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Viscount Goschen: My Lords, I support the amendment. It is vital that there should be a proper flow of information between the police, the courts and the authority and that the duty on the authority should be made clear. I suggest that the best place for that is the face of the Bill. I also wonder whether there should not be a duty on police forces to provide that information.

As the amendment is drafted at the moment, the duty is on the authority to ensure that arrangements are in place. I wonder whether, in addition to that, there also needs to be a duty on those who hold the information to divulge it, not withstanding other constraints that might be on them in terms of divulging what might in other circumstances be confidential information.

The noble Lord, Lord Thomas, is right. Proper arrangements should be put in place to ensure that we do not go to the enormous trouble of regulating more than 100,000 individuals and yet the public still do not have confidence because they cannot be sure that the information flows correctly from one arm of

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government to the other. It is an excellent opportunity for the Minister to demonstrate his commitment to joined-up government.

Lord Bassam of Brighton: My Lords, I do not think that there is a great deal between us on this issue. It is more a case of how we get to the end-point. In keeping with the framework approach that we are adopting in this legislation, we do not consider that it is necessary to place on the face of the Bill a duty on the authority to establish appropriate arrangements with the police service.

The authority will as a matter of course need to establish highly effective channels of communication with all bodies with which it will need to work. In particular, it will need to work closely with the police and come to a detailed operational understanding with them as to how they exchange relevant information. As we said in Committee, we believe that the precise arrangements are best left to the authority, once established, and the police to determine. Placing an explicit requirement in the Bill to ensure that the arrangements are set up in this case might place us under pressure to make similar explicit reference to the other bodies with which the authority will need to work closely.

I have already indicated my reluctance to see such requirements to consult the industry being included in the Bill. Similar arguments might be made with regard to the Criminal Records Bureau, local authorities and so on. That reluctance does not stem from any lack of concern that the appropriate arrangements should be made. Quite the reverse is the case. I am entirely clear in my mind that they are an integral part of the effectiveness of the authority's operations and that they will happen.

The authority will also wish to establish a complaints procedure against licence holders. In deciding whether to continue, modify or revoke a licence, the views of the public and the customers of licence holders will be of critical importance. More widely, the authority's general duties to keep under review the industry, the operation of the licensing system and the legislation in general will mean that it will need to keep its ear close to the ground so as to hear exactly what is going on. A complaints mechanism--and a wider vehicle for other types of public comment--will make an important contribution to the authority's discharge of all of its responsibilities.

I am clear that what lies behind the noble Lord's amendment will happen. However, for the reasons that I have provided, I am reluctant to incorporate his amendment into the Bill. I hope that this explanation will have persuaded the noble Lord to withdraw his amendment. The issues that he has quite properly identified are ones that the authority will need to address once it is up and running. I do not believe that there is any distance between us on that point.

Lord Thomas of Gresford: My Lords, I very much welcome the sentiments expressed by the Minister, but I am disappointed with his reply. This is an important

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issue. The authority could declare that, "Our budget is only so much and we will not set up a complaints procedure. We will not put into place these mechanisms because we do not have enough money in the kitty. The Government have given us only so much". This might come down to budgetary requirements. For that reason, I may well return to this matter on Third Reading. For the moment, however, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Viscount Goschen moved Amendment No. 18A:

    Page 7, line 46, at end insert--

("(4) The Authority may apply to the Secretary of State for Trade and Industry for action to be taken under the provisions of the Companies Act 1985, in the event that the Authority considers that the removal of licences would not provide, or had not provided, an effective sanction against a body corporate which it has reason to believe is engaged in illegal activity in connection with the provision of security industry services.").

The noble Viscount said: My Lords, the Bill as drafted seeks to tackle the problem of regulating the security industry, which provides an extremely valuable service, but has within it elements that cause concern to the Government, to the police, to other bodies and, indeed, to the vast majority of respectable firms operating within the industry. That is to be welcomed. However, the mechanism on which the Government have decided concentrates on the rogue individual--a person with criminal convictions, who may lie on his job application form or perhaps who has a history of stealing--who is then put in charge of guarding cash. The burden of the Bill is to bring a large number of people under the auspices of what will be the security industry authority and for that authority to have the regulatory burden of issuing over 100,000 licences, or perhaps even as many as 300,000 licences. That is a great burden. To issue such a large number of licences and to ensure that all the details are correct on every occasion will be a major task.

With this amendment I am concerned not so much with a rogue individual, but with a rogue firm. I think that the Minister will agree that there have been circumstances where a disreputable security firm has provided a front for other criminal activities. It might be controlled by criminal elements. What action can the security industry authority take against a firm which, fundamentally and organisationally, is corrupt; that is, the corruption does not lie only with the individuals employed by the firm?

The Bill states that licences may be withdrawn from individuals. Thus, licences could be withdrawn from certain front-line employees, from managers and even from the directors of a firm. However, would this be effective or even fair? Circumstances could arise where the real controller of a firm hides behind a "front" of people whom he has put in place as directors or managers. Those people would have their licences withdrawn, but the underworld individual could simply employ more front men to take their places.

I draw a parallel here with the regulation of the finance industry. Not only are the individuals employed by, for example, an investment bank

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licensed so that they face the penalty of having their licences revoked if they behave improperly, but also the investment bank itself needs to hold a licence to conduct its various activities. If I, as a regulated individual, were to undertake an activity not permitted by the regulations, I could have my licence or registration withdrawn. However, in the event that a bank behaves incorrectly as in, say, a BCCI-type of circumstance in which fundamental problems are revealed as regards the ownership and control of the institution, those problems can be directly addressed by the appropriate authority.

No parallel to that can be drawn here. If a security firm is known to be involved in criminal activities, the individuals employed in that firm can have their licences withdrawn, but it will be difficult for the authority to take proper and responsible action against the firm as a whole. Simply withdrawing the licences from all the employees in a firm is a clumsy way of addressing the problem. It penalises individuals who could be perfectly innocent. I invite the Minister to explain to the House how he proposes that the authority should take action against a rogue firm. Can he tell us how this could work under the auspices of the gaming legislation covering bookmakers? Earlier the Minister drew a parallel with bookmakers. Is it the case that each individual working for a bookmaking firm is licensed or regulated, or is there an overall licence or permit held by the bookmaking firm?

The Minister has been extremely helpful. He met me in the interval between the Committee stage and Report and he has already written to me on this subject. In his letter he stated that:

    "The problems which concerned you are not really problems that the SIA is being set up to deal with".

According to the wording of Clause 1, the Minister is correct to say that. However, I suggest that, in the round, he is not correct. I am extremely concerned that the SIA and the regulatory system being put in place will not be able to take firm action against a fundamentally corrupt firm engaged in criminal or dubious activities. If proven cases of criminal activity were revealed, I see that that would be a matter for the police. However, I suggest that this should also be a matter for the authority in reviewing the operation of the company itself, just as the relevant authorities would become involved if the police revealed details of insider trading in the securities industry.

The amendment tabled by my noble friend Lord Cope sought to ensure that nightclub owners could be sued as a result of the actions of those who operate as bouncers on their behalf. The noble Lord, Lord Thomas of Gresford, then rightly pointed out that that would provide an incentive for the owner of the nightclub to ensure that nothing untoward would take place in his name. Similarly, to rely on the regulatory framework provided by the Bill without any additional safeguards will provide no incentive for a firm to manage its affairs correctly; namely, to observe the equivalent of compliance procedures to ensure that employers act properly. We are left in a position where a couple of employees may behave improperly and

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have their licences withdrawn--a couple of foot soldiers go down--but no real damage is done to the economic interests of those who run the firm.

The specifics of my amendment are not particularly interesting or amazing. They merely seek to put on the face of the Bill what the Minister described as his "last resort", effectively; that is, that the authority may apply to the Secretary of State for Trade and Industry for action to be taken under the provisions of, I believe, Section 447 of the Companies Act, which allows the Secretary of State to apply to the court for a company to be wound up in the event that that company is shown to be a danger to the public.

I suspect that the Minister will say that this can be done anyway; that it does not need to be written onto the face of the Bill. At this stage, I am not seeking to up-turn the framework that we have discussed for the provision of regulation of the security industry; I am concerned that the Home Office has not provided a comprehensive explanation of what action would be taken under such circumstances. I invite the Minister to do so. I beg to move.

4.30 p.m.

Lord Cope of Berkeley: My Lords, my noble friend has done the House and the Government a service by drawing attention to the problem of what to do about rogue companies as well as rogue individuals. I am aware that my noble friend has been in correspondence with and met the Minister and his officials in regard to this matter. I look forward to the Minister's reply.

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