Stephen Kinnock
MP for Aberafan Maesteg · Labour · United Kingdom
“I thank the shadow Secretary of State for her kind words and look forward to our exchanges across the Dispatch Box. I am ready to engage with her on getting the maximum benefits for the people of Wales.”
“I thank the right hon. Lady and look forward to working with her. My understanding is that there were challenges around the helicopter capability. Decisions were taken by Natural Resources Wales some time ago to change the way that the tendering for helicopter capability works. We certainly need to look at that.”
“I thank my right hon. Friend for his question. Like him, I pay tribute to all those involved in the collective and heroic response to the wildfires.”
“I thank the right hon. Lady for her question. Many of the ideas coming forward for devolving power right across our United Kingdom, beyond Cardiff Bay and Holyrood, are very exciting, and I look forward to exploring them with her.”
“Just to be clear, this is not about staying out of the issue; it is about respecting the devolution settlement, but being prepared to work constructively where we can in partnership with the Welsh Government. The hon.”
“I know about and welcome the right hon. Gentleman’s strong connections to Wales. I recognise the connectivity benefits that WSMR’s proposal could deliver, particularly for passengers in Wales and the west midlands.”
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“I think it would be a caricature of whatever comments were made to say that we are going to somehow stop people who are already here being here. That seems to be the logical extrapolation of what the hon. Lady is arguing, and I do not think that anybody would argue that. We value the workforce that we have, but we also want to build and create more opportunities for our own, home-grown talent. I am sure that that is something we can all agree on. Let me turn away from the health and care sector for a moment and look at some of the issues that have been raised about the agricultural sector. We cannot have a situation such as we have had in the farming sector where 30,000 pigs are being slaughtered and £60 million-worth of crops are being burned, which is what happened over the past year.”
“How is it boosting productivity? Those are the questions that Government should ask. There should be a proper dialogue, rather than pulling arbitrary numbers out of the air within the Westminster bubble. Are the Government asking for workforce plans from companies that benefit from the shortage occupation lists? If not, perhaps the Minister might like to say a few words on that. Those are the questions that Labour will ask, as and when we enter Government, committed as we are to ensuring that our points-based system strikes the right balance between incentivising employers to train and recruit locally with the right to recruit internationally where required. I look forward to the Minister’s responses to my questions, in addition to those raised by other right hon. and hon. Members.”
“Therefore, we need to be sure that the working conditions attached to the visas are as attractive as possible, in order to attract the workers that we need, and to avoid undercutting. Of course, where sectors and businesses are given permission to recruit from overseas, we need to see commitment to long-term workforce planning. How, for instance, would a company plan to invest in home-grown talent in the long term? What is it doing to invest in research and development, in modernising its technology and machinery to boost productivity? Does it have a skills strategy? Those are the questions that should be asked of companies, as a quid pro quo and part of the conversation about being given shortage occupation and other permissions to bring labour from overseas. What is it doing to show its long-term workforce plan?”
“Maintaining standards is not just important for the wellbeing of migrant workers and preventing undercutting, it is also good for employers, as we need to make Britain an attractive place to work, not least in sectors such as food and farming, where we are clearly more reliant on migrant workers than in other sectors. The National Farmers Union deputy president, Tom Bradshaw, told the Environment, Food and Rural Affairs Committee that, although a 30,000 quota for seasonal workers visas in 2021 was a lifeline for the industry, it has not been big enough. We also know that the challenge for the sector is not just seasonal but year-round. We understand that there are recruitment challenges in relation to the short-term nature of these visas, which the Government must look at closely.”
“The hon. Lady is absolutely right that there is a vital role to play here, in terms of regulation and enforcement. Our major concern is twofold. There is a bit of a mixture of all of these agencies not necessarily co-ordinating together. There are three main agencies, so, first, let us have a single enforcement body. Secondly, the number of labour market inspectors should meet ILO standards. It is currently one to 20,000 and it should be one to 10,000. Those would be major steps in the right direction, and could be the start of cracking down on the issue the hon. Lady rightly raises.”
“Secondly, setting up the new process and establishing rules for how it should operate may take some time; can she indicate how long it might take and when the new system might be up and running?”
“I am sure the Minister agrees that those powers should never be used lightly; their use should be the last resort, where there is no alternative, and there should be safeguards to ensure that the system is fair and subject to independent oversight. The regulations are the first step toward establishing mechanisms for that. The Minister will be aware that some people have voiced concern about the proposed role of the SIAC, given the secrecy of its proceedings. Protecting sensitive material on security grounds is of course crucial. I have two questions for the Minister. First, what reassurances can she give that the new rules will strike the right balance between safeguarding national security and an individual’s right to appeal?”
“If the commission determines that the reasoning is obviously flawed, the Secretary of State may appeal that determination to the appropriate appeal court. What the draft regulations do is enable the Lord Chancellor to make rules setting out details of how the process should work. The rules will need to be approved by Parliament before coming into force—a process that we think is vital. Governments have had the ability to revoke British citizenship in certain cases for decades now, so the concept is not new, but the specific measures introduced through the Nationality and Borders Act give the Secretary of State significant new powers.”
“The Secretary of State must consider three times a year for two years whether the reasons for non-notification remain valid. If, after the sixth review, she still resists notification, she must make a further application to the SIAC, which will once again give independent scrutiny to her decision. As mentioned, the second of the safeguards is the reason we are here today, and we welcome the specifics of the instrument. The Act also stipulates, in schedule 2, that the Secretary of State should apply to the SIAC when making an order to deprive someone of their citizenship without notice. The commission may then determine whether the Secretary of State’s reasons for not providing notice are valid.”
“If the Secretary of State wishes to withhold notice, she must apply to a superior court of record, the Special Immigration Appeals Commission, in advance or within seven days. The SIAC, applying judicial review principles, will examine her reasons and decide whether or not her assessment is obviously flawed. The same test is applied to the making of terrorism prevention and investigation measures under the Terrorism Prevention and Investigation Measures Act 2011. If she does not succeed on her first attempt or on a subsequent application, which must be based on a material change of circumstances or further evidence, the Secretary of State must either give notice in the normal way or revoke the deprivation order altogether. Thirdly, decisions must be reviewed regularly.”
“The Opposition were not convinced by all of the Government’s arguments and worked in the other place with colleagues on a cross-party basis to secure important safeguarding amendments, the first of which established a far more restricted range of circumstances in which notice could be withheld. The original clause would have allowed the Secretary of State to withhold notice whenever that appeared to be in the public interest. Amendments removed the subjective element and provided that notice may be withheld only if the Secretary of State does not have an address for service, or if she reasonably considers it necessary on one of four exceptional grounds. The second amendment was about judicial oversight.”
“During parliamentary consideration of the Nationality and Borders Bill, Ministers explained that under existing law written notice had to be sent to a person’s last known address, and in some cases it might not be possible to reach them at that address, including in cases where the individual in question was known by the Home Secretary to be abroad in a war zone. On that basis, the Government argued that there should be exceptions to the requirement to give notice. Section 10 of the Nationality and Borders Act provides for such exceptions to be made, primarily based on security concerns.”
“It is a real pleasure to serve under your chairship today, Ms Cummins. Powers to deprive someone of their British citizenship in certain circumstances were initially introduced in section 40 of the British Nationality Act 1981. Those powers were subject to a requirement that the Home Secretary provide written notice to anyone subject to a deprivation of citizenship order. In recent years, some high-profile legal challenges have been brought against the Government by people who were deprived of their citizenship without having received the requisite notice.”
“Given the Minister’s unlawful approval of a Tory donor’s housing project in his previous brief, is he really best placed to make that judgment? We know that 222 children have gone missing from asylum accommodation. What are the Government doing to find those missing children, to prevent more children from going missing, and to meet their legal obligations to vulnerable children?”
“The previous Home Secretary revealed today that on 20 October he received legal advice that Manston was “being used, or in danger of being used, as a detention centre”, and he took emergency measures to work within the law. However, the current Home Secretary met officials on 19 October, just before she was forced to resign for breaching the ministerial code. Can the Minister please confirm that the Home Secretary refused to take those same emergency measures, and can he explain why she ignored the advice that she was repeatedly given over a period of several weeks? The Home Secretary told the House just a week ago that she did not ignore legal advice. Can the Minister tell the House now whether he believes that statement to be correct? The key question on Manston is whether legal advice was followed or not.”
“I welcome the Minister to his place. The Home Secretary has stated that after 12 years of Conservative government the asylum system is “broken”. We agree, and it is the Conservative party that has broken it. The Government are processing just half the number of asylum claims that they were processing in 2015, and as a result the British taxpayer is footing a £7 million hotel bill every single day. Their failure to replace the Dublin agreement on returning failed asylum seekers, their failure to crack down on the criminal gangs, and their failure to get agreement with France have also increased the backlog. This catalogue of chaos has led to the overcrowding in Manston, for which the right hon. Member for North Thanet (Sir Roger Gale) has directly blamed the Home Secretary.”
“Could I trouble the Minister to explain a little more about what categories of people who are sanctioned should therefore allowed to be designated as unqualified as directors under the legislation? He has said that amendments are an attempt to narrow the definition to assets-based, but is he therefore saying that someone who is sanctioned for human rights abuses should nevertheless be able to be qualified as a GB director?”
“On the point about the FCDO not sanctioning anything apart from asset freezes, does it not impose travel bans? Is a travel ban not a non-asset freeze type of sanction?”
“Are the Government saying that if somebody has been sanctioned and given a travel ban but not an asset freeze, they are still a fit and proper person to be a director of a British company?”
“Are the Government seriously arguing that somebody who has been sanctioned by the FCDO and given a travel ban but not an asset freeze is still a fit and proper person to be a GB director? If the Minister is saying that the Bill is not the proper place to deal with that issue, where in our legislative framework will it be made clear that somebody who has a travel ban under FCDO sanctions is not a fit and proper person to be director of a British company?”
“We tabled amendment 93 to better understand and probe the Government’s thinking and to explore how additional changes could contribute to the Bill’s aims. The amendment is largely self-explanatory: it would add to the criteria those who aid and abet sanctioned individuals, or so-called “enablers” who help sanctioned individuals to evade our laws. The Minister will be aware of the army of lawyers, accountants and other so-called service providers who are in many ways doing Putin’s dirty work in London. In our view, it is crucial that they are caught in the net that the Bill seeks to cast.”
“Clause 32 raises important questions about who we should and should not allow to hold positions of power and responsibility in UK companies. Currently, under the 1986 Act, the circumstances in which a disqualification order can be imposed are strictly limited. For the most part, they involve individuals with a criminal record for breaches of company legislation involving UK companies. Clause 32 expands the disqualification criteria to provide an explicit prohibition on any sanctioned individual serving as a company director. That is entirely proper, but the Opposition’s question is: why are the Government not going any further? They have considered who should be banned from serving as a company director, but the decision to add only those specifically designated under UK sanctions legislation feels like a missed opportunity.”
“I do understand that; the Minister makes a valid point. As I was saying, this is what one might describe as a probing amendment to try to get from him a sense of the proactive action the Government are going to take to go after those enablers.”
“Again, the Government’s own words provide us with a useful summary of the problem: “Where a company is being used to facilitate criminal activity, the individuals who really control the way that the company is run will likely want to avoid making this information public. They may use ‘nominee directors’ to do this. Nominee directors are individuals who go on the public record as the director of the company to be, effectively, a ‘straw man’ or ‘front man’ for the company. The beneficial owner ‘stands behind’ the nominee and controls the way that the company is run”, de facto. The failure to address that in legislation remains a cause for serious concern.”
“The apparent intent of the changes, which is to make it easier for corporate directors to be held to account for their action, is certainly welcome, but what is not clear to Opposition Members is why the Government have decided to amend the primary legislation—namely, the 2015 Act—when, as we understand it, the secondary legislation to implement the ban on corporate directorships under that Act has still to be introduced. Perhaps the Minister will shed some light on that. Another glaring omission is the issue of nominee directorships. As long ago as 2013, the Government raised that as an issue that company law reform should deal with.”
“In the Government’s own words in a 2021 consultation paper: “Evidence suggests that the use of corporate directors can muddy the waters around ownership and provide a screen behind which to conduct illicit activity…More generally the opacity they create can weaken corporate governance by preventing individual accountability.” The Government even went so far as legislating in the Small Business, Enterprise and Employment Act 2015 to enable the Secretary of State to impose a ban on corporate directors. After more than seven years, however, regulations to implement that have yet to be published. In fact, clause 37—on which my hon. Friend the Member for Feltham and Heston will speak shortly—makes some changes to the relevant section of the 2015 Act.”
“Clause 33 extends the provisions of clause 32 to sectors other than companies—for example, building societies—and clauses 34 and 35 extend the same provisions to Northern Ireland. We support those clauses and, of course, amendment 83, which was tabled by my right hon. Friend the Member for Barking. At various points in recent years Ministers have outlined a number of specific proposals, which now appear to have fallen by the wayside. It seems reasonable to expect that all companies should have at least one director who is an actual human being. We do not have to be experts to intuit how easy it is to abuse the existing system, which allows a company to name another company as its director provided that at least one human being is on its board.”
“The Minister has already pointed out that specifically designated individuals represent just the tip of the iceberg in terms of the scale of economic crime in the United Kingdom. There are any number of others who seek to exploit weaknesses in our laws and our ability to enforce them—for example, by creating opaque corporate structures to hide kleptocrats’ assets. Adding to the criteria those who help to facilitate the evasion of sanctions by designated individuals—not necessarily as our amendment suggests, but through a more root-and-branch, proactive ex ante approach—is one way the Government could really improve the Bill. I would appreciate the Minister’s thoughts on that. Restrictions on company directorships, as envisaged by amendment 93, should go much further.”
“I thank my right hon. Friend for that extremely useful and eloquent intervention. That is absolutely the case, because the enablers are, by definition, experts in knowing how to play and game the system. We know it is going on, but they are notoriously difficult to track down. If we put the onus on industries to act proactively to prevent this sort of activity, that changes the game and makes prevention much more of a duty. I agree with the Minister that we cannot punish people if they are only suspected, but we can have a proactive ex ante approach. I would be grateful to hear his thoughts on that. In many ways, the amendment was designed to illicit a response from the Minister on what my right. hon Friend has just so rightly described.”
“My understanding is that the regulations under the 2015 Act have not yet been put in place. Our question is: why are the Government not implementing those regulations but instead seeking to introduce the provisions in the Bill? That is simply a point for clarification and explanation. We welcome the fact that ID verification is provided for, but we are trying to get to the bottom of who a nominee director is and who actually controls a company. It would be useful to understand what happened between 2015 and 2022 to prevent the implementation of the regulations.”
“A crucial point is that the impunity of delinquent nominee directors is especially pronounced if such nominees are not UK residents. On the rare occasions that they are questioned, such directors tend to make the legally false argument that because they are only nominees they have no responsibility to know anything about the company, let alone control its actions. The lack of progress on this issue—certainly until the Bill’s introduction—has raised concerns with us. Again, perhaps the Minister will say a little more about the Government’s thinking. What does he think has been the impact of not implementing the regulations from the 2015 Act? Can he reassure us with absolute confidence that the issue of delinquent nominee directors will be eradicated by the passing of the Bill?”
“I thank the Minister; I think he has just provided clarification that he is confident that there is now a ban on the use of nominee directors as a front to obscure true beneficial ownership. We are grateful for that absolute reassurance. There was perhaps a misunderstanding on our side of some of the technicalities in the Bill that I am seeking to probe, so I am grateful to the Minister for that clarification. It is worth noting that the World Bank published a report just a few months ago that explained how, under current UK law, nominee directors of UK companies can neglect their duties by failing to submit accounts and certify companies as dormant, even though tens of millions of pounds are passing through those accounts.”
“The hon. Lady raises an extremely important point and illustrates the absurdity of the situation we have got into. There seems to be a “wild west” approach to running corporate affairs in the UK and it is simply not acceptable. I thank her for that intervention and reiterate my hope that the Minister can give us an absolute reassurance that the issue of nominee directorships will be dealt with firmly and clearly in the Bill, without any loopholes. I also hope he will share any other thoughts he may have on the matter.”
“I thank the Minister for allowing me to intervene where I should have done in the first place. On the quantum that we are considering, as my right hon. Friend the Member for Birmingham, Hodge Hill has just said, 1,200 individuals and 120 businesses have been sanctioned since Putin’s illegal invasion of Ukraine. We are not talking about a huge number. Perhaps the terms of the amendment tabled by my right hon. Friend the Member for Barking could be more tightly drawn to make it clear that it is not about every movement of assets and everything a company has done, but simply designed to ensure that if there was a change of director or change of address, the registrar should share that information with the other relevant agencies. The quantum is quite small, so would the Minister consider that proposal?”
“May I just ask you for clarification, Mr Robertson? Do you wish me to stop there or—”
“For at least the past seven or eight years, official reports and media coverage have documented the involvement of UK-based TCSPs in the efforts of oligarchs, many of whom are Russian, to conceal their wealth in opaque webs of corporate structures. It should be clear by now that the Opposition have serious concerns about the proposal to outsource ID checks to the sector. We have therefore tabled new clause 27, which would require annual reporting on the progress towards establishing verification procedures, in order to probe the Government’s rationale for the policy. I hope that the Minister will take seriously the concerns I have just outlined, and that due consideration will be given to whether the policy is really in the interests of tackling economic crime and improving corporate transparency.”
“This is not just a case of sharing responsibilities for supervision between the public and private sectors, as is already the case in the legal, accountancy and some other sectors; this is about outsourcing a set of tasks to the least regulated, least understood and potentially least reliable part of the entire financial services industry. The Government’s own assessment in their national risk assessment was that TCSPs pose a high risk of being used for money laundering purposes. A previous risk assessment said: “Ineffective AML supervision leads to inadequate compliance with the rules, and low and poor quality reporting of suspicious activity”.”
“Ministers now propose to place an enormous amount of trust, faith and responsibility on the shoulders of TCSPs, about which they know very little. Speaking to the Treasury Committee earlier this year, Graeme Biggar, the then director-general of the National Economic Crime Centre, said: “We are developing a plan with HMRC and the Treasury to have both more supervision of, and more enforcement against, company formation agents. We are on it, but it is not the most developed of our plans. We have really got to do more work on that.” It would be excellent if the Minister could give us an update on the progress of the work that Mr Biggar referred to in that evidence. As things stand, it is hard to imagine what the Government were thinking with the proposals in these clauses.”
“By that time, Ministers appeared to have gone lukewarm on handing responsibility for ID checks to Companies House, with a shift in emphasis towards outsourcing the checks to third parties that are collectively known as trust or company service providers. Somewhat confusingly, they are now referred to in the Bill as “authorised corporate service providers”, or ACSPs. That is extremely problematic, for a whole range of reasons. First and foremost, TCSPs represent a highly fragmented sector, making supervision of their activities very difficult indeed. Some may be supervised by professional bodies—for example, if they provide accountancy or legal services—while others may be supervised by HMRC. In some cases, there is no supervision at all, leading RUSI’s Helena Wood to compare the sector to the wild west.”
“It is not at all clear why, after all this apparent effort, Ministers are still unable to set out specific plans in legislation. Perhaps the reason is that they have been struggling to make a decision and stick to it. In the first consultation document back in May 2019, the Government stated fairly unambiguously that they believed that Companies House should be given responsibilities for ID checks. That view was reiterated in subsequent consultation documents published in February 2021, which seemed to indicate that the Business Department is better at flogging a dead horse than at drafting legislation. More than a year passed before the Government finally published a White Paper.”
“The Government’s failure to take the opportunity provided by the Bill to revisit the definition of beneficial ownership is, to put it mildly, a disappointment. I will now look more specifically at ID verification. Clause 61 is the first of a series of clauses in which the Government enable new powers to be introduced to ensure that information on PSCs can be verified. Subsequent clauses stipulate that full details of the verification regime will be set out in regulations at a later date. The Opposition find the absence of substantial details on verification procedures in the Bill perplexing. It is now more than three years since the Government launched the first of what turned out to be no fewer than four separate consultations on proposed reforms to Companies House, which included proposed ID verification powers.”
“103, Q194.] That is the case, given how many different and probably more relevant ways there are of measuring corporate control in the modern business environment. The Government will likely argue that 25% is a widely used international standard, but we should be clear about what that means. Nowhere is it suggested in any of the international frameworks to which the UK is a party that 25% ownership is anything more than an example of how a country might seek to define beneficial ownership. In fact, many jurisdictions set ownership thresholds much lower than that. Some jurisdictions—including Belize and Jersey, which are not exactly known as paragons of corporate transparency—use a 10% threshold.”
“Even if we could rely on the good faith of all those who register, we would still be stuck with the fundamental problem of the 25% ownership threshold. The ease with which that can be used to circumvent the registration requirement—for instance, simply by splitting ownership shares between four people, who may all be family members—has been extensively discussed and is well documented. During last week’s evidence sessions, my right hon. Friend the Member for Barking rightly drew attention to the case for a threshold set much lower than 25%. In response, Professor Elspeth Berry argued that although the threshold should certainly be lowered, even “a zero percentage could be considered.” –– [ Official Report, Economic Crime and Corporate Transparency Public Bill Committee, 27 October 2022; c.”
“It is a pleasure to serve under your chairship, Mr Robertson. I think it is safe to say that we are coming to one of the most significant and consequential aspects of the Bill. Clauses 61 to 67 take up a full 15 pages and provide a framework for the verification of the identities of individuals listed on the register of people with significant control, whom I will henceforth refer to as PSCs. Since its launch in 2016, the PSC register—more colloquially described as the register of beneficial owners of UK companies—has made important progress towards corporate transparency, but it remains very much a work in progress. Much of this Bill is rightly concerned with closing loopholes in existing legislation and, as it stands, the PSC system has loopholes that are big enough to drive a coach and horses through.”
“As I have said, it is not as though the Government have not had enough time to think through what procedures might be necessary; four consultations have already taken place on the topic. Amendment 107 would incorporate into the Bill requirements for some form of official identification, including photo ID, to be submitted to the registrar. That should not be controversial. In fact, the amendment would merely reflect international best practice guidelines, including those published by the Financial Action Task Force, the IMF and the World Bank, among others, and the commitments made in the Government’s own White Paper.”
“I have spoken at some length about the Opposition’s concerns about the provisions in clauses 62 and 63 to authorise third-party trust or corporate service providers—or authorised corporate service providers, as they are described in the Bill—to carry out ID checks on the Government’s behalf. Amendments 108, 109 and 110 to 112 would simply remove those provisions from the Bill in the hope of prompting a rethink by the Government. I should like to explain the thinking behind the amendments tabled by me and my hon. Friend the Member for Feltham and Heston. The purpose of amendment 107 goes back to what I have said about the surprising lack of specific details on the proposed verification process.”
“It is absolutely clear that our amendment 107 uses the words “to include”. We are not limiting anything. The amendment sets out what the minimum should be. Surely the Minister agrees that an identity document with a photograph of the individual’s face and an identity document issued by a recognised official authority should be the bare minimum we would want in the Bill.”
“No. I have made clear to the Minister that we are deeply unhappy, particularly with the failure to take on board the recommendations under amendment 107 and the very important points my right hon. Friend the Member for Barking made.”
“I beg to ask leave to withdraw the amendment. Amendment, by leave, withdrawn. Clause 62 ordered to stand part of the Bill. Clause 63 Authorisation of corporate service providers”
“I beg to move amendment 98, in clause 63, page 53, leave out from line 29 to line 5 on page 54. This amendment removes the provision enabling the authorisation of foreign corporate service providers.”