Clause 21 - Power to enter and remain on premises
Companies (Audit, Investigations and Community Enterprise) Bill [Lords]
9:30 am
Mr Andrew Mitchell (Shadow Minister, Economic Affairs; Sutton Coldfield, Conservative)
You are absolutely right to get carried away by your enthusiasm for the amendments that I now have the honour to put before the Committee, Mr. Conway.
I draw the Committee's attention to amendment No. 18 and, in particular, amendment No. 19. Amendment No. 20 would make a number of consequential changes. Amendment No. 21 deals with entry into residential premises, and amendments Nos. 22 and 23 are consequential on it.
The amendments concern clause 21, which would insert new sections 453A, 453B and 453C into the 1985 Act and would confer on inspectors and investigators a new power to require entry to and remain on the relevant premises. The relevant premises are defined in proposed new section 453A(3) as
''premises which the inspector or investigator believes are used (wholly or partly) for the purposes of the company's business.''
Investigators and inspectors are thus being given the power to enter and remain on premises that are, in some cases, also domestic residential properties.
Not infrequently, the subject of an investigation pursuant to the powers conferred by section 447 of the 1985 Act is a small business. It is by no means uncommon for such businesses to trade from, or have their registered office at, the director's home address; if a business operates from small premises where space is scarce, books, records and other materials may be stored at the directors' homes.
Previously, under the 1985 Act, investigators and inspectors had to obtain a warrant under section 448 before being able to enter any premises. The Bill would empower an official to enter the premises and remain there as long as they thought necessary to assist materially with their functions. The provision requires only that they should be authorised by the Secretary of State to do that—one can see that in practice such authorisation would be given as a matter of course at the start of any investigation—and that they should think that entering the premises would materially assist them in exercising their investigatory function, which I have already mentioned this morning.
The Bill effectively gives investigators carte blanche. In contrast to the existing law, it does not require any failure to produce documents or information before the exercise of the powers. The amendment would impose on inspectors and investigators a requirement
to seek a warrant before entering and remaining on residential premises—to mitigate the possible abuse of the broad power of entry and its impact in situations where domestic or family arrangements overlap with company activity. The amendment would preserve the status quo with regard to residential property, without restricting the powers to enter and remain on separate company premises.
No one disputes that there may be times when, to avoid frustrating the purposes of an investigation, access to premises of mixed use will be necessary. However, the power to enter and remain on residential property, in a domestic setting, is a draconian one. It is potentially highly intrusive into the private lives of children or others with no direct connection to the company's business. If such intrusion is necessary, it must also be proportionate.
Let us imagine that an inspector were to arrive at a family home during a children's meal time or at bed time, or during a visit by an elderly or infirm relative. Amid the chaos the harassed mother might ask the investigators—there could be more than one—to wait, or to come back the following day when co-operation would be easier. The Bill would permit the inspectors to enter and to insist on staying as long as they thought necessary. If challenged they would need only to reply ''We think it necessary''. Refusal to bow to their demands would put the mother at risk of contempt proceedings under proposed new section 453C, on the basis of the inspectors' certification alone.
Alternatively, an inspector who was dissatisfied with the comprehensiveness of the information provided by a director might turn up at the director's home, in front of his family, and insist on staying until the director told him what he expected to hear. We cannot grant the powers in such a form.
I considered tabling an amendment that would impose a limit of five years on the time that an investigator might stay—but I am sure that the Minister will understand that we cannot agree to such an open-ended power. We must stand up for our constituents. The clause presents a frightening prospect. It is right and proper for the power in it to be carefully circumscribed; there should be proper defences against the potential for abuse.
I do not doubt that in practice, the DTI's appointed officials will maintain their excellent standards of professionalism, and will strive to act sensitively in the exercise of the new powers. However, opinions may legitimately differ on what is intrusive or oppressive. Officials' actions may inadvertently exceed what is reasonably necessary. In testing the effectiveness of protection against intrusive powers, it is no use assuming the best. The law that we enact must be proof against the deliberately or inadvertently abusive.
Moreover, there is no provision in the Bill for any mechanism to allow anyone to complain about or obtain effective relief from the abuse of the power by an inspector. Instead, individuals are left to the cumbersome and specialised remedies available under the general administrative law. The Government should give further consideration to that omission.
The requirement for inspectors and investigators to obtain a warrant, which may be subject to conditions, before entering and remaining on residential premises, would provide an effective safeguard against over-zealous officialdom or abuse, and ensure that any necessary intrusion was carefully and independently weighed for proportionality before it took place.
I turn now to amendments Nos. 32, 26 and 27. Amendment No. 32 would add a new subsection to the clause. The purpose of the amendments is to include within new section 453A clear limits on the times during which the power to enter and remain on premises can be exercised by inspectors. I remind the Committee that relevant premises may include domestic as well as business premises.
In the Bill in its present form, the rights to exercise the powers are triggered by what the inspector or investigator thinks would materially assist them in the exercise of their functions and what, in the case of remaining on premises, is necessary for that purpose. The time for exercising the power is circumscribed in only the vaguest of ways by the words, ''at all reasonable times.'' We feel strongly that that balance is not right.
My amendment would add a subsection to new section 453A to make it clear that the exercise of those powers is to be limited to normal office hours, which are defined as being between 9 am and 5.30 pm on Monday to Friday—