City of London

Part of Opposition Day – in the House of Commons at 4:22 pm on 12th March 1986.

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Photo of Mr John MacGregor Mr John MacGregor The Chief Secretary to the Treasury 4:22 pm, 12th March 1986

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: recognises the continuing and increasing contribution being made by the financial services industry in the United Kingdom to wealth creation and employment; and welcomes the Government's measures to remove obstacles to the efficient operation of the market in financial services, to improve the regulatory framework in the whole financial services sector and to deter and punish fraud.". The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) began by speaking about the damage caused by fraud and other dishonest practices in the City. I agree completely with him. Fraud is morally wrong and wholly unjustifiable. It besmirches the good reputation of the City, inflicts serious damage on honest practitioners and frightens investors. It is quite unacceptable that fraudsters can—as it sometimes seems—escape justice with the proceeds of their crimes. The Government have been and are determined to ensure that the sternest action possible is taken against fraudsters wherever their guilt can be proved.

However, I part company from the right hon. Member for Sparkbrook on this point. He waxed indignant about fraud, and the Government share that indignation. However, we have matched our indignation with action over a number of years, long before Opposition Members chose to make this a headline-hunting issue. Let me first remind the House of the Government's programme for dealing with cases of serious financial fraud.

On 8 November 1983—long before the hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore) started to take such a close interest in this subject—the Lord Chancellor and the then Home Secretary announced the establishment of the Roskill committee to investigate a range of problems associated with the detection, investigation and prosecution of serious financial fraud. That was a fundamental inquiry, basic to this vital issue of financial fraud, and it has led to wide-ranging and radical recommendations which are likely to have much greater long-term effects than anything else I have seen canvassed.

On 14 January this year, my right hon. Friend the Home Secretary welcomed that report. The committee made 112 recommendations designed to make the investigation of fraud more effective, and to remove some of the present obstacles to bringing complex financial fraud cases to court and to a successful conclusion. The debate on the report on 13 February in the House brought some flavour of this complexity which makes big financial fraud so much harder to tackle than the Opposition sometimes pretend. I make no secret of my own leaning towards agreement with Lord Roskill's main recommendations, although I note that my right hon. Friend the Home Secretary has said that he is consulting on the matter.

I noted that the right hon. Member for Manchester, Gorton (Mr. Kaufman) was ready to reject one of Roskill's major proposals — trial by assessors — without a moment's thought. It is of course important to bear constantly in mind that, although it is Lord Roskill's recommendation about trial by jury that has attracted most attention, his committee's report contains a mass of detailed proposals which would dramatically improve the chances of bringing fraudsters to book. My right hon. Friend the Home Secretary is now urgently considering with colleagues the Roskill recommendations on the preparation and conduct of fraud trials. The Government will return to the House soon with firm legislative proposals.

In July 1984, again well before the Opposition were prompted by the hon. Member for Hackney, South and Shoreditch to take an interest in fraud, my right hon. Friend the Chancellor of the Exchequer announced the establishment from 1 January 1985 of the fraud investigation group. That followed months of planning. As my right hon. Friend said at that time in a speech to the Bow group: The investing public needs to be assured that wrongdoers and fraudsters will be speedily and effectively brought to book under the law". Again, that is an example of the Government taking a prompt initiative.