Private Security Industry Bill [Lords]

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Mr. Bercow: As was to be expected, the Minister provided an answer, reading closely from his prepared script for the purpose. I am grateful to him for that. However, I am still a little puzzled about whether the work undertaken would be purely incidental to the conduct of the main employment of the individual whom my hon. Friends and I are seeking to protect. The Minister is tending to argue, as is often the case, by advocacy rather than evidence. We shall have to wait to see whether the situation is as he confidently predicts. Nevertheless, I am grateful to him for his reply and his undertaking to reflect on matters that we have highlighted, and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Hughes: I beg to move amendment No. 53, in page 27, line 8, leave out

    ``purposes of any accountancy practice''

and insert

    ``sole purposes of accountancy activities''.

The Chairman: With this it will be convenient to discuss amendment No. 54, in page 28, line 9, leave out

    ``purposes of any accountancy practice''

and insert

    ``sole purposes of accountancy activities''.

Mr. Hughes: Amendments Nos. 53 and 54 deal with the same objective in two sequential paragraphs of the schedule. The first relates to investigations and the second to security consultants, and both are relevant to the debate to which the Minister referred. They concern a different character of activity in another profession—accountancy.

The Committee will not be surprised to discover that, like others, I have received representations from people involved in the investigation or security business. I met representatives of the group of leading corporate investigation companies and consultancies, which includes companies such as the Control Risks Group, the Armor Group, DSFX and Kroll Associates. As they rightly pointed out, there has been significant and increasing diversification in the accountancy world, as in many other sectors. Many accountancy companies provide not only accounting services but, for example, business consultation in general and consultancy work in the security industry.

On 10 April, the Financial Times—which should be lauded not only because it is based in my constituency, but because it is one of the world's pre-eminent newspapers—included a supplement on corporate security. Page 2 of the supplement lists the top players in the intelligence industry, and in doing so makes it clear that the big five accountants are included. The supplement states:

    ``Rivals question the large audit firms' long-term commitment to the corporate security market, but all five have built a large presence in this business. All have expanded from their historical base in financial due diligence to offer a broad range of products and services such as high-technology risk consultancy.

    Their audit arms' client lists and respected names give them easy access to chief executives, but rivals claim such relationships are fraught with potential conflicts.

    Among the prominent members of this group, much speculation has surrounded PricewaterhouseCoopers' intentions. Under Craig Jacobsen, it has built an investigative staff of about 700, but it is said to have sounded out several other corporate security firms about joint ventures or acquisitions . . . Deloitte & Touche took the unusual step of adding a political risk business last November, hiring Martin Stone from Control Risks. It is known for having a strong IT fraud detection service, and has tried to position itself at the top end of the market.''

Certainly, those to whom I spoke said that many of their employees have been poached by accountancy companies, although they were not arguing that to do so is illegal.

To allow those employed by accountancy firms to remain exempt would drive a coach and horses through the Bill. My amendments would change the broad definition that permits exemption irrespective of the activity in question, so that exemption would apply to firms that carry out accountancy activities alone. It behoves the Minister to take seriously this matter, which was debated at length in the House of Lords. He should also say whether the Government are willing to consider accepting an amendment such as mine, be it today or on Report, or a slightly different one if mine is technically defective. It would be as big a nonsense as that referred to by the right hon. Gentleman to allow a sector, which is clearly now a private security business sector, not to be included.

Mr. Clarke: We are discussing difficult professional questions for lawyers, accountants and the IT industry. The task is how to ensure a level playing field, as my right hon. Friend the Member for Walsall, South argued earlier, while not penalising companies marginally involved in those activities. It is not easy to get that right and that is why we wish to target the Bill at those specialist providers of security services that we have said that we want to regulate.

As the hon. Member for Southwark, North and Bermondsey said, the exemption for accountants was discussed at length in the other place, and we accepted Opposition concerns that the wording of the schedule—as originally drafted—did not make it adequately clear that we did not want to take accountants into the Bill's regulatory framework. We tabled amendments in the other place to provide a clear exemption for accountants from the definitions of private investigators and security consultants. Those amendments were limited to exemptions for members of relevant accountancy bodies—defined in clause 25—as mentioned by my right hon. Friend earlier. The amendments before us try to refine the exemptions and limit them to activities carried out by accountants for the sole purposes of accountancy.

The amendments tabled in the other place in response to concerns were drafted following discussions with a variety of specialist bodies, such as the Institute of Chartered Accountants in England and Wales and private companies, the Serious Fraud Office and the Financial Services Authority. Those discussions echoed the concerns expressed by Opposition Members in the other place and we received some helpful advice on how to deal with concerns raised. We decided to exclude accountants who were members of accountancy bodies, by virtue of the high level of qualifications that are required to become a member. We accepted that, in the modern, highly complex accountancy world, some accountants may carry out activities that are designated by the provisions of the Bill. However, the problems that would arise from trying to differentiate between an accountant who undertook accountancy work solely and one who diversified into other activities would create significant definitional difficulties for the authority. We therefore decided that, to keep the regulation simple and effective, we should exempt all qualified accountants who are members of a relevant accountancy body. That builds on the existing regulation and ensures that only those with formal qualifications would be excluded from the licensing requirement of the Bill. Employees of accountancy firms who are not members of the relevant accountancy bodies would of course, if hired out under contract, require a licence.

I see that the hon. Gentleman does not accept the force of that argument. I am prepared to examine the situation again. However, when he decides whether to press the amendment, I ask him to take into account the fact that the definitional issues are not easy to resolve. We feel that we reached a good position in the other place and I hope that the hon. Gentleman will reflect that in his response. I give him the reassurance, however, that we will look at the situation again and see whether we can achieve further clarification.

Mr. Hughes: I am grateful for the politeness of the Minister's reply. I am absolutely not persuaded that one cannot define companies that carry out accountancy, as opposed to those that carry out accountancy as well as other things. I do not accept that point. The reality is that accountants have the definition. The fact that a person may be qualified, validated and recognised by a professional body does not mean that that person or the firm that he works for are not able do other things. I do not know a huge number of accountancy firms, but those with which I have dealt have expanded and perform a whole range of jobs. Some are included in the list that I have just given.

I am not persuaded, although I am prepared to be reasonable and to discuss the matter. I ask formally, after the Committee has finished its proceedings, to have an opportunity to go through the matter with the Minister, and possibly to meet him with those people most affected, before Report. I am aware of the time pressure that we are potentially under, but I will definitely want to come back to the matter on Report if assurances are not satisfactory. I should be grateful if the Minister would give an assurance—on the record—that he will meet me, with those affected, even if the time scale is short between now and Report stage.

Mr. Clarke: I am happy to give that assurance.

Mr. Hughes: On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

6.45 pm

Mr. Bercow: I beg to move amendment No. 33, in page 28, line 1, after second `to', insert `physical'.

The Chairman: With this it will be convenient to take amendment No. 32, in page 28, line 5, after `financial', insert `or information security'.

Mr. Bercow: These amendments might be described as the IT security industry amendments. The principle arguments on behalf of the IT security industry have been aired before most eloquently by my hon. Friend the Member for Surrey Heath. They do not need to be rehearsed in great detail. However, there is no doubt at all that there is a continuing concern, not least on the part of the Confederation of British Industry, that the IT security industry might ultimately be incorporated within the terms of the Bill, even if that was not originally intended, and despite the fact that no earnest of any such intention was given to the sector. The two amendments would more satisfactorily protect the sector than has been done so far. I hope that the Minister will seriously consider the position.

It is commonplace for members of all parties to invoke the support of large trade associations and representative bodies when it suits them. That is entirely legitimate, and you will know, Mr. Winterton, from your 30 years' service in the House, that the Confederation of British Industry is a prized body to invoke in support of one's argument. We have done it, and the Minister has done it.

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