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A further concern is about what is proportionate in the way one treats businesses—my noble friend Lord Lucas rightly brought that to our attention. The Minister said that there will not be criminalisation. Others have said that if an order was made, at least there would be publicity and that could have an adverse effect on the business. The consultation paper specifically says that an alternative might be that part of the order might provide that the business should notify law enforcement officers of the details of their customers and all the compartments. That requires the provision of a lot of bureaucratic work by the company which seems to be a substitute for industry regulation and one wonders why the Government have decided against industry regulation—with a light touch, I hope, because we on these Benches are not in favour of undue and unfair regulation on business—in favour of the panoply of orders that are before us. I beg to move.

7.15 pm

The Deputy Chairman of Committees (Lord Haskel): I have to tell the Committee that if Amendment No. 12 is agreed, I cannot call Amendments Nos. 13 and 14 because of pre-emption.

Lord Dholakia: I shall be very brief because many of the arguments on this matter have already been advanced. All I want to say at this stage is that I can see no circumstances where a person who has no idea that he is being used in this way should be subject to such an order. I find it fascinating that in the example that the Home Office knows and that the noble Baroness, Lady Anelay, mentioned about fishing tackle there is no culpability at all and yet with the example the noble Lord, Lord Lucas, mentioned about the compartments, somebody could be subject to that order. I find this anomaly very difficult to accept. I wonder whether the Minister could explain the thinking behind these two different circumstances.

Lord Lucas: We have covered a lot of this before so I shall not try to add too much. It seems to me that where we have people subject to these sorts of order, or potentially subject, if I read the Bill right they will have an effective defence by saying they agree to provide this information. The court will then presumably assess their reliability and if the court thinks they are likely to continue to provide that

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information correctly and efficiently, they would not grant the order. That is my understanding of it. We do not need to establish rights for ordinary businessmen as a separate defence as that seems to be already in there. I would be grateful for the Government’s confirmation that that is the case.

As my noble friend says, we have got to the point where there is a great extension of the procedures which are already in place with regard to television. When my son bought a television from an ordinary retailer, a week later he received a letter from the television licensing agency saying, “We see you have bought a television. Where is your licence?” So there is clearly—and I had not realised this—a procedure for reporting all sales of television equipment to some authority which then matches it against the database and chases it up. As a result of this legislation we are presumably going to have a series of similar arrangements with materials which are commonly used to commit crimes. Perhaps they are already in place. Perhaps if I go and buy myself a couple of daylight bulbs to offset seasonal affective disorder, I will find that the police know and start coming and looking through my windows to see what I am growing under them.

As my noble friend said, this is becoming a mechanism for producing a regulation whereby, whatever transaction details the Government want, they will have the right to get. However, rather than doing this by regulation so that it is applied evenly in a way that everyone knows, it will be applied by what comes down to an implied threat on an individual basis that says, “If you don’t do this, we will destroy your business”. Again, I question whether this is the right way to treat honest citizens.

Baroness Carnegy of Lour: It seems to me that our friend with the van with a double floor may turn out to be rather a bad example, and we should not be stuck on bad examples. If someone wants to make vans with a double floor, then, unless someone can prove that they are being used for illegal purposes, he must be allowed to continue to make them. To fit in with what my noble friend Lord Lucas said originally, it cannot be right to stop him doing that, and it would be wrong to say, “You’ve got to report all your customers”. Making vans with double floors might be his business. I can think of lots of uses for such vans. Farmers would like those vehicles—I can think of nothing more useful on a farm. So we must be careful with these examples. I know that the noble Baroness is a little hesitant to use them because they are rather vague as a way of describing what the Government are trying to do, but I am perfectly willing to accept that that is a bad example.

Baroness Scotland of Asthal: I shall respond, first, to the whole issue of industry regulation and shall take the example given by the noble Baroness, Lady Carnegy of Lour. It would be over-burdensome to say that all purveyors of such vehicles, who may have legitimate purposes, should give information to the authorities when asked. Indeed, I think that these vehicles are sometimes used by jewellers to convey articles from one place to another, which is a

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legitimate purpose. If you regulated the whole industry, you would put a huge burden on the 99 per cent of businesses that behave entirely appropriately. That would be unfair, unjust and over-burdensome. This provision seeks to target individual businesses which have failed and/or refused to participate in an appropriate way—thankfully, they are still a relatively small minority— and where there is cogent evidence from the authorities that their facilities are being used by serious criminals in a way that inures to the disadvantage of the community and the safety of all. So we think that targeting will make the approach more proportionate.

I have already said that it is our view that someone who has a reasonable excuse will not be in danger. It is a two-staged process. First, the agencies that will operate the orders and will be entitled to apply for them have to deal with a very targeted group engaging in serious criminal activity whom we are seeking to interdict. Therefore, there is always an issue of capacity and of targeting that which is likely to reduce the crime most effectively; in other words, you have to target the relevant people.

Thus, the first test will be the agency identifying those to whom the order should apply. The next test will be undertaken by the legal team which will represent them in relation to these orders, and it will ensure that it is satisfied that an application is more likely than not to succeed. The third test will then be carried out, which, in effect, will be the judgment by the court. We hope that if someone has a reasonable excuse for their activity, they will share it with the authority investigating that activity. If they fail and/or refuse to share it at that stage, they will then share it with the court, which will be in a position to make a decision about reasonableness. If the court finds that the excuse is reasonable, no order can be made.

For the sake of clarity, for which the noble Baroness, Lady Anelay of St Johns, asked, I shall deal with Amendment No. 12. This amendment relates to the meaning of having been involved in serious crime in England and Wales. The same arguments will apply to each of the other amendments, which relate to the other definitions of “involved in” or “involvement in” serious crime in England, Wales and Northern Ireland and outside England, Wales and Northern Ireland.

Clause 2 sets out what constitutes having been involved in serious crime in England and Wales. A person has been involved in serious crime in England and Wales if, first, he has committed a serious offence in England and Wales; secondly, he has facilitated the commission by another person of a serious offence in England and Wales; or, thirdly, he has conducted himself in a way likely to facilitate the commission by himself or another person of a serious offence in England and Wales.

It is right to suppose that the majority of the applications will come under the first two provisions, but Amendment No. 12 would remove the third element. As I said, most of the situations in which we see these orders being useful will be those covered by

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the first two but we believe that there are instances where the third will be appropriate and useful.

The majority of instances that we can foresee will relate to either organisations or individuals providing a good or service. That will usually be in a business context but occasionally it might be where someone provides a good or service on an informal basis. The sort of behaviour that we are talking about here is where a person or organisation turns a blind eye to the likely outcome of their actions—something to which the noble Baroness, Lady Anelay, referred. They may not specifically intend to facilitate serious crime, but they are not taking the precautions that we would expect reasonable people to take to ensure that their actions cannot facilitate serious crime, and so their actions help to bring real harm to others.

I emphasise that the applicant authority would have to show that the behaviour was “likely” to facilitate serious crime, but we do not believe that that is an easy test to meet. We think that the authorities would have to have cogent evidence to satisfy the court that they fell within this criterion. I believe that the test set out in McCann would apply to these provisions. The court would have to be satisfied that the condition was met, and that would mean that the probable outcome of their actions would have to be the facilitation of serious crime. The vast majority of people are able to apprehend the risk of something being the result of their actions where it is probable. This, combined with the exclusion contained in Clause 4(3)(a), under which any action which is reasonable cannot be the basis for an order, provides strong safeguards to those who might inadvertently facilitate serious crime.

Finally, when considering which conditions of an order will be proportionate, the court will consider the actions that form the basis of the order. The conditions necessary to prevent future involvement in serious crime are likely to be more light-touch for a person who has facilitated a serious offence, compared with a person who has committed a serious offence. For those reasons, the amendments tabled are unhelpful and unlikely to prevent the harm caused by serious crime, and so we must resist them.

I hope that I have been able to better and more adequately explain how the provision will work. On that basis, I hope that the noble Lord, Lord Dholakia, will be content to withdraw—no, the noble Baroness, Lady Anelay. The two are so interchangeable that I have made this terrible slip, and I beg both the noble Lord, Lord Dholakia, and, most keenly, the noble Baroness’s pardon for having so confused them.

Baroness Anelay of St Johns: I am not so sure who is the more offended or insulted by such an interchangeability. I am sure that we will find plenty of opportunity to disabuse the Minister on those matters.

Baroness Scotland of Asthal: It is only inability.

Baroness Anelay of St Johns: My noble friend Lord Lucas rightly referred to the fact that in Clause 4

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there is a defence of reasonableness from the point of view of the innocent trader. My concern always is when an innocent person has to avail himself of a reverse burden of proof. We have already had a debate on that in another context.

The Minister has assisted me by further clarifying intent. She said in particular that the majority of applications are likely to be under Clause 2(1)(a) and (b), but maintains that there could be occasions when paragraph (c) would be appropriate. I will certainly read very carefully what she has said with regard to that. She went on to say that she anticipated that cogent evidence would be required that a business was being used for criminal purposes. We have talked too much about adapted lorries today, but I recall that not so long ago the police successfully brought such a prosecution. That makes me think again that there might still be arguments against the need for crime prevention orders on those specific occasions.

The Minister might have unintentionally assisted the noble Lord, Lord Dholakia, who is on my right, at least on this occasion, in his quest to abandon Part 1. He does not have me on his bandwagon at the moment regarding that, but we will see what happens in the future. The noble Baroness has done the Committee a service by clarifying those issues, particularly regarding timing as I can indicate that as a result of her explanation I will not move my amendment on recklessness after what I anticipate will be the diner break. On this occasion, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 13 not moved.]

Lord Bassam of Brighton: I beg to move that the House be resumed, and, in moving the Motion and to facilitate refreshment, I suggest that the Committee stage begins again not before 8.34 pm.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.

Companies Act 2006 (Commencement No. 2, Consequential Amendments, Transitional Provisions and Savings) Order 2007

7.33 pm

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Truscott) rose to move, That the draft order laid before the House on 8 February be approved. 10th Report from the Statutory Instruments Committee.

The noble Lord said: My Lords, your Lordships will be aware that the Companies Act 2006 had a long history, both in its policy development and its passage through this House. The Act is a large one and its implications are far-reaching, and it is important that we ensure its provisions are brought into force in an orderly fashion if we are to maximise the benefits to businesses.

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In the context of the present debate, it might be useful to say something about our overall approach to the commencement of the Act. The Minister for Industry and the Regions, my right honourable friend Margaret Hodge, made a Written Statement in the other place on 28 February setting out, in comprehensive terms, the commencement timetable.

On the same day, the Department of Trade and Industry published a consultation document providing further information concerning implementation, the issues involved and the proposed way forward. We hope that all stakeholders will wish to engage with us to help us make the implementation package as good as possible.

A first commencement order was made in December 2006, commencing important provisions, facilitating electronic communications by companies and implementing EU obligations.

The present instrument, the second commencement order, would come into force from 6 April this year, the common commencement date. It would commence further provisions that we felt it right to implement ahead of the main body of the Act.

The draft order would bring into force Part 28 of the Act concerning takeovers. Throughout the passage of the Companies Bill, the Government made clear their intention to bring the provisions of Part 28 on takeovers into force at an early stage following Royal Assent. These provisions place the regulatory activities of the Takeover Panel within a wholly statutory framework. They will replace regulations which took effect in May last year and implemented the European takeovers directive on an interim basis while the Bill completed its parliamentary passage.

Section 943 of the Act confers a rule-making power on the Takeover Panel. The rules on takeovers have long been laid down in the takeover code, which historically had no statutory basis. Yesterday, the code committee of the Takeover Panel adopted the necessary changes to the takeover code to reflect commencement of Part 28 of the Act. These will come into force on 6 April.

The Takeover Panel has made a significant contribution to the competitiveness of UK financial markets over the past four decades. We are convinced that it will continue to do so within the new legal regime that underpins its activities.

The draft order would also extend to Northern Ireland the availability of community interest companies—CICs. These are limited companies, with special additional features, created for the use of people who want to conduct a business or other activity for community benefit, and not purely for private advantage. CICs were introduced in Great Britain by the Companies (Audit, Investigations and Community Enterprise) Act 2004—the CAICE Act. There are now more than 700 incorporated CICs. It was always intended that CICs would be extended to Northern Ireland. The necessary secondary legislation was, however, never finalised. The Companies Act 2006 will introduce a single legislative regime for companies applying throughout the United Kingdom. The order seeks to apply to

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Northern Ireland both the relevant provisions of the CAICE Act relating to CICs and the supporting secondary legislation.

In making this instrument, we rely on powers in the Companies Act to make consequential amendments, transitional provisions and savings and to commence the provisions of the Act. The consequential amendments provision—Section 1294—is subject to affirmative procedure. We believe that we are making common-sense use of this power. The draft order repeals or revokes redundant legislation, such as the interim regulations giving effect to implementation of the takeovers directive. It also updates references in other legislation to provisions replaced by the Companies Act 2006.

The provisions of the Companies Act 2006 that this order would bring into force have been extensively debated during the passage of that Act. These provisions are self-contained and offer immediate benefits in terms of securing regulatory independence for the Takeover Panel and extending choice of corporate vehicles. We think that there is a good case to give early practical effect to the takeovers and Northern Ireland CICs’ provisions which the draft order is designed to do. I beg to move.

Moved, That the draft order laid before the House on 8 February be approved. 10th Report from the Statutory Instruments Committee.—(Lord Truscott.)

Lord Hodgson of Astley Abbotts: My Lords, I know that the whole House will be grateful to the Minister for his careful explanation of this technical but, nevertheless, important set of regulations. For those of us, including the noble Lord, Lord Razzall, and I, who slogged our way through 1,920 amendments on the Bill’s initial passage before later considering 1,020 Commons amendments, the mere mention of the Companies Act 2006 brings a certain tension to the atmosphere. To paraphrase Shakespeare, we shall certainly stand on tiptoe when this Bill is named.

I welcome the noble Lord, Lord Truscott, to his first outing on this subject. He will be aware that the Bill did for his predecessor, the noble Lord, Lord Sainsbury, but I trust that a similar fate does not await him.

As I said, this is a technical set of regulations, but there are underlying issues on which I believe the House would welcome clarification. First, there are some practical issues relating to the 2004 Companies Act and the application of the CIC regime to Northern Ireland. Secondly, there is some unfinished business from the 2006 Act relating to the implementation of the takeover directive. Thirdly, there is the future implementation of the 2006 Act.

As I was preparing for this debate, I was hoping to persuade the Minister to lift the curtain a fraction on the Government's overall plans for implementation, because there have been a number of different smoke signals. At that very moment, through my letterbox came the Written Statement by Margaret Hodge in another place and the associated consultation document. That did not so much lift the curtain as

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tear it down. We are grateful to the Government for that—as, I know, are a whole range of practitioners. The 2006 Act is complex stuff with far-reaching consequences, so it is important for those affected to have the maximum time to absorb its implications.

I hope that I will not be seen to be ungrateful if I raise a mini-whinge about the Statement. It consists of a helpful list of the dates on which the various parts of the Bill come into effect. Two parts appear to be missing from the list: Part 39, “Companies: minor amendments”—by the way, I am not sure that minor amendments is quite the right title because quite substantial powers are taken and given up by the Minister in that regard—and Part 40, “Company directors: foreign disqualification”. It is only when one goes to the consultation document and the table of commencement date that one can discover that Part 39 is due to come into effect in April 2007 and Part 40 in October 2008. So my minor whinge—and it is a mini-whinge—is that it would have been preferable if the Written Statement had in and of itself contained a comprehensive list of all parts of the Bill.

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