Chamber and committees

Okay. As I have been invited to do so, I will.

You allude to some of the potential limitations introduced by the United Kingdom Internal Market Act 2020 and the Subsidy Control Bill. The Scottish Parliament has refused to pass a legislative consent motion on that bill, and the Economy and Fair Work Committee, of which I am also a member, has written about it in quite stringent terms. Are there any other areas that you want to highlight in that respect? I suppose that there is a timing element to consider, given that, as you have pointed out, initiatives that the Scottish Government might attempt to introduce—and which might be trying to do the right things for the right reasons within a very restricted framework—could fall foul of that bill. You have provided some commentary in your report, but you have not chosen to give any specific examples. Are there any such examples that you would like to highlight now?

It is right to agree to the motion and allow Westminster, at long last, to legislate on economic crime. However, the bill is only at the second reading stage in the House of Lords, and there are some 47 pages of amendments from the House of Commons alone. Therefore, today we are debating the motion before the content of the bill is clear, and it might well emerge deeply flawed.

It should not have been like that. As Oliver Bullough’s new book, “Butler to the World”, makes clear, the UK has been the hub of international organised crime for years. What is worse is that it is not the case that we simply did not have effective legislation; rather, multiple—in particular, Tory—Governments have deliberately blocked reform. For example, it is on the record that, despite the best efforts of some people, the UK Government refused to tackle the criminality that is associated with Scottish limited partnerships. In doing so, it was effectively colluding with economic crime and corruption.

Legislation must also address the issue of UK banks. How many members in Parliament are aware that, since 2010, UK regulators have imposed penalties, mostly on banks, of more than £739 million for anti-money-laundering failures? The National Crime Agency has stated that, annually, money laundering alone is likely to amount to hundreds of billions of pounds. I have put that fact on the record on a number of occasions in Parliament.

The cynic in me might suggest that the real reason why the Tories in London are at last clamping down on organised corruption is that they do not like the competition. However, we must also look to institutions in Scotland. As Oliver Bullough’s chapter on the Scottish laundromat reveals, one major Scottish law firm threatened a senior investigative journalist with withdrawal of advertising from his paper if a story about SLP criminality was published. Said law firm has fronted huge numbers of SLPs and the Law Society of Scotland has not done enough to discourage their use, as submissions to various consultations have made clear. I appreciate that regulation on that resides with the UK Government, but will the Scottish Government consider how use of SLPs in particular can be discouraged—perhaps by having further discussions with the Law Society?

What are a few of the bill’s weaknesses? Despite claiming to make business vehicles more transparent, they can declare—without challenge—that they do not have a beneficial owner. That makes disclosure completely optional. Another weakness is that there is to be no disclosure of the beneficiaries of trusts that hold property. In addition, there will be only small penalties for missed deadlines and even for false filings.

The most startling weakness of all relates to the requirement to register. I would have thought that secret property ownership by oligarchs and others would be considered to be a bad thing in all circumstances. However, the bill will allow the UK secretary of state to exempt individuals from having to register if exemption is thought to be for our own wellbeing. Perhaps that is a perk for pals of the secretary of state. I do not know.

Of course, we have been promised that another bill will be coming along shortly, as Michael Marra mentioned. Despite Westminster’s track record, we are supposed to believe that, unlike what happened with the Criminal Finances Bill in 2017, resources will be made available to agencies such as Companies House to implement the legislation.

I fully support today’s motion, but I will have to reserve judgment as to the Westminster bill’s success.

Good morning. I have a couple of questions for Professor Heald.

I have to say that your comments on accountability were music to my ears, as I have raised the issue a number of times with different committee witnesses, not least Mr Gove, who recently appeared before us on behalf of the UK Government. I asked him specifically how Audit Scotland would be liaised with to check on spend that had been provided by the UK Government. I have to say that he was less than certain in his response, which I think—I am paraphrasing—was, “However they want.” Therefore, I think that you have touched on a very important area.

That said, the other important area is how, in efficiency terms, we attribute a cost to the bidding war that you have alluded to. Do you have any sense of the cost to English local councils of, as you describe it,

“bidding for UK-controlled resources in the way that has become dysfunctional in England”?

Can you furnish us with any figures on that?

Thank you. There is a bit more detail that it would be useful to have about how things are working specifically. I am aware that there has been a lot of reworking of the determination of the loan book at UK Government level. It has been through a number of iterations, and there is some sleight of hand there in accounting terms, which I am aware of, too. That is probably a technical term that I should not have used.

In some respects that does not matter. What interests me is why we should care. In other words, what, specifically, has this got to do with the Scottish budget? Why are we having this technical change of £298.7 million appearing for us—given that it is a loan book—while we do not have student loans in Scotland? That is what I do not understand.

So it really is just a technical thing. It is not—

In asking this question, I acknowledge that the year-end processes are complex at this level across this number of budget lines. That is taken as a given. We get a lot of commentary that the way in which the fiscal framework works is inefficient, and that means that there is a cost to the public purse. I suppose that is what I am driving at: the constant changes—stuff coming in from left field—are incurring a cost, and that is inefficient for public sector expenditure. That is the reason why I am asking this, rather than any other reason.

To go back to the point about trying to apportion some amount to the loss as a result of that bidding, it strikes me that that might be a useful exercise, because I am concerned that it is happening more frequently.

I want to pick up on another point. You may be suggesting where the differences lie between funding from the UK Government to the Scottish Government and from the Scottish Government to councils, in that the Scottish Government, with its universal policies, is not subjecting local councils to bidding. It is simply saying, “This is a pot of money that has to be spent in the same way.” To go back to Liz Smith’s point, we are not actually comparing like with like, are we?

I suppose that that is what I wanted to explore. I apologise for using the term “sleight of hand”—what I meant was that, in my understanding, there is an accounting mechanism to reflect that the loans are not truly loans in a traditional sense, and the public accounting of them is slightly different.

Notwithstanding that, I still do not understand the direct relevance to the Scottish budget of that treatment, which has been applied across the board. I would also like to know how, specifically, it is being applied to the Scottish budget. Are those real numbers, in a technical sense? Are they really based on Scottish loans or are they an apportionment based on population share? In other words, is the number that we are discussing real, and what does it really mean for us?

I get that. I have a last wee question, because I am aware that my colleague wants to come back in and explore this area.

With regard to the loans themselves, I note what you are saying about the historical situation in Scotland; that applies to Scottish loans simply because they run over 30 years, as I understand it. It does not have any relationship to Scottish students who, for example, studied in England and have now come back and become Scottish taxpayers. I am assuming that it is simply a picture of the loan book at a point in time when those loans were taken out.

I am trying to explain that, from an accountability perspective, money that the UK Government provides to councils has to be bid for. We have already agreed that that process is inefficient, as some public expenditure is lost through days of inefficiency. It is not the same as money being set aside, with assistance on how councils should spend it from the Scottish Government, because that is done on a universal basis. I am just trying to confirm that my understanding is correct.