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Lord Bassam of Brighton: My Lords, I, too, congratulate the noble Viscount on raising this issue. His concern is entirely appropriate. I found our meeting most useful and helpful. I apologise if I did not then provide the noble Viscount with a sufficient explanation of the current position in regard to investigating criminality in businesses. If he wishes me to put that explanation on the official record, I am more than happy to do so.

The noble Viscount is concerned that a shady or downright criminal firm might appear to be legitimised by the granting of licences to its members of staff, its managers or its directors; that such a company might continue to engage in illegal activities, perhaps directed by a real controller whose connection with or dominance of the business was not apparent; and that if some lower grade operatives were found out, lost their licences and were prosecuted, they could be replaced and the business could continue as before, as the noble Viscount said.

I have some sympathy with the noble Viscount's concerns, but I should say, first, that I do not believe that it is for the security industry authority to deal with such matters--which, I believe, is the position taken by the noble Viscount earlier--nor do I believe that the Government are washing their hands of the problem.

There are already extensive powers, both under the criminal law in general and the Companies Act 1984, as amended by the Companies Act 1989, in particular,

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for action to be taken where there are suspicions similar to those which have been raised in your Lordships' House. I have provided the noble Viscount with details of the powers contained within the Companies Act. These include that, on direction by the Secretary of State, Department of Trade and Industry, inspectors can seek information about a company and its directors and decide whether they should seek a winding up of the company in the public interest or the disqualification or prosecution of a director.

Where matters in an investigation suggest that a criminal offence may have been committed, the matter will be referred to the appropriate prosecuting authority--for example, the police or the Serious Fraud Office. Where there is evidence of misconduct by a company's directors, the DTI can ask the courts to disqualify them. This would stop a person acting as director for 15 years--a very powerful instrument, I suggest. When the public is at risk, the Secretary of State may ask the court to stop a company trading with immediate effect. It is surely true that if those powers are unable to deal with a sophisticated operation such as the noble Viscount appears to have in mind, then the security industry authority is very unlikely indeed to mount effective action.

However, the noble Viscount makes a profoundly modest proposal; that is, that the authority should simply be able to ask the Secretary of State for Trade and Industry to exercise his powers under the various Companies Acts to investigate and, if necessary, close down problem businesses which the authority's licensing regime cannot address.

As I understand the relationship between this legislation and the Companies Acts legislation, there is absolutely nothing to stop the authority drawing very plainly to the attention of the Department of Trade and Industry the activities of a company which it has reason to regard with profound suspicion but against which it cannot act within the terms of its legislated functions. I hope and expect that the DTI will be one of the stakeholders with whom the authority will consult regularly in the course of its operations, as we have debated earlier during the course of the Bill.

Having said that, I do not believe that it is necessary to take the amendment into the Bill. I hope I have provided sufficient reassurance to the House and to the noble Viscount to enable him to withdraw his amendment. I believe that that is where we should best leave the matter this afternoon.

Viscount Goschen: My Lords, I am grateful to the Minister for that explanation. He said that my amendment is otiose because the authority can do what is suggested in it without a specific power. I accept that. My amendment was designed to draw the Minister and to discover whether the Government recognised that there was a potential problem.

I believe that there is a serious potential problem. That was highlighted when the Minister said that it was unlikely that the SIA would be in a position to mount effective action in the event of a seriously

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corrupt firm undertaking security activities. The Minister should be worried about that. If such a situation arose we could be left with the worst of all worlds, where 200,000 or 300,000 people have been regulated and yet still the public cannot have confidence that the regulating authority can do anything about a potentially serious threat to the reputation of the industry where criminal activities can be carried out under the guise of respectability. The Bill could lead to bent firms being given an aura of respectability and the authority being unable to take effective action against them.

Lord Thomas of Gresford: My Lords, does the noble Viscount agree that it is not a very sophisticated operation that is required, as the Minister said? A person who was incapable of obtaining a licence in his own name--perhaps because of his past convictions and record--could easily set up a company with nominee directors who would obtain licences and operate in that way? It is a very wide loophole.

Viscount Goschen: Precisely, my Lords. I am deeply grateful to the noble Lord for his concise explanation. It does not take much for someone to put forward their brother-in-law or their friend--whom they met perhaps not in prison but in school--as the managing director of a firm and perhaps two or three other friends as managers or directors.

There is the potential for a serious problem. I cannot understand why this regulatory framework should be so different from that of the financial services industry or the bookmaking industry. If the Minister has the information available to explain now how this legislation will work, it will be easier for the House to understand.

Lord Bassam of Brighton: My Lords, perhaps I may return to what the noble Lord, Lord Thomas of Gresford, described as a "wide loophole". If the loophole is as wide as the noble Lord suggests and the noble Viscount avers, the modesty of the amendment which the noble Viscount proposes will not be likely to meet it. As I have said to your Lordships, in any event this matter can also be dealt with simply by the SIA communicating with the DTI in the terms which I described earlier. The modest measure which is proposed is provided for already. We can already refer issues to the DTI for investigation.

The noble Viscount asked me to respond to the point about licences for casinos. The noble Viscount also mentioned bookmakers. The gaming industry may be particularly prone to potential criminality--perhaps that is why the noble Viscount mentioned it--because of the large volumes of cash that are handled. However, I do not think that the same concerns apply with regard to security firms. For those reasons we do not think that additional controls beyond the extensive powers in the DTI legislation will be necessary.

There is a parallel here which I have certainly drawn in the past, but we do not see it in quite the precise terms of the noble Viscount. He was right to raise the issue. However, we believe that his concern can be met

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through the relationship that is likely to exist between the SIA and the DTI as a key stakeholder and regulator of companies. I think that experience will bear out that belief. As I say, the noble Viscount was right to raise his concern but we believe that it can be met. As the noble Viscount said, his proposal is modest. If the loophole is as large as he suggests, I do not believe that his modest proposal would meet it.

Viscount Goschen: My Lords, I certainly agree that my amendment is extremely modest. Strictly speaking it is unnecessary, as the noble Lord has already said that what I seek to do can already be done. I accept that. It was a probing amendment. I apologise to the House for the somewhat lengthy explanation of it. The purpose of bringing it forward was to try to draw from the Minister an explanation of what cards he has up his sleeve to deal with rogue firms. I am in no way convinced that the Minister has a full hand here. He said that the casino industry handles large amounts of cash. However, the guarding industry is probably also involved in the movement of large amounts of cash, and sometimes criminal elements with shotguns try to "stick it up".

I am surprised that the noble Lord has not been able to explain fully why there is a difference between the way in which casinos and bookmakers are regulated and the way that is proposed for the security industry. However, I believe that there will be an opportunity for further dialogue between now and further stages of the Bill. For the moment I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 10 [Appeals in licensing matters]:

4.45 p.m.

Lord Bassam of Brighton moved Amendment No. 19:


    Leave out Clause 10 and insert the following new clause--

APPEALS IN LICENSING MATTERS

(" .--(1) Where--
(a) an application for a licence is refused,
(b) a licence is granted subject to conditions imposed under section 7(6), or
(c) a licence is modified or revoked,
the applicant or, as the case may be, the holder of the licence may appeal to the appropriate magistrates' court against the Authority's decision to refuse to grant the licence, to impose those conditions or, as the case may be, to modify or to revoke the licence.
(2) An appeal under subsection (1) must be brought before the end of the period of twenty-one days beginning with the day on which the decision appealed against was first notified to the appellant by the Authority.
(3) For the purposes of subsection (1) the appropriate magistrates' court is the magistrates' court for the petty sessions area in which is situated, as the case may be--
(a) the address for the appellant that has been supplied for the purpose of being recorded (if a licence is granted) in the register maintained under section 11; or
(b) the address for the appellant that is for the time being recorded in that register.

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(4) Where a magistrates' court makes a decision on an appeal under subsection (1), an appeal to the Crown Court may be brought against that decision either by the Authority or by the person on whose appeal that decision was made.
(5) A court to which an appeal is brought under this section shall determine the appeal in accordance with the criteria for the time being applicable under section 6.
(6) Where an application for the grant of a licence by way of a renewal is refused or a licence is revoked, the licence to which the application or revocation relates shall be deemed to remain in force--
(a) for the period during which an appeal may be brought under subsection (1);
(b) for the period from the bringing of any such appeal until it is determined or abandoned;
(c) for the period from any determination on appeal that a licence should be granted until effect is given to that determination, or it is overturned on a further appeal;
(d) during any such period as the appropriate magistrates' court or the Crown Court may direct, pending an appeal from a determination made on an appeal to that magistrates' court.").

The noble Lord said: My Lords, these grouped amendments are intended to make improvements in the provisions of the Bill relating to appeals from security industry authority and local authority decisions.

In Committee noble Lords opposite tabled a number of amendments designed to make improvements to the drafting of Clause 10, which establishes appeals mechanisms from decisions of the security industry authority to refuse to grant a licence or to modify or revoke one. The main arguments put forward by the noble Lords, Lord Cope and Lord Thomas, were that the clause should require, rather than merely permit, the Secretary of State to establish appeals mechanisms; that they should be established by the Lord Chancellor rather than the Secretary of State; that the detail of the appeals tribunals should be set out on the face of the Bill rather than left to secondary legislation; that it would in any case be better to establish a system of appeals to magistrates' courts; and that there should be a right of appeal against decisions to grant a licence, as well as against decisions to refuse, revoke or modify.

I said in reply that I would take away the many points that had been raised and consult further with Members of the Committee. I indicated in my closing remarks on Clause 10 that I believed that the parties were united in wanting to design a simple, effective and cost-effective appeals mechanism. In the light of that I have to tell your Lordships that the Government have given careful consideration to the proposals that were raised in Committee. We have concluded that it would be right to amend and expand the provisions both in Clause 10, which relates to appeals about individual licences, and in Clause 17, concerning appeals about decisions within the approved contractors scheme. Amendments Nos. 19 and 24 amend our proposals for an appeals system by introducing a right of appeal against authority decisions to the appropriate magistrates' court and thereafter to the Crown Court. By "appropriate" magistrates' court we mean the magistrates' court for the petty sessions area in which is situated the address which the applicant has supplied

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in connection with his application for licensing as a security operative or approval under the approved contractors scheme. Appeals must be made within 21 days. Where the appeal relates to a renewal of a licence or company approval, the amendments provide that the licence or approval, as the case may be, shall remain in effect while an appeal is pending or under consideration or while effect is given to its outcome.

The amendments do not confer formal rights of appeal on third parties who may disagree with decisions reached. Where an application for a personal licence or company approval has been refused, revoked or modified, the aspirant to the licence or approval may appeal to the magistrates' court. Appeals against a magistrates' court ruling may be made by either the aspirant to the licence or approval, as the case may be, or the security industry authority. The Government have considered the question of the interests of the wider community where a third party considers that the security industry authority has awarded a licence or approved a company when it should not have done so. In these cases the third party is free to draw the authority's attention to what he believes to be the error in the authority's judgment or the piece of information he believes it has overlooked. The authority will need to consider such approaches seriously, and has adequate powers to investigate their veracity and relevance. Where the authority subsequently finds itself minded to agree with the third party's objections, it will have the power to revoke or modify the licence or approval in question, having given the licence or approval holder the opportunity to comment.

It was pointed out in Committee that the Bill as drafted makes no provision for appeals in licensing decisions taken by local authorities under devolved arrangements for licensing door supervisors under Clause 12. Amendment No. 21 addresses that point and applies the appeals mechanisms that will be established by new Clause 10, if your Lordships agree to Amendment No. 19, to decisions taken by local authorities. This means that where a local authority has, under arrangements as devolved to it from the security industry authority, refused, revoked or modified a licence for a door supervisor, the door supervisor has an avenue of appeal to the appropriate magistrates' court in just the same way as he would have had against a decision taken centrally by the security industry authority.

I am grateful for the arguments that were raised in Committee. I believe that these amendments address substantively the concerns that were raised and that the result is a substantial improvement in the Bill and the rights of all of those concerned in the industry. I beg to move.


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