Economic Crime: Planned Government Bill

(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy to make a statement on the Government’s plans to bring forward an economic crime Bill.

I thank my hon. Friend for his question, but, as I am sure he will appreciate, I am not going to speculate about the content of any future Queen’s Speech, which is the correct moment for the Government to be setting out their legislative agenda for the next parliamentary Session.

However, I can confirm that the Government remain committed to tackling economic crime, which is why my colleagues in the Home Office and the Treasury take the lead on this. In recent years we have taken a number of actions, including creating the new National Economic Crime Centre to co-ordinate the law enforcement response to economic crime and establishing the Office for Professional Body Anti-Money Laundering Supervision to improve oversight of anti-money laundering compliance in the legal and accountancy sectors. We delivered the Criminal Finances Act 2017, which introduced new powers including unexplained wealth orders and account freezing orders. We are determined to go further to crack down on dirty money to protect our security and our prosperity. With the publication of the fraud strategy and second economic crime plan this year, we will further level up the response to crack down on crimes of this type.

My Department is playing its part. The Department for Business, Energy and Industrial Strategy announced plans to reform Companies House in September 2020. In 2021 we consulted on more detailed aspects of the reforms, and we will respond to the consultation soon. Investment in new capabilities at Companies House is already under way, with £20 million being invested in this financial year and a further £63 million announced in the spending review. The draft Registration of Overseas Entities Bill has undergone pre-legislative scrutiny. We are amending the Bill in line with the Committee’s recommendations, and in line with comments that the Prime Minister made to the House just yesterday. We will introduce the Bill and the broader reforms of Companies House when parliamentary time allows.

I am grateful to the Minister for his response. As he knows, economic crime costs the people of this country £100 billion per annum, according to the National Crime Agency. The Government have committed themselves repeatedly to legislation to give our agencies the tools that they need to tackle this problem, and it was therefore concerning to hear from my noble Friend Lord Agnew—who recently resigned from his role as Minister responsible for countering fraud—that a decision had been made to drop the economic crime Bill from the legislation that is due in the next parliamentary Session.

This is not a notional white-collar offence; it affects real people in very tangible ways. Terrorists and drug dealers depend on it to launder and legitimise their money through UK banks, companies and properties. Up to 50% of moneys flowing through Russian laundromats, often used for tax avoidance, for stolen public funds and to launder moneys derived from organised crime, flow through UK shell companies. UK corporate structures were involved in arms deals which breached sanctions in Sudan. HSBC and NatWest have been fined hundreds of millions of pounds for allowing criminals and Mexican drug cartels to launder their money through accounts held at their banks. An estimated £5 billion or so of taxpayers’ money, in the form of bounce back loans, has been taken fraudulently because some banks have not applied the most basic of checks. Criminals, despots and terrorists involved in people trafficking, illegal immigration, drug dealing, extortion, kleptocracy, the impoverishment of nations, and fraud—including what is taken directly from the public purse, to the tune of £30 billion per annum—are all facilitated by some of the lax rules that we have in this country.

The Government have promised to tackle this issue—as my hon. Friend the Minister has said—by means of Companies House reform; to fund regulation by applying a small surcharge to the current cost of establishing a company in the UK so that we can close down those shell companies and trusts; and to introduce a register of overseas entities to reveal the real beneficial owners of UK property, and a corporate offence of failing to prevent economic crime so that, for example, banks can be properly held to account for granting those fraudulent bounce back loans.

Let me first acknowledge my hon. Friend’s work on Companies House reform, on whistleblowing, and on general economic crime. He really has a handle on this issue, and his thoughts are always well received.

My hon. Friend is right to say that economic crimes are a significant cost to the economy. It should also be borne in mind that there are victims at the end of these crimes, and that they experience significant distress. We also recognise the national security implications of allowing dirty money from overseas into our financial system. We acknowledge the need for action on economic crime, and the Government have acted. My colleagues in the Home Office and the Treasury have begun reforms to the suspicious activity reporting regime, created the National Economic Crime Centre to co-ordinate the law enforcement response, and reviewed our money laundering regulations and supervisory regime. That review will produce a report by June 2022. We are legislating for the economic crime levy in the current Finance (No. 2) Bill. We are committed to building a framework that will deter such crimes from happening and to providing a framework that will ensure that those who commit such crimes can be held to account.

I thank the hon. Member for Thirsk and Malton (Kevin Hollinrake) for his urgent question today.

At the beginning of the pandemic, there was widespread recognition of the urgent need to get money out to support businesses as soon as possible, but what made Lord Agnew’s resignation statement this week so alarming was his criticism of how the Government are handling cases of fraud now we know about them, and the news that the Government may no longer be intending to bring forward an economic crime Bill.

Lord Agnew described the performance of the Department for Business, Energy and Industrial Strategy as “nothing less than woeful”, and added that it has

“been assisted by the Treasury, which appears to have no knowledge of, or little interest in, the consequences of fraud to our economy or society.”—[Official Report, House of Lords, 24 January 2022; Vol. 818, c. 20.]

To be honest, it is one of the few times in this Parliament that the two Departments have been consistent with each other. These are very serious allegations for a serving Minister to make, and I am worried by what the Minister has just had to say about the economic crime Bill, so let me ask him however about the Government’s intentions in his area and whether its commitments still apply.

First, is it still Government policy to legislate for a register of beneficial ownership of property in the UK, so that we can find out who really owns property in this country? Secondly, will the Government still legislate to prevent abuses of Scottish limited partnerships? Thirdly, will the Government still legislate to prevent the shortcomings in the unexplained wealth order regime highlighted by the recent case in the High Court of NCA v. Baker and others? Fourthly, will the Government still reform Companies House? If the register of British companies was more rigorously checked and policed, there would not have been as many fraudulent companies as there were to engage in fraud when the crisis began. Finally, can the Minister confirm that his Department’s latest estimate of the value of fraudulent bounce back loans is £4.9 billion, and that it is the Department’s intention to write off £4.3 billion of that?

I thank the hon. Gentleman for his comments. Our appetite for tackling economic crime remains undiminished, as it does with Companies House reform, which has been well trailed and well considered. We will continue to work in this area, but I cannot pre-empt what Her Majesty will say in the Queen’s Speech.

In terms of the bounce back loans, the Economic Secretary to the Treasury, my hon. Friend the Member for Salisbury (John Glen), made it clear in the House that HMRC did not produce the figure of £4.3 billion, and the money has not been written off. The figure was an inference by journalists, who subtracted £1.5 billion—the estimate of the amount to be recovered by taxpayer protection—from the £5.8 billion that was estimated as error and fraud in 2020-21. It was publicised before Christmas. Our Department continues to work with our fraud measures with partners in Government, the British Business Bank and all the partner banks who issued this money in the first place.

I appreciate that the Minister cannot be tempted to comment on what might or might not be in the Queen’s Speech, but based on what Lord Agnew said, if it were to be true, I please urge the Minister to consider that it will be about as popular as a cup of cold sick with anyone out there who is concerned about the fight against corruption or the fight for transparency. The well of excuses after three or four years of promising this piece of legislation or its related pieces has now run dry. This legislation is essential for the credibility of this country and this Government, particularly when we have a crisis in Ukraine and all sorts of Russian oligarchs waiting to move money into this country if they can, and when there are fundamental questions, as we heard in Prime Minister’s questions, about Westminster today. It is essential that we do not back away from this central piece of legislation, which is a touchstone issue for many stakeholders out there.

I appreciate my hon. Friend’s work in tackling corruption and encouraging further transparency, which we have had several conversations about. We remain undiminished in our approach to tackling economic crime, for the reasons that he has given, and to Companies House reform, too. We will work with the Home Office and the Treasury to make sure we can get these measures in place as soon as possible.

“Lamentable”, “woeful”, “arrogance, indolence and ignorance” were just some of the words that Lord Agnew used to describe the Government’s action on economic crime. In resigning at the Dispatch Box in the Lords, he has shown a lot more courage than anybody on the Front Bench in this place.

Some £4.3 billion was lost in the covid schemes and as-yet-unknown sums were lost in Government-backed loan schemes to crooks and fraudsters, while some in this country got no support. For example, it was deemed too difficult to redress support for parents in the self-employment income support scheme. Lord Agnew also said that it was a foolish decision to kill off the economic crime Bill, and given the evidence that I have heard at the Treasury Committee during our inquiry on it, I wholeheartedly agree.

Many cases of economic crime could be halted if the Government tightened up Companies House, because reform is well overdue. They have huge volumes of evidence on that. There is no verification, it costs only a tiny sum to set up a company and the information on the Companies House register is—politely—utter guff. If the Minister looks at Graham Barrow’s account on Twitter, he will see some of the absolute nonsense that is entered on to the Companies House register and somehow accepted. All that has led to an open door through which crooks and fraudsters have been allowed to waltz off with public money and Government-backed loans. UK corporate structures, such as Scottish limited partnerships, allow that to happen—and have done for years.

When, on what date, will we see an economic crime Bill? When, on what date, will we see the registration of overseas entities Bill, for which I sat on the Joint Committee years ago and on which the Government have failed to act? Why are the Government so unconcerned that the UK is deemed Londongrad and notorious for the laundering of dirty money? Who benefits from that—is it Tory donors and their pals?

I think the last comment is beneath the debate. The hon. Lady talks about Companies House reform. Clearly, a lot of work is already happening in Companies House and it supports law enforcement on hundreds of cases each month. We want to get the balance right to ensure that new entrepreneurs can set up businesses through Companies House easily and affordably. There is much more reform to be done, however, which is why our appetite remains undiminished. She talked about Lord Agnew, who I thank for his work on this area. I worked closely with him to put measures in place to tackle fraud in bounce back loans and other areas of Government. He was a great servant of the Government and I regret the fact that he has gone.

May I congratulate my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) on raising the matter? I point out to the Minister that, over the last 10 years, the Government have made a lot of progress on this area but many hon. Members have put a lot of time and effort into working across the House to try to advance what is an important British agenda, not least at the G8 under David Cameron’s leadership. Companies House remains a good library, but it does not have investigatory powers, and it is there that we want progress to be made. Will he agree to meet me, my hon. Friend the Member for Thirsk and Malton and others who are concerned about progress in that area, together with those who run Companies House, to see whether we can make some progress?

My right hon. Friend raises some interesting and important points. I will ask the relevant Minister, likely Lord Callanan from the other place, to meet him, but I am happy to meet him either way.

I am sorry—the Minister is a nice chap—but we have been calling for this Bill for ages and ages. Time after time, Ministers come back to the House to say, “Yes, there’s going to be a public register of beneficial ownership,” but it still has not happened. They say they will do it in the overseas territories, but it still has not happened. They say that they will stop giving out golden visas to Russians with dodgy money coming into the UK, but it still has not happened. We in this country are a soft touch. If we want to send a strong message to Russia, particularly at the moment, we have to move swiftly and not say, “Oh, I can’t possibly comment on what legislation we might be thinking of in the future.”

I thank the hon. Gentleman for that—it was a shame he did not stop at his first sentence, but it was very kind of him. I appreciate all of those measures that he wants to put in place and, as I say, we remain undiminished on that. In the meantime, we have sanctions to tackle corruption from other countries. We already have very robust procedures in place, but we know we need to go further. That is why these measures will come, but I cannot pre-empt Her Majesty.

I associate myself with the remarks of praise for my noble Friend Lord Agnew, an outstanding Minister who asked searching questions of government at all times. It was a pleasure to work with him. May I press my hon. Friend about the work the Law Commission is undertaking on corporate criminal liability. It is due to present options early this year and I urge him, first, to use all expedition to get on with the job of legislating on economic crime and, secondly, to incorporate what I hope will be sensible recommendations from the Law Commission so that we can get corporate criminal liability in this country right? At the moment, the law is just not working and action is needed.

I thank my right hon. and learned Friend for his work in this area as well. Because there has been no consensus, it is important that the Law Commission looks at this matter, because we are dealing with a very technical crime and if we are going to get the answers to it right, we have to get this right first time. We will, absolutely, consider that report in its fullest when it comes to us.

First, I congratulate the hon. Member for Thirsk and Malton (Kevin Hollinrake) on securing this urgent question and thank him for backing my Bill, which would have brought in that register of beneficial interests. When I mentioned this to the Prime Minister just this week, he pointed to the Leader of the House and said it would be introduced as soon as possible, but now look what has happened: the vehicle we would have used to do that is gone. So I ask the Minister: how can he say that he is taking this seriously, given that this Government say one thing and do the complete opposite, do they not?