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.