I draw hon. Members’ attention to my entry in the Register of Members’ Financial Interests.
This issue has been a concern of mine not just for months but for many years. Anybody who has even a passing acquaintance with the issue at hand will know that its history is somewhat tortuous. A series of options were set out comprehensively in a Law Commission report published in June last year, which I commend to hon. Members. However, there is much that predates that. Indeed, much that has happened in the last few months in this place—in both Houses—reinforces the thrust of the argument that I seek to advance by way of new clauses 4 to 6, which stand in my name and those of many other right hon. and hon. Members, from all parties in the House, to whom I am extremely grateful.
In 2015, my party’s manifesto rightly committed the Government to make it illegal for companies to fail to put in place measures to prevent economic crime. It would be unfair to say that nothing happened. We had the Criminal Finances Act 2017, which created a new offence of failing to prevent tax evasion. That was a development on the failing to prevent bribery offence contrary to section 7 of the Bribery Act 2010, which opened the door to the development of the principle across a range of criminality in this space.
Subsequent to that, the Ministry of Justice launched a call for evidence in early 2017 on corporate liability reform for economic crime. However, it is right to say that progress on that was exceedingly slow. It was not until November 2020, when I was serving as Secretary of State, that it was agreed across Government that the Law Commission would be given the task of examining the issue and producing a report. It was right to acknowledge at that stage that there were a number of potential models that could be deployed here, and it was important for an independent body such as the Law Commission to look at different jurisdictions, as of course it did. It looked in particular at the United States, Canada and Australia: common law jurisdictions that have long been wrestling with the same challenges that we face. To differing effect, they have brought in and deployed their own particular regimes. More on that slightly later.
What is clear is that there is very much consensus in this place on the need for reform of corporate criminal liability. The Treasury Committee’s report of February last year urged the Government
“to act quickly in bringing forward any legislation flowing from the Law Commission’s review.”
In June, the Foreign Affairs Committee talked about
“reform of outdated and ineffective corporate criminal liability laws”,
and, in October, the Justice Committee spoke in similar terms. Finally, a report from the House of Lords Fraud Act 2006 and Digital Fraud Committee in November said:
“Reform of corporate criminal liability will be essential in order to maximise the impact of the Fraud Act and other legal tools going forward…to hold corporates across all sectors to account and to inspire behaviour change.”
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I am grateful to the hon. Member for Aberavon (Stephen Kinnock) for his kind words about me, and I have read new clause 40. I say gently to the Labour party that we do not need six months for a further discussion of this issue. We have a wealth of documentation, which is spread around me on the Bench, including the Law Commission report—I have it here because I believe in primary sources and I am trying to be faithful to it—which comes to the view that the Government should pursue options to create further offences of failing to prevent. Page 119 states:
“any decision to introduce new ‘failure to prevent’ offences needs to be considered alongside the issue of retention or reform of the identification doctrine.”
That relates to new clause 5, which I will speak to shortly. The report goes on to say:
“If the identification doctrine is retained as at present, the case for new failure to prevent offences, is inevitably more compelling. We therefore consider that ‘failure to prevent’ offences are an option for reform, but note that the evaluation of this option must take place alongside the evaluation of the options for reforming the identification doctrine.”
I will now direct my remarks to my right hon. Friend the Minister for Security. The Government were given that challenge back in June, and I strongly submit that it is vital that they rise to it and deal with the identification doctrine in the Bill. That could deal not just with the offences I mentioned in my proposal, which I have been very specific about, but has wider ramifications for other aspects of criminal liability. It is highly germane to new offences under the online harms Bill that is going through Parliament at the moment.
I have not sought to be overly ambitious in my proposal. I have confined it to offences that can be described under the genus of economic crime. I have tried not to use such terms in legislation, because I readily accept, as the Law Commission said, that the definition of economic crime is somewhat broad—hazy, perhaps—and does not descend to the detail of existing criminal offences, be they offences under the Fraud Act 2006; the offence of false accounting, which is a well-known offence under the Theft Act 1968; or the offence of money laundering, introduced by the Proceeds of Crime Act 2002. I have therefore resisted the temptation to be too vague.
I commend the Government’s economic crime action plan of 2021, which I think I helped sign off. Rightly, the action plan describes economic crime as a
“broad category of activity involving money, finance or assets, the purpose of which is to unlawfully obtain a profit or advantage for the perpetrator or cause loss to others.”
It is important that we put this in context and look at what the action plan is saying. It goes on:
“This poses a threat to the UK’s economy and its institutions and causes serious harm to society and individuals.”
I strongly agree. There is no such thing in this sphere as a victimless crime. We are all the victims of this behaviour, whether we are investors, consumers or taxpayers. Everybody is diminished as a result of such behaviour. It damages and undermines the reputation of our country.