Economic Crime Bill finally becomes law

This report should be read alongside our previous reports on this Bill, especially Economic Crime Bill – MPs and peers wrangle over new fraud measure which includes a summary of the Bill and of amendments to it during its passage.

In the first of the two debates covered by that report (11 September) the House of Lords accepted a majority of the Commons’ amendments reversing amendments made to the Bill in the Lords, but defeated the Government on two areas - application of the new ‘failure to prevent fraud’ offence to smaller organisations and cost protection for law enforcement in civil recovery cases. In the other debate covered by that report (13 September) the Commons rejected both the Lords’ amendments of 11 September and sent the Bill back to the Lords. That is where we rejoin the story.

House of Lords Consideration of Commons Amendments - Wednesday 18 October 2023

Conservative peer Lord Garnier has led the battle to remove the exemption for small and medium-sized enterprises (SMEs) from the failure to prevent fraud offence introduced by this Bill. He once again led the way on this.

In an attempted compromise, Garnier this time proposed an amended version of his proposal, which would exempt small businesses from the offence but not medium-sized businesses. His criteria were that two or more of the following conditions much be satisfied for a body to be exempt: turnover not more than £10.2 million; balance sheet not more than £5.1 million; number of employees not more than 50.

People may “accuse me of being wet,” said Garnier, “but I am doing my best to help the Government get out of an unnecessarily sticky hole.”

For the Government Home Office minister Lord Sharpe of Epsom said it brought him ‘great pleasure’ to bring the Bill before the Lords once again but he hoped it would be for the last time.

The minister said he was grateful that Lord Garnier had moved closer to the Government’s position, however, “I am afraid that the burdens that this would place on medium-sized enterprises are simply too great, and so the Government cannot and will not support any lowering of the SME threshold that we have introduced.”

On the second issue left in play, non-affiliated peer Lord Faulks sought simply to reinstate his previous amendment protecting enforcement bodies from high adverse costs when undertaking civil asset recovery against deep-pocketed suspects.

On this issue the minister again resisted. He repeated the Government’s view that Lord Faulks’ amendment would be “a significant departure from the loser pays principle, and therefore not something that should be rushed into without careful consideration”. However, he added that this type of amendment is ‘not necessarily a bad idea’ and that was why the Government had previously added a statutory commitment to the Bill to review and publish a report on this area within a year.

Other peers including Conservative former Treasury minister Lord Agnew, Lib Dem Lord Wallace of Saltaire and Labour spokesperson Lord Coaker rowed in behind Lords Garnier and Faulks. However Conservative peer Lord Wolfson of Tredegar opposed the cost protection amendment.

Lords Garnier and Faulks were unpersuaded by the minister’s arguments and pressed their amendments to the vote, defeating the Government 245-204 on the fraud exemption and 245-209 on cost protection. The Bill was thus sent back to the Commons.

Read the full debate here.

House of Commons Consideration of Lords Message - Wednesday 25 October 2023

And so, a week later, MPs returned to the Bill.

Dame Margaret Hodge proposed an amendment seeking a review of the threshold for the failure to prevent fraud offence reporting to Parliament within 18 months of the Bill’s Royal Assent.

The minister, Kevin Hollinrake rejected this, saying that the Government “have already future-proofed the Bill by including a delegated power to allow the Government to raise, lower or remove the threshold altogether.” He made ‘a personal commitment’ to keep the threshold under review and to make changes if evidence suggests that they are required.

On cost protection the minister repeated the arguments put by his colleague in the Lords.

Rushanara Ali spoke for Labour, expressing disappointment “that the Government are not willing to compromise and not willing to heed the wise and expert input of the Lords.” The minister intervened to reject the idea that the Government had been unwilling to compromise, pointing out the significant changes made to the Bill since its introduction, such as the introduction of the ‘failure to prevent fraud’ offence itself.

Referring to both these issues Ali said it would now be “for the next Government — the next Labour Government, I hope — to pick up the pieces and toughen up our response in order to end the corrosive impact of dirty money in our country.”

Sir Robert Neill, chair of the Commons Justice Committee, hoped that, even at this late stage, the Government would reflect and try to move further on the failure to prevent fraud offence. Another Conservative, former Justice Secretary Sir Robert Buckland, warned that ‘unscrupulous operators’ would exploit the threshold definitions and ‘find clever ways around the law’.

Alison Thewliss, for the SNP, backed the Lords on both proposals.

MPs voted on the Hodge amendment, rejecting it 208-274. The Government motions disagreeing with the Lords were then passed 280-207 and 280-208 respectively.

Read the full debate here.

House of Lords Consideration of Commons Amendments - Wednesday 25 October 2023

A few hours later the Bill was returned to the upper House.

The minister, Lord Sharpe, urged peers to agree with the government position so Royal Assent could be granted and the Government can start implementing the reforms in the Bill.

Lord Fox, for the Lib Dems, and Lord Coaker, for Labour, both acknowledged that the time had come to let the Government have their way and concentrated their remarks on the importance of making sure the promised reviews of the two contentious areas actually happen. Both also recognised the improvements made to the Bill during its passage.

The Lords accepted the two government motions without a vote.

Read the full debate here.

The Bill gained Royal Assent the following day, Thursday 26 October 2023, and is now an Act.