions for “beneficial owner” in Part 2 of Schedule 2. These five conditions, in general terms, relate to shareholdings, rights or control over legal entities, or other arrangements. Amendment 17 seeks to apply the term “beneficial owner” in the context of a qualifying estate—that is, the land itself—which would not work. Further, the amendment fails to empower overseas entities to obtain the information required which, for the most part, remains undefined.
To be clear, this Bill was designed specifically to capture the beneficial owners of overseas entities. This is because, if the land is held in the name of an overseas entity registered in a jurisdiction with poor levels of corporate transparency, law enforcement agencies here may struggle when investigating the affairs of someone of interest. If they cannot obtain information about the entity itself, they will almost certainly never be able to identify any ultimate economic beneficiary of the land. This register aims to ensure that investigators can find out about the overseas entity to further their investigations. There may be a wider policy debate to be had about capturing ultimate economic beneficiaries of land, but this register, focused as it is on overseas entities and not on land held by individuals or UK companies, would not be the appropriate vehicle.
The government amendments provide robust provisions to ensure that overseas entities provide information about beneficiaries, settlors and other persons who can appoint or remove trustees or have rights over the exercise of trustees’ functions, which some may refer to as protectors, where there is a trustee who is a registrable beneficial owner. These amendments go one step further and also apply where there are overseas arrangements with similar characteristics to a trust and those arrangements’ trustee equivalents are registrable beneficial owners.
The noble Lord, Lord Clement-Jones, suggested that nominees will be used to hide true beneficial owners of property. I point out to the noble Lord that there are regulation-making powers within the Bill allowing for amendments to prevent such abuse, if that is needed. I therefore hope that, with the information that I have provided, the noble Lord and his supporters will feel able not to press Amendment 17.
I turn to Amendments 1A, 22A and 29A, which seek to require a director who is acting as a nominee to provide a statement that they are satisfied by the legitimacy of the financial affairs of the beneficial owner and that the nominee will cease to act if information validating legitimacy is not forthcoming on a timely basis. I appreciate the intent of my noble friend Lord Agnew in tabling these amendments, and I understand that his intention is to further verify the legitimacy of the beneficial owner, to create an obligation for a nominee director to have regard to the financial affairs of those they are acting for, and to validate this legitimacy on a timely basis.
However, it must be noted that it will already be necessary for overseas entities to provide evidence of the verification of any information provided on beneficial owners before an application for registration, an update or an application for removal from the register is in fact made. The requirement for this is in Clause 16, which obliges the Secretary of State to make regulations to this effect. Additionally, it will be an offence to deliver, or cause to be delivered, any document to the registrar that is false, misleading or deceptive, or to make any statement that is misleading, false or deceptive. Any nominee director of an overseas entity acting on behalf of a beneficial owner would be obliged, on pain of criminal sanction, to file accurate information.
There are also safeguards set out in the legislation that make it clear that, if a nominee is being directed by someone else, such as the real beneficial owner, the person doing the directing is caught by Part 2 of Schedule 2—condition 4 under paragraph 6—and is, therefore, a registrable beneficial owner because they have significant influence and control over the entity. That is an important point.
Under this legislation, consistent with existing rules for UK companies, the person required to be registered is the one actually exercising a right, rather than the person who legally owns the right to exercise significant influence or control. That is an important catch-all legal phrase that we have inserted into the Bill.
Again, with the information and, hopefully, reassurances that I have been able to provide to the House, I hope that noble Lords will feel able not to press their amendments.
My Lords, I think that everybody in this House, as was the case last week, is on the same page, and we do not want to be seen to be arguing amongst ourselves until the early hours of the morning about something that is so significant. But can I ask the Minister if he and his colleagues in his department will keep a rolling review of this going, even if the gap between this legislation and the next piece of legislation is comparatively short? The last thing we would want is to see some oligarch on the front page of a national newspaper smirking that he or she had circumvented and found some way of actually getting around the will of Parliament and humiliating us. It would be seen, I think, as a failure of policy. I am sure that the Minister is very conscious of that, but it would be helpful if he could tell us that his department will monitor this on an ongoing basis, and not deal with this as a one-off and just leave it to the next piece of legislation.
My Lords, perhaps I could just add to what the noble Lord has just said. The Minister mentioned the regulations which are possible post the passing of the Bill. Will he undertake to review some of the points made during the passage of this Bill and consider whether or not regulations might be needed to fill certain gaps?
Indeed, I am happy to provide the reassurances that both noble Lords have asked for—in the case of the noble Lord, Lord Clement-Jones, in terms of the regulations, and in the case of the noble Lord, Lord Empey, that we see this as an iterative process. As I mentioned, this is fairly unique legislation in the world; we are aware of only one other country, possibly, that has attempted to do something similar. When we introduced the provisions on PSCs—persons with significant control—in relation to UK companies, we had to make some iterative changes to that, as it became evident over time that aspects were not working as effectively as we had hoped. I hope that we have thought of everything on this one, and I hope that we have all of the details correct, but a lot of it—some of it anyway—has been drafted in haste and it is possible that we will have missed one or two complicated international devices. But, the noble Lord can be assured that we will keep it regularly under review, and if there are—I hesitate to use the word “loopholes”, although it is probably appropriate—devices that clever lawyers, of which there are several in this House, find to get around the provisions, we will not hesitate to close them if we need to.
Amendment 1 withdrawn.
Amendment 1A not moved.
Amendment 2 not moved.
3: Clause 4, page 3, line 21, at end insert—
“(3A) The registrar may request further information to be provided in a timely manner where there appear to be material omissions or suspected false statements.(3B) An application may not be accepted unless the registrar is satisfied that any request for further information has been adequately addressed.”
I really want to carry on in a similar vein to earlier comments, and what my Amendment 3 is trying to do is to give more levers to government and enforcement agencies to force out information when we are worried that the information is not clear. My noble friend made the point that the Explanatory Notes say that this will be subject to regulations, but those regulations will be subject to a negative resolution. Could my noble friend confirm that we could be involved in the drafting of those regulations, rather than being faced with a fait accompli at the last minute, because I think there is a lot more to be done here? This perhaps plays to my noble friend’s point about the iterative improvements this Bill is going to need over the next few years, because it is fiendishly complicated.
The other piece to this jigsaw is the likelihood of prosecution of bad actors. Having been in business many years, I am afraid that the phrase that has often been offered to me when one is trying to get things done is “It’s the cost of doing business.” If the fines are so weak and the enforcement so inconsistent, it sends a message to those bad actors to continue, because—let us be realistic—is the NCA or Companies House, or any of these other people, going to take an action against a promoter in the British Virgin Islands for £10,000 of unpaid fees? It is just not going to happen, unless we are very clear that there is a mechanism for that to happen and that the fines very quickly get to a level that makes it worth while for litigators, acting on behalf of the taxpayer and the Government, to do that. I beg to move.
My Lords, I rise to speak to a number of amendments in my name in this group—there are eight of them—and I will be fairly brief.
First, Amendments 5 and 13 basically ask the beneficial owners and various other parties to provide their former names. In Part 4 of Schedule 1, the Bill requires managing officers who are managing the beneficial owner’s interest to provide their former names. But the same is somehow not required for registerable beneficial owners where they are persons other than individuals—which could be companies that are forever changing their names, or other parties. What I am seeking to do through Amendments 5 and 13 is to, as it were, align the various provisions in the Bill, and I hope that the Government will be agreeable to that.
Amendments 8, 12 and 14 require the beneficial owners, or their managing agents et cetera, to provide a list of any criminal convictions and sanctions against them. At the moment, the Bill does not ask for that kind of information, so it is perfectly possible for somebody to look at this proposed register of property ownership and not know that the ultimate beneficiaries have various convictions, which may well be abroad. It really exerts pressure on them to either come clean or to avoid the UK altogether—which perhaps would be more preferable. Again, it is a fairly straight forward suggestion asking the Government to act upon that.
The meatier part of my eight amendments relate to Amendments 18, 19 and 20, which take issue with the Government’s provision of the definition of registrable beneficial interest, generally taken to be 25% of the shares or voting rights, or somebody having significant influence or control. As it is now defined it is too wide. Indeed, the provision of any number is too wide. If you say it is 25%, it is not inconceivable that half a dozen people will get together and make sure that nobody gets to 25%. If you specify 20%, that will be exactly the same. So four, five or six drug traffickers can get together and own a fraction of a company, and through that they can invest their proceeds in a property. Under this kind of approach, none of them would be identified as a beneficial owner or count as a person of significant control, because they do not meet the thresholds specified in the Bill.
The Bill as presently drafted leaves open the possibility that companies holding UK property would continue to hide the identity of true owners by claiming that there was no beneficial owner. This is already a major problem at Companies House for the companies already registered in the UK. That has been identified by a number of whistleblowers and a number of leaks that we have had. However, rather than tackling the issue, the Government have imported these problems into the Bill, and it is quite likely that the Bill will not achieve its assumed objectives.
So I suggest that there should be no numerical specification of the beneficial interest definition; rather, any interest should be disclosable. It is not every day that ordinary individuals want to buy UK property through opaque offshore companies. They have a reason why they want to do this, so we must make sure that absolutely no door is open to them. By leaving this definition, the danger is that the Bill simply will not achieve its objectives. I therefore recommend my amendments to the Government in the hope that this will help to end the abuses.
My Lords, I support most of the amendments in the group, including the government amendments, which are generally very helpful.
I will speak to Amendment 24 in my name and to the similar Amendment 23, in the name of the noble Baroness, Lady Chapman, both of which are intended to address the possibility of there being a very long period between a change in the ownership of the entity and that change being reported in the annual update. I thank the noble Lord, Lord Cromwell, for his support in this. Amendment 23 would require an update to be filed within 14 days of when a person has become or has ceased to be a registrable beneficial owner. My Amendment 24 is slightly wider, requiring any changes in registered information to be reported within 14 days. However, both amendments seek to bring the overseas entity regime into line with the persons of significant control regime that UK companies must follow. To be honest, I would be content either way.
As the Bill is currently drafted, an overseas entity could register and then immediately change its beneficial ownership and we would not get to know about that for a full year, during which time any number of actions could take place, including the sale of the property to an innocent third party who unwittingly might find themselves enriching a criminal or someone subject to sanctions.
The Bill rightly puts restrictions on the disposition and registration of property, but it does nothing to deal with the more likely scenario of the overseas entity itself, or indeed an entity further up the ownership chain, being sold; indeed, this 12-month grace period almost wilfully ignores that. It seems rather perverse that the overseas entity regime should be more benign than the regime that applies to persons of significant control for UK companies.
In his helpful all-Peers letter of Friday, the Minister explained that the reason they have done it this way is to protect innocent third-party buyers from not being able to register the purchase of a property if the overseas entity turns out to be in breach of the requirement to report a change. That is obviously extremely important. However, a very simple solution is already built into the Bill. The overseas entity has the ability, under Clause 7(8), to shorten the update period and file an update immediately before it sells. Any innocent buyer would simply insist that this happens before the sale is completed, and that would deal with the problem that the Minister explained. Accordingly, I see no reason why one of Amendments 23 or 24 should not be accepted, so that overseas entities would have the same reporting requirements as UK companies have. The whole point of the overseas entity register is that we should know who beneficially owns UK properties. Allowing that information to be potentially up to 12 months out of date cannot make sense. I cannot think of any other corporate register that would allow such a long period to notify changes.
Given the urgency, I will not divide the House, but this is just another example of a matter that requires proper, unrushed discussion, and I hope the noble Lord is ready to have those discussions as we progress through the wider economic crime landscape.
I want to comment also on Amendment 53 in the name of the noble Lords, Lord Clement-Jones and Lord Fox, and the noble Baroness, Lady Chapman. At Second Reading, the issue of enablers and how to disincentivise them was raised multiple times. The Minister referred to the UK’s existing robust system of anti-money laundering regulations, but he went on to rather undermine that by saying that the Solicitors Regulation Authority had issued only 14 fines in 2021 and that the Institute of Chartered Accountants in England and Wales had cancelled the membership of only six firms—I remind the House that I am a member of the ICAEW. These are tiny numbers given the acknowledged size of the problem, and the fines are almost irrelevant, averaging just £11,600 for solicitors and just £3,000 for accountants. That is self-evidently not enough to disincentivise the enablers, which must explain at least in part why London has become known as the “London Laundromat” or “Londongrad”. Amendment 53 goes some way to deal with this by creating an express offence if a professional fails to disclose knowledge or suspicion of false or misleading information to the registrar.
While I strongly support that, I would go further and introduce an active requirement that a regulated professional must make a positive statement, added to the register, that they have carried out their due diligence and have satisfied themselves that the information about beneficial ownership is correct. As I explained at Second Reading, there is a world of difference between a duty to report suspicions and an active requirement to confirm the information. In the former, the professional remains unnamed. They are only on the hook if a problem later becomes public. So they may feel that the risk of turning a blind eye is quite low, especially set against the small fines that they would face, which I mentioned earlier. Their reputation is not affected unless they get caught, which happens rarely. The noble Lord, Lord Cromwell, alluded to this in his Second Reading speech when he referred to certain bankers who seem surprisingly willing to act for apparently high-risk clients.
Making a positive statement that they have verified the information, on the record, would publicly associate the professional with the information registered. That would seriously concentrate their minds both reputation-wise and legally—they would be putting their reputation clearly on the line. There could be no wriggling off the hook because they relied on someone else. Turning a blind eye would be an active decision rather than a low-risk, passive decision not to say anything.
I considered adding an amendment to this effect, but it can more easily be dealt with in the regulations to be issued under Clause 16, particularly subsection (2)(c). Given the desire to pass the Bill quickly, I decided not to submit an amendment. However, it is an important point and I would like to follow this up as part of those regulations. Would the Minister be willing to meet with me and perhaps others to discuss the matter further?
Finally, the noble Lord, Lord Sikka, has tried to add a number of information requirements, all of which are sensible. I hope that the Minister will actively consider those under the powers to regulate in Clause 4.
My Lords, I will make a couple of observations on the amendments put forward by my noble friends Lord Sikka and Lady Chapman, and the noble Lords, Lord Fox and Lord Agnew. These observations are based on my experience as chairman of the Jersey Financial Services Commission. The Bill as drafted is significantly weaker than the requirements for registration in Jersey. For example, on the point made by my noble friend Lord Sikka, under the Control of Borrowing (Jersey) Order, any interest can be required to be registered without one of these numerical levels.
Secondly, with respect to the amendment proposed by my noble friend Lady Chapman and others, in Jersey, the requirement is that a change of beneficial ownership be registered within 21 days. This 12-month period is really foolish. It provides an open door to misbehaviour.
I support my noble friends Lord Sikka and Lady Chapman and friends in the amendments they have put forward. We should be able to achieve at least the level of seriousness achieved in Jersey.
My Lords, there is clearly a great deal we can learn from Jersey and I am very happy to follow the noble Lord, Lord Eatwell.
I will speak to Amendment 24, to which I have added my name, and will also make a couple of comments on Amendment 53—there may be a slight sense of déjà vu, as my noble friend Lord Vaux has done the same.
In relation to Amendment 24, on page 3 of his very helpful all-Peers letter of 11 March, the Minister explains that Companies House would not know if a legal entity registered abroad was compliant with the 14-day rule. Likewise, this would not be visible to a third party, whereas that third party could be confident that, if an annual date had passed, the register would be up to date.
I am not convinced that that is so clear-cut or indeed helpful. This approach means that, for up to 12 months, an entity could keep hidden its change in ownership structure. Only at that point would it be in breach if it had not disclosed the change—or possibly multiple changes. Assuming—which may be a bold assumption given some of the entities—that the entity indeed complied with a 12-month date to reveal changes, this would still leave the third party in the dark for up to 12 months and the entity under no obligation to register the changes and having that as a defence. In short, it is possible for entities to game the system by carefully timing their changes. Twelve months, or even one month, can be a long time in business.
This also makes it possible for an entity to waste the time and resources of the acquirer and the regulatory and enforcement agencies if, for example, it becomes subject to sanctions based on its ownership but can claim, at a time to suit itself, that the affected owner or owners actually no longer own it. A 14-day limit greatly tightens the ability of both the registrar and any third party to see, at least in the case of compliant entities, any registered changes in as close to real time as is practicable.
Where entities are not compliant and fail to declare changes in this timely way, should this emerge in due course, it should give the third-party acquirer grounds for withdrawal and the authorities grounds for pursuit. This does leave an obligation on the registrar to ensure that entries are kept up to date, but that is a technological and resourcing issue perhaps better addressed in other amendments. For these reasons, I added my name to Amendment 24 and support it. I urge the Minister to rethink the 14-day requirement.
I shall now make a few comments on Amendment 53. In paragraph 4 on page 2 of the same letter, in relation to the purpose of the Bill, the Minister acknowledges that there will be those who seek to exploit opportunities to avoid it—he also referred to this earlier today. I raised at Second Reading the issue that there are enablers whose approach to reporting suspicions is light-touch or simply to turn a blind eye. I also advocated the idea put forward very eloquently by my noble friend Lord Vaux a few moments ago of having a named senior official on the hook. Simply saying that existing regulations cover this is to deny the evidence that there are entities and enablers in the area addressed by this Bill that have been skirting round existing regulations too easily by claiming ignorance or that suspicion was only mild. I think this may be more specifically reflected in the reference in paragraph 5 on page 5 of the Minister’s letter of 11 March, which says in relation to verification of information that:
“We expect that this will include a role for professionals regulated in the UK by the Money Laundering Regulations.”
This amendment, by including suspicion rather than certain knowledge, covers the loophole by which enablers can claim not to have had certain knowledge even if they should have had reasonable suspicion. This makes it considerably more difficult for enablers and others to look the other way and strengthens the hand of those seeking to hold them better to account. I support this amendment.
My Lords, I shall speak to Amendment 53. I thank the noble Lords, Lord Cromwell and Lord Vaux, for their support, although I understand that they would like to see this tweaked to go further. I also thank the noble Lord, Lord Eatwell, for his supportive comments.
The Bill needs to be comprehensively amended to close the loopholes that currently allow professional enablers to undermine the effectiveness of, and even circumvent, the checks aimed at detecting, disrupting and deterring economic crime. One of the key ways this can be done is by imposing a positive duty on professional enablers to disclose knowledge or reasonable suspicion that misleading, false or deceptive information has been provided to the registrar of overseas entities.
As I set out on Second Reading, professional enablers, such as lawyers, accountants and bankers, are the gatekeepers of economic crime and the Government need to adopt a comprehensive strategy towards them. Given the nature of their work, there is an inherently high risk that these professionals may unwittingly enable economic crime, but there are also enablers that specialise in services aimed at concealing the source of wealth or ownership so as to frustrate the objectives of the law.
This poses a particularly acute challenge in the context of the Bill’s attempt to tighten the checks around the beneficial ownership of property by overseas entities. The UK’s 2017 national risk assessment of money laundering and terrorist financing revealed that 50% of suspicious activity reports related to the legal sector in 2016 were linked to the property market, illustrating that real estate transactions are especially susceptible to money laundering.
As the noble Lord, Lord Vaux, very eloquently deconstructed, the Minister prayed in aid regulation by the Solicitors Regulation Authority and the Institute of Chartered Accountants in England and Wales on Second Reading. Does the Minister really believe that these regulators are the way to tackle these professional enablers? The current model for supervising professional enablers is fragmented and weak. In the legal and accountancy sectors alone, there are 22 different professional body supervisors, or PBSs. In its 2021 report, the Office for Professional Body Anti-Money Laundering Supervision found that the vast majority—some 81%—of these legal and accounting PBSs do not implement an effective risk-based approach to supervising their members as required by the money laundering regulations. Where is the evidence that they can do the kind of job needed to root out corrupt behaviour in sanctions avoidance or as envisaged by this Bill?
In summary, it is critical that the Bill addresses the heightened risk that professional enablers, particularly conveyancers and lawyers, will frustrate the objectives of the register of overseas entities. Beyond this modest amendment, urgent reform is needed—I hope it will take place in the second Bill—to ensure that there is effective, comprehensive supervision of professional enablers. This should be fully addressed when we come to the second economic crime Bill.
My Lords, I had not intended to speak today. I came to learn and listen to the experts on areas I do not know much about. But listening to the noble Lords, Lord Cromwell and Lord Clement-Jones, I am reminded of an example. I know this would not be classed as money laundering, but the well-known spiv, Aaron Banks, was responsible for what is, I think, the biggest political donation in British history—I think it was £8 million—during the Brexit referendum period. When it came to investigation by the Electoral Commission, which had the responsibility for doing this, he was not an unwitting enabler. His conclusion was, “We’re cleverer than the regulator.” The Minister does not want to be faced with that during the passage of this Bill and its actions, so he would be very wise to accept the spirit of some of these amendments.
I think it is obvious that the Minister will accept a lot of these amendments, because they are from people who are much cleverer than most of us in this Chamber.
I support most of the amendments—even all the government amendments, because they are quite helpful, particularly those that require the disclosure of whether any beneficial owners of property are subject to sanctions, and the strengthening of the criminal offences for false declarations. However, it is obvious from the speeches of other noble Lords that the Government are still falling short and that the Bill needs to be tougher. For example, Amendments 23, 24, 57 and 58 all need to be inserted into the Bill.
All beneficial interests should be registered, not just those acquired on or after 1 January 1999. That is a completely arbitrary date and should be removed. The Minister shakes his head; I guess he will argue that it is a very important date. I disagree.
This legislation is being rushed through as an emergency, but the Government are content to wait another year, following initial registration, before any changes in beneficial ownership take place. I cannot see the logic in that and I think most people will not either. It makes much more sense to update the register within 14 days of any changes.
My Lords, this is the first time I have spoken today. I will make a couple of points from the Front Bench that reflect on the other groups as we debate them.
We on these Benches share the hopes of the Government and, indeed, Her Majesty’s loyal Opposition to get this Bill on to the statute book as quickly as we can. For that to happen, the Government seem to be moving on a number of issues, which will be helpful. For our part, we have had to suspend the level of scrutiny that this Bill would normally attract. That has been difficult for us because, as we heard at Second Reading and have already heard in debate on the first group, much could be done to improve and extend the Bill.
As such, and as we have already heard from the noble Lords, Lord Vaux, Lord Cromwell, Lord Cormack and Lord Empey, there are a number of solid assurances that the Minister can give us—he hinted without necessarily assuring in his response to the previous group. We would appreciate an undertaking from the Minister that, when we return to this topic on the second part of this Bill, or ECB 2 as we now have to know it, there will be a frank assessment from the Government as to the operations of ECB 1, and a chance to debate and modify ECB 1 in the light of that frank assessment.
Further, the four planned elements of ECB 2 were set out by the noble Baroness, Lady Williams, at Second Reading. They indicate a fairly narrow—indeed, dangerously narrow—focus for that Bill. A commitment from the Government that they will enable that Bill to be broadened, and that some of the issues we have already heard and some more that we will hear later will be added to the curriculum of that Bill, will be very important.
This is a large group of amendments; noble Lords will be pleased to know that I will not take them one by one and summarise them all. There are a number of amendments from the Government, which we welcome, but I will briefly highlight Amendment 24 in the names of the noble Lord, Lord Vaux and Lord Cromwell. We have heard from them so I will not reiterate their speeches. We believe that this important issue is possible and do not see why it is not something the Government could easily incorporate in the current form of the Bill.
I will primarily speak on my noble friend Lord Clement-Jones’s Amendment 53, to which the noble Baroness, Lady Chapman, and I have added our names. We have heard today and at Second Reading that this is the issue that hits at the heart of the problem we face, and the scale of the infiltration of stolen wealth that has come into the United Kingdom. It is why the kleptocrats have been so comfortable here: they have been feather-bedded by a welcoming committee of enablers, anxious to claim new clients and get some of the money. For some so-called enablers—indeed, most of them—that temptation was outweighed by their moral and practical concerns. We should note that clearly. Unfortunately, for others, such as the sorts that the noble Lord, Lord Vaux, identified, the temptation has been too great. A significant minority of practitioners have taken the “ask no questions and tell me no lies” philosophy to doing business.
This amendment would really do no more than reinforce what should be happening already, but it restates it in a different way. Within each of these enabler services, there needs to be a senior partner or director who signs off on the due diligence and is accountable to the law for doing so.
In closing, I note a briefing from the Law Society that arrived in my inbox this morning. It expressed concern about this amendment. The pressure group said that the amendment appears to extend a duty of due diligence to all stages of client take-on and transactional/advisory work. Its concern was that it would
“create a significant burden on professional services such as law firms that would be difficult for them to meet”.
In other words, this due diligence would be too hard to do. That tells us that there is work to be done in this area.
My Lords, this is yet another group of amendments with contributions from across the Chamber that signifies some of the problems we have in fast-tracking this part of the Bill. Many noble Lords, including my noble friend Lord Sikka, have put forward sensible amendments that would improve the Bill, but we cannot accept them because we are in a rush to get it through. They are common-sense amendments. I take very much the point that the noble Lord, Lord Empey, made: if we are not careful we will have a situation where we pass the Bill and, in a week or a couple of months’ time, there will be an oligarch, a kleptocrat or whatever you want to call them—somebody living off dirty money—on the front pages of the papers parading themselves as having got round what the Government have only just passed.
Of course, that is the whole purpose of the amendments that so many noble Lords have put forward: to say to the Government that they have to address some of this. If they cannot address it in this Bill, which clearly they will not be able to do because it is emergency legislation—we all accept the crisis in front of us—let us have a cast-iron guarantee that the second economic crime Bill will come quickly to address these various issues and that we will be able to come back to them. Those are the reassurances that so many of us are looking for from the Government. I do not think that is too much to ask.
As my noble friend Lord Rooker pointed out, with his normal passionate use of the English language, we do not want a situation where people—I cannot remember who he referred to—parade around saying, “Look, we’re cleverer than the regulator.” That undermines democracy and Parliament. It undermines all of us. That is how serious it is when people flaunt their ability to circumvent the law. That is not in our interest, whatever the crisis we face. I know that the Minister would accept that.
I am grateful to all noble Lords who have tabled amendments in this group, which cover a variety of non-trust provisions relating to the register of overseas entities. I should give my noble friend Lady Chapman’s apologies. She cannot participate in proceedings for personal reasons, but she tabled Amendment 23, which, like Amendment 24 in the name of the noble Lord, Lord Vaux, seeks to accelerate the reporting of changes in beneficial ownership, for reasons ably supported by my noble friend Lord Eatwell. Again, this seems absolutely common sense; it does not seem to be a point of argument.
The Government are keen to stress that the vast majority of entities that apply to join the register will be entirely above board. We accept much of that. However, under the current provisions, a shell company could be registered under certain ownership on day 1, with new appointments to the board made on days 2 and 3, but it would be required to report that only 12 months later. That is clearly not acceptable or sensible. As my noble friends Lord Sikka and Lord Eatwell, the noble Lord, Lord Vaux, and others said, something should be done about that. The Government should see what changes they can make.
There are legitimate questions about enforcement, but do the Government agree that there should be a general principle that entities need to be proactive in reporting changes? The Minister should accept Amendment 23, or indeed Amendment 24, but if not, he should commit to giving this further thought as the Government begin to draft the next piece of legislation.
We are also sympathetic to other amendments in the group, including Amendment 3 from the noble Lord, Lord Agnew, and Amendment 53 from the noble Lord, Lord Clement-Jones, supported by my noble friend Lady Chapman and the noble Lord, Lord Fox, which tries to start to deal with enablers. On so-called enablers, it would be helpful to understand what steps, if any, the Government have taken since Russia invaded Ukraine. As this is an emergency piece of legislation, what emergency action have the Government taken with respect to enablers? There have long been stories of lawyers and estate agents who purposely avoid asking their clients probing questions because they know that the answers would preclude them from doing business with them. It is time to say, “Enough is enough and we will seek you out and do something about it.”
We know that some individuals have sought to urgently offload their UK-based interests and, if they are seeking to rush sales through, we would hope that estate agents and others were already querying the reasons for that. In addition to any steps that might have already been taken, what steps do the Government plan to take over the coming days and weeks to deal with that problem? This series of amendments asks various questions, but ultimately seeks to tighten up a Bill that is in all our interests.
First, I thank all noble Lords who have contributed to this debate. Before I address the amendments tabled, I reiterate the point I made earlier. This will be almost the first register of its kind in the world. We should accept that we are leading on this. I completely accept that we may not have everything perfect, but we will learn as we go—just as we did, in the example I cited, when we implemented the people with significant control requirements for domestic companies. We had to learn and iterate that, and now many other countries have followed our lead. That is a good thing. I re-emphasise that we will be perfectly willing to revisit these measures if it transpires that we have not got everything quite right.
I would be happy to debate with the noble Lord. When I queried this, my information was that Germany potentially has something similar, but nobody else. I am happy to exchange letters with him about numbers, but that is not the information I have.
Before I move on, perhaps I may correct something I said on the first grouping—which will teach me to pluck numbers from memory rather than consulting my notes. The correct figure is that there are 30,000 overseas entities registered in the UK owning approximately 95,000 properties. I think I may have said that the other way round. I slightly disagree with the noble Lord, Lord Sikka. The vast majority of those are perfectly legitimate entities. We are an open trading environment and welcome investment from all over the world. International companies owning headquarters in the UK do so perfectly legitimately. The vast majority of these entities are legitimate. A small minority are not, and they are the ones we seek to catch in this register, but we must be fair to the vast majority which are perfectly legal, above board and just seeking to use the UK to do business, which we encourage.
Let me also pick up the points made by the noble Baroness, Lady Jones. Although I am grateful that she is supporting the government amendments—I will write that down for posterity, because I am not sure it will happen again—we did not just pluck the dates of 1999 for England and Wales and 2014 for Scotland out of thin air. We did not just sit there and think what date we would make it retrospective to. Those were the dates of incorporation when that was required by the Land Registry, so it is appropriate to go back to them. Northern Ireland has never required this, so it is impossible to retrospectively apply the provisions there. I hope she will accept that we did not just make these dates up; they are put in place for a reason.
Moving on to the amendments, let me start with those tabled by my noble friend Lord Agnew and the noble Lord, Lord Sikka. These amendments broadly deal with additions to the required information that needs to be provided at the point of application in respect of beneficial owners and managing officers.
Amendment 3 in the name of my noble friend Lord Agnew would add to Clause 4 a provision to enable the registrar, on an application for registration, to request further information to be provided in a timely manner where there appear to be material omissions or suspected false statements. This amendment also provides that an application may not be accepted unless the registrar is satisfied that any request for further information has been adequately addressed. Amendments 5 and 13 would provide that registrable beneficial owners and managing officers also have to provide any former names. Amendments 8, 12 and 14 relate to information that should be provided by managing officers on sanctions that apply or any criminal convictions that are held.
Although I understand the motives for these amendments, it is fair to point out that a rigorous amount of information is already required for application, as outlined in Schedule 1. The register of overseas entities is itself designed to increase transparency. The information required on beneficial owners is closely based on the existing requirements for information required on people with significant control in the UK company regime.
Again, it is worth remembering that the majority of entities registering will be legitimate, and we have to balance the burden of this reporting for them with the benefits that the Bill will deliver. That is a balance that we have sought to strike throughout the development of the register.
I refer the Minister to an entity called Business Bank Italy Ltd. It was owned by a convicted Mafia person from Italy, who registered this bank here and it had a website inviting wealth management. At Companies House, there was absolutely no declaration of any criminal convictions. Previously, the same person registered as secretary and director of another company, where the same person provided information in Italian. When it was translated into English, it read, “My name is the Chicken Thief, my occupation is a fraudster”, and the address was “Street of 40 Thieves, town of Ali Baba in Italy.” There is no information on whether there was any criminal conviction or anything else. The Minister just said that there are robust checks at Companies House. Where are these robust checks? I could pick out that example. Companies House did not carry any out; neither did any government department. As he knows, I have been filing a lot of Written Questions of late drawing Ministers’ attention to all kinds of strange goings-on in companies. It seems to me that, by rejecting the idea that somebody has to provide their former names and a record of criminal convictions and sanctions, the Government are opening the door for these people to misbehave.
We are not opening the door. I assume that the companies the noble Lord is referring to are existing UK-registered companies; I know he has asked me a number of Written Questions about companies registered on the UK database, and I totally accept his point. He is pointing out an issue we are well aware of: that the existing UK companies register is a dumb register. The registrar is obliged under existing law to accept the information tabled to her. The noble Lord has raised a number of examples and tabled Written Questions to me about some patently ridiculous information that has been supplied. I get regular correspondence from noble Lords and from constituency Members of Parliament where false information is given and false companies registered at people’s addresses, unknown to them, and they then receive correspondence.
The difficulty at the moment is that the registrar does not have the legal power to query the information registered to her. If the noble Lord will be patient and wait for economic crime Bill part 2, which is coming, he will find that it will deal with this precise point. It will give the registrar the ability to query that information and provide that people must give identity details, passport information, et cetera, when they register. This is a massive change to the operation of Companies House—the biggest change for something like 170 years to the register database. It will give the registrar the power to query that information and people will have to provide evidence of their identity, addresses, et cetera. The noble Lord is right—there are a number of ridiculous examples—but we will deal with that. I am aware of it, and it will be in the next Bill.
In addition, information regarding designated persons who are listed on the UK sanctions list is already published for free via GOV.UK by colleagues in the Office of Financial Sanctions Implementation.
Finally, the verification mechanisms of the register, which will be provided for under Clause 16, will ensure as far as possible that the information provided is highly accurate. This register will provide vital information and in turn give enforcement agencies even greater information to take actions and carry out their own investigations. Therefore, on balance and taking into account the reasoning we have set out, we are unable to accept these amendments.
However, I am in agreement with the noble Lord on the particular importance of ensuring that there is clear information for users of the register about whether individuals identified as beneficial owners of the overseas entities are subject to UK sanctions. It is in the public interest for users of the register of overseas entities to be able easily to see whether a registrable beneficial owner is a designated person listed on the UK sanctions list.
The Government have therefore tabled their own Amendments 7, 9 and 11, which would mean that the required information about a registrable beneficial owner will include information about whether they are designated by virtue of the Sanctions and Anti-Money Laundering Act 2018. These three amendments would require overseas entities to confirm whether any of their registrable beneficial owners are designated persons listed on the UK sanctions list. It would be an offence not to do so. This information would be displayed publicly on the register. This will ensure that this information is then more easily accessible to the average user of the register. That fulfils a requirement raised by a number of noble Lords, and by Members of the other place when they debated this legislation. I hope that the noble Lord, Lord Sikka, will appreciate that these three amendments will deliver a good deal, if perhaps not all, of the intention of his amendments and those proposed in the other place.
I move on to Amendments 18, 19 and 20, also tabled by the noble Lord, Lord Sikka, which relate to the level of shareholding that would define a “beneficial owner”. His amendments seek to remove the 25% level altogether, to capture any person who holds any shares in the overseas entity in scope.
The 25% threshold contained in the Bill is in line with global norms with regards to beneficial ownership. The Financial Action Task Force, which sets global anti-money laundering and counterterrorist financing standards, has found that this threshold is acceptable as an example of how to determine beneficial ownership. As a result, 25%—or more than 25%—is used in many jurisdictions, such as in the US and in the European Union’s recent anti-money laundering directives. The 25% threshold also follows the UK’s PSC—person with significant control—regime, which similarly requires beneficial ownership information of UK-registered companies. When the PSC regime was in development—
I think it refers to rights of control—the actual percentage shareholding of the company—but if I am incorrect on that, I will certainly write to the noble Lord.
When the PSC regime was in development, significant analysis, including consultation, considered the question of thresholds. The threshold of more than 25% reflects the level of control a person needs in voting rights, under UK company law, to be able to block special resolutions of a company. It was considered that 25% represented the optimum opportunity to understand who is in a position to exert significant influence and control over a company. Collecting information on legal ownership below that threshold would be much less likely to do this. Removing the threshold altogether would have the effect of essentially creating a register of shareholders rather than a register of beneficial ownership, which—I hope noble Lords will agree—is not appropriate for the purposes of the Bill and the transparency involved in this register. Maybe the noble Lord, Lord Sikka, likes going through thousands of register entries, but I am not sure it would be helpful to most people.
For entirely legitimate entities, there could be hundreds or thousands of shareholders. For instance, think of a large foreign company that owns property in the UK. I am really not sure whether it would be tremendously helpful to have literally thousands of individual shareholders on the list of a property’s beneficial owners. For example, in the case of public limited companies with highly dispersed ownership, where shares can be bought and sold frequently and instantly, removing the 25% threshold would make the requirements of the register disproportionately difficult to comply with, as entities must first send a notice to those that they believe are their beneficial owners, and then allow time for potential beneficial owners to respond.
We are mindful of the risk that an individual wishing to disguise their beneficial ownership might, for example, deliberately reduce their shareholding. We have considered this, and so have made provision that means that anyone, regardless of their shareholding or voting rights, who exerts or has the right to exert significant influence or control over an entity is captured within the meaning of “beneficial owner”. This includes anyone who holds the right to appoint or remove a majority of the board’s directors. Perhaps that takes account of the point the noble Lord made earlier.
I am sorry that the noble Baroness, Lady Chapman, cannot be with us today. I thank her and other noble Lords for Amendments 23 and 24. In particular, I thank the noble Lord, Lord Vaux, for his engagement and for the points he has made. I am very happy to meet the noble Lord to discuss these matters further.
These amendments would require overseas entities to update the register not just annually but when there has been a change in beneficial ownership. I know this matter has been exercising a number of noble Lords. It was also raised in 2018, during pre-legislative scrutiny of the then draft registration of overseas entities Bill. At the time, the scrutiny committee accepted fully in its report that this requirement would be difficult to enforce without active investigation. This would also create great uncertainty for third parties transacting with the overseas entities. This is the key reason why we have adopted the 12-month threshold.
A change in beneficial ownership is not necessarily foreseeable and would not be knowable to any third parties, including Companies House, without detailed investigation. As I said, there are about 30,000 of these overseas entities. As such, a requirement for an overseas entity to update its information when there is such a change means that, at any point in time, it could be compliant one moment and then not compliant the next. Our problem is that we think this creates significant legal uncertainty for any third parties engaging with the entity and seeking to purchase the property from it.