INVESTMENTS AND INVESTMENT BUSINESS (Hansard, 30 October 1986)

§ The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Michael Howard)
I beg to move, That this House doth agree with the Lords in the said amendment.

§ Mr. Speaker
With this, it will be convenient to take the following Lords amendments: No. 2, in page 2, line 8, after "business" insert "maintained by him"
No. 3, in page 2, line 9, leave out paragraph (b) and insert— (b) engages in the United Kingdom in one or more of the activities which fall within the paragraphs in Part II of that Schedule and are not excluded by Part III or IV of that Schedule and his doing so constitutes the carrying on by him of a business in the United Kingdom. No. 32, in clause 30, page 19, line 27, after "business" insert "maintained by him".

§ Mr. Howard
As this is the first group of amendments to be discussed, and especially as it is the first group of several which deal with the scope of the Bill, it might be appropriate if I made some general comments before coming to the substance of the amendments under consideration.
Many amendments have been made to the Bill. I wish that it had been possible to keep the number rather smaller, although I must immediately add that many of the amendments are technical. However, the number and variety of amendments fulfil a promise we have made throughout the proceedings on the Bill that we would listen carefully and with an open mind to representations put to us and would not hesitate to introduce amendments where a case was made out.
The Bill is highly technical and it ventures into previously uncharted legislative territory. We would have been severely criticised, and justly so, if in those circumstances we had not listened to representations.
I would not wish my introduction to suggest that the Bill is, or is intended to become, fundamentally different from the Bill that was introduced 10 months ago. The basic regulatory structure remains unchanged because we believe that it is the right structure. But the Bill has benefited from extensive consultation on detailed structure and on technical points.
We have received several representations about the scope of clause 1. The anxiety that has been expressed about the definition in clause 1 was that a person engaging in some business wholly unconnected with investments might be regarded as carrying on investment business, and 490 hence be required to be authorised, by virtue of entering into a single investment transaction. That would clearly be absurd. As it happens, it would not be the result of the clause as originally drafted. But on such a matter, it is clearly important that there should be as little room for doubt as possible.
Amendment No. 1, therefore, makes it clear that a person who engages in investment activities from a permanent place of business in the United Kingdom will be regarded as carrying on investment business in the United Kingdom only if his investment activities taken on their own, in isolation from any other activities and from any activities excluded by virtue of part III of schedule 1, could be regarded as amounting to carrying on business.
Amendment No. 3 makes it clear that a person who does not carry on investment activities from a permanent place of business in the United Kingdom will be regarded as carrying on investment business here only if he engages in the United Kingdom in one or more investment activities which are not excluded by parts III or IV of schedule 1 and, in so doing, may be regarded as carrying on a business in the United Kingdom. These amendments will, I believe, remove any remaining doubts about the effect of the clause.
Amendments Nos. 2 and 32 make it clear that the references to a "permanent place of business" in clause 1(3)(a) and clause 30(2) refer to a permanent place of business maintained by the person in question. Without this clarification it might be argued that an overseas person who engaged an agent established in the United Kingdom to enter into investment transactions for him could be regarded as entering into those transactions from a permanent place of business in the United Kingdom. This would mean that the exclusions in part IV of schedule 1 would not apply, although the arrangement I have described is one which they were designed to cover. Once again, it seems preferable to put the matter beyond doubt by the amendments.

§ Mr. Bryan Gould (Dagenham)
I am grateful to the Parliamentary Under-Secretary for his general comments. As this is the first group of amendments, I shall follow suit. We are confronted with a most unusual position. We have before us a list covering 581 Lords amendments, comprising 136 printed pages. It is fair to say, as the Minister has, that many of the amendments are of a technical and consequential nature and that others arise because of commitments given in earlier proceedings. However, the fact remains that we have great difficulty, not only because of the sheer volume of the amendments, but because of the timing.
The Lords completed their procedures only earlier this week. The simple exigencies of printing, and so on, have meant that we have seen the amendments in their marshalled form for only 24 hours at the maximum. Although the Minister is well able to handle the volume of material, since, one assumes, he has had a hand in preparing it, a great burden is placed on other hon. Members. I immediately pay tribute to the efforts that the Minister and his private office have made over the past months to try to keep the Opposition Front Bench in touch with what has been going on. That has been helpful.
However, I think of other Government and Opposition hon. Members who will find it an almost superhuman task to try to winnow out from this immense volume of material what is important and what is not. It is all very 491 well for the Minister to say that the amendments are merely technical, but if the Opposition —I include all Opposition parties—are to do their job properly, they cannot take that on trust. We must look at the amendments to ensure that they are technical and consequential and that there are not points of political significance buried in them. It must be said that the Government have confronted the House with an extremely difficult proceeding.
In my view, the Government are not entirely to blame, although, as the prime mover in such matters and responsible for the consultations and preparations for the Bill, they must take the ultimate responsibility. However, I think that the Minister has been unfortunate—if I may offer him a word of comfort—in that he has been the victim of some remarkably late lobbying on the part of City interests and institutions which have belatedly woken up to the fact that some of the Bill's provisions will cut across some of their well-established interests. No doubt the Minister has found that some people have been banging hard on his door over recent weeks, and perhaps that is part of the reason we are confronted with so many late amendments. We cannot let the point pass without registering that protest — that we are confronted with that difficulty and, as a consequence, we are unable to give the Bill the detailed scrutiny that it should have. It is an important measure, and I fear that we must take a great deal on trust.
I was interested to hear the Minister's comments on the substance of the amendments. I shall ask him a straightforward question. Many of the amendments to the definition clauses of the Bill have arisen because of representations made by bodies such as the Association of Corporate Treasurers and the Confederation of British Industry. They became alarmed that the Bill as originally drafted would drag into its net a range of activities that were not intended to be covered. Opposition Members are familiar with some of those arguments.
From time to time, the Minister and his governmental colleagues have said that great reliance can be placed on the word "engaged", and that the phrase "engaging in business" implies a connotation of continuity; in other words, it does not apply to a one-off transaction and, therefore, many of the problems that were feared might arise are thereby dealt with. Sometimes, it was argued that the word "engaged" implied the doing of business for remuneration. I ask the Minister whether he is satisfied that such reliance can be placed on the term. Can he give us a general assurance that the proper concerns raised by the corporate treasurers and others have been largely met? I am not aware that there is any residual difficulty about the matter, but I think that it is worth placing on the record the fact —if indeed it is a fact—that the basic objections and difficulties have been met.

§ Mr. Tim Smith (Beaconsfield)
I shall comment briefly on the general points that have been made. First, I congratulate the hon. Member for Dagenham (Mr. Gould) on his election to the shadow Cabinet. On behalf of the Labour party, he has carried the Bill almost single-handedly, and his performance has been most impressive. Perhaps that has something to do with his elevation. As to the points made about the way in which the matter has been dealt with—

§ Mr. Deputy Speaker (Mr. Harold Walker)
Order. I thought that it made sense to allow the Minister to make 492 an explanation. Equally, it made sense for the Opposition Front Bench spokesman to respond. However, I think it inappropriate to embark on what would, in effect, be a further Third Reading debate. The House should address itself to the amendments.

§ Mr. Smith
That is a bit tough on Back Benchers, is it not, Mr. Deputy Speaker?

§ Mr. Deputy Speaker
Order. No. The hon. Gentleman is suggesting that I should never have allowed any general comment in the first place. That is a criticism that he must not apply to me. The House must address itself to the amendments.

§ Mr. Smith
I apologise, Mr. Deputy Speaker.
The amendment illustrates the dilemma in which my hon. and learned Friend the Minister found himself. He said that when he received representations on the matter he was not satisfied that there was any need to amend the Bill. He felt that clause 1 made it clear that what was intended was reference to sombody who was running an investment business on a regular basis. He thought that it was quite clear that it was not referring to a one-off investment transaction. However, he wanted to put the matter beyond doubt and to satisfy those who were concerned.
I think that many of the amendments are to do with the periphery, the boundaries of the Bill, the definition of "investment business", and whether certain people are or are not caught by the Bill. Amendment No. 1 illustrates the difficulty in which my hon. and learned Friend found himself. That is true of many of the amendments. He has said that, although the Government have put down amendments and they have been accepted in another place, amendment No. 1 is not strictly necessary.

§ Mr. Howard
I thank my hon. Friend the Member for Beaconsfield (Mr. Smith) for his remarks. I associate myself with the congratulations he offered to the hon. Member for Dagenham (Mr. Gould) on his election yesterday to the shadow Cabinet. I am also happy to associate myself with the remarks made by my hon. Friend about the part played by the hon. Gentleman during the consideration of the Bill in this House. Certainly, it owes a good deal to his constructive contribution. I acknowledge the protests that he registered and the way in which he did so. I hope that we can make progress this evening, and if necessary tomorrow, to deal with the issues involved.
The answer to the specific question that the hon. Gentleman raised was largely provided by my hon. Friend the Member for Beaconsfield. We took the view that the word "engaged" had the connotation suggested by the hon. Member for Dagenham. For that reason, the meaning which was attributed to clause 1 by those who were concerned about its application was not justified, and they were being unduly apprehensive. On the other hand, it seemed that one had a duty to respond to those concerns, to place the matter beyond doubt and to deal with it in the way in which we have sought to do by bringing the amendment before the House. I am happy to tell the House that we have met the concerns that were expressed rather late in the day by the CBI and the Association of Corporate Treasurers. There is no lingering unhappiness on their part, at least so far as I am aware, about the concerns they expressed to us at the end of July.