Seema Malhotra
MP for Feltham and Heston · Labour (Co-op) · United Kingdom
“Public sector productivity is improving, with the latest Office for National Statistics figures showing output continuing to grow faster than inputs, and Departments being challenged to improve efficiency and modernise outdated processes.”
“I was proud to support the Feltham Convening Partnership’s young leaders summer programme last month. What struck me was their ambition for themselves and their community, as well as their call for more work experience opportunities.”
“We will be working to commence the socioeconomic duty on public bodies in section 1 of the Equality Act to require public authorities to put addressing socioeconomic disadvantage at the heart of their strategic decision making. There will be more on that to follow. Let me again thank my hon.”
“For generations, the message to those who want to enter public life or elite professions has been that if they want to get on, they must sound like everybody else. When Margaret Thatcher became leader of her party in the 1970s, she famously underwent intensive elocution lessons with a tutor from the National Theatre.”
“Whether a young person chooses a degree or a trade, their journey must be determined by merit and their potential—never by whether they have to change their voice or pretend to be someone else to fit in.”
“Interestingly, studies also regularly show that regional accents such as Welsh or Yorkshire are rated by the public as trustworthy, warm and honest. Yet when those same studies measure perceived intelligence or employability, standard southern English and received pronunciation invariably top the metrics.”
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“Perhaps the Minister can outline how he sees the taskforce working, and the engagement of colleagues through that process. I note, too, that the aforementioned orders—the development consent orders and so on—have the safeguard of being subject to consideration by the Secretary of State. In relation to that, I note that in the energy security strategy released last year, the Government said that to accelerate domestic supplies of low carbon and affordable electricity, the UK will need to expand “the connecting network infrastructure to support it”. As a result, we are not fully convinced that this legislation is necessary, or that, if implemented in a particular way, it would not hinder the Government’s own express mission to expand the electricity infrastructure to enable greater use of low-carbon technologies.”
“As the Minister has said previously, the small number of cases where there is a dispute over the amount of compensation would be determined by the Upper Tribunal in England and Wales, and by the Lands Tribunal for Scotland. Throughout the passage of the Bill, he has referred to encouraging the use of alternative dispute resolution processes, instead of immediately resorting to the Upper Tribunal. It is worth considering why the take-up of alternative dispute resolution processes has been lower than we would want to see, and what improvements can be made. Comments that have previously been made, while sympathetic to the arguments, raise questions about the cost and the speed of the processes. We need to look at ways in which we can improve the current system and make sure that it has gone through the process of the taskforce.”
“I have a couple of questions for the Minister, who I am sure will want to ensure that the process does not inadvertently slow down some of the development that we need across all our constituencies, including in rural areas. Will the taskforce look at how improvements can be made to the processes that are currently in place? That was talked about on Second Reading, and we need to make sure that they are delivering in the way that was intended. Some of the measures in the Bill would require the Secretary of State to draw up proposals for the use of alternative dispute resolution processes, and to look at providing compensation in this respect. Under the Bill, compensation would be paid to landowners.”
“That is relevant to the subject of this Bill, because we should be in no doubt that achieving the urgent mission to have clean power requires us to have a revolution in green energy technologies, to establish storage capacity, to manage peaks in energy demand, to develop new ways of balancing the grid, and to deliver comprehensive improvements to our energy infrastructure in order to expand the grid to new sources of energy. I am sure the right hon. Member for North Somerset has heard concerns about National Grid having the capacity to expand to new sources of energy, and about seeing the transmission of energy across the country.”
“That is a matter of concern for all of us, and the Federation of Small Businesses has similarly shown that one in four of its members plans to close, downsize or restructure should energy relief come to an end in April. We are in a race against time to improve our energy stability and security for the sake of our businesses and the planet. That is why the Opposition have been setting out our plans, and right hon. and hon. Members will have heard the Leader of the Opposition make a speech yesterday. We believe that we need to make Britain a clean energy superpower by 2030.”
“I am sure that he also hears about the cost of energy from local businesses and families. We want to develop our energy security and resilience in this country, and ensure that in the future we do not have the kind of crisis that we have seen in the last year, whereby skyrocketing energy bills have had an impact on our ability to employ people. We need to have a much more sustainable and long-term plan for our energy stability and security, and the price of energy should be a lot lower for all our constituents. Research released this week by the British Chambers of Commerce shows that almost half of businesses say that paying their energy bills will be very difficult when the current business support package comes to an end in April.”
“Friend the Member for Stalybridge and Hyde laid out some of those concerns and the potential negative consequences of the Bill on our national mission, which is essential to revolutionise our electricity infrastructure for the long-term prosperity of all our communities, including those in rural areas. Indeed, rural businesses have raised with me the need to look at infrastructure to support development so that they can operate with the same level of success and opportunity as businesses in towns and cities. There are different sides to the question of renewal and development of our infrastructure that we need to take into account and consider in our proceedings. Like other hon. Members, the right hon. Member for North Somerset also referred to the energy crisis that we are facing.”
“That is core to an industrial strategy and how we plan for the future, which are big questions for Parliament and for our nation. It is about having processes that look to engage fairly and empower local residents to have a voice. I will ask some questions of the Minister and reiterate some of the concerns that were laid out by my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) on Second Reading, particularly about some of the unintended consequences that could arise. I am sure that these questions will be considered by the Minister as the taskforce takes forward its work on how the balance of rights and development is achieved. In that context, my hon.”
“I congratulate the right hon. Member for North Somerset (Dr Fox) on his success in the ballot and, indeed, on the Bill’s passage through Second Reading, Committee and its remaining stages. I also congratulate him, as I have not put it officially on the record, on the Down Syndrome Act 2022, which I was proud to see become law in support of the work of the all-party parliamentary group on Down’s syndrome. I thank the other hon. Members who have contributed to the debate; I will make only a few short remarks. I have listened to the proceedings and reviewed the outcome of the Committee, and I recognise and understand the rationale for the Bill. The right hon. Gentleman has laid out some of the concerns that we have as a nation about recognising the need to look at energy transmission and how demand will go up.”
“The Minister will know that prepayment customers, many of whom are the least well off in society, are charged a higher rate for their energy; that has been mentioned by Members on both sides of the House. Does he recognise the injustice of thousands more families being forced on to prepayment meters, on his watch, and on to higher rates at a time when so many are facing severe cost of living pressures? Does he not accept that it is time for him to step up and act further and faster, because this country needs that?”
“The amendments we have tabled seek to ensure that the Bill goes further in areas including reporting and parliamentary scrutiny, strengthening the objectives of the registrar to see a more proactive role in preventing and detecting economic crime, and tightening up the authorisation and supervision of corporate service providers. Amendments scheduled for tomorrow include provisions on the failure to prevent economic crime and director liability.”
“However, it was frustrating that in Committee the Government did not accept a number of amendments tabled by the Opposition and other Members that would have significantly strengthened the Bill even further. The Minister did agree to keep some issues under review, which we will pick up on today. This long overdue second economic crime Bill is an opportunity to finally end Britain’s role as a global hub for dirty money, and to support honest businesses to trade and flourish, with better standards and more transparency, helping to level the playing field for businesses and co-operatives. I echo the Minister’s words on the importance of that in tackling terrorism, economic crime and illicit finance, and in cleaning up our economy in the way we all want to see.”
“It is a pleasure to follow the Minister and to speak to our amendments. The Labour party has supported this important Bill’s passage in a cross-party spirit through Second Reading and Committee. I pay particular tribute to my right hon. Friends the Members for Barking (Dame Margaret Hodge) and for Member for Birmingham, Hodge Hill (Liam Byrne) for their contributions during our proceedings. May I add my words of support? The Minister has a long track record on these issues and a reputation through the all-party group on anti-corruption and responsible tax and other campaigns, which I hope bodes well for further progress and amendments to the Bill.”
“Under our amendment, the purpose of the report would be clearer and stronger. We would have an annual report with an assessment as to whether the powers available to the Secretary of State and the registrar were sufficient to enable the registrar to achieve her objectives under proposed new section 1081A of the Companies Act 2006, which is inserted by clause 1.”
“The extent of these powers risked riding a coach and horses through the defences against economic crime that we are seeking to build through the legislation. But even after those amendments, a number of Henry VIII powers are left unchecked. I am sure that will be debated in the other place. The next welcome concession is Government new clause 15, which imposes a duty on the Secretary of State to prepare and lay before Parliament reports about the implementation and operation of parts 1 to 3. That significant step, however, is surprisingly weak as regards setting any expectations of what Parliament would expect to see in the report. That is why my hon. Friend the Member for Aberavon (Stephen Kinnock) and I tabled new clause 16, which has cross-party support and is similar to amendments tabled by colleagues in Committee.”
“I thank the hon. Lady for her comments. She is alluding to a theme that goes through the Bill: we cannot expect this to suddenly be the answer to everything, so we have to keep it under review and to have the mechanisms for that review, including effective information coming to Parliament. The Minister has just spoken to the Government’s amendments. We are pleased to see that there have been some concessions following Committee. The Government have tabled about 25 amendments that remove powers to exempt directors from identity verification requirements. That is a huge concession by the Government to a central question asked by us in Committee about the completeness of the legislation, the extent of the Secretary of State’s powers and the challenge required for parliamentary oversight.”
“My hon. Friend is absolutely right. The amendment would do two things. It would change the culture of how Parliament operates and plays a role in tackling economic crime. It would also shift the culture based on our expectations of business, how business should behave and how directors should be held to account, as well as shift the culture in Companies House and the work of the registrar. For all those reasons, it is an important area for development.”
“The Minister will be aware of the concerns that we raised in Committee about the need for Parliament to have transparency even on the number of uses of exemption powers under the Bill.”
“My right hon. Friend is right about keeping our legislation up to date. He says that with great authority. We must recognise that those who seek to perpetuate economic crime are always innovating, and unless we are aware and informed, we will not move our legislation and processes on with that. There is also a vital point about the information that comes to the House. Today, we are debating reporting and information. There will be further debate tomorrow about the appropriateness of the structures through which that information is assessed. New clause 16 seeks to specify further some of the information that should be brought forward and, crucially, calls for a detailing of instances—or maybe even numbers, depending on the reasons—in which exemption powers under the Bill are used by the Secretary of State.”
“233.] Since then, we have not heard a satisfactory answer to the central question: should an individual convicted of an offence for a serious breach of the National Minimum Wage Act 1998, such as a deliberate refusal to pay the national minimum wage, be prevented from serving as a company director?”
“In Committee, the Minister stated that it was “right to identify the scale and nature of the problem before we legislate”. –– [ Official Report, Economic Crime and Corporate Transparency Public Bill Committee, 3 November 2022; c. 240.] He said that he was “keen to do so.” He also said: “There have been 16 people convicted under the National Minimum Wage Act 1998. I want to do some further research on that to see what has happened to those people and their director qualification or disqualification. That might inform debate more clearly.” – [ Official Report, Economic Crime and Corporate Transparency Public Bill Committee, 3 November 2022; c.”
“Issues of concern that the report may draw attention to, and which we could encourage the registrar to look at, could include investigations of unusual patterns of directorships and companies registered at one address. All of that would also enable Parliament to hold Companies House to account for its performance. We are willing to work with the Minister to strengthen the Government’s new clause so that it becomes more purposeful and effective—and, in doing so, collectively achieve the outcomes that we intend for the Bill. I turn to further amendments tabled by Labour Front-Bench Members. New clause 22 seeks to disqualify any individual convicted of a serious breach of the National Minimum Wage Act 1998, such as a deliberate refusal to pay the national minimum wage, from serving as a company director in future.”
“My right hon. Friend is absolutely right. We should be ambitious for the registrar and for Companies House in tackling economic crime and being a beacon around the world for how a nation should do that. She makes an important point about where the new clause goes further than the Government’s proposal. Along with the report and the data in it, importantly, there would be recommendations about whether further legislation should be brought forward in response to that report and the information in it. That is extremely important, because that is where Parliament will have to make choices about whether it chooses to take further action.”
“For example, they could be a lawyer or an art dealer. They would therefore not be supervised. Proposed new section 1098I(2) specifies that a “‘relevant regulatory regime’ means a regime that, in the opinion”— I stress, in the opinion— “of the Secretary of State, has similar objectives to the regulatory regime under the Money Laundering Regulations”. However, it does not specify any transparency on how that conclusion is reached. Clause 63 is a risk for a backdoor route to the authorisation of foreign corporate service providers—”
“New clause 34 seeks to create an obligation for the Secretary of State to publish a report, first, into the number of authorised corporate service providers with a head office based outside the UK, by which we mean where the authorised UK subsidiary supervised by His Majesty’s Revenue and Customs is beneficially owned by a company that is outside the UK; and secondly, on the number of foreign corporate service providers authorised by regulations set out in proposed new section 1098I(1) of the Companies Act 2006, which is amended by clause 63. Clause 63 enables the Secretary of State, by regulations, to authorise a person abroad to become a foreign authorised corporate service provider “even if the person is not a relevant person as defined by regulation 8(1) of the Money Laundering Regulations”.”
“New clause 34 seeks transparency reporting on the involvement of foreign corporate service providers in the two main routes by which they may be authorised to conduct ID checks and to incorporate a company in the UK that is registered with Companies House. Such a company being registered could have an office address in the UK; a postal address in the UK, with all the risks we debated in Committee; or an address abroad as an overseas company. The directors of the company registered in Companies House by the foreign corporate service provider may be living abroad and may never come to the UK.”
“This is a window of opportunity that we should not miss. On new clause 34, the processes set out in the Bill rely on effective ID verification of company directors. There has been a debate as to whether that should be done in-house. The Government have chosen to use a model whereby authorised corporate service providers are trusted to undertake ID verification on behalf of Companies House and effectively certify that through a confirmation statement. The debate is ongoing on how that introduces risk into the process. Indeed, if the registrar can do only part of the verification and we need to use authorised corporate service providers, that only works if the ACSPs are known, trusted and effectively regulated.”
“As a side issue, the Minister may helpfully confirm whether directors of companies that have been struck off will also be subject to verification checks so that we do not have a period through which they may escape ID verification as Companies House looks to undergo those checks with existing directors. The key issue is that unscrupulous directors can misappropriate the strike-off process to avoid scrutiny and rack up debts or sell company assets ahead of the company dissolution, absconding with the proceeds. The Minister said he appreciated the case for widening access to the less cumbersome process of administrative restoration, and he undertook to consider the matter further. If he does not agree to our new clause 24, I would be grateful if he would commit to bringing forward proposals during the passage of the Bill.”
“I am happy to give him forewarning that, subject to his response, we may well press the new clause to a vote. New clause 24 calls for a creditor or liquidator to be able to apply to restore a company to the register administratively. Currently, if creditors, former creditors or liquidators wish to apply to restore a company, that is done through the court in what is often a complex and costly procedure that may well take 12 to 18 months or longer. In Committee, the Minister said that there ought to be a basis for a “less cumbersome” process for creditors and particularly for liquidators. We agree. Currently, when companies are struck off the register—that happens on average to about 400,000 companies a year—little is done to check whether fraud has occurred.”
“I thank the hon. Member for his intervention. Perhaps he is missing some of our argument around the central question, because it does not happen in all cases. We have not received any further information on the work and research that the Minister started during Committee on what happens with those directors, which he committed to follow up. In our view, new clause 22 would strengthen the Bill. We are talking about people whom we hope to have trust in to undertake their responsibilities as a director. The Bill introduces a substantial amount of regulation about who can and cannot serve as a company director as a result of criminal or potentially criminal practices, so this feels like the right place for consideration of such a measure. I would be grateful for the Minister’s response.”
“It is a risk—the Minister is shaking his head, so I am going to repeat it—for a backdoor route to the authorisation of foreign corporate service providers in a high-risk territory that falls outside money laundering regulations.”
“I will just complete my point and then bring the Minister in if he wishes to intervene. I would be grateful if he could confirm why that is in the Bill in that way, and the extent of the safeguards that are in place. He will, I am sure, be mindful of the need for trust and confidence, and for transparency on who our corporate service providers are and for whom they are undertaking ID verifications, which we are then expected to trust. Subject to the Minister’s response, we intend to press this transparency reporting new clause 34 to a Division.”
“I am grateful to the Minister for his intervention, and for setting out the context and the Government’s intention behind clause 63. However, there is a difference between the intention behind the clause and how it could be used. I think it would be worth while for the Government to seek further legal advice on how the clause could be used, because legislation is not just about how Ministers intend to use powers today, but about how they could be used tomorrow. With the succession of Secretaries of State that we have had, some of whom may perhaps be—how shall I put this? Well, I shall not go any further, because I think the House understands. There are those who have been in such a position and whose judgment may be questioned a little more than that of others in this House.”
“The Minister has heard what my right hon. Friend says. If that is what Parliament wishes and intends, we should have the courage to put it in the Bill. The amendments tabled by my right hon. Friend and by the hon. Member for Barrow and Furness and others—including new clauses 17 and 19 and amendments 102 and 103—are important, and we support what they are calling for. Separately, we strongly encourage the Minister to look at amendment 101.”
“Perhaps the Minister would like to intervene in response to those two points.”
“This is a protection for the system in the event that an individual is subsequently found to have lied about their identity. I suspect that, broadly, we are in the same place when it comes to what is intended to happen through this legislation, but it would be helpful if the Minister could confirm that by answering a couple of questions. First, does he expect the registrar, under the arrangements that he has proposed, to issue a unique ID to each new director and to existing directors on the database, and should we understand that, for all intents and purposes, the power will operate in practical terms as if it were a duty? Secondly, in a search on the Companies House website, will clicking on a director’s name bring up all their directorships, linked internally by the unique ID, even if they go by different names in different companies?”
“Secondly, amendment 106 states that the registrar should ensure that the same unique identifier is used for that person in “any other entries they have on the register under the same name or a different name.” Thirdly, through amendment 108, we want to reduce the risk to the integrity of the register by tightening up the arrangements for the confirmation statement. A proposed director must confirm in writing either that they already have a unique director ID with the register under the same or a different name and state what it is, or that they do not yet have a unique ID. If an individual chooses to go by a different name, or may have dual citizenship and use a different passport for ID, or may even have a fake birth certificate suggesting a different date of birth, how will the registrar know?”
“That is part of what we seek, but there is further to go. I know that amendments tabled by other colleagues also draw on the issue of phoenixing and the importance of preventing it. Checks on directors of companies that have been struck off and measures addressing the ease of administrative restoration are tools that we could employ to tackle phoenixing and protect customers along with other businesses and creditors. Amendments 105 and 106 draw on a wider theme, which is that what we want in the Bill is duties, not powers. We want to see a clear outcomes focus. We want to legislate for things to be done, not for the potential for the registrar to do things—a very important distinction. First, amendment 105 specifies that it should be a duty, not a power, for the registrar to allocate a unique identifier to a director.”
“According to the spin that the Government chose to put on the wording of the 2018 Act, its obligation had been met simply by the publication of a draft Order in Council, regardless of when, or even whether, such an order might actually come into force. The result is that we are here yet again, nearly five years later, still discussing how to ensure the implementation of registers to the same standards across all the UK’s territories. Surely it should not have been beyond the wit of Ministers, even in this Government, to have sorted this out by now. [Interruption.] With the exception of the Minister who is present today.”
“New clause 26, which is being debated today but will be subject to a decision tomorrow, would amend provisions in the Sanctions and Anti-Money Laundering Act 2018 to require the introduction of open registers of beneficial ownership in each of the UK’s overseas territories. There should be no double standards in the legal requirements for transparency of beneficial ownership across different parts of the UK, including the overseas territories. We have witnessed too many scandals involving money being laundered through territories for whose administration the UK is ultimately responsible to accept the idea that we must simply leave them to their own devices.”
“The current fee of just £12 makes this country the sixth cheapest place in the world in which to set up a company. The Treasury Select Committee recommended a fee of £100. Will the Minister tell us what his plans are? Having a plan to resource Companies House is fundamental to achieving the goals of the Bill. I thank Scottish National party Members for their amendments, whose arguments are similar to ours. In particular, we support new clause 36 and amendment 109, which deal with reporting and unique IDs—although we think that some minor changes might be made to new clause 36—and would also support any attempt to push them to a vote.”
“I thank the Minister for his confirmation. The legislation is not as tight as we would like it to be, but if he puts his intentions on record, that does take us a step further. Amendment 107 would require a limited partnership dissolution notice to be published on the registrar’s website and to remain published for a minimum of 20 years. The Minister has previously said that he would like to explore with Companies House the feasibility and costs associated with introducing that requirement. I should be grateful if he confirmed that he has concluded those discussions, and tell us what decision he has reached. New clause 20, which we support, concerns resourcing. It would raise Companies House fees to £100 to help to properly fund the fight against crime.”
“I thank my right hon. Friend for her intervention and for the discussions that we had on this matter prior to the Report stage. In summary, this legislation is essential, but as we have heard from across the House today, there are still areas in which it must go further if we are to catch up after years of being on the back foot on economic crime due to years of inaction. These are thoughtful and purposeful amendments that will improve the Bill, and I look forward to the Minister’s response.”
“I thank the Minister for giving way. Would he commit to a meeting with the right hon. Member for Barking (Dame Margaret Hodge) and me on this issue? It is not the case that my new clause duplicates the Government’s new clause. The new clauses are very complimentary and there is more to be done to make sure that we get this right.”
“The Minister has made the point today and in Committee about this data being collected and reported elsewhere, but that should make it easier to have a more comprehensive report, so that all the information on economic crime is in one place. Perhaps that is something we can pick up in the meeting that he has kindly agreed to.”
“Of course, the Minister will not want accounts to be inadvertently linked where there may be two people with the same name and, possibly, date of birth. Has he had any discussions with Companies House about writing to current directors to ask them to confirm whether they are on the register with any past addresses, to speed up the linking with the unique ID at the back end?”
“Maintaining the universal service obligation as affordable and accessible for all, ensuring a fair deal for workers and improving the service by Royal Mail are what it will take to ensure the quality of postal services that our constituents need and deserve. Astonishingly, last year the International Distributions Services board led the company to losses of £1 million a day, just six months after reporting huge profits and paying out £567 million in dividends and the share buy-back, putting at risk the stability needed to modernise and keep Britain’s Royal Mail competitive. Is this not so clearly the result of mismanagement at the highest level, and is it not now time for an inquiry into the actions of the board and the CEO and the risks facing the postal service?”
“What concerns has he raised, including about its sudden and rapid reversal of fortunes? What discussions has the Minister had with the CWU about its proposals, and what discussions has he had with Royal Mail about how it has handled the management of the organisation and the assessment of its strategy for the future of the business, for workers and for our constituents? As my hon. Friend the Member for Eltham (Clive Efford) said, this is a service that people rely on and we should not be dumbing it down.”
“Frankly, Royal Mail’s essential workers, who I know take such pride in their jobs, should not have felt driven to take industrial action to get a fairer deal. It is positive that the CWU and Royal Mail are now in a period of intensive negotiations, and the country will expect a fair negotiated deal and an end to the dispute. We have had a very important debate today, and at a very significant time. But it is clear that, at a time like this, the Government’s vision and policy for the future of Royal Mail really matter. Will the Minister confirm that the Government will not change the statutory minimum requirements of the universal postal service, which are set out in the Postal Services Act 2011? What recent discussions has he had with Ofcom regarding Royal Mail’s performance against the USO and its performance targets?”
“Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) in November, which outlined his concerns about recent developments and the increased shareholding in International Distribution Services by Vesa Equity, a company with links to Russia, which the Government have allowed to acquire a controlling stake. The management’s handling of the current industrial dispute is also under question—not just from colleagues today, but from former CEO Rico Back. It has also been concerning to hear reports of Royal Mail intimidating striking workers. If that is correct, even in a small number of cases, it is absolutely unacceptable. I ask the Minister to put on the record his and the Government’s condemnation of any intimidation.”