My Lords, I welcome this small but important Bill that has returned to this House—I hope for the final time. I again thank the noble Lord, Lord Tunnicliffe, and the noble Baroness, Lady Kramer, who have previously contributed to an engaging debate on these important issues.
Two amendments have returned for our consideration today. Both relate to amendments previously narrowly passed in this House. They have returned to the House after being carefully considered by the other place and having been convincingly rejected, with financial privilege cited as the reason. I will summarise both.
The first amendment that the Commons have rejected would have added an additional condition to Clause 2 of the Bill whereby the freeport NICs relief would be available only if the freeport governance body maintained a public record of beneficial ownership of businesses operating in the freeport tax site. The House of Commons has considered the issue and decided that the amendment made in your Lordships’ House is subject to the financial privilege of the House of Commons and should not be accepted. However, I will mention what the Government are doing to ensure that firm and co-ordinated action is taken to crack down on economic crime, as I know that this House has kept the issue very much at the forefront of its mind, given the unfolding events in eastern Europe, and contributed vastly to furthering this particular debate.
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For the record, following the commitments announced by the Prime Minister in February, the Government have brought forward the Economic Crime (Transparency and Enforcement) Bill to crack down further on illicit money and corrupt elites in the UK, and I look forward to following the discussions on that Bill very shortly. The Bill will introduce a register of overseas entities’ beneficial ownership of UK property to tackle foreign criminals using UK property to launder money; reform our unexplained wealth orders regime to remove key barriers faced by law enforcement and to help target more corrupt elites; and strengthen the Treasury’s ability to take action against financial sanctions breaches.
We have also published details of further upcoming legislation, including fundamental reform of Companies House, enhanced information-sharing powers and new powers to seize crypto assets, which are designed to clamp down on money laundering and illicit finance. The Prime Minister also confirmed that we will set up a new dedicated kleptocracy cell in the National Crime Agency to target sanctions evasion and corrupt Russian
assets hidden in the UK, which means that oligarchs in London will have nowhere to hide. These measures are good news for the UK, enhancing our already strong reputation as an honest and trusted place to do business.
The Government have also taken steps to ensure that freeports are secure from money laundering, fraud and other illicit activities. First, to ensure that goods within the freeport customs site remain under customs control and the sites are robustly secured, both the freeport operators and businesses operating in the customs site will need to be authorised by HMRC and Border Force. Compliance checks on goods within the freeport will be carried out by HMRC and Border Force.
Secondly, to ensure sufficient security of the sites and prevent illicit activities, freeports will have to adhere to the OECD code of conduct for clean free trade zones and must maintain the current obligations on freeports set out in the UK’s Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
Thirdly, the Government also require each freeport governance body to undertake reasonable efforts to verify the beneficial owner of businesses operating within the freeport tax site and to make the information available to HMRC, law enforcement agencies and other relevant public bodies. This is a condition of freeport status and is a proportionate approach; it means that the local area and law enforcement can take effective measures to ensure the security and propriety of operations within the freeport.
Moving on, the second amendment that the Commons overturned would have provided the Treasury with an additional power to amend the period in which an employer can apply a zero rate of secondary class 1 NICs to a veteran’s employment. The House of Commons has considered the issue and decided that this amendment is subject to the financial privilege of the House of Commons and should not be accepted. There are existing levers within the Bill, such as increasing the upper secondary threshold and extending the overall period of the relief. The proposed additional powers are therefore not necessary. In addition, the Government consulted widely on this measure and have received positive feedback from stakeholders, as the House will know.
In conclusion, the Commons rejected both amendments on the basis of financial privilege. I hope that this House will accept the will of the elected House for the reason of finance privilege and pass this important Bill. I beg to move.