I wholeheartedly agree with the content, sentiment, analysis and explanation that the hon. Member for Barrow and Furness (Simon Fell) gave the House. Like him, and like my right hon. Friend the Member for Barking (Dame Margaret Hodge), I very much welcome the Bill coming to the House and to its Report stage. The Bill is overdue, but it is also underpowered. It is therefore open to improvement, which is why I hope the Minister will be listening so carefully to the debate on these amendments.
5.30 pm
As I have said, the Minister is a very lucky Minister. Very few people in this House can have campaigned on an issue for so long, then been handed their dream job by the Prime Minister and then secured parliamentary time for sweeping legislative reform that puts more power into their hands and those of the agencies for which they are responsible. If that was not good enough, the Minister then has a chorus line of Members of Parliament tipping up to the House to offer not to cut his budget but to increase it, to provide him with the resources he needs to fulfil the ambitions of this job. Let us be clear: there will be no progress on tackling economic
crime unless we give the enforcement agencies more money. Frankly, money is the root of all progress in this area, and at the moment, although Companies House may get new powers from the Bill, it does not get the resources it needs. That is why the changes set out in new clause 20 are so important.
Many right hon. and hon. Members have rehearsed the rationale for the Bill, and I just want to add a couple of words on that. One relates to the autopsy on tackling economic crime that we conducted at the witness stage of this Bill. Secondly, I want to celebrate the Minister for Security, the right hon. Member for Tonbridge and Malling (Tom Tugendhat), who is not in his place, for some of the work he did as Chair of the Foreign Affairs Committee, in order to underline how this is a shared agenda right across the House, supported by hon. Members in all parts of it.
My right hon. Friend the Member for Barking eloquently set out, as she has for some years, the sheer staggering scale of the scandal of economic crime in this country. We have become almost immune to the stories about the Russian laundromat and the Azerbaijan laundromat, but hundreds of billions of pounds being laundered through UK corporate structures is a matter of shame and scandal for this country. Bill Browder, that doughty fighter, said in the public witness sessions that he simply could not believe that he had been campaigning around the world for things such as Magnitsky sanctions for a long time but the real scandal was that here in this country, despite the hundreds of billions laundered out of Russia through this country, there had been only one successful prosecution for money laundering relating to that smuggling of money away from the Russian people. That is an appalling track record of prosecution in this country, and all of us in this House are united in an ambition to fix that.
We then heard from the policing agencies. We heard from the City of London police and from some of our economic crime fighters, who went on the record time and time again to say that they did not have the resources to do the job. So the size of the scandal is well established and a police force that is telling us loud and clear, in public, in this House, that it does not have the resources to do the job. We then heard from representatives of Companies House, in a hearing held in November, on the record, that even though we were only months away from a new financial year, they had not yet submitted their budget requests to the Treasury. The Minister has not told us what those budget requests look like today, even though the next fiscal statement is scheduled for just 50 days’ time. So I hope that when the Minister winds up he can give us a degree of reassurance that a budget is ready and ready to go, because, having been a Chief Secretary, I can tell him that if he is not on the front foot in arguing for the budgets he needs, he is going to get taken to the cleaners.
One of the most alarming bits of evidence that we concluded with in the Public Bill Committee sessions came from the independent reviewer of terrorism legislation. He painted for us a realistic scenario that could well have been a storyline from “Gangs of London”, whereby economic criminals team up with weapons suppliers to bring serious amounts of weaponry into this country and into the hands of organised criminal groups. The independent reviewer of terrorism legislation was frankly amazed that this has not happened already, but it
underlines how, as my right hon. Friend the Member for Barking said, economic crime is a national security issue and we should be treating it as such.
None of these problems is a secret. The Minister for Security, who is not in his place, did the House a great service as Chair of the Foreign Affairs Committee in overseeing two reports, the last of which was on illicit finance. I want to remind the House of some of the report’s conclusions. First, it concluded that
“assets laundered through the UK are financing President Putin’s war in Ukraine.”
That is how bad the enablers in this country are. Secondly, it said that
“the Government appear to lack a grip on both the enablers of potential sanctions targets and, crucially, their proxies to whom wealth is transferred.”
The result was a conclusion from the Foreign Affairs Committee calling on the Government to substantially increase funding and expert resources for key law enforcement agencies.
The report went on to talk about how, as my right hon. Friend the Member for Barking shared with the House, the UK spends a grand total of 0.042% of GDP on tackling economic crime. Money laundering prosecutions are going so well that they have actually dropped by 35% in the last five years. Convictions by the Serious Fraud Office are on a notable downward trajectory. The Atlantic Council, for heaven’s sake, has said that the UK is now
“in severe danger of being shown to be a paper tiger”
because our enforcement of the sanctions against economic crime is so weak. The report concluded:
“we repeat the call for a substantial increase in funding and export resourcing for the National Crime Agency, Serious Fraud Office and other responsible agencies.”
In that context, two points are important in the basket of new clauses we are debating this afternoon. First, it is essential that Ministers come to the House each year with an assessment of how the Government are doing in policing the sin of economic crime. That cannot simply be constrained to the performance of Companies House. It has to be a report on the economic crime system. The proof of the need for that was given to us by openDemocracy this morning. I am, as are many Members here, enormously grateful to Jim Fitzpatrick for the courage he has shown in bringing together a story that shows that this country is actually providing sanction waivers for warlords. We have given the green light to Putin’s chef, Prigozhin, to hire London lawyers to fly to St Petersburg to prepare a case in English courts to silence English journalists.
I have gone through the email traffic that is the background of the story. It includes lawyers, some based in London, debating how to attack Eliot Higgins—not Bellingcat, because the individual is always more vulnerable than the company—and how they are going to make sure the assets are assessed to ensure maximum damage can be done to Bellingcat. We gave the green light for those lawyers to fly to St Petersburg to have that conversation. We gave them a waiver on a sanctions exemption.
The Office of Financial Sanctions Implementation—an agency in the Treasury—is frankly not joined up with the rest of Government or the economic crime system. That is an appalling system failure, which I hope the House will have a chance to debate in some depth over
the days to come. It underlines why we need in this legislation a stipulation, requirement or demand on Ministers to come forward and bring us a comprehensive analysis each year of how the economic crime system is performing and of the new sins for which new laws are required in order to police them.
The second point is on resourcing. We have all heard loud and clear today about how the economic crime system lacks money. I hear and sympathise with the Minister’s argument that £100 is not the right figure—that it might need to go up, that it should not be a one-off and that it should be planned annually. I suppose all those arguments would carry more weight with the House this afternoon if we had on the table an analysis of how much the economic policing system actually needs and how the Minister will assemble that money in 50 days’ time for the Budget and the beginning of the new financial year.
However, the truth is that we do not have that. We have not had any sign of it, and we have been hunting for it pretty systematically before Report. We are now in January and it is still not there, so the House is right to be pretty alarmed that the money that is needed will not go into economic crime policing over the year to come. The intention of Members of this House is not to force the Minister’s hand; it is to empower him in his conversations with the Treasury, which will no doubt be difficult, but in which we hope he will prevail.
Let me conclude with two points, which have stood out for me in the debates that we had in the Bill Committee and today’s debate on Report. We are a small, open country with a very big financial services system. Working in that system are millions of people who are honest, work hard, do their best and pay their taxes. Indeed, I was very happy to work in that sector, at Rothschild, for several years before I was elected to this House. But if this country continues to neglect our defences against economic crime, those financial services will go elsewhere. In a very real sense, as Thomas Gresham once put it, bad money will drive out good, and the price will be paid by millions of hard-working people in the financial services sector of this country.
The Minister has campaigned on this issue for so long, and all of us salute him for that work, but he has now signed up to fight this inferno as a Minister, asking to be armed only with water pistols. That is not brave or heroic. That is an approach that is doomed to failure. Even at this late stage, we urge the Minister to change course, because policing on a shoestring is policing that is hamstrung. It is no good having Ministers who are clear-sighted about the risk but half-hearted about the response. When police are too weak, it generally means that criminals are too strong, and the economic criminals who exploit this country have been too strong for too long.