Lords gives way on FTP… and Bill gets Royal Assent

The saga of the debate on scope of the proposed new failure to prevent fraud offence. The Commons (Kevin Hollinrake, Under-Secretary of State for Business and Trade) urged both houses not to “risk the safe passage” of the entire Economic Crime and Corporate Transparency Bill be continuing to press for a wider application of the proposed offence than just to large companies. He appreciated that the Lords had moved further to the Government position by proposing to exempt both micro-entities and small organisations, but said the Government will not support any lowering of its proposed threshold at this time. He repeated that the purpose of the offence is to ensure accountability where fraud occurs in large organisations, and that there is “simply no need” to apply this particular offence to smaller organisations. He claims that business owners would be “distracted” from running their businesses by the need to assess the risks of a new offence, and would need to take professional advice. He said the Government had assessed that the Lords’ threshold would cost medium sized businesses £300m in one off costs and nearly £40m in annual recurring costs.

He did note that the Government has already “future-proofed” the Bill by including a delegated power allowing changes to the threshold but rejected the proposal for an amendment to require a review, saying that a review would not guarantee change but rather what was needed was “the right people at the Dispatch Box making changes”.

Rushanara Ali (Lab) spoke of the disconnect between the failure to prevent bribery offence and the limitations of the Government fraud proposals, reiterating both that the size of a business should not determine who is exempt and pointing out that in reality the carve out would deprive SMEs of the defence of having put in place reasonable anti-fraud procedures. Sir Robert Neill (Con) also spoke in favour of the Lords’ proposal as did Alison Thewliss (SNP), who described the Lords’ compromise as “very reasonable”. She stressed that the Government notion is to exempt 99.5% of businesses from the offence and queried (as many have before) why it takes a different view to this proposal than it did to the other failure to prevent offences.  Dame Margaret Hodge (Lab) noted that the Lords’ support for their amendments has grown with each vote.  She also noted that a survey of SMEs in 2015 on the Bribery Act had found that 90% said the Act caused them no problems and did not affect their ability to export.

Kevin Hollinrake merely continued to insist that he committed to keeping the offence under review, and that far from the offence causing an unlevel playing field, insisted the field is currently not level because in small companies it is much easier to identify who is responsible for a fraud.

On a vote, the House supported the Government positions by a margin of around 80 votes.

And so the Bill went back to the Lords. Lord Sharpe urged the Lords to accept the Government position. Ultimately, the Lords agreed that this was the last time it would see the Bill and, although may expressed reservations, it was agreed the Bill left in a better shape than it started, so it agreed not to fight any further.

The Bill swiftly then moved to Royal Assent.



Emma Radmore