I rise to speak specifically to new clause 2, on the funding of enforcement agencies, but I wish to say a couple of things about the amendments in general. First, I am grateful to the Minister for the Government’s spirit and approach in respect of the amendments. We all want the same thing and are attempting
to find the most effective wording and mechanism to achieve our shared objectives. I hope the Minister sees the amendments on which there are votes tonight as utterly constructive. I assure him that they really do have cross-party support among Back Benchers in the widest possible sense. A lot of people are behind them and I hope that reassures him that we want to help and are not here to cause him problems.
I am grateful for the concessions that the Government have already made on penalties, on the implementation period, on speeding up sanctions—I very much welcome those new clauses—and on the reporting of unexplained wealth orders, which I have been after for a long time. As I have said to the Minister privately, our amendments include drafting amendments. I am glad he is going to talk to us about amendment 3. He will have heard the general concern throughout the House about whether the wording targets the individuals we wish to target. The other amendments are about strengthening the Bill.
To talk generally, some of the amendments point to the fact that this is not an economic crime Bill. A range of vital issues have to be addressed in a substantial and substantive economic crime Bill. A lot of people have talked about Companies House and tougher regulation; I would include company formation agents in that. We have talked about other enablers and effective enforcement, which is covered in our amendment. My right hon. Friend the Member for Birmingham, Hodge Hill (Liam Byrne) raised SLAPPs, and issues in respect of whistleblowers and Scottish limited partnership are also important. That all shows that we do need a comprehensive Bill, but I accept that this is a very important first stage.
8 pm
New clause 2 is very narrowly defined, because we had to get it in scope, but what we are talking about is the resourcing of all the enforcement agencies to enable them to meet the objectives of the legislation that we are passing tonight, and of other legislation on the statute book. We are trying to challenge and punish those responsible for economic crime, but if the enforcement is weak, we simply do not achieve our objectives. There is an issue of our having too many enforcement agencies, but that is for another debate at another time and in another place. I genuinely say to the Minister that, under the austerity of the past decade or so, we have hollowed out the resources that are available to our enforcement agencies, and those agencies are now no longer fit for purpose.
In new clause 2, we ask that within 28 days of the Act being passed, the Government publish a report on the funding of enforcement agencies for the purpose of unexplained wealth orders. I would have loved the new clause to go further, but we have kept it within the terms of the Bill.
I could go on about this forever, but if we look at the facts, we see that money laundering prosecutions have dropped by 35% over the past five years, just as money laundering has increased and intensified in the UK economy. Fraud is now the most common crime committed in the UK, with more than 5 million offences, but hardly any are prosecuted. The National Crime Agency has obtained fewer than five prosecutions a year for economic crime offences over the past five years. The number of individuals convicted by the Serious Fraud Office every year is also on a downward trajectory, from 13 in 2016-17
to four in 2020-21. The agency’s overall conviction rate has fallen from 86.7% in 2016-17 to 67% in 2020-21, so we are pursuing fewer criminals and we are being less successful in getting convictions.
As a Conservative Member mentioned on Second Reading, the UK spends about £852 million on enforcing economic crime laws. Just to be absolutely clear, that is equivalent to 0.042% of GDP, and that is a generous estimate that I have put together. Even though the most recent estimate that I have seen of the cost of economic crime is around £290 billion, which is well over 10% of GDP, the National Crime Agency has suffered a 4.2% cut in its core budget over the past five years. In contrast, I met a group of anti-financial crime executives working for the banks and they told me that the regulated financial services sector spends—hold your breath—£49.5 billion every year on financial crime compliance. Our £852 million is just too small in comparison.
Others have made a comparison between the UK and the USA. There is a massive difference in the effectiveness of enforcement between what happens here in the UK and what happens in the USA. We see that through all the actions that have been taken on the leaks—for example the FinCEN leaks and others. The Americans are just more aggressive and better resourced. They have a system whereby the agencies can hold back some of the money that they get in fines to fund their work. I think I heard someone ask how we could fund these changes. Well, that is one of the ways. The fines do not all have to go to the Treasury. Some could be held by the enforcement agencies themselves for them to do the work.