Kevin Hollinrake
MP for Thirsk and Malton · Conservative · United Kingdom
“That issue is one of the many things that the people who signed the petition are concerned about, Dr Huq. One of the big things that the Government promised, which I agree with them about, is the need to encourage faster growth in our economy. Of course that is right, but look at where that growth is.”
“The UK economy went through many challenges, of course, some of them caused by Brexit; the reality is that a change like that was bound to have a short-term effect—but only a short-term effect. The country grew faster than Germany and France during that period of time.”
“As I said before, governing is not easy; we had many challenges ourselves, and we did not get everything right, but what we did during that difficult period of time—those 14 years—was get 1.2 million more people employed in our economy. Unemployment was halved during our time in office.”
“Of course, many Government Members supported his leadership challenge. We are here now, looking forward to a general election coming down the track. We are ready for a general election when the Government are, because, unlike them, we have a strong leader—against their weak leader.”
“I was, absolutely. I thank my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk (John Lamont) for his excellent opening speech. He made so many good points, not least about the level of support for this petition.”
“Members on the Government side of the House also feel betrayed and angry with their own leadership, for marching them up to the top of the hill and marching them back down again on many of these issues, but they do not feel as betrayed as the businesspeople in this country in particular.”
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“The hon. Gentleman makes an important point, and we urge banks to listen to their customers about keeping their doors open. Of course, we have the banking framework relationship with the post office network, which provides deposit and cash facilities for small businesses on high streets in Denton and other parts of the country. We are determined to make that relationship more generous to the Post Office to ensure the sustainability of the post office network.”
“Reducing the exemption threshold to only micro-entities would increase one-off costs for businesses from around £500 million to £1.5 billion. The annual recurrent costs would increase from £60 million to over £192 million.”
“This will allow the Government to work with relevant stakeholders to target the regulations in an effective and focused way that does not impose disproportionate burdens. Members of the other place agreed with the Government’s proposal and I trust that Members of this House will therefore agree with it today. Lords amendments 151B and 151C would apply the exemption from the failure to prevent fraud offence to micro-entities only, rather than the Government’s position of excluding all small and medium-sized enterprises. The Government appreciate that Lord Garnier has moved closer to the Government’s position in agreeing to the principle of applying a threshold. However, our position remains that such an amendment would still incur significant costs to businesses.”
“I urge this House to accept the Government amendments, to settle those remaining topics and ensure that we can proceed to Royal Assent and implementation of these important reforms without delay. I will now speak to those remaining topics. In the other place, the Government tabled two amendments on nominee shareholders—amendments 23B and 23C, in lieu of Commons amendment 23A, and in response to Lord Vaux’s amendment 23 on this topic from Report stage in the other place. The Government’s amendments will allow the Secretary of State to make regulations to make further provision for the purpose of identifying persons with significant control in cases where shares are held by a nominee.”
“It is always a pleasure to speak with right hon. and hon. Members on the Economic Crime and Corporate Transparency Bill, which they will know is close to my heart and contains many vital measures for which I have long campaigned. The Bill will give us the powers we need to crack down on those who abuse our open economy, while ensuring that the vast majority of law-abiding businesses can grow and flourish. I am grateful that both Houses have reached agreement on several issues, including those relating to the register of overseas entities and on removing the extension of the failure to prevent offence to money laundering. However, we are here today as agreement is still outstanding on a handful of remaining issues.”
“We will potentially be handing huge powers to the state, which could be held over an individual.”
“For example, the evidence available to pursue a case, particularly where evidence is required from overseas, often proves more vital to an operational decision. There are already a number of ways in which an enforcement agency’s liability to legal costs can be protected under the civil procedure rules in England and Wales. For instance, rule 44.2 gives the court discretion as to the payment of costs by either party, including whether they are payable to another party, the amount, and when they are payable. In addition, a cost-capping order can be applied for under rule 3.19 to limit any future costs that a party may recover under a later costs order. If we are to introduce further legislation, we must consider what gap this is trying to fill. We should also consider civil liberties and property rights that underpin our economy.”
“Turning to Lords amendment 161B, made by Lord Faulks, on cost protection for law enforcement in civil recovery cases, the Government remain of the view that the amendment would be a significant departure from the loser pays principle and therefore should not be rushed into without careful consideration. There is no clear evidence that such changes would help to achieve their intended aim of increasing the capacity of law enforcement to take on more civil recovery cases. There have been no adverse cost rulings against an enforcement authority carrying out this type of civil recovery in the past six years. Costs are just one of many factors that determine whether law enforcement will take on a case.”
“That is the case even where they subsequently assess that they already have adequate controls in place. That is time and resource that could otherwise have been used to grow and generate wealth for their businesses and jobs for their staff. The Government are extremely mindful of the pressures on companies of all sizes, including SMEs, and therefore do not feel it is appropriate to place this new unnecessary burden on over 450,000 businesses. I therefore urge Members of this House to support the Government motion to disagree with the Lords amendments, to ensure that we take a proportionate approach and do not impose unnecessary measures that would curb economic growth.”
“Those costs would still be disproportionately shared by small business owners, when law enforcement can attribute and prosecute fraud more easily in these smaller organisations; and, as I have set out before, we must be mindful of the cumulative impact on SMEs across multiple Government requirements and regulations. In all the work I have done in the past from the Back Benches on failure to prevent, it was invariably the case that all cases involved larger businesses, not SMEs. Large companies have the resources and specialist expertise to cope with additional burdens, whereas small businesses often have to dedicate a significant amount of time and resource, often paying for external professional advice to assess what new rules would mean for them.”
“We used very similar analysis to that used for the failure to prevent bribery and failure to prevent tax evasion offences. We have used a common methodology. I have not seen any figures that contradict our figures here, but in my view—having run a business and dealt with some of the failure to prevent bribery provisions—there is no doubt that there are significant costs. There may be external consultants to bring in, for example. Even if one is compliant, one might not know whether one is compliant, so there are definite associated costs to ensuring that reasonable efforts are made to prevent fraud, as it would be in this case.”
“I have listened carefully to my right hon. and learned Friend’s points. He said a few seconds ago that this would relate only to fraud that benefits the body concerned. Paragraph 1(b) of Lords amendment 151 also covers the body or an associate within that body providing services, so this is not just about the benefit to the organisation itself.”
“It is very difficult to draw a line, and we believe that drawing a line at larger companies is right.”
“There is a balance between risk and regulation, and we want to make sure that the regulations do not put excessive costs on business. My right hon. and learned Friend the Member for South Swindon (Sir Robert Buckland) made similar points. He cast doubt on the figures I have in front of me on the costs of the burden on business, which we believe will be £1.5 billion of implementation costs and around £192 million of recurrent annual costs. I am happy to look at other costs and analyses, but those are the figures before me. My right hon. and learned Friend makes an interesting point that the threshold will facilitate economic crime in certain companies, but the Lords amendment allows some companies to be outside the rules. I am not sure how he can draw a line to say that there will be economic crime in some companies and not in others.”
“In considering this legislation, we have often debated the extra resources that we are determined to deliver for Companies House and will pay for at least 400 more people. That is an incredibly important part of the Bill. My hon. Friend the Member for Bromley and Chislehurst (Sir Robert Neill) stated very clearly that he feels the failure to prevent threshold is too widely drawn, and I understand his point. As I said in my opening speech, all the cases I have dealt with in this place—whether it be Lloyds HBOS Reading, HSBC, NatWest or others—have involved large organisations that turned a blind eye to fraud or let it happen on their watch. We believe it is right to strike a balance between the offence’s crime prevention benefits and the burden placed on business.”
“Its budget has now increased 40% from the figure in 2019 and stands at just over £700 million. Together, the recent spending review settlement and private sector contributions through the new economic crime levy will provide £400 million of funding over the spending review period, and the levy is estimated to bring in £100 million per annum starting from this financial year, 2023-24. There will be a wide-ranging review by the end of 2027, providing transparency on how the levy is performing against its original purpose, including on how the money is spent. Existing efforts will move at pace to enhance and further drive forward the unit in what are inevitably complex and lengthy operations.”
“Many of us have worked on this cross-party across the House from the Back Benches and now on the Front Benches, and this is the second piece of legislation we have brought forward on economic crime in the past 18 months. These are groundbreaking new measures. This Bill contains further reforms to the Register of Overseas Entities introduced in the previous legislation. Our legislation on strategic lawsuits against public participation—SLAPPs—is world leading, and we now have the “failure to prevent” offence, which I will speak to in a moment. The hon. Lady also referred to the resources made available to our law enforcement agencies. We are continuing to invest in measures to tackle economic crime, and we have increased the budget of the National Crime Agency year on year since 2019.”
“I welcome the hon. Member for Bethnal Green and Bow (Rushanara Ali) to her place. We worked closely together on the Treasury Committee and it is a pleasure to work across the House with her today. I also pay tribute to her predecessor, the hon. Member for Feltham and Heston (Seema Malhotra) for her similar approach to the work we have done on this legislation. I thank all hon. and right hon. Members for their contributions to this debate and their support for the Government’s amendments made in the other place. I want to refer to a number of points that have been raised today. The shadow Minister, the hon. Member for Bethnal Green and Bow, referred to the Government turning a blind eye to the issue of economic crime, but nothing could be further from the truth.”
“The small company threshold is 50 employers, £10.2 million of turnover and a £5.1 million balance sheet, according to Companies House, whereas we think a 250-employee threshold would be more appropriate. That is where we differ, but I am happy to continue that conversation.”
“I do agree. I listened closely to my right hon. Friend’s remarks. He said he might be the only small business owner currently in the Chamber, but he is talking to one. I have owned a business for 30 years, growing it from a small business to a larger one, and I absolutely agree that it is not just the legislation itself but its implementation and the requirement to implement prevention procedures. As he puts it, that would almost create a new industry of advisers to advise on what needs to be done, be they accountants or third parties. He is right to raise those concerns on behalf of small and medium-sized enterprises. My hon. Friend the Member for Bromley and Chislehurst asked about setting the threshold at a different level, the small company threshold rather than the current micro company threshold.”
“The motions tabled by the Government today achieve that balanced and proportionate approach, and I therefore urge Members on both sides of the House to support them. Lords amendments 23B and 23C agreed to. After Clause 180 Failure to prevent fraud Motion made, and Question put, That this House disagrees with the Lords in their Amendments 151B and 151C and insists on its Amendment 151A. —(Kevin Hollinrake.) The House proceeded to a Division .”
“However, I am not aware of anything the Justice Committee or the Law Commission has done in this area. It is important that we look at that kind of evidence before we implement these kinds of measures. The right hon. Member for Barking (Dame Margaret Hodge) accuses me of being party political. I am surprised she takes that view. I have worked on a cross-party basis from the Back Benches and, as she knows, I do the same from the Front Bench, and I will continue to do so to make sure that we get this legislation right. In conclusion, throughout the passage of the Bill, the Government have worked hard to get the balance right between tackling economic crime and ensuring that the UK remains a place where law-abiding businesses can flourish without unnecessary burdens.”
“I, too, have spoken to Bill Browder, and I have spoken to officials about whether this measure is needed in the UK regime. Members will be aware that Mr Browder principally looks at the parallels with the US situation, where adverse costs do not apply across the system. Members have talked about the chilling effect of such provisions, but there is potentially a chilling effect on the other side of the equation. Yesterday I met a barrister who defends people against such actions, and he was very concerned about the imbalance of power that would result. I have not seen any significant evidence, and I am very interested in the evidence that my hon. Friend the Member for Bromley and Chislehurst gave to the Cambridge crime symposium, at which I have spoken in the past, on whether this is needed.”
“I would be keen to have a conversation with the very learned Members in the Chamber, but they must understand that the state is powerful and well resourced compared with the individual. Obviously there are some individuals who are very well resourced, but we still operate on the presumption of innocence in this country, and we have to be very careful. That is why we want a review to look into this and report back to Parliament within 12 months. We have communicated with the National Crime Agency to ask for evidence on where it feels these measures are needed. All law enforcement agencies want more power and more provision, of course, but I have seen no clear, significant evidence from the enforcement agencies that cost-capping orders would be needed in this situation.”
“All the cases I dealt with on the Back Benches, and indeed the information I have seen as a Minister, show that the kind of fraud the law enforcement agencies have not been able to prosecute is happening in larger companies, not smaller companies. We believe that these circumstances are different from unexplained wealth orders, for which we obviously put cost-capping measures in place. Of course, unexplained wealth orders are not a process for taking somebody’s assets from them; they are a process for freezing assets. Lords amendment 161B is entirely different. In my view, there is definitely a civil liberties issue in terms of the power of the state versus the power of the individual. This measure potentially delivers an imbalance of power between the state and the individual.”
“I think I have been pretty consistent in everything I have said in the House, unless she can point to anything different I have said from the Back Benches— [ Interruption. ] The shadow Minister, the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), laughs, but I have always been a champion of the “failure to prevent” offence. If Members look back to the original Bill, which I think was 260 pages long—it is now nearly 400 pages long—they will see that I have been very keen to make sure that we listen to hon. Members on things like the “failure to prevent” offence and the identification doctrine, which both now feature in the Bill.”
“We are very clear that we believe we have the right threshold. Larger companies clearly have the capacity and the human resources and risk compliance departments to mitigate these kinds of risks, whereas small and medium-sized enterprises are rightly much more focused on driving their business forward, which is very important to the economic health of our country. I think we have it right. My hon. Friend made a similar point in our previous debate on this issue, and he makes it very strongly. The fact that both he and my right hon. Friend the Member for North West Hampshire (Kit Malthouse) have made that point today counterbalances some of the arguments on the other side for extending the threshold further. The hon. Member for Glasgow Central (Alison Thewliss) spoke about my previous comments.”
“The hon. Lady speaks passionately, and I absolutely accept many of the comments made in the debate, but the law specifically does not allow a non-disclosure agreement to prevent somebody from going to the police about a sexual abuser. That absolutely is not the law.”
“That means that an NDA would be unenforceable if it stopped a worker from making a protected disclosure about wrongdoing, for example, to a lawyer or certain regulatory bodies or other prescribed persons for whistleblowing purposes. My hon. Friend the Member for Cheadle pointed out that the current whistleblowing regime has limited scope—I think those were her words—and, as she knows, we are now undertaking a review, which will conclude by the end of this year. Indeed, officials involved in that review are in the Chamber today, so they will have heard her points clearly.”
“Members of this House and organisations such as Can’t Buy My Silence have brought to light examples of where NDAs have been drafted to intimidate employees from making disclosures to anyone, as mentioned by my hon. Friend the Member for Stoke-on-Trent Central (Jo Gideon). It is important to note that there are existing legal limits on the use of NDAs in the employment context. Some key ones were raised by my hon. Friend the Member for Cheadle (Mary Robinson)—I thank her again for all the work she does on the all-party group on whistleblowing—and by the hon. Member for York Central (Rachael Maskell), who talked about the seven NHS staff. An NDA cannot prevent a worker from blowing the whistle.”
“It is expected to take effect in 2024, and I recognise the important contributions made by Members here today—my right hon. Friend the Member for Basingstoke and the hon. Members for Oxford West and Abingdon (Layla Moran) and for Birmingham, Yardley (Jess Phillips)—throughout the passage of that Bill. As a Minister in the Department for Business and Trade, I know that good employers will look to tackle bad behaviour head-on and improve their organisational culture and practice, rather than attempting to cover it up, as the hon. Member for Glenrothes (Peter Grant) clearly outlined. Organisations that do not treat such complaints in the way that he described are, in my experience, missing an opportunity.”
“The Government have already taken significant steps to prevent the use of NDAs in the higher education sector to protect students, who are in a particularly vulnerable position as they have moved away from family and support networks for the first time. In January 2022, we introduced a world-leading pledge, with the campaign group Can’t Buy My Silence, that commits higher education providers to voluntarily ending the use of NDAs in cases of sexual misconduct. As of 1 September, 84 providers, covering almost two thirds of students, have signed the pledge. The Higher Education (Freedom of Speech) Act 2023 goes further and bans the use of NDAs in cases of sexual harassment, sexual misconduct and other forms of bullying and harassment in higher education.”
“It is a pleasure to serve with you in the Chair, Ms Ali. I commend my right hon. Friend the Member for Basingstoke (Dame Maria Miller) for securing this debate and for her long-standing and effective campaigning in the area of non-disclosure agreements—she will remember that I engaged with that as a Back Bencher—and the negative effect they can have when used inappropriately. I thank hon. Members across the House for their very valuable and passionate contributions. These agreements, which are also known as confidentiality clauses, can be used in a variety of contexts and contracts—for example, to protect commercially sensitive information. However, I will restrict my comments to the area of concern, which, as Members have discussed, is NDAs used in settlement agreements in cases of discrimination or harassment.”
“I point out to him that it is in the capability of the Northern Ireland Administration to implement that in Northern Ireland if they choose, with the matter being devolved to Northern Ireland.”
“That is why the Government took action in developing extensive guidance, which was published by the Equality and Human Rights Commission and ACAS. It is clear that NDAs should not prevent individuals from making disclosures to the police and medical or legal professionals. We have already legislated to prevent higher education providers using NDAs, as I said. We are keen to see how that works in practice, and it will come into force in 2024. The Government held a consultation on the matter in a wider context in 2019. We all agree that these agreements should not be used to intimidate individuals or conceal criminal conduct or illegal wrongdoing, as pointed out by the hon. Member for Strangford (Jim Shannon).”
“In 2019, the then Department for Business, Energy and Industrial Strategy consulted on the misuse of NDAs in an employment context. The consultation followed evidence found by the Women and Equalities Committee that individual workers may not be aware of their existing statutory rights and may be intimidated into pursuing claims even where the NDA is unenforceable—a point raised by the hon. Member for Oxford West and Abingdon. Again, my right hon. Friend the Member for Basingstoke does very important work in that area. The consultation also heard evidence that individuals are pressured into signing NDAs without the appropriate legal advice, and therefore do not understand that their NDA is unenforceable.”
“I will come on to some other points on that issue, including on the guidance that we have given to ACAS in that area. NDAs cannot prevent workers from reporting a crime to the police or from co-operating in a criminal investigation, because such a clause would be unenforceable— [ Interruption. ] I may have misheard what the hon. Member for Birmingham, Yardley said, but it is very important that anybody listening to this debate, who is considering what their rights are, knows very clearly that such an agreement cannot prevent them from reporting a crime in this area. Furthermore, the use of an NDA by an employer could amount to a criminal offence—for example, if it is an attempt by the employer to pervert the course of justice or conceal a criminal offence. Independent legal advice is a requirement for settlement agreements to be valid.”
“Member for Bath (Wera Hobhouse), which will strengthen protections for employees against workplace sexual harassment by placing a duty on employers to take reasonable steps to prevent sexual harassment of their employees. Protecting and enhancing workers’ rights while supporting businesses to grow remains a priority for this Government. We are clear that the use of NDAs to intimidate victims of harassment and discrimination into silence cannot be tolerated. We are already taking action in the higher education sector; we have published extensive guidance and consulted on the use of NDAs in the workplace; and we are carefully considering how to tackle wrongful practices in a wider context.”
“Of course I will meet my right hon. Friend, and I am very happy to meet the campaigning organisation as well. The consultation found some support for NDAs when they helped victims to make a clean break and move on—I think that point was also raised by the shadow Minister, the hon. Member for Ellesmere Port and Neston (Justin Madders). We feel that an outright ban across all organisations may therefore not be appropriate and could have unintended consequences for employees. The Government have listened carefully to the experiences shared through a consultation on sexual harassment. We are legislating through the Worker Protection (Amendment of Equality Act 2010) Bill, first introduced in the Commons by the hon.”
“It is now unquestionably a milestone piece of legislation that takes the UK’s fight against economic crime to an entirely new level. I will summarise a few key changes, starting with the game-changing reforms to corporate criminal liability. As the Minister for Security, my right hon. Friend the Member for Tonbridge and Malling (Tom Tugendhat), committed to, the Government tabled amendments to introduce a new failure to prevent offence, which will drive cultural change towards improved fraud prevention in organisations and, failing that, hold organisations to account with prosecutions if they profit from fraudulent actions.”
“It is a pleasure to bring this Bill back to the House. It is crucial in ensuring that we can bear down on kleptocrats, criminals and terrorists who abuse our open economy, while also strengthening the UK’s reputation as a place where legitimate business can thrive. I am pleased to say that the Bill is now in a better place and there is a great deal more of it than when it left for the other place back in January. When introduced, the Bill ran to some 239 pages; it is now closer to 400. That reflects the spirit of genuine collaboration across both Houses and the fact that the Government have listened and taken many sensible proposals on board. I take this opportunity to thank Members of both Houses for their collaborative and cross-party approach. The Government made significant amendments to the Bill in the other place.”
“Member for Barking (Dame Margaret Hodge) will welcome, given the amendments they proposed in Committee. I must pay tribute to my ministerial colleagues Lord Sharpe of Epsom, Lord Johnson of Lainston and Lord Bellamy for all the work they have done to get this important Bill to where it is now.”
“Member for Feltham and Heston (Seema Malhotra) in particular will welcome these improvements, given their previous amendments. We also recognise the points made by several Members of this House, as well as in the other place, about the role of authorised corporate service providers in the identification process, and we have tightened the framework. Our amendments will improve the transparency of ACSPs, including by requiring verification statements made by ACSPs when they carry out ID verification on behalf of an individual to be made publicly available on the register. Furthermore, we have tabled a number of important amendments to strengthen and increase the transparency of the register of overseas entities, which I trust the hon. Member for Aberavon (Stephen Kinnock) and the right hon.”
“Friend the Member for Bromley and Chislehurst (Sir Robert Neill) for all their work and engagement to further the cause for the reform of corporate criminal liability. We have also made amendments to tackle strategic lawsuits against public participation, known as SLAPPs, that feature economic crimes. We believe that this is the first national legislation in the world to combat SLAPPs. The new clauses will enable an appropriate, fair and effective early dismissal procedure against SLAPP cases. I very much thank the right hon. Member for Birmingham, Hodge Hill (Liam Byrne) for his work in this area. Members will also be pleased to hear that the Government have tabled amendments to improve the new statutory objectives for the registrar of companies, and I hope my hon. Friend the Member for Barrow and Furness (Simon Fell) and the hon.”
“I will speak in detail to the various amendments, including the non-Government amendments, one of which is on the threshold that the hon. Lady refers to. If I may, I will defer addressing that until later in my remarks. The Government have also introduced reforms to the identification doctrine for economic crimes to make it easier to prosecute corporations in their own right for these offences. The House will know that this is the largest and most meaningful change to corporate criminal liability in decades. It will have a transformative effect on our ability to hold corporates to account for the actions of criminal individuals. I thank my right hon. and learned Friend the Member for South Swindon (Sir Robert Buckland) and my hon.”
“Any amendments made to strengthen the Bill have been carefully weighed up, and the Government are confident that we have struck the right balance in tackling economic crime and preserving the UK’s welcoming business environment.”
“I thank the hon. Gentleman for his work and his intervention. It is clear that fraud and money laundering are already criminal acts; what the Bill principally does is help to prevent fraud by requiring organisations to make sure that fraud is not happening within them in the first place. I think he has spoken to that in the past, as have I as a Back Bencher. I fully support it as the Minister concerned, and I absolutely believe that the Bill will have a major impact in clamping down on economic crime. We must do more to tackle crime, but we must also ensure that the UK remains a great place to start and grow a business. As such, the Government strongly oppose putting additional burdens on legitimate business, unless there is a clear rationale for doing so.”
“I thank my right hon. and learned Friend for his point and his work in this area. I will come on to that amendment, if I may, later in my remarks. He makes a valid point, and we want to ensure there are no loopholes while at the same time maintaining the position that the Bill does not put new burdens on businesses that are not likely to have a systemic effect on economic crime.”
“My hon. Friend makes the other point, and these measures are about the delicate balance that we want to strike, ensuring that the right provisions are in place to prevent fraud without putting undue burdens on business. I am pleased that those interventions reflected both those positions so that we can see the legislation holistically rather than just through the lens of failing to prevent fraud.”
“If I may, I will make a little progress on that point. We believe that the six non-Government amendments for debate would pose significant and disproportionate burdens on business, penalising reasonable companies and businesspeople with limited evidence that the burdens would be outweighed by any meaningful benefits. I will go into each amendment in detail, but I will begin by emphasising the Government’s position. We must insist that the balance achieved in the Bill through Government amendments made in the other place is maintained.”